Paul L. Caron
Dean



Friday, August 14, 2020

NY Times: Can Trump Cut Taxes Without Congress?

New York Times, Advisers Consider Whether Trump Can Cut Taxes Without Congress:

White House officials have explored whether President Trump has the power to sidestep Congress and unilaterally cut a broad swath of taxes as the president looks for ways to inject fuel into a slumping economy, according to a senior administration official.

While such a move is not imminent, Mr. Trump’s advisers have sought legal guidance from White House lawyers about whether the president has the authority to eliminate certain taxes, including income and business taxes, without the approval of Congress.

The discussions about how much power the president can wield over tax policy come as Mr. Trump prepares to delay payroll taxes for some workers until the end of the year. But unlike that move, which simply defers what workers owe until some point in the future, the White House is discussing whether the president can actually eliminate taxes owed by businesses, workers and investors.

The legality of such a move is dubious, but Mr. Trump has not been shy about pushing the boundaries of his authority. The Constitution gives Congress the power to set tax policy and lawmakers would most likely object to any attempt to bypass their authority. The executive branch does have wide latitude, however, to enact regulations regarding tax collection and it can defer taxes, as it did with the payroll tax and with the three-month delay of the traditional April 15 tax filing deadline.

“They clearly can delay pretty much anything for a year,” said Daniel Hemel, a tax law professor at the University of Chicago.

But Mr. Trump, who faces a tough re-election campaign amid a sputtering economy, has made clear that he wants to do much more than just delay taxes — and that another big tax cut will be a central part of his pitch for a second term. Getting such a tax cut through Congress would be tough, particularly if Democrats retain control of the House.

“We’re looking very seriously at a capital-gains tax cut and also at an income-tax cut for middle-income families,” Mr. Trump said at the White House on Monday evening. “We’re looking at expanding the tax cuts that we’ve already done, but specifically for middle-income families, and you’ll be hearing about that in the upcoming few weeks.”

Mr. Trump and his advisers have regularly considered unorthodox tax maneuvers that they believe would spur economic growth, including reducing the taxes that investors pay on profits earned from selling assets like stocks or bonds. Mr. Trump has long said he has the authority to reduce so-called capital gains taxes by indexing those profits to inflation, which would essentially reduce both the gains and the tax owed on the sale of assets.

That position has been championed by Pat Cipollone, the White House chief legal counsel, who has presented an expansive view of the Treasury Department’s power to dictate tax policy through regulation. But Treasury Secretary Steven Mnuchin, who oversees the Internal Revenue Service, has adopted a more conservative approach as to how much can be done without congressional approval. The White House and Treasury Department ultimately determined last year that indexing capital gains to inflation would have affected a wide range of assets, creating unhelpful complications and costs. ...

One issue being debated within the White House is whether anyone would have legal standing to sue if the president did use executive action to halt tax collection on a more permanent basis. Tax scholars and some of Mr. Trump’s advisers have said that it would be difficult for a party to claim that they were harmed by a move that saves them money, even if it costs the federal government revenue.

Mr. Hemel said that if Mr. Trump wanted to push the bounds of his power to slow tax collection, he could in theory also direct I.R.S. staff not to come to work or reassign auditors to other tasks. More realistically, he said, Mr. Trump could temporarily have the Treasury Department adjust the amount of income tax that is withheld from workers’ paychecks to give them more take-home pay.

“This gets into a deep question of where executive power comes from and what its limits are,” he said.

https://taxprof.typepad.com/taxprof_blog/2020/08/ny-times-can-trump-cut-taxes-without-congress.html

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Comments

Call it Deferred Action on Collection Activity or DACA. Later, Chief Justice Roberts writes a majority opinion explaining why a future President can't do away with the indefinite deferral of tax collections.

Posted by: Micha Elyi | Aug 14, 2020 2:44:19 AM

Remember that whole checks and balances thing in the constitution? Oh yeah, neither do I.

Posted by: Anon | Aug 14, 2020 5:40:44 AM

Who’s gonna have standing to complain? This is a reverse DACA. Deal with it. Repay lawlessness with lawlessness. Roberts will do what’s popular, rather than call balls and strikes.

Posted by: Anon | Aug 14, 2020 10:11:33 AM

@Micha Elyi: We’re birds of a feather! Your life must be superb like mine.

Posted by: Anon | Aug 14, 2020 4:28:11 PM

Quote: The Constitution gives Congress the power to set tax policy and lawmakers would most likely object to any attempt to bypass their authority.

Oh, I don't know. If the Supreme Court can declare that Obamacare, which wasn't passed by Congress as a tax, is in fact, a tax, then I can't see why the president can't flip that argument around, declaring that something that looks like a tax (in this case a cut) isn't.

You want sloppy law-making in one area, yah gotta live with sloppy law making in other areas. And I suspect that those who purred with contentment over that Obamacare decision will howl with fury over what Trump may do.

Posted by: Mike Perry | Aug 17, 2020 6:32:12 AM

Yup, Mike Perry. Gotta fight fire with fire. That’s the only way liberals will understand.

Now if we could only demonopolize the media to get rid of the left’s double standards...

Posted by: Anon | Aug 18, 2020 2:14:38 PM