taxes

Analyses of 2016 Candidates’ Tax Plans Demonstrate That Dynamic Scoring Is Now Mainstream

In a significant victory for proponents of better tax policy, dynamic scoring has replaced static scoring as the preferred method for estimating the effect of changes in tax policy by tax policy experts across the ideological spectrum. The final step in this process was taken when the Tax Policy Center (TPC) dynamically scored the tax plans of presidential candidates Hillary Clinton and Donald Trump. Dynamic scoring accounts for fluctuations in the economy when families, businesses, investors, and entrepreneurs adapt their behaviors in response to changes in tax policies.

Although the Tax Foundation and Tax Policy Center models use different approaches, they are both serious and economically grounded methods for accomplishing the difficult task of dynamically estimating complex changes in the tax code. The debate over dynamic scoring now shifts to resolving differences in approach. In the near term, the question of crowding out will be central. Replacing biased and inaccurate static scoring with the more precise dynamic scoring is a significant victory for those working toward tax reform.

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