The rules that Congress uses to measure the effects of tax changes are “downright dumb” for not including growth effects, Sen. Orrin Hatch said Monday.
Hatch, the Utah Republican set to steer tax legislation as Senate Finance Committee chairman in the Congress beginning in January, endorsed so-called “dynamic scoring” for taxes at an event in Washington Monday.
Dynamic scoring allows Congress’ official revenue estimates to take into account the positive economic growth and subsequent increased tax revenues that would result from certain taxes changes. Generally, official estimates do not account for increased economic growth.
Hatch argued that Congress’ official scorekeepers now have the statistical sophistication to measure macroeconomic changes and incorporate them into their revenue estimates, citing “major developments in the tools that economists use, including the development of dynamic programming and computing.” He noted that the Congressional Budget Office and Joint Committee on Taxation already incorporate such tools into supplemental analyses prepared for lawmakers and used dynamic analysis to score the Senate comprehensive immigration reform bill last year.
Nevertheless, Hatch warned, the effects were not a “magic elixir” that would make huge tax rate cuts appear to have no effect on the deficit.
His remarks were delivered Monday at an event on dynamic scoring hosted by the American Action Forum and the Tax Foundation, two right-of-center think tanks.
With control of both the House and Senate, Republicans could unilaterally change the rules to institute dynamic scoring as the default for the CBO and JCT. Many conservative analysts believe that such a move would ease the process of passing a comprehensive overhaul of the tax code.
