Paul L. Caron

Wednesday, May 29, 2024

McMahon: Moore Support For Tax Exceptionalism—Severability In Reconciliation

Stephanie Hunter McMahon (Cincinnati), Moore Support for Tax Exceptionalism: Severability in Reconciliation:

Moore v. United States provides the impetus to examine the likely result if the Supreme Court selectively invalidates a revenue-raising provision enacted as part of reconciliation legislation. When Congress uses the reconciliation process, it limits its own power to consider proposals that surpass a stated revenue threshold, and any tax that is included is a fundamental component of the resulting congressional compromise. Recognizing this self-imposed rule is critical because, under the severability doctrine, legislative intent is a necessary inquiry for determining whether an unconstitutional provision can be severed from a statute. Consequently, one of two results will occur if the Supreme Court declares the tax at issue in Moore unconstitutional. Either the Court recognizes that the elimination of a revenue-raising provision of the 2017 Tax Cuts and Jobs Act nullifies the legislative agreement necessary for the bill’s passage and the entire statute falls or, if the Court fails to strike the statute, Moore fundamentally changes the doctrine of severability by cleaving legislative intent from its consideration of whether or not to sever. 

Thus, even if Moore is decided on narrow grounds, the jurisprudence of severability forces the Court to situate this tax increase within the budget reconciliation process; and doing so shows that tax provisions, at least those framed as revenue raisers in reconciliation bills, remain a little exceptional. Congress is clear in its intent that they are necessary for reconciliation.

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