Tax Modeling & Tax Reform: Why It's Important

 

As Congress works to reconcile House and Senate versions of tax legislation through a conference committee — and as new scores estimating the budgetary and economic effects of the legislation are released — it is important for policymakers and the general public to have a full understanding of the various analyses and the underlying approaches to better interpret their meaning.

The budgetary and economic effects of proposed tax legislation are a critical element of the debate. While these effects are central to tax policy, the modeling assumptions underlying them are often not adequately understood. 

To help illuminate the assumptions and methodologies used in modeling changes to tax policy, the Peterson Foundation asked three non-governmental organizations — the Penn Wharton Budget Model, the Tax Foundation, and the Tax Policy Center — to answer a set of nine questions that highlight important aspects of tax modeling. Each organization independently submitted its written responses, which are shown in the report.

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