Using Cloud Computing to Make Better Policy Choices
That’s how many alternative scenarios the Tax Policy Center analyzed this week in examining the Tax Cuts and Jobs Act. That’s a lot. But why does it matter?
When policymakers or advocates offer a new proposal, analysts like ours in the Tax Policy Center (TPC) race to describe its consequences using a microsimulation model—a tool that answers what-if questions about tax policy change. Does the result cost too much? Benefit the wrong folks? Come back with a different proposal, and they’ll run the model again.
Now, using cloud-based technology, TPC can run thousands of scenarios in a short time, varying a few parameters to find the ones that best achieve a given outcome. Want to lower the tax on low- and moderate-income families with small children, at a given revenue cost, so they have more disposable income and can provide a more stable base for healthy development? Which combinations of tax policy changes would optimize that outcome?
For its first use of this powerful tool, TPC looked at 9,216 policy combinations—alternative choices to those made in the Tax Cuts and Jobs Act (TCJA) of 2017—to understand what would have been the resultant changes in federal revenue and taxpayers’ after-tax income.
Of the parameter choices examined, only a few combinations—less than 1 percent—would have been more beneficial to highest-income households than the TCJA itself.
That’s good to know, but I am even more excited about how this capacity can help policymakers design the next set of choices, and the set thereafter. We’re excited to use this capacity over time to accelerate analysis of options, not only in tax policy, but health insurance, retirement security, antipoverty programs, and prison populations, to name a few.
TPC also put the scenarios directly into users’ hands with an interactive tool, allowing anyone to plug in their own policy variables and reach their own conclusions. Having run so many different scenarios, it was relatively easy to make it possible for you to see how your preferred parameters would play out.
This is just one way the Urban Institute is embracing technology to improve research, democratize data, and offer decision-support tools to policymakers.
Technology will continue to transform how we work and live. And how we do our work—to help changemakers accelerate solutions. I would like to hear your ideas for what we do next.
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