Presidential Tax Discretion

Abstract

Increasingly, Congress allows the president to determine tax consequences with the stroke of a pen. For example, if the president declares a major disaster under the Stafford Act, affected taxpayers are allowed a deduction for net personal casualty losses. This Article surveys instances of executive tax discretion scattered throughout the code, with a focus on disaster declarations. In isolation, any single presidential determination may have a limited impact on a relatively narrow group of taxpayers. But in the aggregate, these deferrals represent a concerning departure from democratic norms and an alarming augmentation of executive autonomy. They erode the protections of the typical legislative process, eliminate the safeguards of judicial review, and introduce opportunities for political mischief. With those concerns in mind, the Article identifies areas where Congress might look to further enhance executive tax discretion, particularly during financial emergencies. This Article concludes that any such expansion would be unwise and suggests alternatives that would facilitate agile and consistent responses while avoiding the risks associated with unilateral executive action.

Keywords: tax, taxation, president, executive, administrative law, disaster, emergency relief, tax policy

JEL Classification: K34, K1