★ 39–006

105TH CONGRESS REPORT " ! HOUSE OF REPRESENTATIVES 1st Session 105–50

PROPOSING AN AMENDMENT TO THE CONSTITUTION OF

THE UNITED STATES WITH RESPECT TO TAX LIMITATIONS

APRIL 10, 1997.—Committed to the Committee of the Whole House on the State of

the Union and ordered to be printed

Mr. CANADY of Florida, from the Committee on the Judiciary,

submitted the following

REPORT

together with

DISSENTING VIEWS

[To accompany H.J. Res. 62]

[Including cost estimate of the Congressional Budget Office]

The Committee on the Judiciary, to whom was referred the joint

resolution (H.J. Res. 62) proposing an amendment to the Constitution of the United States with respect to tax limitations, having

considered the same, report favorably thereon with an amendment

and recommend that the joint resolution as amended do pass.

CONTENTS

Page

The Amendment ...................................................................................................... 2

Purpose and Summary ............................................................................................ 2

Background and Need for Legislation .................................................................... 3

I. Application of the Amendment ..................................................................... 3

II. The ‘‘de minimis’’ Exception and Implementing Legislation ...................... 3

III. Prior Legislative Action ................................................................................. 4

IV. State Tax Limitation Laws ........................................................................... 5

V. Supermajority Requirements and Taxation ................................................ 5

VI. Standing to Sue Under the Tax Limitation Amendment ........................... 7

VII. Differences Between the Tax Limitation Amendment and the House

Rule ............................................................................................................. 8

Hearings ................................................................................................................... 8

Committee Consideration ........................................................................................ 9

Vote of the Committee ............................................................................................. 9

Committee Oversight Findings ............................................................................... 12

Committee on Government Reform and Oversight Findings ............................... 12
2

New Budget Authority and Tax Expenditures ...................................................... 12

Congressional Budget Office Estimate ................................................................... 12

Constitutional Authority Statement ...................................................................... 13

Section-by-Section Analysis .................................................................................... 13

Views ......................................................................................................................... 14

The amendment is as follows:

Strike out all after the resolving clause and insert in lieu thereof

the following:

That the following article is proposed as an amendment to the Constitution of the

United States, which shall be valid to all intents and purposes as part of the Constitution when ratified by the legislatures of three-fourths of the several States

within seven years after the date of its submission for ratification:

‘‘ARTICLE —

‘‘SECTION 1. Any bill, resolution, or other legislative measure changing the internal revenue laws shall require for final adoption in each House the concurrence of

two-thirds of the Members of that House voting and present, unless that bill is determined at the time of adoption, in a reasonable manner prescribed by law, not to

increase the internal revenue by more than a de minimis amount. On any vote for

which the concurrence of two thirds is required under this article, the yeas and nays

of the members of either House shall be entered on the journal of that House.

‘‘SECTION 2. The Congress may waive the requirements of this article when a declaration of war is in effect. The Congress may also waive this article when the United States is engaged in military conflict which causes an imminent and serious

threat to national security and is so declared by a joint resolution, adopted by a majority of the whole number of each House, which becomes law. Any increase in the

internal revenue enacted under such a waiver shall be effective for not longer than

two years.

‘‘SECTION 3. Congress shall enforce and implement this article by appropriate legislation.’’.

PURPOSE AND SUMMARY

H.J. Res. 62, introduced by Congressman Joe Barton of Texas,

would require a two-thirds vote for any bill that increases the internal revenue by more than a de minimis amount. The supermajority requirement would be waived when a declaration of war

is in effect or when both Houses pass a resolution, which becomes

law, stating that, ‘‘the United States is engaged in military conflict

which causes an imminent and serious threat to national security.’’

The amendment authorizes Congress to enforce and implement the

article through legislation.

The Tax Limitation Amendment is intended to make it more difficult to raise taxes—it will make it more difficult for the Federal

government to take more of the people’s money. The Tax Limitation Amendment will require the Congress to focus on options other

than raising taxes to manage the federal budget. It does not foreclose the possibility of raising taxes, but requires a broad political

consensus to achieve that goal.

According to testimony received during the hearing of the Subcommittee on the Constitution, in 1941, federal taxes were only 6.7

percent of the Gross Domestic Product (GDP). Since the late 1960’s,

federal taxes have approached twenty percent of GDP. Federal

Taxes went from 5% of a family’s income in 1934 to 19% in 1994.

A Tax Limitation Amendment will force Congress to carefully consider how best to use current resources before demanding that taxpayers dig deeper into their hard-earned wages to pay for increased

federal spending.
3

1The Internal Revenue Code, Title 26 of the United States Code, is not explicitly referenced

because Congress could avoid the application of the amendment by passing tax legislation and

putting it elsewhere in the code or characterizing it in a different fashion.

BACKGROUND AND NEED FOR THE LEGISLATION

The Federal government seems to have forgotten a fundamental

fact—the money we spend belongs to the people. It is only fitting

that when we increase our demand of those earnings, with the

force of law and its punishments, we do so with careful consideration and broad consensus. A supermajority requirement as found

in the Tax Limitation amendment is a needed mechanism to impose fiscal discipline and constrain the growth of government.

The amendment would not require a two-thirds vote for every tax

increase in any bill. For example, a bill that both lowered and increased taxes, if it were revenue neutral, would not be subject to

the two-thirds vote. In addition, the supermajority requirement

would be waived when a declaration of war is in effect or when

both Houses pass a resolution, which becomes law, stating that,

‘‘the United States is engaged in military conflict which causes an

imminent and serious threat to national security.’’ The amendment

authorizes Congress to enforce and implement the article through

legislation.

I. Application of the amendment

The amendment in the nature of a substitute adopted by the

Committee ties application of the amendment to changes to the internal revenue laws. The amendment applies to any ‘‘bill, resolution, or other legislative measure changing the internal revenue

laws * * *’’. Any bill changing the internal revenue laws would require a two-thirds vote, unless it was determined that the bill’s

provisions, taken together, raised revenue by less than a de

minimis amount.

Generally, the ‘‘internal revenue laws’’ covers taxes found in the

internal revenue code—income taxes, estate and gift taxes, employment taxes, and excise taxes. This would cover the Internal Revenue Code and any future revenue laws even if they were not placed

into the code.1 The tax limitation amendment will cover personal

and corporate income taxes, estate and gift taxes, employment

taxes and excise taxes. The amendment would not apply to tariffs,

user fees, voluntary payments or bills that do not change internal

revenue laws, even if they have by more than a ‘‘de minimis

amount.’’

II. The ‘‘de minimis’’ exception and implementing legislation

The amendment states that a determination must be made at

the time of adoption of legislation, as to whether it raises the internal revenue by more than a ‘‘de minimis’’ amount. This determination shall be made ‘‘in a reasonable manner prescribed by law.’’ In

an April 7, 1997 letter to Chairman Henry Hyde, Chairman Bill

Archer of the House Ways and Means Committee, which would

have jurisdiction over the drafting of such legislation, discussed the

meaning of the ‘‘de minimis’’ standard and implementing legislation:
4

[T]he Constitutional amendment excepts from the 2/3 requirement tax legislation that raises no more than a ‘‘de

minimis’’ amount of revenue. The amendment states that

Congress may ‘‘reasonably provide’’ how this exception is

applied. Details may be very important, but they do not

belong in the Constitution. Instead, Congress would adopt

legislation that implements the Constitutional amendment

by defining terms and fleshing out procedures.

