23-Sep-2002
Editor's Note: Taxes are one tool of how a government can control the economy. For instance gasoline taxes in Europe are thought to encourage driving behavior and technological innovation to conserve petrol. Taxes on cigarettes and alcohol are supposed to discourage drinking and smoking whereas illegal drugs are mostly available tax-free. Since economies are known to be complex systems any attempt at controlling can have many unintended outcomes. In complex systems research robust simulation methods have been developed to answer questions like the impact of new tax laws on the economy. Because of the huge volume of the current government's tax-cut, it seems reasonable to do a careful modeling and analysis of its consequences.Excerpts: The opponents say there is no way to develop sufficiently precise estimates of the effect of tax cuts on an economy as complex as the United States's. (...)
The new reports will supplement but not replace the current system under which the committee provides official estimates of what a tax cut will cost in lost revenue without calculating the long-term economic effects. (...) new reports would be a big step toward (...) a "dynamic scoring" system that incorporates offsetting revenue gains in calculating the cost of tax cuts.
- Group May Estimate Effects of Tax Cuts, Richard W. Stevenson, NYTimes, 02/09/18