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Camp Opening Statement: Hearing on Economic Models Available to the Joint Committee on Taxation for Analyzing Tax Reform Proposals

September 21, 2011

Good morning and thank you for joining us for the latest in our continued series of hearings on comprehensive tax reform.  Over the last several months, as we’ve discussed the various facets and complexities associated with comprehensive tax reform, a wide array of economists and business leaders have testified before this Committee that comprehensive tax reform that lowers rates by broadening the tax base will promote economic growth and job creation.  But how much growth and how many jobs is what the American people want to know.  Frankly, it is what I want to know and I think most members of Congress want to know as well.  

Before we can even determine if a tax reform package is worthy of consideration, let alone be called a success, it is critical to understand the true impact it will have on economic growth, federal revenues and, most importantly, job creation.  And that brings us to the focus of the hearing today: both the capabilities and limitations of the Joint Committee on Taxation in estimating and analyzing comprehensive tax reform plans.  

JCT serves a critical role in the legislative process by providing expert and impartial analysis of the potential revenue effect of proposals to change U.S. tax policy.  However, under current practice, the analytical methods used by JCT do not typically take into account the potential effects of statutory tax changes on economic growth.  For most of the proposals analyzed by JCT, this practice is appropriate because the proposed changes would not be large enough to have a material impact on an economy as large as that of the United States.

However, comprehensive tax reform by its very nature constitutes a significant change in U.S. tax policy and has the potential to significantly boost economic growth and job creation.  JCT has developed a suite of macroeconomic models that can be used to estimate the impact of the tax policy changes on economic growth.  

Today’s hearing will help us better understand which policies and decisions are most relevant to promoting economic growth.  As our economy continues to struggle, this additional analysis and research will serve an important role in helping this Committee make the hard decisions that are necessary to craft comprehensive tax reform.

It is my hope that today’s discussion will help to highlight how the work being done by the Joint Tax Committee will help us plan and develop solutions that create a tax code that works better for employers and families – instead of one that for far too long has worked against them.  I thank the witnesses for being here today, and I yield to Ranking Member Levin for his opening statement.