The Senate’s top GOP tax writer struck a measured tone about budget rules for tax policy on Monday, arguing that lawmakers would need much more than the so-called “dynamic” scoring preferred by Republicans to overhaul the tax code.
{mosads}Sen. Orrin Hatch (R-Utah), the likely next chairman of the tax-writing Finance Committee, cautioned in a speech that budget rules that project that tax cuts will lead to economic growth “would hardly be the supercharged supply-side miracle” that many Republicans see in dynamic scoring.
Dynamic scoring, Hatch said during a speech sponsored by the American Action Forum and the Tax Foundation, is “not a panacea.”
“While I’d like to tell you that tax cuts always more than pay for themselves, or maybe even that tax cuts cure influenza, I’m sad to have to tell you that just isn’t the case,” Hatch added.
But he also said that more dynamic scoring rules need to be in place for when the Congressional Budget Office (CBO) and the Joint Committee on Taxation (JCT) consider broad policy changes to areas like immigration or the sort of overhaul of the tax code that Republicans are seeking.
Any argument otherwise, Hatch insisted, is “downright dumb,” arguing that dynamic scoring had to have a place in judging tax reform proposals.
“The question is not whether CBO and JCT should use dynamic macroeconomic analysis. As I have said, they have done so, can do so, and will do so,” Hatch said. “The question is what role that analysis should play. And, as we continue to work toward tax reform, that question becomes all the more relevant.”
The Utah Republican also accused Democrats, who latched on to dynamic scores of the Senate’s immigration overhaul last year, of hypocrisy for generally spurning dynamic scoring for tax changes.
“It is intellectually dishonest to praise and accept such analysis for spending or labor market-related proposals like immigration, while arguing against the use of that same type of analysis when it comes to taxes,” Hatch said.
Under static scoring, budget analysts generally project that tax or budget changes affect people’s behavior, but have a more limited impact on the size of the economy.
Top Republicans — most notably Rep. Paul Ryan (R-Wis.), the likely next chairman of the House Ways and Means Committee — have pointed to dynamic scoring as a way to ease the path for tax reform. At a speech in September, Ryan said “the scorekeeping we use is not correct.”
Democratic tax writers generally say there are too many unknowns in dynamic scoring and relying on it for tax reform would undercut the accuracy of official projections.
On Monday, Hatch pointed to a tax reform draft from the current House Ways and Means Committee chairman, Rep. Dave Camp (R-Mich.), to illustrate that dynamic scoring by itself wouldn’t be the key to tax reform.
Congressional scorekeepers projected that Camp’s draft could spur between $50 billion and $700 billion in new revenue that could conceivably be poured back into reducing tax rates.
But even with that $700 billion, Hatch noted, “You’d probably be able to lower tax rates in the various brackets by less than 1 percentage point.
That’s one of the reasons, Hatch said, that Camp’s draft gave him “the chills,” underscoring the challenges facing tax writers seeking reform.
“Tax reform has been and will continue to be a long and difficult process,” Hatch said.