What is Tax Exceptionalism? [No. 86]
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What is Tax Exceptionalism? [No. 86]


Notions of tax exceptionalism became particularly
pervasive in the 1980s, 1990s and early 2000s with the general assumption of most tax specialists
being that tax administration was exempt or largely exempt from general administrative
law principles. Tax exceptionalism in general is the notion
that tax administration shouldn’t have to follow some or even perhaps many or all of
the general administrative law requirements, doctrines and norms that other federal government
agencies have to follow. One of the main arguments I think in favor
of tax exceptionalism that is often offered is that tax is different because the government
can’t function without the revenue that the tax system collects. Tax is sort of a first among equals, if you
will. General administrative law has as its guiding
principle, the notion that we give federal government agencies a tremendous amount of
policymaking discretion and delegated authority from Congress. And one of the things that needs to go along
with that tremendous discretionary authority is transparency and accountability when agencies
exercise the powers that they have been given. Tax really is no different in that sense,
particularly to the extent that many, many, many citizens have to deal with the tax system. Over 150 million individual income tax returns
were filed last year. Transparency and accountability in administration
of the tax laws ought to be thought of as particularly critical. Moreover, even though many people think of
the tax system and think of tax administrators as having the primary function, or even the
sole function, of raising revenue for the federal government, the fact of the matter
is that the Internal Revenue Service in contemporary times does a lot more than that. The Internal Revenue Service serves a variety
of regulatory and social welfare functions. For example, the Internal Revenue Service
is the largest antipoverty agency that we have in the federal government. The earned income tax credit and the child
tax credit, which are administered by the Internal Revenue Service are both larger in
terms of the amount of dollars that they involve than any other antipoverty programs that we
have in this country. We have the Internal Revenue Service administering
many different programs associated with healthcare and pensions. The Affordable Care Act, for example, is under
the administration of the Internal Revenue Service, albeit often, though not always,
in conjunction with the Department of Health and Human Services. .But when you have the Internal Revenue Service
administering a wide array of regulatory and social welfare programs that have little or
nothing to do with revenue raising, then justifying tax exceptionalism on grounds that the IRS
serves a unique function of raising revenue starts to fall apart just a little bit.

One Comment

  • mike thais

    Main priority of exemption not only tends to distract, but undermine 'higher cause" and larger goals ethic directions.
    Comment and/or correct on this view pls.

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