See For Yourself

CGO going open source with taxes and benefits.

Policy models should be open and transparent. This is the mantra of the new Open Policy Group at the Center for Growth and Opportunity (CGO), an academic and public policy research center housed in the Huntsman School of Business. Earlier this year, the Open Policy Group launched FiscalSim, an exciting, new open source 50-state model of US federal and state tax and benefit policy. An accompanying FiscalSim web application is currently in beta and will be broadly deployed later this year.

Benjamin Franklin famously wrote in 1789 to his friend, Jean-Baptiste Le Roy, "In this world nothing can be said to be certain, except death and taxes."

"And we dread them both," says Dr. Richard Evans, Director of Open Policy and Senior Research Fellow at the CGO. "The US federal tax code is one of the most complicated in the world," says Evans. "Add to that all of the federal benefit programs and the patchwork of varied state and local tax policies, and you are left with a boondoggle of requirements that are increasingly difficult to understand, predict, and manage."

Technically referred to as a microsimulation model, FiscalSim can calculate all the tax liabilities and benefit eligibilities for a single filer or a whole dataset of tax filers. In contrast to accounting software, FiscalSim can show you how tax liability and benefit eligibility change when you change characteristics of the law. You can test out how a tax cut affects you, other filers in other states, or the whole economy. "Think TurboTax for the whole economy – that's what this tool is – except all the software is free and all the code is openly available," says Evans.

This ability to simulate tax and benefit reforms has previously been exclusively and privately held by large government organizations like the Joint Committee on Taxation, the Congressional Budget Office, and by large research centers, think tanks, and consulting firms.

"Most policy models are still closed and proprietary," says Evans. "If someone – a politician, or pundit – tells you that a tax reform will cost $1.3 trillion over 15 years, there is no way to independently verify if that is correct unless you can look at their model's code, replicate it, and test its sensitivity to assumptions," he explains. "We are trying to democratize the policy analysis process by making policy models that are open source, transparent, and accessible."

The work of the Open Policy Group at CGO has already had an impact on US policy. In January of this year, Evans and Dr. Jason DeBacker of the University of South Carolina used an open source model to analyze three potential business tax reforms in Tennessee. Evans and DeBacker were able to show the effects of each proposal on the businesses in the state as well as how each would affect the state's rainy day fund.

After the CGO team presented this information to Tennessee Governor Bill Lee's staff, the Tennessee legislature passed business tax reforms, including policies that were informed by CGO's analysis. In March of this year, Evans used FiscalSim to show how a cut in Utah's income tax rate would affect taxpayers in the state.

Not only is CGO's Open Policy Group making policy analysis more transparent, it is training Huntsman students to use and update the FiscalSim model. To date, seven students have contributed to the FiscalSim code. Two of them have also co-authored papers with Evans using the tool. The CGO recently sponsored three Huntsman students (two masters students and one undergraduate) to present research using the FiscalSim model at the Association of Private Enterprise Education annual meeting in Mexico in April 2023.

"Working on FiscalSim has shown me how to investigate complex problems, use models, and think deeply about how policy decisions can affect people," says Mitchell Pound, recently graduated USU triple major in Economics, Finance, and Math. "I especially like the open source aspect of the project that has shown me how to take criticism and ensures the results coming from FiscalSim are transparent and honest."

FiscalSim is the first step in a broad program to inform policymakers and increase transparency and openness. Dr. Evans and the CGO team have met with legislative staff in the US Senate and House of Representatives, as well as key congressional committees, government policy organizations, national think tanks, and associations. They are also working with state legislatures and think tanks to showcase how open, transparent policy analysis can better inform policymaking at all levels of government.

Evans has even worked with international organizations like the European Commission, World Bank, and United Nations to help both developed and developing countries use open source models to unlock more advanced analytical tools that were previously beyond their reach.

Benjamin Franklin was certainly not the first person to refer to death and taxes together. But the Center for Growth and Opportunity is working to pair taxes and benefits with openness and transparency.

About FiscalSim

FiscalSim encompasses a broad spectrum of tax and benefit policies, including federal income tax rates, tax credits, federal revenue, federal benefit programs, poverty rates, SNAP, and state income taxes.

The FiscalSim model was utilied to assess a targeted cash assistance program in Cambridge, Massachussetts. The evaluation revealed a significant welfare cliff, wherein participants earning above a certain threshold no longer qualified for the aid program.

FiscalSim is designed to show you how changes to after tax income, marginal tax rates, and average tax rates impact people of different income levels.

View the web application and the underlying Python code for FiscalSim.