Why is it so hard to decide how much a candidate's tax plan costs?
Over the next decade, Sen. Ted Cruz's tax plan could cost $8.6 trillion—or just $768 billion. Both estimates come from respected, non-partisan tax think tanks. So why are they wildly different?
Considering this question Friday at FiveThirtyEight, Ben Casselman notes that the Cruz estimates are perhaps an extreme disparity, but varying estimates are not uncommon:
[[{"type":"media","view_mode":"media_original","fid":"144219","attributes":{"alt":"","class":"media-image","height":"318","typeof":"foaf:Image","width":"597"}}]](FiveThirtyEight)
Article continues belowThe Week
Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.
Sign up for The Week's Free Newsletters
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.
Most of the variety stems from "the broader economic impact of the various plans," he says, because "[c]hanges in tax policy have far-reaching ripple effects on the economy," which in turn affect revenues. That explains the difference between the static and dynamic estimates in the above chart — only the dynamic ones attempt to forecast how the candidates' plan will change the economy. That forecasting involves a greater degree of opinion and uncertainty than simply running the numbers for a static model, so economists' differing views can more significantly influence predictions.
