JCX-28-92 JCX-29-92 JCX-30-92 Description Of Chairman's Mark To H.R.11 (Revenue Act of 1992) Scheduled for Markup Before the Senate Committee on Finance on July 29, 1992 July 28, 1992 Estimated Revenue Effects Of The Chairman's Mark July 29, 1992 Access To Tax Information By The Department Of Veterans August 4, 1992 JCX-31-92 Discussion Of Revenue Estimation Methodology And Process August 4, 1992 JCX-32-92 JCX-33-92 JCX-34-92 JCX-35-92 JCX-36-92 Estimated Budget Effects Of H.R.11, As Reported By The August 4, 1992 Proposals And Issues Relating To The Financial Condition August 10, 1992 Comparison Of Revenue-Related Provisions Of H.R.776 As September 25, 1992 Comparison Of Estimated Budget Effects Of September 25, 1992 Comparison Of Estimated Budget Effects Of H.R.11. As October 1, 1992 JCT REQUEST Mr. FAZIO. Thank you, Mr. Chairman. I think some of the members might be interested to know the source of these requests, this work load increase and the fact that you are able to do 75 percent of it is indicative of the fact that you make some judgment calls. You would have to, based on the request made of you. Could you give us a feel for where they come from and why they are growing and the criteria you use to decide to do some and not others. Mr. ROSTENKOWSKI. I guess that is a professional question for a professional staff person to respond to, but let me just say, as I said at the outset, the one area that I think this subcommittee has to focus on is that when a request for particular data is made on our part from the Joint Committee, we get an overview of how it reflects in the overall view-in the overall picture. When you are competing with forces downtown focused on their area alone, they are painting a different picture because they are focused in a tunnel vision on something that they want to accomplish. Mr. FAZIO. Give us an example who you are talking about. Mr. ROSTENKOWSKI. Any group downtown that is interested in tax policy or in how much certain provisions in the law will cost the Federal Government. Their estimates are always far less than ours, and so Mr. YOUNG. Are you talking about government groups? Mr. ROSTENKOWSKI. No, I am talking about interest groups in the lobbying area downtown. I will turn this over to Mr. Gutman to answer any further questions. Mr. GUTMAN. Let me try the second one first, which is the competition we are facing. Then I want to go back to the Chairman's question about the increased work load. Because of the significant constraints that the Budget Act has placed on the ability of the tax committees to do legislation and the fact that everything has to be revenue neutral, a large part of the game, sort of the threshold that has to be overcome, is that the tax provisions that lose money have to be offset by tax provisions that pick up money. So people who are interested, interest groups particularly, in proposing to Members' amendments that they would have the Members offer often go to downtown firms who provide a revenue estimating service to get a revenue estimate of the cost of a program or the revenue benefit of a proposed revenue raiser. That has become a big business. The accounting firms now, virtually every accounting firm, have the capacity to do this. Peat Marwick does it, Price Waterhouse has done it. They have, in turn, hired away from both the Treasury tax estimating staff and our estimating staff, or tried to, the people who have the capacity to do this. So when the Chairman talks about the competition from downtown, we have competition from downtown, both in terms of substance and also in terms of trying to hire away my people. And the salaries that they offer, frankly, are in the area of twice as much as what I can pay. And there comes a point with the people on the staff when they just say, "Gee, you know, I love what I am doing here, but I just can't afford it because they are throwing more dollars at me.' Another part of this is the capacity technologically to be able to deal with things. We are worried that if we fall behind in terms of our technological development, they will be able to outstrip us there. The one advantage we continue to have is the database that we have as compared to what they have. But even there, they are attempting to make inroads. So the problem is a problem both of competition from the outside and then internally. And this gets back to your question, Mr. Chairman, about our ability to be able to respond timely and accurately to your requests. We do three different things. First, the revenue estimating function has taken on an overwhelming aspect, because it controls what you can do in the legislation. But I would like the committee not to lose sight of the fact that we are the people who provide the technical expertise to both of the tax writing committees and to any Member who wants to introduce tax legislation. We are the ones who will work with legislative counsel