TaxProf Blog

Editor: Paul L. Caron
Pepperdine University School of Law

Tuesday, January 3, 2017

Kysar:  Trump’s Tariff Plan Is Unconstitutional — Tariffs (Like Taxes) Must Originate In The House

New York Times op-ed: Is Trump’s Tariff Plan Constitutional?, by Rebecca Kysar (Brooklyn):

Among the first steps being floated by the incoming Trump administration is a 5 to 10 percent tariff on imports, implemented through an executive order. It’s the sort of shoot-first, ask-questions-later action that President-elect Donald J. Trump promised during the campaign. It’s also unconstitutional.

That’s because the path to imposing tariffs — along with taxes and other revenue-generating measures — clearly begins with Congress, and in particular the House, through the Origination Clause. When presidents have raised (or lowered) tariffs in the past, they have tended to do so using explicit, if sometimes wide-ranging, authority from Congress.

The founders thought about this issue a lot: After all, taxes, as every grade schooler knows, fueled the colonies’ push for independence. So they wrote the Constitution, and its Origination Clause, to give the taxing power to the part of government that is closest to the people, thereby protecting against arbitrary and onerous taxation. ...

Mr. Trump would not be the first president to suggest raising revenue by executive action. Last year, President Obama, long criticized for his expansive use of executive authority, eyed unilateral actions on tax matters, with Hillary Clinton and Bernie Sanders voicing support. The taxes at issue then, however, were predominantly to close corporate loopholes. These loopholes were either created by the Treasury or implicated regulatory powers delegated to the agency by Congress, and thus were appropriately in the executive’s wheelhouse.

Of course, Mr. Trump doesn’t have to act unilaterally; he has Republican majorities in both chambers that are eager to work with him. One option would be to push for a border adjustment tax, a proposal already being floated in the House as part of comprehensive tax reform, which would forbid tax deductions for imports and exempt exports from taxes.

A border adjustment tax is a far better option than tariffs. It would eliminate incentives in the current tax system to manufacture abroad, and to shift income abroad. Unlike a tariff, it aims to be trade neutral, with any changes in consumer pricing of imports and exports being offset by a rise in the dollar. And with strong support in the House, it could be enacted in full compliance with the Origination Clause, lending it legitimacy that a unilateral tariff would lack.

Mr. Trump doesn’t need to go it alone in strengthening the domestic economy. He just needs to have the patience to do it in accordance with the Constitution.

http://taxprof.typepad.com/taxprof_blog/2017/01/kysartrumps-tariff-plan-is-unconstitutional-tariffs-like-taxes-must-originate-in-the-house.html

Congressional News, Tax | Permalink

Comments

Trump should just claim it isn’t a tax, it is a “penalty” and he is imposing the penalty under the taxing power. Since it isn’t a “tax” it doesn’t have to originate in the house. Thanks Chief Justice Roberts for the mental gymnastics you contorted yourself in to uphold Obamacare in National Federation of Independent Business v. Sebelius.

Posted by: John.Citizen | Jan 3, 2017 1:48:46 PM

The NY Times still hasn't figured Trump out, even though he's lived in their city for virtually all of his life. The NY Times is giving him precisely what he wants—publicity. He stays in the news while Obama fades.

Posted by: Michael W. Perry | Jan 3, 2017 6:11:23 PM

"All Bills for raising Revenue shall originate in the House of Representatives . . . ." Is a sumptuary tariff--intended to discourage or provide a financial disincentive to the importation of foreign manufactures–a “Bill[] for raising Revenue?” Maybe not, but even so it would seem a tax, whether intended to raise revenue or no, must be enacted as a law; it cannot be imposed by executive order.

Posted by: Publius Novus | Jan 4, 2017 9:10:28 AM