ABSTRACT
: In this chapter, the authors describe microsimulation model of the federal individual income tax and the Global Insight (GI) short-term US Macroeconomic Model combined with calibration techniques to analyse the economic and budget effects of permanently extending some of EGTRRA's and JGTRRA's expiring provisions. The authors discuss their procedures for calibrating to Congressional Budget Office (CBO's) baseline projections and for simulating the economic and budget effects of a change in tax policy. They review the conventional revenue and marginal rate effects of the extension plan as estimated using the microsimulation model. The authors consider the macroeconomic and dynamic revenue effects as estimated using both the Global Insight model and the microsimulation model. They calibrate two models to CBO's baseline economic and budgetary projections. The first model is the Global Insight short-term US Macroeconomic Model. The second is a microsimulation model of individual income tax returns.
