Tax Analysis Division

Helping the Congress make decisions about federal revenues

CBO's Tax Analysis Division plays two critical roles in Congressional policymaking: estimating future federal revenues and analyzing tax policies.

Working from CBO's macroeconomic forecasts, revenue estimators in the Tax Analysis Division use economic models and microsimulation techniques to produce 10-year projections of revenues, by source, twice a year. Those estimates are combined with forecasts of spending to give the Congress a complete picture of the federal budget.

Division analysts also estimate the revenue changes that would result from proposed legislation dealing with such sources of revenue as payroll taxes, receipts from the Federal Reserve System, customs duties, fees, and penalties. In addition, the division conducts policy studies that focus in detail on how changes to U.S. tax law would affect the economy and the behavior of taxpayers.

Many of those analyses rely on the division's tax simulation models and on detailed tax data not usually available to researchers. Some of the division's recent studies have estimated effective marginal tax rates on labor income, compared corporate income tax rates across countries, and measured effective tax rates on capital income along with the impact of possible approaches to reform. Of particular interest to the Congress and others are the division's estimates of changes in the distribution of income and federal taxes among taxpayers. The division's current research projects deal with taxpayer response to changes in marginal tax rates arising from various health reform proposals, alternatives to the current tax treatment of charitable contributions and state and local taxes, the use of tax-exempt bonds by colleges and universities, and the distributional consequences of possible carbon taxes.

Most of the analysts in the Tax Analysis Division have graduate degrees in economics, public policy, or public affairs. The division also employs assistant analysts who focus on revenues from specific sources and work with more experienced staff on tax modeling and research issues. Members of the division work closely with talented colleagues in the Congress, the Treasury, and other CBO divisions in a stimulating research environment, and they are encouraged to remain professionally active by participating in conferences and publishing articles in academic journals.