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Jan. 2 — The dismal science of economics is about to become happier for Republican tax writers in Congress—and harder for the economists who work for them.
The Republican-led House is poised to require in 2015 that the congressional Joint Committee on Taxation estimate the revenue effects of tax legislation based on macroeconomic, or “dynamic,” models that have played only a background role in recent years and tend to cast a positive light on tax cuts' ability to boost the economy. The demands could stretch a team of economists that has been working with relatively flat budgets in recent years, former JCT staff members told Bloomberg BNA.
Much of the impact of the new rule—which applies to the House but not the Senate—is anyone's guess, including whether lawmakers eager to secure a favorable estimate will introduce bigger tax bills they believe generate the 0.25 percent effect on gross domestic product in any single year that triggers the requirement. A macroeconomic score takes into account taxpayers' possible reaction to certain provisions, such as spending more when taxes are lower.
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