Congressional Tax Writers and Scorekeepers You Should Know

When you hear about tax policy, you may think of the Internal Revenue Service (IRS), the agency responsible for collecting federal taxes. But who is responsible for drafting, reviewing, assessing, and passing tax legislation at the federal level?

With so many governmental entities and associated acronyms, it can be difficult to keep track of everything. In Congress, the House Ways and Means CommitteeThe Committee on Ways and Means, more commonly referred to as the House Ways and Means Committee, is the chief tax-writing committee in the US. The House Ways and Means Committee has jurisdiction over all bills relating to taxes and other revenue generation, as well as spending programs like Social Security, Medicare, and unemployment insurance, among others. and the Senate Finance Committee are responsible for writing tax legislation before it’s voted upon by the broader House and Senate.  

Supporting these committees are the congressional scorekeepers. The Joint Committee on Taxation (JCT) and the Congressional Budget Office (CBO) provide estimates and analysis on the budgetary and economic effects of proposed tax policy.

House Ways and Means Committee

Established in 1789, the House Committee on Ways and Means is the oldest committee  within the US House of Representatives. Its authority is rooted in Article I, Section VII of the US Constitution, which states: “All Bills for raising Revenue shall originate in the House of Representatives.”

Ways and Means is tasked with drafting legislation on:

• Revenue generation
• Tariffs and trade agreements that impact revenue
• Revenue aspects of social programs, such as Medicare and Social Security

Once tax legislation is passed out of the Ways and Means Committee, the full House of Representatives must pass it and then send it to the Senate.

Senate Finance Committee

The Senate Finance Committee is the counterpart to the House Ways and Means Committee. It first became a standing committee in 1816, making it one of the first Senate committees.

The Senate Finance Committee’s jurisdiction includes:

• Revenue measures, including taxation
• Tariffs and trade agreements that impact revenue
• Health and human services programs, including Medicare, Medicaid, and Temporary Assistance for Needy Families (TANF)

One key difference between the two committees lies in jurisdiction over Medicaid. While the Senate Finance Committee oversees both Medicare and Medicaid, the House Energy and Commerce Committee (not Ways and Means) holds jurisdiction over Medicaid.

Another important distinction: all revenue-raising legislation must originate in the House, giving Ways and Means a formal advantage in shaping tax policy. The Senate Finance Committee may rewrite tax bills it receives from the House, and after legislation is passed out of committee, the full Senate must pass it.

If the Senate passes an amended version of a House tax bill, it will be sent to a joint committee of the House and Senate to agree on a compromise version that must then be approved by the full House and full Senate.

Joint Committee on Taxation (JCT)

Established by the Revenue Act of 1926, the Joint Committee on Taxation (JCT) is a nonpartisan congressional committee that assists both the House and Senate with tax legislation. It is one of just a few joint committees in Congress today.

The JCT has a broad range of functions throughout the entirety of the legislative process. Key responsibilities include:

• Preparing official tax revenue estimates of proposed tax legislation
• Providing nonpartisan technical and policy support for tax-writing committees
• Conducting independent studies on tax policy and related issues

The JCT is closely connected to the tax-writing committees through its leadership. By tradition, the Chair of the JCT rotates between the Chair of the House Ways and Means Committee and the Chair of the Senate Finance Committee.

Congressional Budget Office (CBO)

The Congressional Budget Office (CBO) was created by the Congressional Budget and Impoundment Control Act of 1974, which sought to regain congressional control over the federal budget.

The CBO’s primary role is conducting nonpartisan analysis for Congress on economic factors impacting the budget, including:

• Forecasting federal spending, revenue, and economic trends
• Producing cost estimates for proposed legislation
• Assisting congressional committees in evaluating and drafting budget-related policy
• Conducting independent studies on federal fiscal issues

While the CBO handles a broad range of budget matters, it relies on the JCT for official tax revenue estimates when analyzing tax legislation.

 Tax Writers and Scorekeepers in Action

The 2017 Tax Cuts and Jobs Act (TCJA) provides an example of collaboration among the congressional tax writers and scorekeepers.

The bill originated from the Ways and Means Committee, was reconciled in a conference committee with the companion bill from the Senate Finance Committee, and was analyzed by the JCT and the CBO. The CBO collaborated with the JCT to estimate the costs of the bill, including revenue losses and deficit increases.

While the well-known IRS is responsible for collecting federal taxes and enforcement, it is not responsible for writing tax laws (though its administrative role includes interpreting tax law through regulation, rules, and procedures). Ultimately, Congress shapes tax policy through the Ways and Means and Finance Committees, supported by the JCT and the CBO. Lawmakers are directly responsible for designing the tax policies that affect every American taxpayer and business.

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