Who can ask the Joint Committee on Taxation for a revenue estimate or help in crafting legislation?
Any Member of Congress may request a revenue estimate for a tax proposal or solicit the committee’s help in crafting tax legislation. The Joint Committee Staff has received a significant number of revenue requests over time. In the last few decades, the number of requests has increased by over 400 percent. Over the last decade, the Staff has averaged approximately 4,000 requests per year, with some fluctuation year to year. While the majority of requests are for revenue estimates, the Joint Committee Staff also receives requests for distributional, legal, and data analyses. All requests are treated as confidential unless otherwise stipulated. A response to a request is released only to the Member making the request and the response remains confidential unless the Member decides to make the information public. Confidentiality allows the Joint Committee Staff to maintain its nonpartisan role in the policy process.
Procedures for Congressional Members requesting revenue estimates from the Joint Committee on Taxation are as follows:
The request procedures are outlined on the Requesting Revenue Estimates and Other Analysis page.
Does the Joint Committee on Taxation ever publish their revenue estimates?
When a revenue estimate has been included in a publicly available document (e.g., a revenue table summarizing a markup proposal or the result of a reported bill), the estimate is posted to the Joint Committee website and publicly released. An estimate is also posted in circumstances where the information is of widespread and immediate interest by the Members of Congress (e.g., a tax bill about to be voted upon by the full House or the full Senate).
Are Joint Committee on Taxation estimates “static”?
No. JCT estimates include many micro-dynamic behavioral effects that economists anticipate would result from changes to taxation; for example, a proposal to increase excise taxes on cigars would be assumed to reduce demand for cigars while potentially increasing demand for cigarettes. In providing conventional estimates, the Joint Committee Staff assumes that a proposal will not change total income and therefore holds Gross National Product fixed. However, it is important to note that the use of fixed economic assumptions does not prevent the Joint Committee Staff from taking into account that in response to a tax change, economic activity will shift across sectors or markets and/or the timing of economic activity may change.
Although conventional revenue estimates are sometimes referred to as “static,” for more than a quarter of a century, Joint Committee Staff revenue estimates have taken into account taxpayers’ likely behavioral responses to proposed changes in tax law. Behavioral effects can be broadly characterized as shifts in the timing of transactions and income recognition, shifts between business sectors and entity form, shifts in portfolio holdings, shifts in consumption, and tax planning and avoidance strategies.
What kinds of models does the Joint Committee on Taxation use to produce conventional revenue estimates?
The Joint Committee Staff uses a wide variety of economic and statistical models to estimate the revenue impact of changes in tax laws. The primary source of tax data for the models comes from the SOI division within the IRS. However, the Joint Committee Staff receives data from multiple sources from both government agencies and non-government organizations.
Some of the models are large models that simulate taxpayers responses to tax law changes and use large micro-data files, while others are smaller and spreadsheet based. The Joint Committee Staff uses several highly developed tax models that simulate taxpayers responses to tax law changes (“microsimulation” models). These are the Individual Model, the Corporate Model, and the Estate and Gift Model. In addition, the Joint Committee Staff is beginning to use individual panel-based models. The complexity and scope of a model are determined by several factors including the amount and type of data available, the level of interest in the issue addressed by the model, and the level of complexity associated with the questions being asked of the model. Finally, the Joint Committee Staff employs multiple models to analyze the macro-economic impact of significant changes the tax system. Additional publications are available regarding revenue estimating methodology and macro-economic analysis.