Analyzing the Impact of Tax Changes – Economic Incidence Analysis a more accurate measure of how taxpayers will fare

June 2013

Policymakers need accurate information in order to make informed policy choices.  And the general public, too, should know what is at stake when their elected officials propose tax changes.  That is why it’s so important to have data on how the proposed tax changes in North Carolina will impact actual taxpayers in the state.

The model used by the Budget & Tax Center was created by the Institute on Taxation and Economic Policy (ITEP), and employs methods widely considered to be the best, most comprehensive way to determine how tax changes will affect taxpayers. This type of model – known as an Economic Incidence Analysis – uses tax return data on real-world taxpayers and other economic and consumer spending data to produce the most accurate prediction.  This type of model is used by the U.S. Treasury Department, the congressional Joint Committee on Taxation and the non-partisan Congressional Budget Office.