Revenue forecasting

It was during the time early in the Carter administration, which proposed a crude oil equalization tax on oil producers when I first time ever dug into the details of a revenue forecast. I was curious about the revenue forecast for this legislation and made some calls. The Joint Committee on Taxation told me that they didn’t do their own estimate and were using one from the Treasury. So I called the Treasury and they said that they basically extrapolated from a forecast of oil consumption that they got from the Department of Energy. The people at DOE told me that they hadn’t done the oil forecast themselves but were using one that was produced by a private consultant. Finally, I reached the consultant, who was horrified that this huge legislative fight was essentially based on his analysis, which, he told me, was nothing more than a back-of-the-envelope calculation.

At the time I was working for Congressman Jack Kemp, who was strongly opposed to the oil tax. Ironically, he became the prime congressional sponsor of the legislation. He had sponsored a private relief bill for one of his constituents who had been screwed over by an obscure tax provision. The details are unimportant. What matters is that Kemp’s bill had passed the House and was awaiting action in the Senate Finance Committee when the oil tax bill came up. For whatever reason, it was decided that the Senate should move the bill first. But revenue bills must originate in the House of Representatives according to the Constitution. A Senate-initiated tax bill can’t be sent to the House unless it is appended to a House-passed tax bill. But the only House-passed tax bill the Senate had available was Kemp’s private relief bill. The crude oil equalization tax was therefore added to Kemp’s bill as an amendment so that the legislative process could move forward, thus technically making Kemp its sponsor.