AuthorWallace, Clinton G.

Introduction 273 I.Why Democracy? 281 A. Debate Among Democratic Theorists 281 B. Features of Democratic Decision Making 283 II.Democracy Avoidance in Tax Lawmaking 290 A. Avoiding Democracy Pre- and Post-Enactment 291 B. Broad Delegations to Independent Experts 293 1. An Independent Commission to Write Tax Law 300 2. Public Choice as Anti-Democratic Justification 306 III. Proposals to Enhance Democracy in Tax Lawmaking 315 A. Analysis of Actual or Typical Taxpayers 316 B. Democratic Framework Legislation 320 1. Engaging Unlikely Participants 321 2. Sponsorship, Support and Reason- Giving 325 3. Taking Action on a Regular Basis 330 C. What to Expect from These Reforms? 332 Conclusion 336 INTRODUCTION

When the Tax Cuts and Jobs Act was signed into law in December 2017. it was the most significant amendment to U.S. federal tax law in more than three decades. (1) The obvious question for taxpayers across the country was: How will it affect me? Surprisingly, the answer for most taxpayers was that they had no idea--to find out if they were better or worse off, individuals and businesses generally had to wait for more than a year until they actually prepared and filed their first returns under the new law. (2) That meant that they did not really see how they were affected until months after election day for many of the members of Congress who advocated for and against the legislation. (3) Transparency and accountability, both fundamental to democratic governance, (4) were sorely lacking. (5)

Many of the process-based objections to the Tax Cuts and Jobs Act carried the taint of p rtisanship--Democrats who opposed the bill complained, while Republicans celebrated. (6) But just eight years earlier the partisan sides were flipped as Republicans lodged process complaints about the enactment of another hugely significant piece of tax legislation, the Affordable Care Act. (7) There were some similarities between the two--each was the product of significant out-of-public-view wrangling, each included special provisions that benefitted powerful special interests, and each was enacted using the same distinctive procedural mechanisms that help to avoid extended public debate. (8) Hence, the processes in each case gave their critics fodder for complaints on democratic process grounds. (9)

American expectations of democratic control are arguably at their zenith when Congress exercises its constitutional power to tax (think: "no taxation without representation"). (10) But, as experienced recently, modern tax lawmaking in the United States can feel divorced from the conduct of democratic governance. (11) This perceived democratic deficit is not incidental. Rather, among tax policymakers and scholars, America's most democratic institutions and procedures are commonly approached as obstacles to implementing desired tax policies. (12) At the federal level, democratic barriers are perceived to be erected in the halls of Congress, with its byzantine committee process, burdensome procedural hurdles, constant myopic focus on elections and reelections of members, and attentiveness to interest group lobbyists. (13) To be sure, some of these features are anti-democratic by constitutional design or by political evolution, including bicameralism, the skewed representation of small states in the U.S. Senate, and legislative practices particularly in the Senate that allow a minority to shape the legislative agenda. (14)

But some commentators have responded to the current state of fiscal policymaking by advocating for mechanisms that would further avoid or constrain democratic forces. This Article identifies a persistent undemocratic impulse in tax policymaking--an interest in byp ssing democratic decision making to get to preferred policy outcomes--that has given rise to a host of democracy avoidance proposals. These proposals would work to enact desired tax policies by limiting who participates in tax policymaking, or by favoring certain participants in the process or certain normative perspectives. (15) One proposal would insulate tax policymaking from political pressures by delegating tax rate setting authority to an independent body like the Federal Reserve Board of Governors. Another would outsource new tax reform legislation to a panel of experts, in a posture so that their proposal would presumptively become law unless blocked by Congress. (16) These sorts of approaches to tax lawmaking find support in public choice scholarship, which uses economic analysis to evaluate collective decision making (17) and which has become a preferred lens among some tax scholars for analyzing the political economy of taxi nd other types of legislation. (18)

