In a previous post, I discussed some good sources of public policy analysis. Today I want to look especially at those related to tax policy.
Joint Committee on Taxation. The JCT is a congressional committee, but a very unusual one. While it has members of Congress sitting on it, as other committees do, it almost never holds hearings or marks up legislation. It is also a rare committee with membership from both the House of Representatives and the Senate.
The JCT is essentially a staff operation that was created in the 1920s to help the House Ways and Means Committee and the Senate Finance Committee draft tax legislation, manage complex bills that need to go back and forth between the two sides of Capitol Hill, and keep straight what the right and left hands are doing simultaneously.
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The JCT staff consists primarily of tax lawyers, as well as accountants and tax economists. They generally prepare briefing documents for every major hearing of the Finance and Ways and Means Committees that summarize relevant law and provide background on the topic of the hearings. These pamphlets may also contain revenue projections, distribution tables and other statistical material.
Personally, I find these JCT briefing documents to be invaluable. They are absolutely authoritative, up to date and generally intelligible to non-tax-professionals such as myself. After all, not every member of a tax-writing committee is a lawyer or even a tax specialist. Many members of Congress join Ways and Means or Finance because of other issues in their jurisdiction, such as health, international trade or Social Security.
In recent years, the JCT has put all of its historical archives online, creating an invaluable resource for the study of tax policy for the past 100 years. It is amusing to read JCT reports from the 1920s that complain about the same tax problems people still kvetch about today, especially the complexity of the tax code.
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The JCT is an admirably transparent institution that lays its methodologies, models and data out for scholars to replicate and critique. It tends to work very closely with the Congressional Budget Office, which supplies the JCT with much underlying macroeconomic data, as well as the Internal Revenue Service and Treasury Department.
Office of Tax Policy/Office of Tax Analysis, U.S. Treasury Department. These offices are the exact counterpart to the JCT within the administration. They draft tax legislation, submit tax proposals in the president’s budget, write tax regulations in conjunction with the Internal Revenue Service and otherwise manage the executive branch’s tax policy.
Being an economist, the work of the Office of Tax Analysis is of primary interest to me. OTA is filled with some of the best tax economists in the world, with exceptionally deep knowledge of how taxes affect saving, investment, business organization and a wide variety of other topics. Its in-depth research is shared with smaller agencies such as the JCT and presented to professional organizations such as the National Tax Association.
In the pre-Internet era, OTA research was often difficult to access and copies of its working papers were much sought after by researchers. But now this material is all posted online. One paper I often refer to is by Treasury economist Jerry Tempalski, which lists every major tax bill since World War II along with its major provisions and revenue effect. It’s extraordinarily useful and typical of the sort of basic research that OTA does.
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O.T.A. has also performed an important public service by putting online copies of major tax reform reports from the past, including the path breaking Blueprints for Basic Tax Reform (1977) and the Treasury’s 1984 tax reform study which led to the Tax Reform Act of 1986.
One thing I have learned from many years of studying tax policy and history is that not much changes. The same problems and issues come up year after year. Only the numbers and the sponsors change.
Tax Policy Center. Unlike the other agencies I’ve discussed thus far, the TPC is a private organization affiliated with the Brookings Institution and the Urban Institute. Its output is similar to that of the JCT and OTA The big difference is that it produces revenue estimates and distribution tables for a wide variety of proposals and not just those getting a push by the White House or the tax-writing committees.
As I have previously noted, control of information has long been a powerful political tool. Historically, only the Treasury or committee chairmen could get basic data on the revenue effects of tax legislation or tables on how it would affect taxpayers at different income levels – essential information for serious consideration.
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In the pre-computer era, such information was in fact very difficult to produce, requiring many man-hours. But today, the process has become relatively routine and the TPC takes advantage of this fact by publishing a vast array of numbers, regularly updated, on tax proposals of interest to policymakers. Many TPC economists are veterans of the Treasury and essentially replicate its methodology.
The TPC website has guides to tax topics of regular interest, including an excellent encyclopedia of taxation. For my recent book on tax reform, I relied heavily on its historical tables for tax rates and provisions in past years. One table that TPC regularly updates, which I find especially valuable, calculates the average and marginal income tax rates on families with the median income back to 1955. It also includes payroll taxes in another series.
The TPC is unquestionably the best source for the most up-to-the-minute tax data and analysis relating to proposals one might be reading about today. Its main defect is simply having too much material to wade through. I know that even those working there often have trouble finding information they know is online, someplace.
Relative to the world of tax analysis that I first entered in the mid-1970s, my cup runneth over. Critical information that was once almost impossible to get is now just a click away. Yet, curiously, the quality of tax policymaking has gotten much worse. I will ponder why in a future post.
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