What should the new Congress focus on next year? Preventing a massive tax hike? Cutting spending? Reforming entitlements? Defanging Obamacare? According to Heritage fellow J. D. Foster, the debate on all of those issues can be improved if Congress would first reform the way its support agencies produce their analyses. In short, says Foster, the Congressional Budget Office, the Congressional Research Service, and the Joint Committee on Taxation too often produce analyses with inaccurate assumptions that reflect a leftward tilt.
Foster points out, for example, that the Congressional Research Service says fixing the Alternative Minimum Tax would cost the government $658.8 billion from 2009 to 2020. But that makes sense only if you assume that people’s money belongs to the government first. “[P]olitically neutral language,” says Foster, “might say that a permanent fix to the AMT would have a significant revenue impact and that failure to index the AMT for inflation would impose a $658.8 billion tax hike.”
The Joint Committee on Taxation, meanwhile, continues to assume that changes in tax rates have no impact on incentives to work, save, and invest. In theory that means raising the top marginal tax rate to 100 percent could raise a lot of money, but common sense tells us that such policy would destroy economic activity and actually reduce government revenues. And as for the Congressional Budget Office, its analyses of budget baseline still assume that expiring spending programs will be reauthorized while expiring tax cuts will not be. This makes it seem as if maintaining the same tax rates amounts to a tax cut that has to be “paid for.”
For more on these problems, see Foster’s paper “Eliminating Partisan Analysis from Congress’s Support Agencies,” The Heritage Foundation, November 15, 2010.