Against Anti-Tax Exceptionalism

Abstract

This paper examines the arguments found in what has become known as the anti-tax exceptionalism literature. That literature seeks to apply the rules of administrative law to tax procedures. The core claim is that the procedures used by the Internal Revenue Service and the Treasury routinely violate the requirements of administrative law. Secondarily, that literature argues that this is normatively bad: the Treasury and Internal Revenue Service should not be treated differently from other administrative agencies because the tax system is not exceptional. Promoting the goals of administrative law, that literature argues, requires that the tax system conform to standard procedures. This paper addresses both claims. First, it shows that the procedures used by tax administrators substantially comply with administrative law requirements. The central doctrinal claim of the anti-tax exceptionalism literature is incorrect. Second, the paper considers normative concerns of the anti-tax exceptionalism literature, focusing on three: (i) uniformity versus exceptionalism, (ii) information flows, and (iii) accountability. Regarding uniformity, even assuming that current tax procedures do not comply with administrative law requirements, uniformity would not be a desirable goal. Administrative law is, and should remain, flexible, adapting to the needs of widely varying agencies. Moreover, the goal of reforms to tax procedures should be to improve the operation of the system, not conform it to procedures used by agencies that operate in different on texts. The framing of uniformity versus exceptionalism misstates the issue. Regarding information lows and accountability, the remedies suggested by the anti-tax exceptionalism literature, notably greater use of notice and comment procedures and more supervision of tax administration by courts, are not good ways of meeting those goals. The paper offers alternative, better methods of improving information flows and accountability. The paper concludes that we should reject the claims of the anti-tax exceptionalism literature on both positive and normative grounds.