It is up to this or a future Congress to design this ‘‘implementing legislation.’’ However, it is my understanding

and intent that such legislation will have the following

characteristics:

Revenue would be measured over a period consistent

with current budget windows. For example, measuring the

net change in revenue over a 5 year period would be appropriate.

Estimation would be made employing the usual revenue

estimating rules. As under the Budget Act, a committee of

jurisdiction or conference committee would, in consultation

with the Congressional Budget Office or the Joint Committee on Taxation, determine the revenue effect of a bill.

A bill would be considered to raise a ‘‘de minimis’’

amount of revenue if increased Federal tax revenues by no

more than 0.1 percent over 5 years.

For purposes of determining whether a bill raises more

than a ‘‘de minimis’’ amount of revenue, only tax provisions (i.e., provisions modifying the internal revenue laws)

in the bill would be considered. Other provisions that increase Federal revenues or receipts (such as asset sales,

tariffs, user fees, etc.) would not be taken into account in

determining the revenue raised by the bill.

Opponents of the tax limitation amendment have argued that the

amendment will make it more difficult to close tax loopholes. The

amendment does not bar measures to close tax loopholes. Legislation to close a tax loophole, which would have the effect of raising

revenue, would only require a two-thirds vote if it raised revenue

by more than a de minimis amount. That is, if the tax provisions

in the bill, taken together, increased federal tax revenues by more

than one-tenth of one percent of federal revenues over a five year

period.

III. Prior legislative action

The House voted on a constitutional supermajority requirement

to raise taxes twice in the 104th Congress. During floor consideration of H.J. Res. 1 on January 25 and 26, 1995, the Full House

voted on the Barton Balanced Budget proposal which would have

required a three-fifths majority of the entire House and Senate to

increase tax revenue and would have allowed a simple majority to

waive the requirement in times of war, or in the face of a serious

military threat. On April 15, 1996, for the second time in the 104th

Congress, the House voted to amend the Constitution to require a

supermajority vote of each House to raise taxes. The Barton substitute, H.J. Res. 169, made in order under the Rule, required a

two-third’s majority in each House for any measure that increased
5

2 ‘‘Proposing an Amendment to the Constitution with Respect to Tax Limitations, 1997: Hearings on H.J. Res. 62 Before the Subcomm. On the Constitution of the House Judiciary Committee,’’ 105th Cong., 1st Sess. (written statement of Dr. Barry Poulson). 3 ‘‘Proposing an Amendment to the Constitution with Respect to Tax Limitations, 1997: Hearings on H.J. Res. 62 Before the Subcomm. On the Constitution of the House Judiciary Committee,’’ 105th Cong., 1st Sess. (written statement of Daniel Mitchell).

revenue by more than a de minimis amount. The House voted 243–

177 in favor of the Barton Tax-Limitation amendment, thirty-seven

votes short of the two-thirds majority needed to pass a constitutional amendment.

IV. State tax limitation laws

There are presently fourteen states that require a supermajority

vote to raise taxes: Arizona, California, Colorado (only emergency

taxes require a two-thirds vote otherwise voter approval is necessary), Louisiana, Missouri (taxes that exceed $50 million), Nevada, South Dakota and Washington all require a two-thirds vote

for tax increases. Delaware, Mississippi, and Oregon require a

three-fifths vote to raise taxes. Florida requires a three-fifths vote

to raise corporate income tax rates. Arkansas (applies primarily to

sales and alcohol beverage taxes) and Oklahoma require a threefourths vote to raise taxes.

Professor Barry W. Poulson, Professor of Economics of the University of Colorado, testified before the Constitution Subcommittee

that when these fiscal discipline mechanisms are incorporated into

state constitutions ‘‘they are more likely to constrain the growth of

government’’ than statutory provisions.2

Daniel Mitchell, McKenna Senior Fellow in Political Economy at

the Heritage Foundation, testified before the Subcommittee on the

Constitution that empirical data from states suggests that supermajority requirements are successful in limiting the growth of government and enabling a more rapid pace of economic growth and

job creation. States with supermajority requirements had lower

spending increases, faster economic growth, more jobs and a more

tightly controlled tax burden than states without such requirements.3

V. Supermajority requirements and taxation

There is nothing undemocratic or unusual about supermajority

requirements in our system of representative democracy. Supermajority voting requirements are routinely used for legislative

business in both the House and the Senate. Since 1828, the House

has allowed a two-thirds vote to suspend rules and pass legislation.

Senate rules require a two-thirds vote for suspension of the rules

and for the fixing of time for considering a subject. The Senate requires a three-fifths vote of all Senators to end debate or to increase the time available under cloture. Senate Budget procedures

require that three-fifths of the full Senate must agree to waive balanced budget provisions or points of order to consider amendments

that would violate the budget approved by Congress.

There are ten instances in which the Constitution already requires a supermajority vote. Seven of these were part of the origi-
6

4There are ten instances in which the Constitution already requires a supermajority vote:

Art. I, § 3, cl. 6: Conviction in impeachment trials.

Art. I, § 5, cl. 2: Expulsion of a Member of Congress.

Art. I, § 7, cl. 2: Override a Presidential Veto.

Art. II, § 1, cl. 3: Quorum of two-thirds of the states to elect the President.

Art. II, § 2, cl. 2: Consent to a treaty.

Art. V: Proposing Constitutional Amendments.

Art. VII: State ratification of the original Constitution.

Amendment XII: Quorum of two-thirds of the states to elect the President and the Vice

President.

Amendment XIV, § 3: To remove disability for holding office where one has engaged in

‘‘insurrection or rebellion.’’

Amendment XXV, § 4: Presidential disability. 5 Art. I, § 9, cl. 4 of the U.S. Constitution states: ‘‘No Capitation, or other direct, tax shall be

laid, unless in Proportion to the Census or Enumeration herein before directed to be taken.’’ 6 James Madison, Alexander Hamilton and John Jay, The Federalist Papers, XXI, (1787–8).

nal Constitution and three were added through the amendment

process.4

Opponents of the amendment point to the fact that one of the

weaknesses that led to the demise of the Articles of Confederation

was that they required a supermajority vote to raise federal revenue. It is true that the Framers did not impose a supermajority

voting requirement to raise revenue. Their solution was far more

severe—an explicit constitutional restriction on direct taxes found

at Article I, Section 9, clause 4.5

As explained by Alexander Hamilton in Federalist No. 21, the

taxing ability of the federal government was intentionally limited:

It is a signal advantage of taxes on articles of consumption [today called tariffs, sales and excise taxes] that they

contain in their own nature a security against excess. They

prescribe their own limit, which cannot be exceeded without defeating the end proposed—that is, an extension of

the revenue. When applied to this object, the saying is as

just as it is witty that, ‘‘in political arithmetic, two and two

do not always make four.’’ If duties are too high, they lessen the consumption, the collection is eluded; and the product to the treasury is not so great as when they are confined within proper and moderate bounds. This forms a

complete barrier against any material oppression of the

citizens by taxes of this class, and is itself a natural limitation of the power of imposing them.6

