Democracy Avoidance in Tax Lawmaking

Abstract

The Tax Cuts and Jobs Act was the most significant tax law in more than three decades, but the strategy for getting it enacted included a variety of maneuvers to avoid public scrutiny. As a result, many taxpayers did not know how they would be affected until they filed their own tax returns more than a year later. This Article identifies this lack of transparency as part of a persistent pathology of avoiding and constraining democratic inputs and responsiveness in U.S. federal tax lawmaking. Indeed, some scholars and policy makers have sought to channel tax lawmaking away from democratically grounded decisions and towards prescribed outcomes, justifying these moves with strands of public choice theory that are expressly critical of democratic decision making. I critique this democracy avoidance approach to tax lawmaking, and make the case that tax law should be a product of mechanisms that provide greater transparency, accountability, and responsiveness to advance democratic legitimacy.

I propose four reforms to tax lawmaking in the U.S. Congress to make resulting tax laws more democratically legitimate. One proposal, for example, is to require Congress to consider (and publicize) precisely how a proposed change in tax law is expected to affect different example taxpayers, including taxpayers from each congressional district. This would allow actual taxpayers observing the lawmaking process to anticipate their treatment under a proposed law, and in turn demand greater responsiveness to their real interests from their representatives. Other proposals build on this approach, calling for drastically more transparency and a radical—but, I argue, achievable—reworking of the types of analysis produced in the federal tax legislative process for consumption by non-experts.

Keywords: Tax, Tax law, legislative process, lawmaking