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Abstract:
This Article provides an overview and critical analysis of sunset provisions in the tax code, and through examination of the political pressures that led to their striking transformation, also reveals disturbing points of vulnerability in the legislative process. It concludes that, contrary to one of the primary justifications for the enactment of sunset provisions - that these provisions reduce the influence exerted on lawmakers by interest groups - sunsets may instead further politicize the legislative process and, due to their mechanics, increase the likelihood of inefficient social outcomes. The history of sunset provisions in tax legislation also illuminates the complex, multidirectional, and often dramatic interaction between the budgetary process and other political ends. Additionally, it suggests that, when budgetary and tax legislative processes intersect, budgetary concerns supplant debate over and achievement of traditional tax policy goals.

First, this Article explores how sunset provisions in recent tax legislation serve to avoid checks on legislative behavior in the budget process and, post-enactment, further affect the budget process in myriad ways. Next, it demonstrates that the continual termination of certain tax benefits and burdens creates opportunities for politicians to extract votes and campaign contributions from those parties who are affected by the threatened provision. And, because lobbying on behalf of legislation requires significant resources, sunset provisions reward well-connected and well-resourced players, an advantage which increases across time, in the competition for the extension of sunsetted legislation. Accordingly, the availability of sunset provisions may shape tax legislation to benefit only those groups that have the concentration of interests sufficient to motivate such long-term rent extraction. Finally, through analysis of the "kill the code" proposals advocating the sunset of the entire tax code and of the fallout from the use of sunsets in recent tax acts, this Article revisits the democratic rationales for sunsets. Concluding that the inherent attributes of these provisions do not impart legislative flexibility or ensure efficient, restrained lawmaking - and that they instead lend themselves to all the aforementioned pathologies - this Article casts doubt upon the legitimacy of sunset provisions as legislative tools.

Taxation, Tax Law, Sunset, Sunset Provisions, Political Economy, Rent Extraction, Rent Seeking, Interest Group, Budget

Abstract:
In the wake of recent scandals involving lobbying and special interest spending on Capitol Hill, each of the houses of the 110th Congress adopted unprecedented legislative, procedural rules that require broad disclosure of spending earmarks and tax provisions that benefit special interests. Recognizing the strong incentives for members of Congress to hide special interest deals within complex tax and spending legislation and through ambiguous drafting, scholars have long sought to bring such deals into the open in order to promote congressional deliberation and public accountability. Although the new reforms appear designed to address that laudable goal, the efficacy of the rules is doubtful given their self-referential status; that is, they rely upon the foxes to govern administration of the henhouse.

This Article begins by describing various tactics legislators have used or will likely use to evade the new disclosure regime, as well as deficiencies in the regime's design. The piece then explores the value of enlisting a force external to Congress as a response to the inherent weakness of endogenous, procedural rules. It concludes that although direct judicial review of legislation for compliance with the rules likely raises constitutional difficulties, judicial involvement through statutory interpretation offers a potential solution. Specifically, when interpreting ambiguous legislation that falls within the ambit of the disclosure rules, judges should assume the rules have functioned correctly; in other words, if no special interest beneficiary has been disclosed, judges should assume that none was intended and interpret the ambiguous provisions accordingly. The proposal thus strengthens congressional adherence to the rules by imposing costs upon defecting lawmakers, as well as the special interests they support. It does so, however, without offending the constitutional mandate that lawmakers have purview over such rules. Hence it offers a counterpoint to the entrenched view that Congress cannot truly precommit itself through procedural rules. Furthermore, because this method of statutory interpretation is guided by Congress's own remedy to the problem of special interests, it differs in an important respect from prior scholarly proposals for narrow interpretation of special interest legislation, making it more resilient to the critique that the interpretive mode exceeds the judicial function.

earmark, special interest, lobbying, legislative rules, good government, statutory interpretation, tax, spending, budget

Abstract:
Recently issued final regulations under sections 367(b) and 1248 clarify the amount of earnings and profits taken into account by some U.S. shareholders upon an otherwise tax-free inbound exchange of the stock or assets of the parent of a tiered group of controlled foreign corporations. This article explains the rationale underlying the clarification, which was not articulated in its issuance, and endorses it from both technical and policy perspectives.

taxation, international taxation