As Lawrence Hunter, President of the Business Leadership

Council testified before the Subcommittee on the Constitution:

In Madison’s and Hamilton’s original design, the taxing

and spending authority of the Federal government was

hemmed in by the dual constraints of exclusive reliance on

indirect taxes (which ‘‘prescribe their own limit’’) working

side-by-side with the powerful constraint on spending resulting from the limited delegation of powers to the Federal government. This limited delegation of powers severely restricted the objects and activities on which the

Federal government could spend money. In other words,

the original constitutional design constrained both the

means by which Congress spent (taxation) and the ends on
7

7 ‘‘Amendment to the Constitution Requiring Two-thirds Majorities for Bills Increasing Taxes,

1996: Hearings on H.J. Res. 159 Before the Subcomm. On the Constitution of the House Judiciary Committee,’’ 104th Cong., 2nd Sess. 75.

which Congress spent (defined by a limited delegation of

powers).7

As ratified, the Constitution allowed no direct taxation of the income of citizens. For three-quarters of our history, the power of the

U.S. government to tax was carefully constrained by explicit constitutional restraints. It was not until early in this century that the

16th Amendment swept away the Constitution’s careful balance

with respect to taxes. While in the 1780’s, the federal government

may have had a problem raising revenue, this is certainly no longer

a problem today. As recently as 1940, federal taxes were only 6.7%

of the Gross Domestic Product. Since the late 1960’s federal taxes

have approached 20% of GDP.

Under our current system it is too easy to add to the already onerous tax burden Congress has placed upon the American people.

The adoption of a supermajority provision will force Congress to

give careful consideration to proposals to raise taxes, and will require a broad consensus in order to do so.

VI. Standing to sue under the tax limitation amendment

As a general matter, in order to bring a lawsuit in federal court

a plaintiff must have standing. In order to open the door of the

courthouse, a plaintiff must demonstrate that he (1) suffered an actual injury of the type for which a court may give relief (2) by some

action of the defendant and that (3) the court will be able to redress the injury.

Prudential considerations, not rooted in the Constitution, also

come into play. These rules require that (a) the defendant violated

the plaintiff’s legal right, not someone else’s; (b) the plaintiff’s injury is somehow differentiated from those of all other people in the

country; and (c) the injury is of the type that the law or constitutional provision in question was designed to protect.

Ordinarily, a taxpayer has no standing to sue the government for

carrying out an arguably unconstitutional program that is wasting

the public’s money. Most direct constitutional challenges to the exercise of the government’s spending power are beyond judicial

reach. The mere fact that the government does not act constitutionally does not provide a plaintiff with standing.

Under the amendment reported by the Committee, an increase in

taxes does not automatically trigger a two-thirds vote. The amendment does not create a legal right to have taxes raised only where

there is a two-thirds vote. Therefore, a taxpayer would not have

standing to sue merely because his tax burden was increased. The

amendment requires Congress to determine ‘‘at the time of adoption, in a reasonable manner prescribed by law’’ whether the tax

provisions in the legislation, taken as a whole, increase the internal revenue by more than a ‘‘de minimis’’ amount. An evaluation

will need to be performed as to whether the legislation as a whole

increases taxes by more than a ‘‘de minimis’’ amount.

In other words, a bill raising some taxes and lowering others,

would not necessarily trigger a two-thirds vote. A court would be
8

8The strongest case for standing would be made where Congress failed entirely to make the

evaluation of whether a bill changing the internal revenue laws did indeed ‘‘increase the internal revenue by more than a ‘‘de minimis’’ amount. Even here, however, it is not entirely clear

that a plaintiff whose taxes had been raised under such a scenario would have standing to sue

under current requirements of this doctrine. 9 As referred to in the House rule, Section (1)(a) covers the tax rate for married individuals

filing joint returns and surviving spouses. Section (1)(b) covers heads of household. Section (1)(c)

covers unmarried individuals. Section (1)(d) covers married individuals filing separate returns.

Section (e) covers estates and trusts. Section 11(b) covers the amount of tax on corporations.

Section 55(b) covers the tentative minimum tax.

extremely reluctant to substitute its own judgement on the revenue

effects of a particular piece of legislation for that of the Congress.

Under current interpretations of ‘‘standing’’ rules, it is highly unlikely that a court would allow a taxpayer to challenge Congress’

determination that a bill raised revenue by less than a de minimis

amount.8

VII. Differences between the tax limitation amendment and the

House rule

The House rule for the 104th Congress required a three-fifths

vote for any bill ‘‘carrying a Federal income tax rate increase.’’ The

rule was waived several times during the 104th Congress. The proposed constitutional amendment requires a two-thirds vote for any

bill changing the internal revenue laws that increases revenue by

more than a ‘‘de minimis’’ amount.

At the beginning of the 105th Congress, the House rule was

changed. Now, the Rule XXI(5)(c) requires a 3/5 vote for any bill

that ‘‘amends subsection (a), (b), (c), (d), or (e) of section 1, or to

section 11(b) or 55(b), of the Internal Revenue Code of 1986, that

imposes a new percentage as a rate of tax and thereby increases the

amount of tax imposed by any such section’’ (emphasis added).9

The House rule applies to amendments to certain sections of the

Internal Revenue Code that increase tax rates even if the bill,

taken as a whole, would reduce revenues.

In contrast, the Constitutional amendment would not necessarily

require a two-thirds vote for a bill that changed the tax rates—if

the overall effect of the tax provisions of the bill reduced federal

revenues.

The tax limitation amendment allows changes to the tax code as

long as they do not increase revenues by more than a de minimis

amount. It will make it harder for Congress to raise taxes, but still

leaves the flexibility to cut taxes, close loopholes and make revenue

neutral changes to the tax laws.

HEARINGS

The Committee’s Subcommittee on the Constitution held one day

of hearings on H.J. Res. 62 on March 18, 1997. Testimony was received from seven witnesses: Representative John Shadegg; Honorable James Miller, Counselor, Citizens for a Sound Economy; Robert Greenstein, Executive Director, Center for Budget and Policy

Priorities; Dr. Barry Poulson, Professor of Economics, University of

Colorado; Dean Samuel Thompson, Dean, University of Miami

School of Law; Professor Michael Rappaport, University of San

Diego School of Law; Daniel Mitchell, McKenna Senior Fellow in

Political Economy, Heritage Foundation.
9

COMMITTEE CONSIDERATION

On April 8, 1997, the Committee met in open session and ordered

reported favorably the resolution H.J. Res. 62, with an amendment

in the nature of a substitute, by a roll call vote of 18 to 10, a

quorum being present. The Committee adopted an amendment in

the nature of a substitute offered by Mr. Canady of Florida. The

amendment in the nature of a substitute made two changes to the

underlying text: it required that all votes taken pursuant to the

amendment be taken by the yeas and nays and it conformed the

text of H.J. Res. 62 to the language voted on by the House in 1996

by making clear that the amendment applies to any ‘‘bill, resolution, or other legislative measure changing the internal revenue

laws * * *’’. The Committee also adopted an amendment offered

by Mr. Scott of Virginia. The Scott amendment provided that the

vote required under the amendment should consist of ‘‘two-thirds

of those present and voting’’ rather than two-thirds of the whole

number of each House as was required by H.J. Res. 62 as introduced.

