We have updated our preliminary estimates of the revenue effects of the candidates’ tax plans. Our estimate for the ten-year revenue change compared with current law from Senator Obama’s plan is identical to that in our original study—a $2.7 trillion revenue loss. Our updated projection for Senator McCain’s plan shows a revenue loss of $3.6 trillion instead of $3.7 trillion. With interest costs, Obama would add $3.3 trillion to the national debt, while McCain would increase the debt by $4.3 trillion.

Our new estimates also show that if current policy is extended beyond 2010—the way both candidates prefer to describe their plans—Obama would raise $262 billion in tax revenues and Senator McCain’s would reduce revenues by $615 billion. Our initial estimates understated the revenue loss for McCain and overstated the revenue gain for Obama against this baseline. We also made minor revisions to some other estimates.

Note that our estimates for the candidates’ plans reflect some of the ways people change their behavior when tax laws change. For example, some people can be expected to switch from taxable to tax-exempt bonds when rates increase. In the past, we estimated only the static effect of tax changes. Static scoring had the virtue of simplicity—most estimates came straight from our tax model—but the disadvantage that they were not strictly comparable with official revenue estimates, which do account for behavioral responses. We plan to reexamine our assumptions and methodology before we release the next update of our paper on the candidates’ tax plans. We also expect the next version to include an analysis of both candidates’ health proposals and more analysis of proposals we left out of our original version: Obama’s stated plan to increase Social Security taxes on those earning over $250,000 and McCain’s proposal to allow taxpayers to elect a simplified alternative tax system.