San Antonio – The Texas Public Policy Foundation has expanded its ability to promote limited government by acquiring complex computer modeling capabilities on state tax policy. Once reserved for the Texas Comptroller, the Legislative Budget Board and large firms with powerful mainframe computers, the Texas Public Policy Foundation now has the ability to analyze past and present state tax policies and proposed changes.
“The acquisition of this model opens an entirely new field of research for TPPF and allows the Foundation to significantly impact state debates over tax reform,” said TPPF President Jeff Judson. “We intend to help Texans see clearly the significance of spending budget surplus or using it to reduce taxes,” he said.
TPPF is a nonprofit, nonpartisan research institute based in San Antonio. It is dedicated to the core principles of limited government, free markets and individual responsibility.
As a “dynamic” model, it incorporates the effects of tax law changes on economic activity and estimates how those changes affect tax revenues over time. Many tax models used for government estimates yield a “static” result that does not adequately account for the effects of tax changes on household and business behavior. Each analysis will evaluate the effects on the state economy as a whole and on individual economic sectors, including construction, -more- manufacturing, finance, insurance and real estate, trade, transportation and public utilities, and services.
TPPF’s tax model was developed by a team of economists headed by David G. Tuerck, Ph.D. and including In-Mee Baek, Ph.D., Jonathan Haughton, Ph.D., and James Fetzer, Ph.D., all of the Beacon Hill Institute for Public Policy Research at Suffolk University in Boston, Massachusetts. Tuerck also serves as Chairman and Professor of Economics at Suffolk University.
TPPF’s economist who will run the model in Texas is Mel Hinich, Ph.D. Dr. Hinich is a Professor of Government and Economics at the University of Texas at Austin and teaches several courses on econometrics. He holds a B.S. and M.S. in Mathematics from the Carnegie Institute of Technology and a Ph.D. in Statistics from Stanford University. Dr. Hinich was formerly a Professor of Economics with the Virginia Polytechnic Institute and State University.
Earlier versions of the model have been used to analyze changes in state income taxes, corporate taxes, sales taxes, unemployment insurance taxes and taxes on manufacturing and on mutual funds. Tax analysis by the Beacon Hill Institute has greatly influenced policy debates in Massachusetts, New Jersey, Oklahoma, Ohio, Louisiana and Iowa. The model contributed to the rejection by the state legislature and voters of a proposed $1 billion increase in the Ohio sales tax.
The modeling team has drawn on its experience with other states to develop the Texas model, which is based on detailed data on Texas taxes and the Texas economy. TPPF intends to analyze proposals to deal with the state budget surplus as well as tax policy proposals introduced during the 1997 Texas legislative session and proposals to establish a state income tax.