What kinds of models does the Joint Committee on Taxation use to produce conventional revenue estimates?
The Joint Committee Staff uses a wide variety of economic and statistical models to estimate the revenue impact of changes in tax laws. The primary source of tax data for the models comes from the SOI division within the IRS. However, the Joint Committee Staff receives data from multiple sources from both government agencies and non-government organizations. Some of the models are large models that simulate taxpayers responses to tax law changes and use large micro-data files, while others are smaller and spreadsheet based. The Joint Committee Staff uses several highly developed tax models that simulate taxpayers responses to tax law changes (“microsimulation” models). These are the Individual Model, the Corporate Model, and the Estate and Gift Model. In addition, the Joint Committee Staff is beginning to use individual panel-based models. The complexity and scope of a model are determined by several factors including the amount and type of data available, the level of interest in the
