Saturday, June 19, 2004
Martin Sullivan has posted Practical Aspects of Dynamic Revenue Estimation on the Heritage Foundation web site. Here is part of the Conclusion:
By its nature, dynamic revenue estimation is an ambitious undertaking; and, faced with the almost innumerable difficulties and uncertainties that accompany it, any economist who asserts its viability can radiate an aura of insufficient humility or, worse, a lack of intelligence. But the age-old question must be asked: What is the alternative? Every year, lawmakers propose hundreds and enact dozens of changes in tax law, usually with only the slightest amount and vaguest kind of economic analysis. Would the results of dynamic revenue estimation be better than “the unsubstantiated assertions that policy makers now use in the debate”?…
The supply-side framework in this paper does not include all the effects of taxation that economists would like to examine. Depending on one’s perspective, the glass could be considered half-full as well as half-empty. From the perspective of this economist, if the only “dynamic” thing the JCT did was to incorporate the detrimental effects of federal deficits on capital formation, this would be more than worth the effort.
