by Rea S. Hederman, Rachel Greszler, John L. Ligon
The Heritage Foundation
February 28, 2014
House Ways and Means Committee chairman Dave Camp (R–MI) released a plan for comprehensive tax reform. Setting aside its merits, Camp’s proposal is noteworthy on two accounts: (1) It presents the most comprehensive tax reform proposal in decades, and (2) it includes a dynamic estimate from the Joint Committee on Taxation (JCT). The latter is a long overdue and welcome change to how tax policy is discussed at the federal level. Conventional government scores of tax policy have historically excluded the effects of behavioral changes on macroeconomic growth. This is known as “static scoring.” “Dynamic scoring,” in contrast, takes into the account the changes that individuals and businesses make in response to tax policy and the impact of their behavior on economic growth. The Camp bill will fundamentally change how tax legislation is evaluated by JCT in the future.