VOTES OF THE COMMITTEE

1. An amendment was offered by Mr. Nadler and Mr. Meehan

that would eliminate the two-thirds requirement for bills that repeal or reduce exemptions, deductions or credits available to business entities. The amendment was defeated by a 10–16 rollcall

vote.

AYES NAYS

Mr. Conyers Mr. Hyde

Mr. Frank Mr. McCollum

Mr. Nadler Mr. Gekas

Mr. Scott Mr. Coble

Mr. Watt Mr. Smith (TX)

Ms. Lofgren Mr. Gallegly

Ms. Jackson Lee Mr. Canady

Mr. Meehan Mr. Inglis

Mr. Delahunt Mr. Goodlatte

Mr. Wexler Mr. Buyer

Mr. Bono

Mr. Chabot

Mr. Barr

Mr. Jenkins

Mr. Cannon

Mr. Rothman

2. An amendment was offered by Mr. Conyers that would remove

the two-thirds requirement on bills that would increase revenues

by adjusting foreign tax credits or deferring taxes on unrepatriated

foreign profits. The amendment was defeated by a 10–15 rollcall

vote.

AYES NAYS

Mr. Conyers Mr. Hyde

Mr. Frank Mr. McCollum

Mr. Boucher Mr. Gekas

Mr. Nadler Mr. Coble
10

Mr. Scott Mr. Gallegly

Mr. Watt Mr. Canady

Ms. Jackson Lee Mr. Inglis

Ms. Waters Mr. Goodlatte

Mr. Delahunt Mr. Buyer

Mr. Wexler Mr. Bono

Mr. Chabot

Mr. Barr

Mr. Jenkins

Mr. Cannon

Mr. Rothman

3. An amendment was offered by Mr. Watt eliminating the twothirds requirement. The amendment was defeated by a 8–17 rollcall vote.

AYES NAYS

Mr. Conyers Mr. Hyde

Mr. Boucher Mr. McCollum

Mr. Nadler Mr. Gekas

Mr. Scott Mr. Coble

Mr. Watt Mr. Smith (TX)

Ms. Jackson Lee Mr. Gallegly

Mr. Meehan Mr. Canady

Mr. Delahunt Mr. Inglis

Mr. Goodlatte

Mr. Buyer

Mr. Bono

Mr. Bryant (TN)

Mr. Chabot

Mr. Barr

Mr. Jenkins

Mr. Cannon

Mr. Rothman

4. An amendment was offered by Ms. Jackson Lee that would

eliminate the two-thirds requirement on any bill that raised revenues necessary to protect the solvency of the Federal Old-Age and

Survivors Insurance Trust Fund and the Federal Disability Insurance Trust Fund, or any successor funds. The amendment was defeated by a 9–16 rollcall vote.

AYES NAYS

Mr. Conyers Mr. Hyde

Mr. Boucher Mr. McCollum

Mr. Nadler Mr. Gekas

Mr. Scott Mr. Coble

Mr. Watt Mr. Smith (TX)

Ms. Jackson Lee Mr. Gallegly

Ms. Waters Mr. Canady

Mr. Meehan Mr. Inglis
11

Mr. Delahunt Mr. Goodlatte

Mr. Buyer

Mr. Bono

Mr. Chabot

Mr. Barr

Mr. Jenkins

Mr. Cannon

Mr. Rothman

5. An amendment was offered by Mr. Nadler that would eliminate the two-thirds provision for bills providing for more effective

enforcement of the internal revenue laws. The amendment was defeated by a 9–17 rollcall vote.

AYES NAYS

Mr. Conyers Mr. Hyde

Mr. Boucher Mr. Sensenbrenner

Mr. Nadler Mr. McCollum

Mr. Scott Mr. Gekas

Mr. Watt Mr. Coble

Ms. Jackson Lee Mr. Smith (TX)

Ms. Waters Mr. Gallegly

Mr. Meehan Mr. Canady

Mr. Delahunt Mr. Inglis

Mr. Goodlatte

Mr. Buyer

Mr. Bono

Mr. Bryant (TN)

Mr. Chabot

Mr. Jenkins

Mr. Cannon

Mr. Rothman

6. Final Passage. Mr. Hyde moved to report H.J. Res. 62, as

amended, favorably to the whole House. The resolution was ordered favorably reported by a rollcall vote of 18–10.

AYES NAYS

Mr. Hyde Mr. Conyers

Mr. Sensenbrenner Mr. Boucher

Mr. McCollum Mr. Nadler

Mr. Gekas Mr. Scott

Mr. Coble Mr. Watt

Mr. Smith (TX) Ms. Jackson Lee

Mr. Gallegly Ms. Waters

Mr. Canady Mr. Meehan

Mr. Inglis Mr. Delahunt

Mr. Goodlatte Mr. Rothman

Mr. Buyer

Mr. Bono

Mr. Bryant (TN)

Mr. Chabot

Mr. Barr

Mr. Jenkins

Mr. Pease

Mr. Cannon
12

COMMITTEE OVERSIGHT FINDINGS

In compliance with clause 2(l)(3)(A) of rule XI of the Rules of the

House of Representatives, the Committee reports that the findings

and recommendations of the Committee, based on oversight activities under clause 2(b)(1) of rule X of the Rules of the House of Representatives, are incorporated in the descriptive portions of this report.

COMMITTEE ON GOVERNMENT REFORM AND OVERSIGHT FINDINGS

No findings or recommendations of the Committee on Government Reform and Oversight were received as referred to in clause

2(l)(3)(D) of rule XI of the Rules of the House of Representatives.

NEW BUDGET AUTHORITY AND TAX EXPENDITURES

Clause 2(l)(3)(B) of House rule XI is inapplicable because this

legislation does not provide new budgetary authority or increased

tax expenditures.

CONGRESSIONAL BUDGET OFFICE COST ESTIMATE

In compliance with clause 2(l)(3)(C) of rule XI of the Rules of the

House of Representatives, the Committee sets forth, with respect to

the resolution, H.J. Res. 62, the following estimate and comparison

prepared by the Director of the Congressional Budget Office under

section 403 of the Congressional Budget Act of 1974:

U.S. CONGRESS,

CONGRESSIONAL BUDGET OFFICE,

Washington, DC, April 10, 1997.

Hon. HENRY J. HYDE,

Chairman, Committee on the Judiciary,

House of Representatives, Washington, DC.

DEAR MR. CHAIRMAN: The Congressional Budget Office has prepared the enclosed cost estimate for H.J. Res. 62, proposing an

amendment to the Constitution of the United States with respect

to tax limitations.

If you wish further details on this estimate, we will be pleased

to provide them. The CBO staff contact is Stephanie Weiner.

Sincerely,

JUNE E. O’NEILL, Director.

Enclosure.

H.J. Res. 62—Proposing an amendment to the Constitution of the

United States with respect to tax limitations

H.J. Res. 62 would propose an amendment to the Constitution to

require the approval of two-thirds of the members of Congress for

the passage of any bill that would amend the Internal Revenue

Code to increase revenues by more than a de minimis amount. The

legislatures of three-fourths of the states would be required to ratify the proposed amendment within seven years for the amendment

to become effective.