This Article responds to the tendency of democracy avoidance in federal tax lawmaking in two respects. First, I place the phenomenon of democracy avoidance in a broader, ongoing debate among democratic theorists. (19) Some democratic theorists argue that democratic decision making has its own moral force, regardless of how one might evaluate substantive decisions. From this perspective, democracy as a mode of decision making should be preferred and privileged even if the democratically chosen policies are undesirable in some respects. In short, as Amy Gutmann succinctly explained in an argument supporting a deliberative model of democratic decision making, "democracy is valuable for far more than its capacity to achieve correct outcomes." (20)

In contrast, the democracy avoidance proposals identified in this Article are aligned with another strain of democratic theory, which posits that outcomes are the most important aspect of governance. (21) From this perspective, democracy is preferable if it allows a society to make the best decisions for its community members; but, equally, if democracy does not deliver good results, other forms of decision making might be deemed preferable. By privileging specific tax policy outcomes that can be arrived at by insulating decision making from democratic forces, some of the advocates of the strategies described in this Article have placed tax policy as an issue that supersedes commitments to democratic governance. (22) This Article seeks to introduce tax scholars and policymakers to this debate, (23) and make clear that democracy avoidance proposals implicitly embrace the tradeoff of less democratic input in exchange for "better" tax policy outcomes. (24)

Second, I offer several proposals to refocus tax lawmaking to value and benefit from democratic engagement (and to produce democratically legitimate tax policies) rather than avoiding democratic decision making and circumvent democratic institutions. While these proposals are a response to the democracy avoidance proposals critiqued earlier in the Article, they also could be implemented in ways that are consistent with some of the ideas that I critique--some of those specific proposals are not mutually exclusive with democratically legitimate decisionmaking. (25) This approach places democracy as a central concern in tax lawmaking, not because of the resultant policies--although there is interesting empirical and theoretical work supporting the idea that more democratically responsive policies may be better policies (26)--but rather because it is important that community members perceive tax policies to be democratically legitimate. (27) This Article seeks to shift tax policy debates to appreciate the value of democratic decision making to the tax system. The first volley, presented here, is to recommend reforms to the U.S. Federal tax lawmaking process to reorient it towards (rather than away from) democratic responsiveness. (28)

The proposals, laid out in Part III, include the following: to counteract the uncertainty most taxpayers experienced with the Tax Cuts and Jobs Act that is a threat with any complex tax legislation, Congress should formally require, as p rt of the legislative process, detailed and publicly accessible analysis of how specific provisions affect typical taxpayers. (29) This reform would rely on Congress's professional tax staff (housed in the Joint Committee on Taxation) to analyze the expected changes in tax liability for various typical taxp yers in each congressional district--perhaps the median individual filing as a single taxpayer, the median family of four, a small service-providing business, typical taxp yers from different racial groups or of different genders, and so on. Thus, before a congressperson voted on final legislation, he or she would receive a district-specific report (which would also be made public) showing the effects on variations of common taxp yers who are his or her constituents, based on demographics of the district and models of taxp yer responses. (30)

The Article proceeds as follows: Part I introduces the debate among democratic theorists about how to value and justify democratic decision making, and whether and how to account for policy outcomes. This part also briefly introduces some features of democratic decision making that public choice theory generally sidelines, but that I argue should come to bear on tax policymaking institutions. Part II uncovers and examines the strain of democracy avoidance in tax lawmaking and tax scholarship, which I argue is rooted in public choice theory. In Part III, I propose four specific reforms that can bolster democratic legitimacy in federal tax policymaking in accordance with the framework. Part III also begins to consider what the vision of democratic tax policymaking presented here might mean in terms of substantive tax policy.


    1. Debate Among Democratic Theorists

      Among democratic theorists, there is a long-running debate about how to justify democracy--in short, what is democracy good for? The justification matters in practical terms, as the discussion in Part III of this Article will show. If democracy is a moral imperative--that is, there are rules and norms of decision making that...

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