In modern regulatory states, the theoretically firm lines dividing the legislative, executive, and judicial branches of government are increasingly blurred. Teasing out how to design and enforce effective regulation has become a major preoccupation of scholars and policymakers in every area of law.
Delegating Tax, an article by the talented James R. Hines Jr. and Kyle D. Logue, is wonderful reading in that light. The article contrasts the reluctance of Congress to delegate the lawmaking authority of the IRS and Treasury in the tax area with Congress’ increasing willingness to delegate that authority to other federal administrative agencies. The authors make the case for great delegation in the tax area, noting the potential for the executive branch to draw on greater expertise and to respond more quickly.
Hines and Logue create a taxonomy of delegations that they urge Congress to consider: delegation of parameters for tax subsidies to the Treasury Department, delegation to set some income tax rates to an independent agency like the Federal Reserve, and delegation of tax reform to an independent commission. Hines and Logue would reserve the ability for Congress to fix the distribution of tax liabilities to ensure “fair distribution.”
I enjoyed reading the whole article, although my favourite part was the authors’ efforts to answer the question, “Why should the regulatory approach to tax policy differ from regulatory approaches to other areas of federal policy?” (P. 259). They examine historical accident and path dependence and the value of retaining the ability to set rates with Congress as a key tool in facilitating bargaining in the legislative process. They find each possible justification to be wanting.
The piece concludes with an exploration of the constitutional constraints on expanded tax delegation. Ultimately, the authors conclude that their proposed delegations should “pass constitutional muster” (P. 271).
The article takes on the broad areas where more delegation might appropriately be considered as a mechanism for accessing some of the benefits of the executive branch. The authors acknowledge at the outset of their piece that Congress could replace the Internal Revenue Code with a single sentence, “The Department of Treasury shall promulgate all tax rules necessary to raise revenue sufficient to balance the federal budget and shall do so in a manner that is fair and efficient” (P. 238), although they do not recommend that approach. The Hines and Logue article provides the platform from which readers can ask additional questions about delegation among the branches of government in the drafting of every provision in the Internal Revenue Code (or any piece of legislation, for that matter).
The question of the appropriate balance among the legislative, executive, and judicial branches in tax lawmaking is not unique, of course, to the United States, although the balance struck in the United States has unique features. Hines and Logue’s article contributes to the conversation highlighted in comparative work on this same topic advanced by Chris Evans, Judith Freedman, and Richard Krever in The Delicate Balance: Tax, Discretion, and the Rule of Law (IBFD, 2011). It’s a pleasure to see that the dialogue continues.