WASHINGTON -- Senate Finance Committee Chairman William V. Roth, Jr., testified today before the Senate Appropriations Committee's Subcommittee on the Legislative Branch. Chairman Roth, who is also this year's chairman of the Joint Committee on Taxation, discussed the fiscal year 1999 appropriation request for the Joint Committee.

In his statement, Chairman Roth stated that the Joint Committee staff will work this year to develop the capability to incorporate macroeconomic effects into the revenue estimates of major tax legislation.

"I want to emphasize the importance that I place on developing macroestimating capabilities. I think that it is crucial to our efforts to restructure the Federal tax system that we have the ability to understand how the economy will perform when we replace the current income tax system," Chairman Roth said.

The following is the full text of Chairman Roth's oral testimony:

"Mr. Chairman, I appreciate the opportunity to appear today before the Subcommittee on Legislative Branch on behalf of the fiscal year 1999 appropriation request for the Joint Committee on Taxation (the "Joint Committee"). Congressman Bill Archer and I have submitted a written statement and I ask that this written statement be made a part of the hearing record.

Joint Committee achievements and responsibilities

"The operations of the Joint Committee on Taxation are vital to the tax legislative process. For example, the Joint Committee staff played a critical role last year to help the
Congress enact the Taxpayer Relief Act of 1997, which began the process of returning to the American people some of their hard-earned dollars. This tax relief bill, which provided the biggest tax cut Americans have received in 16 years, included such major tax benefits as the child tax credit, the opportunity to save for retirement in tax-deferred IRAs, significant education tax incentives, relief from confiscatory estate and gift taxes for small businesses and family farms, and substantial reductions in the tax on capital gains.

"During 1997, the Joint Committee staff prepared more than 2,000 revenue estimates in response to Member requests and in connection with Committee markups, drafted 14 Committee and Conference Reports, drafted 8 tax treaty Executive Reports, published 92 documents made available to the Congress and the general public, and reviewed the work of the IRS on more than 600 large income tax refund and 64 large deficiency cases.

"During 1998, the Joint Committee staff will be front and center on our efforts to reform and restructure the Internal Revenue Service. The Joint Committee staff has also been devoting significant resources to analyzing the various proposals to restructure the Federal tax system and will take a lead role in providing assistance to the Congress as we consider fundamental tax reform in the not-too-distant future. These tax reform proposals will require the Joint Committee staff to provide comprehensive economic and legal analyses of a wide range of issues, including complex transition issues.

Revenue estimate requests

"I want to speak for a minute on the important role of the Joint Committee on Taxation in the preparation of revenue estimates for pending revenue legislation. Under the Congressional Budget Act, the Joint Committee has the sole responsibility for preparing revenue estimates for all tax legislation considered by the Congress.

"As I mentioned, during 1997, the Joint Committee staff responded to over 2,000 requests for revenue estimates from Members of Congress, including estimates prepared in connection with Committee markups. Current staffing levels permitted the Joint Committee staff to respond to approximately 66 percent of the requests received from Members. During 1998, the Joint Committee staff expects to receive at least 1,500 requests for revenue estimates.

"In addition, during 1998, the Joint Committee staff will continue to proceed with the work necessary to develop the capability to incorporate macroeconomic effects into the revenue estimates of major tax legislation. As part of this effort, the Joint Committee has contracted with two major macroeconomic forecasting firms to help in the development of a prototype macroeconomic model. In addition, the Joint Committee
staff consults regularly with the economists who serve on the Joint Committee revenue estimating advisory board with respect to this important effort.

"I want to emphasize the importance that I place on developing macroestimating capabilities. I think that it is crucial to our efforts to restructure the Federal tax system
that we have the ability to understand how the economy will perform when we replace the current income tax system.

"I want to address specifically a concern raised by this Subcommittee during last year's appropriation process that the Joint Committee on Taxation staff did not respond adequately to requests from Members of Congress who do not sit on the tax-writing Committees. Included in my written testimony is a table that provides information on the Joint Committee staff's responses to revenue estimate requests during the 104th Congress and for the first session of the 105th Congress.

"The Joint Committee on Taxation staff receives a large number of revenue requests each year and responds to approximately two thirds of these requests. As Attachment D to my testimony shows, the responses to non-tax writing Committee Members during the last Congress [1995-1996] were pretty close to the responses to tax-writing Committee Members. However, I am concerned that data for the first session of this Congress [1997] is showing some disparities in responses to non-tax writing Committee Members.

"I believe that it is imperative that the revenue estimating process of the Joint Committee on Taxation be above criticism. Therefore, when I recently named Lindy Paull to take over as Chief of Staff of the Joint Committee on Taxation, I directed her to undertake a review of the revenue estimating function of the Joint Committee and closely monitor requests so that all Members are treated fairly.

Summary of appropriation request

"The fiscal year 1999 appropriation request for the Joint Committee is $6,018,000. This amount is a net increase of $202,500 over the fiscal year 1998 appropriation and $1,000 less than the fiscal year 1995 appropriation for the Joint Committee. This increase is attributable solely to projected cost-of-living adjustments (as provided to the Joint Committee by the House Finance office) and a 1-percent merit increase for personnel expenses for the Joint Committee staff.

Summary

"The funding we have requested for the Joint Committee on Taxation represents the minimum amount necessary to finance the operations of the Joint Committee for fiscal year 1999. The Joint Committee provides essential services to the Congress that are not duplicated by any other Congressional or Executive Branch office. In closing, I want to thank the Subcommittee for its continued recognition of the important role that the Joint Committee plays in the development of revenue legislation."