The Art of the (Budget) Deal

By Daniel Hemel and David Herzig

Who Holds the Trump Card on Reconciliation?

Republicans on Capitol Hill are reportedly planning to use the filibuster-proof budget reconciliation process to repeal the Affordable Care Act and overhaul the tax code. Against that background, Sam Wice says that “the most powerful person in America” in 2017 will be Senate Parliamentarian Elizabeth MacDonough, the nonpartisan official who will “determine” how much of their agenda Republicans can pass through reconciliation. This, of course, is an exaggeration: like it or not, the most powerful person in America in 2017 will be Donald J. Trump, who will wield all the power of the imperial presidency. But Wice’s post helpfully directs our attention to the budget reconciliation process, the rules of which quite likely will determine whether the Republican leadership on Capitol Hill can repeal the ACA and reform the tax laws.

Yet while one should not underestimate the importance of reconciliation, one should also not overestimate the power of the Parliamentarian in the reconciliation process. As a formal matter, the Parliamentarian’s role is advisory; and as a practical matter, the Parliamentarian has little say over significant aspects of reconciliation. Other actors—most notably, Senate Budget Committee Chairman Mike Enzi (R-Wy.)—wield at least as much influence as the Parliamentarian. Most importantly, Enzi—not MacDonough—will determine whether the provisions in any reconciliation bill violate various rules against deficit-increasing legislation being passed via reconciliation. And unlike the Parliamentarian, the Budget Committee Chairman is very hard to fire.

Reconciliation measures can begin in either or both chambers. However, since the ultimate vote on the budget measure occurs in the Senate, we’ll focus on the Senate side of the reconciliation process for purposes of this discussion. On the House side, the Rules Committee Chair and the Budget Committee Chair will wield outsized influence as well. We expect Pete Sessions (R-Tex.) to stay on as House Rules Committee Chair; as for the House Budget Committee Chair, the race is on for a replacement to Tom Price, the Georgia Republican recently tapped as Trump’s Health and Human Services Secretary.

To understand why the Budget Committee Chair is as powerful as he is, a bit of background on reconciliation may be helpful. Continue reading “The Art of the (Budget) Deal”

Revisiting Presidential Tax Return Disclosure

imjustabillBy Sam Brunson

At this point, it’s pretty clear that the norm of presidential candidates (and, presumably, presidents) releasing their tax returns to the public is dead and buried. Sure, it’s been on life support for some time now (I mean, a significant number of candidates in this race released weak disclosures at best), but Trump’s election without having ever released his returns clearly demonstrates that flouting this particular norm is not a bar to election.

On election day I wrote that Congress should require disclosure from presidential candidates (and, at this point, I would expand that to sitting presidents and vice-presidents), and provided a handful of ideas about how such legislation should look. But my previous post suffers from one significant weakness: I assumed that disclosure was a good thing, without explaining why. Continue reading “Revisiting Presidential Tax Return Disclosure”

Federal Hall and Taxes

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By Sam Brunson

I spent my Thanksgiving in New York this year, ostensibly to see the Macy’s Thanksgiving Day Parade.[fn1]

Before and after Thanksgiving, my family and I went to various National Memorials in New York. (My Hamilton-obsessed kids were thrilled to make a pilgrimage to Hamilton Grange, even if they haven’t actually seen the musical yet.)

And on Friday, we went to Federal Hall.[fn2] And, like our visit to Alcatraz over the summer, I was surprised (and pleased) to find a tax connection.  Continue reading “Federal Hall and Taxes”

Trump’s Emolument Tax Problem

By: David J. Herzig (photo from Vox.com)

When a businessperson who runs many active businesses runs and wins for President, clearly there would be many second order problems associated with inherent conflicts between running corporations and the country.  When President-elect Trump won the office, many of these conflicts have bubbled to the surface.

For example, to avoid a conflict of interest between benefiting one’s personal holdings and the Country’s best interests, assets of the President are placed in a blind trust.  As many have pointed out, this works only when the President does not know the nature of the holdings.  Putting existing businesses into a blind trust does not stop the President for knowing the underlying assets of the trust.  The conflict is not ameliorated by trust structure.  Nor, by the way, would it be fixed if President elect Trump divests but the family continues to own the assets.

For this post, I want to consider the current discussion related to the blind trust problem called emolument.  Many prior to the election probably have not heard much about the idea of emolument.  Larry Tribe and others believe that President elect Trump’s ownership of active business assets, even in a blind trust, would violate, Article I, Section 9, Clause 8 of the Constitution which prevents the President from accepting “presents” or “Emolument” from foreign states.  Others, like Andy Grewal, do not believe that mere ownership of assets triggers the Emolument Clause.

If the solution to the blind trust and Emolument Clause problems is a divesture of President elect Trump’s assets as many advocate, this would trigger (to borrow a catch phrase of President elect Trump’s) huuuuuuge tax problem.