CBO estimates that enacting this resolution would have no direct

effect on the federal budget. H.J. Res. 62 would not affect direct
13

spending or receipts, so there would be no pay-as-you-go scoring

under section 252 of the Balanced Budget and Emergency Deficit

Control Act of 1985. This legislation contains no intergovernmental

or private sector mandates as defined in the Unfunded Mandates

Reform Act of 1995 (UMRA) and would not affect the budgets of

state, local, or tribal governments.

The CBO staff contact for this estimate is Stephanie Weiner.

This estimate was approved by Rosemary Marcuss, Assistant Director for Tax Analysis.

CONSTITUTIONAL AUTHORITY STATEMENT

Pursuant to rule XI, clause 2(l)(4) of the Rules of the House of

Representatives, the Committee finds the authority for this legislation in Article V of the Constitution, which provides that the Congress has the authority to propose amendments to the Constitution.

SECTION-BY-SECTION ANALYSIS

Section 1. This section provides that any bill, resolution, or other

legislative measure changing the internal revenue laws shall require for final adoption a two-thirds vote in either House unless it

is determined, in a reasonable manner prescribed by law, that the

legislation raises revenue by less than a ‘‘de minimis’’ amount.

This section also requires a majority of two-thirds of those

present and voting for passage of legislation that will increase internal revenue by more than a ‘‘de minimis’’ amount.

Section 2. This section waives the requirements of section 1 of

H.J. Res. 62 when a declaration of war is in effect or when both

Houses of Congress pass a resolution, which becomes law, stating

that ‘‘the United States is engaged in military conflict which causes

an imminent and serious threat to national security.’’

Section 3. This section requires Congress to enforce and implement the article through legislation.
(14)

1 It is significant to note that because of population patterns, Senators representing some 7.3%

of the population could prevent a bill from obtaining a two-thirds majority. See U.S. Department

of Commerce, U.S. Census Bureau, Press Release CB–96–244, 1996 Population Estimates, Dec.

30, 1996. 2The Federalist Paper No. 58, at 393 (James Madison) (The Belknap Press of Harvard University, 1961). Last Congress, at the Constitution Subcommittee hearing, Judiciary Chairman Hyde

(R–IL) concurred with this concern:

I am troubled by the concept of divesting a Member of the full import or his or her

vote. You are diluting the vote of Members by requiring a supermajority of them to do

something as basic to government as acquire the revenue to run government. It is a

diminution. It is a disparagement. It is a reduction of the impact, the import, of one

man, one vote.

‘‘Proposing An Amendment to the Constitution of the United States to Require Two-Thirds Majorities for Bills Increasing Taxes: Hearings on H.J. Res. 159 Before the Subcomm. on the Constitution of the House Comm. on the Judiciary,’’ 104th Cong. 2d Sess. 107 (1996).

DISSENTING VIEWS

The problems with H.J. Res. 62 are myriad and obvious: most

fundamentally, it undercuts the very principle our nation was

founded on—majority rule. By requiring a two-thirds supermajority

to adopt certain legislation, the amendment diminishes the vote of

every Member of the House and Senate, denying the seminal concept of ‘‘one person one vote.’’

In addition, there is no definition of ‘‘internal revenue laws’’ or

‘‘de minimis amount.’’ It is unclear how or when the revenue estimates required under H.J. Res. 62 are to be made. The amendment

would make it nearly impossible to plug tax loopholes and eliminate corporate tax welfare, or even to increase tax enforcement

against foreign corporations. The amendment would also make it

nearly impossible to balance the budget, or develop a responsible

plan to restore Medicare or Social Security to long-term financial

solvency. Further, if H.J. Res. 62 were to be adopted, it would be

extraordinarily difficult to reauthorize excise taxes and related fees

supporting such important programs as superfund, highway construction, and air safety. For these and the reasons set forth below,

we dissent from H.J. Res. 62.

I. Amendment disregards constitutional principle of majority rule

The framers of the Constitution wisely rejected the principle of

requiring a supermajority for basic government functions.1 James

Madison vehemently argued against requiring supermajorities,

stating that under such a requirement, ‘‘the fundamental principle

of free government would be reversed. It would be no longer the

majority that would rule: the power would be transferred to the minority.’’ 2

Adopting a supermajority tax requirement would repeat the very

mistakes made in the 1780’s under the Articles of Confederation,

when we required a vote of 9 of the 13 states to raise revenue. It

is because this system worked so poorly that the founding fathers
15

3 ‘‘Proposing An Amendment to the Constitution with Respect to Tax Limitations on H.J. Res.

62 Before the Subcomm. on the Constitution of the House Comm. on the Judiciary,’’ 105th Cong.

1st Sess. (1997) [hereinafter 1997 Judiciary Hearing] (Statement of Robert Greenstein, Executive Director, Center on Budget and Policy Priorities). 4 U.S. Const. art. I § 2, cl. 2., art. I, § 3, cl. 6.

5See 26 Fla. Stat. Ann. V. § 1(e) (West 1970). California sometimes acts simultaneously on

taxes and spending cuts, through the annual budget process, which considerably diminishes the

supermajority’s impact on tax increases. See Congressional Quarterly, Economic & Finance,

April 20, 1996, at 1033. It is also important to note that the total tax receipts collected by the

federal, state, and local governments in the United States—31.5%—is lower than all of the other

major industrialized countries. See Gregg A. Esenwein, ‘‘U.S. Library of Congress, Congressional

Research Service Report for Congress, The U.S. Fiscal Position: A Comparison with Selected Industrial Nations,’’ (CRS Report 96-386 E, March 1, 1996). Moreover, federal tax revenue, as a

percentage of gross domestic product, was 19.3% in 1995—and has remained more or less constant since 1960. See Gregg A. Esenwein, ‘‘U.S. Library of Congress, Congressional Research

Service Report for Congress, The Size and Distribution of the Federal Tax Burden: 1950–1995’’

(CRS Report 96–386 E, April 30, 1996). 6 Arkansas, California, Delaware, Florida, Louisiana, Mississippi, and South Dakota.

7See 1997 Hearings, supra note 3 (statement of Daniel J. Mitchell, The Heritage Foundation).

8 Iris J. Lav & Nicholas Johnson, Center on Budget and Policy Priorities, ‘‘Do States with

Supermajorities Have Smaller Tax Increases or Faster Economic Growth than Other States?’’

(April 10, 1997). 9Two years at similar points in the economic cycle.

sought to fashion a national government that could operate

through majority rule.3

Supporters of H.J. Res. 62 have sought to justify the departure

from majority rule by pointing to other provisions in the Constitution requiring a two-thirds vote, such as approving a treaty or convicting in a congressional impeachment trial.4 But supporters neglect to note that none of these supermajority requirements pertain

to the day-to-day operations of the government—limiting such congressional authority is an invitation to gridlock.

