TaxProf Blog

Editor: Paul L. Caron, Dean
Pepperdine University School of Law

Wednesday, December 27, 2017

Waiting Until Jan. 3 To Sign Tax Reform Would Not Have Delayed A PAYGO Sequestration

Yale Notice & CommentFollowing up on my previous posts:

Sam Wice, Waiting Until January 3 to Sign Tax Reform Would Not Have Delayed a PAYGO Sequestration, Yale J. on Reg.: Notice & Comment (2017):

In an earlier post, I suggested that Republicans should wait until January 2018 to pass tax reform so that they can delay a Pay-As-You-Go (PAYGO) sequestration.  President Trump appears to have taken this idea to heart and decided that if Congress did not waive the PAYGO sequestration, he would wait until January 3, 2018 to sign tax reform into law.  Although in a Festivus miracle Congress waived the PAYGO sequestration, for future reference I explain here why President Trump could not have delayed a PAYGO sequestration by merely waiting until 2018 to sign tax reform into law.  The plain meaning of PAYGO and prior Office of Management and Budget (OMB) practice indicated that no matter when President Trump signed tax reform, it must still have been included in the 2017 PAYGO annual report, which would have triggered an immediate sequestration. ...

Despite President Trump not having the power to delay a sequestration by waiting to sign PAYGO, he had two gimmicks he could have used to avoid or delay a PAYGO sequestration.  First, as I previously wrote, President Trump could have ignored the Congressional Budget Office’s (CBO) estimate and instead used a Department of Treasury estimate, which claims that the economic growth from tax reform would pay for its costs.  Although PAYGO generally requires OMB to use CBO’s estimate, because the conference report for tax reform did not include a required PAYGO statement, PAYGO allowed OMB to determine the cost of tax reform for PAYGO purposes.  If OMB were to conclude that tax reform did not increase the deficit, PAYGO would not require a sequestration.  Second, OMB could have issued its 2017 PAYGO annual report immediately after the 2017 session of Congress ended, but before President Trump signed tax reform into law.  If tax reform were not yet law, it could not be included in an up-to-date scorecard.

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Would the bill have been subject to a pocket veto if not signed prior to Jan 3?

Posted by: Joe Bob | Dec 28, 2017 9:21:05 AM