Continue reading “Trump’s Emolument Tax Problem”

Letter Urging the Senate to Vote on U.S. Tax Court Nominations

Over 50 tax law professors have signed a letter (available here) urging the U.S. Senate to vote on U.S. Tax Court nominees Elizabeth Ann Copeland and Vik Edwin Stoll. Unfortunately, these nominations may not get much attention in the wake of the election. However, the signatories (myself included) are urging the Senate to schedule a vote on these nominees, both of whom were favorably reported out of the Senate Finance Committee over a year ago. Danshera Cords has more on Procedurally Taxing.

Podcast: Require Candidates to Disclose Tax Returns?

By: Philip Hackney

On this morning where we have a newly elected president, Sam Brunson and I discussed in a #CookingtheBooks Podcast whether Congress should pass legislation requiring a presidential candidate to disclose some number of years of tax returns in order to run for office.

Sam argued here on the blog a couple of days ago that this should be a requirement. I agree with him, but neither of us believe the failure to disclose those returns was a critical factor in a Trump win. We just think it tells the American people something important about the person who will be leading the country.

We also discussed a little bit about what tax policy might look like in a Trump administration. Sam, ever the optimist, is worried but not terribly about Trump tax policy. Feeling a bit pessimistic myself this morning, and having lived through 8 years of Governor Jindal in Louisiana and very afraid that this will lead to enormous deficits.

In the end, we look very much forward to critiquing Trump tax policy as much as we would have critiqued Clinton tax policy.

Anyway, give the podcast a listen and let us know what you think. We enjoy the medium as another channel for discussing tax policy.

Donald Trump —> Mandatory Tax Return Disclosure

So it looks like Trump wasn’t lying when he said he wouldn’t release his tax returns—it’s Election Day,[fn1] and we still haven’t seen them.[fn2]

As has been endlessly pointed out, every Republican nominee for president since Ronald Reagan has released his tax returns, and most nominees since the 1970s have. Trump, in refusing to release his returns, is flouting a long-standing norm.

The thing is, though, he’s run a campaign largely based on flouting norms. And it’s not like the norm was aging well, anyway. Sure, there were candidates with exemplary releases. But there were candidates—on both sides of the aisle (I’ve got my eye on you, Bernie Sanders!) who did less than the bare minimum, releasing only one or two years’ worth of returns, and only really releasing their 1040s. (Several months ago, I graded candidates’ tax return disclosures here.)  Continue reading “Donald Trump —> Mandatory Tax Return Disclosure”

Cooking The Books Podcast on Trump’s Taxes

By: David J. Herzig

Today Pulitzer Prize winning journalist, David Cay Johnston, Phil Hackney, and I got together for a 30 minute podcast discussion regarding the recent NY Times follow-up article about Mr. Trump’s $916 million tax loss (“NOL”).

Here is link if you missed hyper-link above: http://share.sparemin.com/recording-5131

The topics ranged from the current tax reporting regarding Mr. Trump’s 1990s tax returns to the Trump Foundation to potential criminal sanctions against Mr. Trump.  It was fantastic to be a part of and I hope everyone listens.

Continue reading “Cooking The Books Podcast on Trump’s Taxes”

On Trump and Tax Opinions

Every so often, Brunson and Herzig carve out a day to swap long-winded emails, then those emails are published on the Internet.

Sam-

trump-returnI am sure you have seen by now the NY Times story about Donald Trump’s purported tax positions from the 1990.  The NY Times has been following up on a story they originally published about a month ago reporting that Mr. Trump reportedly had a $990 million net operating loss (“NOL”).  After the story, there was rampant speculation about the loss.

If Mr. Trump used exclusively all of his money to buy properties or casinos or whatever and those assets were used in a trade or business and those assets went down in value, Mr. Trump would suffer a real economic loss.  This real economic loss would then generate a real tax loss.  At the time, most tax experts thought that Mr. Trump may have used some of his money but all used loans.  I think I was quoted as saying this was likely given his prior statements about being the king of debt. Continue reading “On Trump and Tax Opinions”

Does the IRS Permit Churches to Endorse Candidates Through an “Alternate Channel”?

By Benjamin Leff

While we’re all waiting for one of my co-bloggers to say something smart about this, I thought I’d say a little more about campaign intervention by 501(c)(3) organizations.

Brian Galle asks by tweet, ” can we have a cite for the claim that a church cannot electioneer through a c(4)?”  In a prior post, I said, “The short answer is that IRS guidance on campaign intervention differs from its guidance on lobbying because it denies 501(c)(3) organizations who want to endorse candidates the ‘alternate channel’ that is provided for lobbying. And therefore current guidance is unconstitutional.” But I didn’t explain that claim. Furthermore, the D.C. Circuit Court seems to disagree with me, since it stated in the leading case on campaign intervention by a 501(c)(3) organization: “the Church can initiate a series of steps that will provide an alternate means of political communication that will satisfy the standards set by the concurring justices in Regan.”  So, here’s my justification for claiming that the IRS’s guidance is insufficient: Continue reading “Does the IRS Permit Churches to Endorse Candidates Through an “Alternate Channel”?”