Moreover, the fact that fourteen states have adopted some form

or another of a supermajority vote requirement for tax increases

also bears little relation to the current debate. First, it is inappropriate to compare a state’s revenue needs with the more comprehensive obligations of the federal government (such as economic

policy and disaster assistance). In addition, many of the state requirements apply to particular types of taxes and do not apply to

all or even the principal means of raising state tax revenue. For

example, in Florida the supermajority requirement only applies to

corporate income taxes; exempt from the requirement is the sales

tax on the purchase of goods—the primary source of the state’s revenues.5

In addition, arguments by proponents that seven states who have

had a supermajority tax requirement in place for a number of

years 6 have enjoyed more rapid economic growth are also misleading.7 A recent study by the Center on Budget and Policy Priorities

found that such analysis was ‘‘simplistic’’ and ‘‘flawed.’’ 8 This study

found that by some measures, supermajority states had lower economic growth and more tax increases than other states. For example, when measured between 1979 and 1989,9 four of the seven

states had lower than average economic growth measured by state

gross domestic product, five of the seven states experienced lower

than average growth when measured by changes in per capita income, and six of the seven states had higher than average increases in state and local revenues as a percentage of residents’ income. Obviously, there are many factors which impact state growth
16

10 ‘‘Show Vote on Tax Day,’’ Wash. Post, April 9, 1997, at A20. 11See infra note 32. 12See Center on Budget and Policy Priorities, ‘‘Proposed Constitutional Amendment Would

Make It More Difficult to Address the Long Term Social Security and Medicare Crisis’’ (March

30, 1997). 13 1997 Judiciary Hearing, supra note 3 (statement of Robert Greenstein). Between 1982 and

1993, five pieces of legislation that raise significant revenue were enacted. The Tax Equity and

Fiscal Responsibility Act of 1982, passed the House by a vote of 226–207. The 1987 Social Security rescue plan was passed by a vote of 282–148. The Omnibus Budget Reconciliation Act of

1987, a product of bipartisan negotiations that contained both spending cuts and revenue increases, passed by a 237–181 vote and the Omnibus Budget Reconciliation Act of 1993 passed

other than supermajority tax requirements, including a state’s educational system and the skill of its workforce.

II. Amendment would lead to large cuts in Social Security and

Medicare and increased deficits

H.J. Res. 62 would likely lead to large reductions in Social Security and Medicare benefits. As the Washington Post noted in a recent editorial:

When the baby boomers begin to retire not that many

years from now, the country will be in an era of constant

fiscal strain. To avoid destructive deficits, there will have

to be tax increases and/or spending cuts. By making it

harder to increase taxes, the amendment would compound

the pressure on the major spending programs: Social Security, Medicare, Medicaid and the rest. Is that what Congress really wants to do? The pressure on those programs

is great enough as it is.10

H.J. Res. 62 would also effectively rule out measures to raise

Medicare premiums for higher income individuals’ levels as well as

even modest measures to shore up Social Security and Medicare

(such as by slowing the erosion in the share of employee compensation subject to the payroll tax). Indeed, when the Republican budget reconciliation bill reached the House floor in the fall of 1995, it

became clear that its proposed increase in Medicare premiums for

those at higher income levels constituted a tax increase.11 Similarly, expanding Social Security’s coverage to include state and

local government employees—which was recently proposed by the

Advisory Council for Social Security—would also result in a revenue increase and be subject to the two-thirds requirement.12 Despite the obvious and clear cut threat H.J. Res. 62 represents to Social Security, when Ms. Jackson-Lee offered an amendment to exempt legislation necessary to preserve the Social Security Trust

Fund’s solvency from the constitutional amendment, the Majority

rejected it on a party-line vote.

Another dangerous byproduct of H.J. Res. 62 would be increased

deficits. As the Center on Budget and Policy Priorities testified:

The proposed constitutional amendment * * * would effectively preclude [action to balance the budget]. The

amendment would make it virtually impossible to amass

the two-thirds majority required to pass large deficit reduction packages that include both reductions in federal

programs and measures to raise revenue. As a result, the

amendment would erect serious new barriers to long-term

deficit reduction.13
17

by a slender 218–216 vote. Last Congress, both the ‘‘blue dog’’ and the Republicans’ proposed

balanced budget bills included tax increases. Id. 14Letter from Warren B. Rudman, Co-Chair & Paul E. Tsongas, Co-Chair, The Concord Coalition Citizens Council to Members, U.S. House of Representatives (April 11, 1996). 15 1997 Judiciary hearing, supra note 3 (statement of Samuel Thompson, Dean, University of

Miami School of Law). 16 ‘‘Congress of the United States, Congressional Budget Office, Federal Financial Support of

Business’’ (July 1995). ‘‘Tax expenditures’’ are provisions of the tax code that selectively reduce

the tax liability of particular individuals or businesses. Id. See also Analytical Perspectives,

Budget of the U.S. Government, Fiscal Year 1998: Chapter 3—Federal Receipts (Feb. 6, 1997)

[hereinafter President’s budget]. 17 Citizens for Tax Justice, ‘‘The Hidden Entitlements,’’ May 1996. 18The IRS also found that on average, foreign companies report only 40% of what comparable

American companies reported in taxes. See ‘‘Department of the Treasury’s Report on Issues Related to the compliance with U.S. Tax Laws By Foreign Firms Operating in the United States:

Hearing Before the Subcomm. on Oversight of the House Ways and Means Comm.’’ 102d Cong.,

2d Sess. 7 (1992) [hereinafter 1992 Ways and Means hearing] (statement of Representative Pickle, Chairman, Subcommittee on Oversight).

The problem is particularly acute in the auto and electronics industries. For example, of foreign automotive company tax returns reviewed in a recent Congressional study, 28% showed no

taxes due, even though these firms reported sales of nearly $27 billion. One foreign auto comContinued

It is for these reasons that perhaps the nation’s most credible advocate of deficit reduction—the bipartisan Concord Coalition—

strongly opposes a supermajority tax requirement. In their view,

‘‘enactment of [a tax limitation] constitutional amendment would

be detrimental to the budget process. * * * No area of the budget—on either the spending or the revenue side—should receive

preferential treatment such as requiring supermajority votes.’’ 14

III. Amendment will make it difficult to close tax loopholes

H.J. Res. 62 will make it nearly impossible to eliminate tax loopholes, thereby locking in the current tax system at the time of ratification. As Dean Samuel Thompson, one of the nation’s leading tax

law authorities, observed at our hearing:

The core problem with this proposed Constitutional

amendment is that it would give special interest groups

the upper hand in the tax legislative process. Once a group

of taxpayers receives either a planned or unplanned tax

benefit with a simple majority vote of both Houses of Congress, the group will then be able to preserve the tax benefit with just a 34% vote of one House of Congress.15

The potential revenue loss to the Treasury Department from

such loopholes is staggering. A recent Congressional Budget Office

study found that over half of the corporate subsidies the federal

government provides are delivered through ‘‘tax expenditures.’’ 16

Such expenditures are estimated to cost the federal government

$455 billion in fiscal year 1996 alone—triple the current budget

deficit and a full two and one-half times as much as all means-tested entitlement programs combined.17

In addition, H.J. Res. 62 would make it inordinately difficult to

make foreign corporations pay their fare share of taxes on income

earned in this country. Congress would even be limited from changing the law to increase penalties against foreign multinationals

who avoid U.S. taxes by claiming that profits earned in the U.S.

were realized in offshore tax havens. Estimates of the costs of such

tax dodges are also significant. A 1992 IRS study estimated that

foreign corporations cheated on their tax returns to the tune of $30

billion per year.18
18

pany had $3.4 billion in sales over two years and paid no taxes. Of the foreign electronics companies reviewed in the study, 40% paid no United States income tax whatsoever, though they

reported sales of almost $30 billion. One electronics firm sold $2.4 billion of products over eight

years and paid no taxes. Another company had sales of more than $9.4 billion in the U.S. and

paid $156 in taxes. Id. 19The foreign tax credit allows U.S. based multinational corporations to reduce their taxes in

this country by one dollar for every dollar of taxes they pay overseas. 26 U.S.C. §§ 27, 33. This

favorable treatment contrasts sharply with the treatment of nearly every other business expense—whether it be wages or taxes paid to state or local governments here in the U.S. The

foreign deferral provision allows U.S. corporations to pay no income taxes on the profits of their

foreign subsidiaries unless and until such profits are remitted to the U.S. parent. 26 U.S.C.

