by Scott A. Hodge, Stephen J. Entin, Michael Schuyler
August 26, 2013
Led by Chairman Dave Camp (R-MI), the House Ways and Means Committee is developing a plan to dramatically simplify the tax code and cut individual and corporate tax rates. Congressman Sander Levin (D-MI), the ranking Democrat on Ways and Means, recently asked the Joint Committee on Taxation (JCT) to estimate the revenue losses associated with such a tax rate cut plan. The revenue estimates produced by the Joint Committee on Taxation overstate the difficulty of paying for lower individual and corporate tax rates. Dynamic analysis shows that cutting individual tax rates (as is being considered by the House Ways and Means Committee) is 21 percent less costly than the static estimate produced by JCT. Cutting corporate tax rates would be 59 percent less costly.