For Michigan, there are five main options for estimating the impact of tax policy changes:

1. Continue to analyze tax policy proposals using the microsimulation models already in place at the Department of Treasury and, when appropriate, make adjustments for taxpayer behavior. The current system has provided timely and accurate short-run analyses of a wide array of tax policy proposals.

2. Build a sales tax model, a property tax model, and a tax incidence model. These would clearly enhance current capabilities of state agencies to provide accurate short-run analyses.

3. First: Build a sales tax model, a property tax model, and a tax incidence model.

   Second: Modify and integrate the State's REMI model with the micro-simulation models to produce dynamic estimates for major tax policy initiatives. This is one way to produce both static and dynamic estimates.

4. Build a sales tax model, a property tax model, a tax incidence model, and a CGE model of the state economy. Integrate the CGE model with the micro-simulation models to produce dynamic estimates for major tax policy initiatives. This is another way to produce both static and dynamic estimates.

5. Use what we already know about the potential magnitude of dynamic effects to make adjustments to static analysis produced by micro-simulation models.