PolicyEngine Powers Niskanen Center's Analysis

Three new reports from the Niskanen Center think tank demonstrate PolicyEngine's tax and benefit reform model.

PolicyEngine recently powered three Niskanen Center tax and benefit reforms. Our updated model offers new opportunities to explore both the budgetary and distributional impacts of these proposals on childhood poverty. Niskanen, the first major American think tank to use PolicyEngine, follows in the footsteps of institutions such as The Centre for Policy Studies and the Green Party in the United Kingdom. On issues from the Child Tax Credit (CTC), Earned Income Tax Credit (EITC), household filing status, and more, PolicyEngine has proven itself a reliable authority on tax and benefit modeling.

The report, "Building A Stronger Foundation for American Families" leverages PolicyEngine's capacity to identify marriage penalties and benefit cliffs. PolicyEngine instantly provided the cost ($110 billion) and poverty impacts (a 31.2 percent child poverty reduction) for Niskanen's baseline case, restoring the American Rescue Plan's CTC expansion. The authors then adjusted key policy levers (we provide thousands) on the platform with the intent to lower cost, reduce marriage penalties, and target specific income deciles.

PolicyEngine's built-in instant interactive data visualizations powerfully illustrate the distributional effects of Niskanen's proposals across income deciles. For example, the chart below unpacks the distributional analysis of two simultaneous reforms–an expansion of the CTC combined with the elimination of the head of household (HoH) filing status, which reduces taxes for single parents compared to single individuals. Policy makers are often looking to find lower costs, and charts like these demonstrate how multivariate changes to the tax-code enable policymakers to balance budgetary concerns with impact. James Medlock, a favorite contributor to online policy discussion, applauded the chart: "Especially for more 'give and take' reforms like this, it's nice to show heterogeneity within deciles," he wrote.

PolicyEngine also empowers consumers of policy reforms to test the analysis and dig deeper. PolicyEngine's free open source model makes our assumptions transparent and enables anyone to design policy reforms. For example, by clicking here you can see all component reforms and impacts of Niskanen's preferred policy design.

Two other recent Niskanen analyses demonstrate PolicyEngine's versatility. The first, on Virginia's family benefit policy, uses PolicyEngine to calculate the cost of state policy. Examining the recent Commonwealth Kids Credit proposal, PolicyEngine predicts a cost of $873.8 million per year. The second, an analysis of the recently passed statewide Child Tax Credit in Illinois, also uses PolicyEngine's microsimulation model to predict both costs and impacts. Converting the state's dependent exemption into a fully refundable child tax credit for children under eighteen, PolicyEngine models a cost of approximately $50 million this year and deep child poverty reduction of 11%. PolicyEngine's sheer speed, when combined with its high level of specificity and customizability, makes it an attractive choice for policy analysts across the political spectrum.

As PolicyEngine grows and improves, institutions like the Niskanen Center can continue their thoughtful analysis in an ever more efficient, intuitive, and user-friendly way. Interested in using PolicyEngine for your own work? Reach out at hello@policyengine.org.

max ghenis
PolicyEngine's Co-founder and CEO



ben gross
Communications Intern at PolicyEngine

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