to draft, we are the ones who prepare the initial committee reports for both the Senate and the House side and the conference agreements. We also provide economic analysis of proposals, apart from revenue analysis. So when we are in a situation like we were in the last congressional session, where we had two major tax bills that went through the Congress, as well as an energy bill, as well as two unemployment bills-we actually did on the Senate side six tax bills last year and five on the House side-when that is going on, obviously every Member has an interest in trying to get his or her piece of legislation considered. The demands on us to produce estimates become extraordinary. Mr. ROSTENKOWSKI. It is also very difficult when the administration will give us a time certain at which they expect the bill to be presented on the Floor of the House of Representatives. We had that experience on two occasions in the last Congress. I mean, we— the committee does not really work at its own pace any more, particularly when we are challenged. RELATIONSHIP WITH TREASURY Mr. FAZIO. It is also how you interrelate with Treasury because a lot of people don't think we do all this, they think Treasury does. You might want to speak to that. Mr. GUTMAN. Sure. Let's talk first about the estimating side. Our revenue analysis staff consults with the Treasury revenue analysis staff as much as we possibly can. It is in nobody's interest to have these numbers be wildly divergent and we talk a lot about methodology, we talk a lot about factors which ought to influence an estimate. So we are in touch with them about what is going on. No one actually discloses numbers to one another, but methodologies are discussed to make sure that each of us is fully apprised of what the other is doing. Mr. FAZIO. In essence, it is the separation of powers right here. Mr. GUTMAN. Exactly. One of the reasons estimates will be different is the separation of powers. Treasury operates off the OMB macroeconomic assumptions, we operate off the CBO assumptions and often different estimates will be accounted for simply because of those different macroeconomic assumptions. We try to work with the Treasury, also, in terms of substantive legislative proposals, because to the extent that we can cooperate, the legislative product is going to be better. Sometimes that is an easier task than others, but we try to interact with them. Mr. FAZIO. Mr. Moran, and then Mr. Young. Mr. MORAN. You can go ahead. Mr. YOUNG. Either one. Mr. MORAN. I am trying to understand how you could possibly come up with the complexity of estimates that are required. For example, if we were to take the investment tax credit, we have got— bottom line estimates seems to be about $35 billion in lost revenue, but you have got, whatever, we won't quibble, but you have got considerations such as it favors heavy industrial firms at the expense possibly of high tech firms. You have got a lumping, the dynamic so that you get maximum corporate tax benefit, and you have got substantial administrative costs involved in it. Now, if you would be asked, perhaps, to come up with a current estimate if we were to go with the ITC, and I am using that because it is something that is being thrown along and with the gas tax, would you consult with the Library of Congress in doing that? Would you use their resources? Would you use the JEC resources? How do you then, once you get a task like-a complex tax like estimating the effects of the ITC, where do you then go? Because you couldn't possibly do it with the staff resources that you have physically on site. Mr. GUTMAN. I will let Bernie respond more specifically to it because he is the one who is in charge of revenue estimation. Let me just give you a general statement about that. In general, we look to our database from tax return information. That provides us with an enormous amount of information. For example, based on depreciation charges, we can figure out how much investment has been made in the economy in any particular year. Mr. MORAN. You keep all that data. Mr. GUTMAN. All that stuff is on tape. That is why this is so very important for us. We have that material on tapes going back for years, and when we are asked to do something like the investment tax credit, what we would have to do first, of course, is identify how much investment there has been in the economy and then try to figure out how much it is going to change due to the fact that what the government is going to do is reduce the cost of investment for certain types of assets. Now, with the investment tax credit, we have some history, because we have had it before, and there have been empirical studies done by economists of the response to investment of these kinds of incentives, and we go back and look at that. So after trying to predict the level of investment in the country, then we will try to predict a behavioral response. |