Trump's budget plan makes a lot of assumptions using a controversial accounting trick
Raul Hernandez
May 23, 2017
President Trump's 2018 budget proposal details many federal programs he'd like to cut.
But his budget figures don't jive with his policies because of something called "dynamic scoring."
For example, Mr. Trump's treasury secretary, Steven Mnuchin, wants to reduce the US business tax rate from 35% to 15%, but the White House's budget projects tax receipts to increase every year from 2017 to 2027.
If businesses across the country are going to be paying less in taxes, how can the federal government collect more in taxes each year?
This discrepancy in budget projection figures is due to dynamic scoring, an accounting method that surprisingly has no standard methodology.
It can be used for relatively simple calculations, such as how raising the sales tax on a particular item will affect its sales. But it gets more complex when trying to project the cost of, say, cutting federal taxes.
On its face, cutting federal taxes leaves the government with less money in its pockets. But it's possible that if US businesses keep that money thanks to a lower tax burden, more Americans may end up with jobs. And if more Americans have jobs, the government's tax base grows, potentially making up for the lost revenue from the tax cut.
Dynamic scoring is the practice of projecting out those events and factoring them into budget analysis, which is also known as budget scoring.
more:
http://www.businessinsider.com/trumps-budget-plan-uses-dynamic-scoring-2017-5
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