§§ 11(d), 882, 901, 951. If profits are never dividended to the parent, taxes never become due

in the U.S., amounting to an interest free loan from U.S. taxpayers. 20See Internal Revenue Service, Statistics of Income Bulletin, ‘‘Data Release: Corporate Foreign Tax Credit, 1992: An Industry and Geographic Focus,’’ Winter 1995-96; see also President’s

budget, supra note 16 at 73. 21Since 1979 we have lost almost 3 million manufacturing jobs in this country. See U.S. Department of Labor, Bureau of Labor Statistics, Current Employment Statistics Program, April

4, 1997. During the most recent downturn we lost 26,000 manufacturing jobs per month—the

equivalent of shutting down one Fortune 500 company every 30 days. Id. At the same time the

number of jobs with U.S.-based manufacturing companies abroad has skyrocketed. For example,

there are nearly 40,000 foreign workers working for U.S. corporations in Singapore alone. Recently, the Wall Street Journal reported that nearly half of the export jobs in China are linked

to U.S. and other multinational-based companies. See Joseph Kahn, ‘‘Foreigners Help Build China’s Trade Surplus,’’ Wall St. J., April 7, 1997, at A1. 22 1997 Judiciary Hearing, supra note 3 (‘‘It is not clear from the text of H.J. Res. 62 whether

it would only apply to a bill that leads on an over-all basis to an increase in tax.’’) (statement

of Dean Thompson). 23The Republicans rejected an amendment offered by Mr. Nadler which would have exempted

improved enforcement from the provisions of H.J. Res. 62.

Adoption of H.J. Res. 62 would also make it more difficult to

adopt legislation repealing or limiting foreign tax credits or the deferral of taxes on unrepatriated foreign profits.19 According to the

OMB, this loophole costs the United States nearly $22 billion dollars annually, and the foreign deferral provision will deprive the

Treasury of $2.4 billion in revenues in 1998, and a total of $14 billion between 1998 and 2002.20

Not only do these loopholes cost the Treasury desperately needed

funds—they cost our workers jobs.21 Despite these concerns, the

Republicans rejected amendments offered by Mr. Nadler and Mr.

Conyers which would have exempted the elimination of corporate

loopholes in general, as well as the foreign tax credit and deferral

loopholes in particular, from the requirements of the two-thirds

majority. Republicans also rejected an amendment offered by Mrs.

Jackson-Lee which would have exempted foreign taxpayers from

the requirements of a two-thirds vote.

In rejecting these arguments, the Majority attempted to argue

that under H.J. Res. 62, a two-thirds majority wouldn’t necessarily

be required if the elimination of the loophole was linked to other

tax cuts, so the overall bill was revenue neutral. Although it is not

entirely clear the amendment would operate in such a fashion,22

even if it did, this interpretation would prevent using the funds

raised from the elimination of such loopholes for any reason other

than providing for tax cuts. For example, such revenues couldn’t be

used for deficit reduction, disaster assistance, education, Medicare,

or Social Security. There is simply no legitimate policy reason to

link a bill raising taxes on foreign corporations or eliminating abusive loopholes with any additional federal tax changes.

Incredibly, under H.J. Res. 62, even measures that raised revenue by improving tax enforcement would require a two-thirds majority vote.23 As a result, new anti-fraud provisions or even a pro-
19

24See James V. Saturo & Louis Alan Talley, ‘‘U.S. Library of Congress, Congressional Research Service Report for Congress, Tax Limitations Proposals: An Assessment of the Issues and

Options Together With the Major Tax Acts, Votes, and Revenue Effects’’ (CRS Report 97-372

E, March 20, 1997); see also 1997 Judiciary Hearings, supra note 3 (statement of Representative

Rangel, Ranking Member, House Comm. on Ways and Means). 25See generally 26 U.S.C. Chapters 31–36, 42–47, 51–54. 26 A Proposed Constitutional Amendment To Require A Two-Thirds Vote to Increase Taxes:

Hearings on S.J. Res. 49 Before the Subcomm. on the Constitution, Federalism and Property

Rights of the Committee on the Judiciary, 104th Cong., 2d Sess. (1996) (statement of Lloyd Cutler). 27Proponents’ arguments that the courts can resolve the meaning of such open-ended terms

in the same way they have ‘‘equal protection’’ and ‘‘due process’’ also miss the point. The courts

are the most appropriate body to protect such individual rights and liberties from government

excesses in these areas. But judging the policy value of tax legislation is an inherently political

judgment. Such laws shouldn’t require court involvement to begin with. 28See ‘‘Hearing on Nomination of Richard Darman to be the Director of the Office of Management and Budget Before the Senate Comm. on Governmental Affairs,’’ 101st Cong., 1st Sess.

(1989). The amendment’s authors allowed for a loophole of potentially massive dimensions when

Continued

gram of stepped up enforcement against foreign multinationals who

avoid U.S. taxes would be subject to a supermajority requirement.

IV. Amendment will endanger excise taxes which fund public safety

and environmental programs

There are many important public safety programs funded by excise taxes whose extension would be subject to a supermajority

vote. Many such excise taxes are dedicated to purposes such as

transportation trust funds, Superfund, and compensation for health

damages.24 H.J. Res. 62 would also apply to excise taxes on alcohol,

tobacco, and pensions, as well as a variety of environmental

taxes.25

Former White House Counsel Lloyd Cutler explained the difficulties a supermajority tax requirement could cause in the context of

extending such excise taxes:

Today a simple majority of the Senate and House could

restore the [expired airline ticket tax] * * * But under the

proposed amendment, it would take 67 of the 100 senators

and 290 of the 435 congressmen to restore this tax which,

having expired on December 31, 1995, would clearly be a

‘‘new’’ tax covered by the amendment.26

Recognizing the burdens H.J. Res. 62 would place on Congress’

ability to extend such basic excise taxes which protect our health

and safety, Ms. Lofgren offered an amendment exempting them

from H.J. Res. 62—it was also rejected by the Majority.

