Reconciling Congress to Tax Reform

Tax law constantly churns, somehow avoiding the molasses of the legislative process. A common critique levied against tax law is that there is too much legislative action, resulting in ever-changing rules. This Essay argues that, in reality, congressional gridlock, the theme of the symposium for which this piece is written, is ever-present in the tax context. Although Congress increasingly enacts a high volume of temporary, patchwork tax provisions, it fails to accomplish fundamental tax reform, which is a necessary part of any solution to the looming budgetary crisis. As a result, recent proposals to enact tax reform through an existing fast-track framework, the reconciliation process, or through an entirely new process aimed specifically at tax reform, have gained popularity. Despite the growing flexibility of existing fast-track processes, however, their truncated timelines and production of polarizing, unstable policies are antithetical to fundamental tax reform. A simple majority's ability to shape such processes to its ends also threatens the precarious Senate truce over the filibuster. From an institutional perspective, this nontransparent, piecemeal approach to filibuster reform destabilizes Senate practices and contributes to partisan politics that make the achievement of tax reform and other policies even more remote. For these reasons, existing fast-track processes should primarily be relegated to meeting annual deficit targets once tax reform is achieved. Learning from the undesirable features of these processes, this Essay proposes a set of framework procedures that have the potential to assist Congress in achieving fundamental tax reform over the next two years. In the near-term, a commitment to such a process may also help bridge impasses over future budgetary and fiscal conflicts. INTRODUCTION I. THE WAYWARD PATH OF RECONCILIATION A. Background of the Budgetary Process: The Congressional Budget Act and the Budget Resolution B. The Origins of Reconciliation C. Reconciliation as a Deficit-Reducing Tool D. Reconciliation as a Catalyst E. Reconciliation as a Deficit-Increasing Tool F. Reconciliation in Flux 1. The Continued Controversy over Tax Cuts 2. The Debate over Health Care 3. Fast-Track Tax Reform II. RECONCILING TAX REFORM A. The Need for Fundamental Tax Reform B. Truncated Timelines as an Obstacle to Reform C. Immoderate, Unstable Policy 1. The Polarizing Influence of the Reconciliation Process 2. Reconciliation as Destabilizing 3. The Contested Scope of Fast-Track III. THE FUTURE OF FAST-TRACK, TAX REFORM, AND THE FILIBUSTER A. A Framework for Tax Reform B. Implications for the Filibuster CONCLUSION INTRODUCTION Congressional gridlock, the theme of this symposium, has long been a part of American politics. (1) Central features of constitutional design and the legislative process, such as bicameralism and the filibuster, encourage it. Yet escalating partisanship and the heightened use of the filibuster, some argue, has now crippled Congress, resulting in a new and troubling degree of political stalemate. (2) Tax law, on the other hand, constantly churns, somehow avoiding the molasses of the legislative process. (3) A common critique levied against tax law is that there is too much legislative action, resulting in ever-changing rules. This Essay argues that, in reality, gridlock is ever-present in the tax context. Although Congress increasingly enacts a high volume of temporary, patchwork tax provisions, it fails to accomplish fundamental tax reform, which is a necessary part of any solution to the looming budgetary crisis. (4) Simply put, there is too much of the wrong kind of tax legislative action. Counter-intuitively, congressional gridlock can exist in an area of high legislative activity. …