The Senate Should Not Vote on Tax Reform Without a Dynamic Score
In the coming weeks, the Senate is expected to vote on its version of the Tax Cuts and Jobs Act, which the Joint Committee on Taxation (JCT) has estimated would add $1.4 trillion to the debt under conventional scoring. Supporters of the legislation have argued the actual cost of the bill would be lower under dynamic scoring that incorporates the effect of faster economic growth. Maya MacGuineas, president of the Committee for a Responsible Federal Budget, said the following:
An essential goal of tax reform is to increase economic growth. While originally many lawmakers wanted to use the gains from growth to improve the nation’s precarious fiscal position, that has shifted to a goal of tax reform that doesn’t add to the debt after accounting for growth. It is therefore necessary to have credible guidance of how much growth to expect from a tax bill.
Given that the Senate passed a budget that allows $1.5 trillion in borrowing to account for possible growth, they now need to see what the JCT, Congress’s official tax scorekeeper, produces as a dynamic score for their tax legislation. The Senate should not vote on tax reform before they have the score to determine how much borrowing they should accept.
JCT is likely to conclude the tax bill will promote economic growth – but not nearly enough to pay for itself. Recent estimates produced with models similar to JCT’s have found the tax bills may increase the growth rate by 0.03 to 0.09 percentage points per year, producing as much as $200 billion of dynamic feedback. But these aren’t official estimates – JCT’s estimates are.
Tax reform should be about generating as much growth as possible – not rushing legislation through before we have any idea how much growth it will produce.
For more information contact Matt Bylis at email@example.com.