V. Amendment is vague and could transfer significant authority to

the courts

H.J. Res. 62 will present a variety of new and complex interpretational difficulties. Most notably, there is no definition of the term

‘‘internal revenue laws,’’ a new term of art with no legislative antecedent.27 For example, although the amendment’s authors contend

there is a clear distinction between ‘‘taxes’’ (which they believe fall

within the concept of ‘‘internal revenue’’) and ‘‘user fees’’ (which

they believe are not ‘‘internal revenue’’), in practice, this is a distinction without any meaningful difference. As former Republican

OMB Director Darman has acknowledged, ‘‘[i]f it looks like a duck

and walks like a duck and quacks like duck, it is a duck, [and] euphemisms like user fees will not fool the public.’’ 28
20

they stated that efforts to adjust the Consumer Price Index—which would reduce indexing for

tax brackets—would not constitute a change in ‘‘internal revenue.’’ (Transcript at 39 (‘‘under the

[revised] language [reducing the CPI] would not [require a two-thirds vote], because that would

not be a change to the internal revenue laws.’’) Under this interpretation, legislation such as

that offered by William Roth (R–DE), Chair of the Senate Finance Committee, reducing CPI adjustments by 1.1% per year—and which CBO has estimated would increase income taxes by

$22.8 billion per year in 2002 and more than double that by 2006—would not constitute an increase in ‘‘internal revenue.’’ See S. 2, 105th Cong. 1st Sess. (1997). 29 Jim Miller, OMB Chief under President Reagan, testifying on behalf of the Citizens for a

Sound Economy, stated that the ‘‘de minimis’’ requirement should be taken out. See 1997 Judiciary Hearing, supra note 3. 30 In the event judicial review is invoked, H.J. Res. 62 would also raise difficult questions concerning standing. For example, it would be unclear whether a taxpayer whose taxes were raised

would be able to show sufficient harm to constitute a ‘‘case or controversy’’ or whether it would

be necessary for a Member or a whole House of Congress to bring the legal challenge. See Balanced Budget Constitutional Amendment: Hearing before the Subcomm. on the Constitution of

the House Comm. on the Judiciary, 104th Cong., 1st Sess. 229 (1995) (statement of Walter

Dellinger, Asst. Att’y Gen., Office of Legal Counsel, Dep’t of Justice). 31 Rule XXI 5(c), 104th Cong., 1st Sess. (January 4, 1995).

Another definitional problem arises from the fact that it is unclear how and when the so-called ‘‘de minimis’’ increase is to be

measured, particularly in the context of a $1.5 trillion annual

budget. Would we look at a one, five or ten-year budget window?

What if a bill resulted in increased revenues in years one and two,

but lower revenues thereafter? It is also unclear when the revenue

impact is to be assessed—based on estimates prior to the bill’s effective date, or subsequent determinations calculated many years

out. Further, if a tax bill was retroactively found to be unconstitutional, the tax refund issues could present insuperable logistical

and budget problems.29 An additional problem in the amendment’s

drafting can be seen in the requirement that Congress provide for

a law setting forth procedures to determine ‘‘in a reasonable manner’’ whether any tax legislation conforms to new supermajority requirement—yet another new constitutional term of uncertain

meaning.

All of these ambiguities point to one of the most serious problems

inherent in H.J. Res. 62—uncertainty regarding the branch of government vested with responsibility for interpeting and enforcing

the amendment’s requirements. If H.J. Res. 62 is read to authorize

judicial interpretation and enforcement, courts would be drawn into

fundamental policy disputes best left to the Congress.30 But if judicial enforcement is unavailable, those seeking redress for improperly imposed tax increases would be left without a meaningful remedy, undermining the public’s faith in the Constitution. It is doubtful the public would be satisfied with Congress’ selecting an

unelected bureaucrat, such as the head of the Congressional Budget Office or Joint Tax Committee, to police these matters. Yet when

Mr. Scott and Mr. Watt sought to clarify enforcement responsibility—by more clearly providing for enforcement by either the courts

or Congress—Republicans rejected both such approaches.

VI. Republicans have frequently waived their own house rules requiring a three-fifths majority vote to increase taxes

The unworkability of H.J. Res. 62 is illustrated by the fact that

the Republicans have frequently ignored their own House Rule preventing tax rate increases from taking effect unless approved by

three-fifths of the House.31 Last Congress, the Majority ignored or

waived this three-fifths requirements for tax increases on six sepa-
21

32On April 5, 1995, during the consideration of H.R. 1215, the Contract with America Tax

Relief Act, there was a parliamentary ruling that the new House rule did not apply to the bill

even though H.R. 1215 would have repealed the current 50 percent exclusion for capital gains

from sales of certain small business stock. The net effect of H.R. 1215 was to increase the maximum rate of tax on those gains from 14 percent (50 percent inclusion times 28 percent top rate)

to 19.8 percent. All seem willing to concede now that the ruling was erroneous. (Even Speaker

Gingrich in a June 27, 1995 letter, responding to an inquiry by Messrs. Gibbons, Moakley, and

Gephardt, conceded that the ruling did not seem ‘‘either satisfactory or overly compelling.’’)

On October 26, 1995, the House rule was waived for the consideration of H.R. 2491, the FY

1996 budget reconciliation bill and its conference report. The bill contained several tax rate increases.

On October 19, 1995, the House rule was waived for the consideration of H.R. 2425, the Medicare Preservation bill (which would have imposed additional taxes on withdrawals from

MedicarePlus Medical Savings Accounts and premium increases on high-income Medicare beneficiaries).

On March 28, 1996, the Republicans waived the House rule for consideration of H.R. 3103,

the Health Coverage Availability and Affordability bill (imposing additional taxes on withdrawals from Medical Savings Accounts).

On May 22, 1996, the House rule was waived for consideration of the Small Business Protection Act.

On July 31, 1996, the House rule was waived for the Personal Responsibility and Work Opportunity Reconciliation Act of 1995 (possible increases in the earned income tax credit program). 33 Charles Stenholm, ‘‘An Amendment Without a Prayer’’, Wash. Post, April 15, 1996, at A21. 34 Rule XXI 5(c), 105th Cong., 1st Sess. (Jan. 7, 1997).

rate occasions.32 As Rep. Charles Stenholm (D–TX) noted in a

Washington Post editorial opposing a similar proposal last year:

[T]he final blow to any hope that the vote [on the supermajority tax requirement] might be for real comes from

the dismal adherence Republicans have made to their own

internal House rule requiring a three-fifths vote to raise

taxes. After much fanfare during the organization of the

104th Congress, the House leadership has waived its own

effort to restrain itself in every potential instance except

one.33

In an attempt to avoid these problems, at the beginning of the

105th Congress, the House Rule was significantly narrowed to limit

its application to increases in particular tax rates specified under

the Internal Revenue Code, rather than tax rate increases generally.34 Such experiences highlight the unworkability of setting

forth special procedural rules concerning tax laws and tax rates

and these problems would be greatly compounded in a constitutional context.
22

CONCLUSION

We are surprised that a Republican Party which has a difficult

enough time putting forth any coherent agenda or adopting any

meaningful legislation somehow believes that they can accomplish

more by making it even more difficult to enact legislation. Yet this

is precisely what H.J. Res. 62 would do. In our view, it’s time the

Republican Party assumed responsibility for legislating, and

stopped blaming the Constitution for their own political problems.

JOHN CONYERS, Jr.

ROBERT C. SCOTT.

MAXINE WATERS.

WILLIAM D. DELAHUNT.

BARNEY FRANK.

JERROLD NADLER.

MELVIN L. WATT.

SHEILA JACKSON LEE.

Æ