House Votes Down Proposed Constitutional Amendment

Provided by CCH

The House of Representatives on June 12 voted on HJRes 96, a proposed constitutional amendment requiring a supermajority in Congress to pass tax changes that increase revenue beyond a certain amount. Although the vote was 227 to 178, the measure needed 290 votes to meet the constitutional requirement for passing a proposed constitutional amendment.

Had it passed, HJRes 96 would have required a two-thirds vote in each chamber of Congress to pass any internal revenue law changes that would increase tax revenue beyond a de minimis amount (TAXDAY, 2002/06/12, C.4). Tax cuts that increased revenue would be exempt.

Congress could have waived the requirement during a declaration of war. It also could have waived it if a majority in each chamber passed a joint resolution declaring that the U.S. was in a military conflict causing an "imminent and serious threat" to national security. Any increase in internal revenue enacted under such a waiver would only be valid for two years.

The amendment could harm the federal government's ability to address budget deficits, according to a June 12 report released by the Center for Budget and Policy Priorities. The report, "The Constitutional Amendment to Require a Two- Thirds Supermajority to Raise Taxes," said that budget deficits will become unsustainable when the baby boom generation retires. Congress will be hindered in its ability to address them through revenue increases if a two-thirds majority is necessary, said the report. As a result it may resort to cutting programs for deficit reduction. Higher deficits could be an unintended consequence, it added, as Congress may lack the political will for making cuts.

An amendment would also protect tax subsidies to businesses, as a two-thirds majority would be required for repealing them, said the report. It could lead to more tax loopholes because a majority would be needed to establish them while the supermajority would be required to close them. Even measures to curtail tax shelters could be construed as raising revenue and so require the supermajority, said the report, making legislation in that area hard to pass.

Democrats will not offer an amendment, said a House Democratic aide. House Minority Leader Richard A. Gephardt, D-Mo., said the amendment was "an absolute waste of time." The House consistently rejects similar amendments, he said. The Senate probably would not pass it. "You would be better off working on homeland security and cracking on that than wasting our time on the floor with these old chestnuts that they keep bringing up that aren't going anywhere," said Gephardt.

This is the seventh time since 1996 that the House has voted on similar constitutional amendments to limit taxes. None received 290 votes:

  1. HJRes 159 failed on April 15, 1996, by a 241-157 vote. The amendment would have required any bill that levied a new tax or increase in the rate or base of any tax to get a two-thirds vote in each chamber of Congress;

  2. HJRes 62 failed by a 233-190 vote on April 15, 1997. It would have required the same two-thirds majority unless the measure did not increase internal revenue by more than a de minimis amount;

  3. HJRes 111 failed by a 238-186 vote on April 22, 1998. It would have excluded from the supermajority requirement any increase in revenue resulting from the lowering of an effective rate of any tax;

  4. HJRes 37 failed on April 15, 1999, by a vote of 229-199, and HJRes 94 failed on April 12, 2000, by a vote of 234-192. They were identical to HJRes 111 except for technical changes; and

  5. HJRes 41, failed on April 25, 2001, by a 232-189 vote. It was identical to the bills introduced during the 106th Congress.

You may like these other stories...

Many senior US tax professionals believe that a streamlined audit process will be the top benefit resulting from the IRS Transfer Pricing Audit Roadmap, a new toolkit organized around a notional 24-month audit timeline,...
Tax accounting to be simplified for money-market fundsThe US Securities and Exchange Commission (SEC) voted 3-2 on Wednesday for sweeping changes to institutional money-market funds, Emily Chasan, senior editor of...
By Cathy Stopyra and Todd SimmensUnderpayment interest, refund interest, and penalties charged to businesses are just a few of the considerations the IRS calculates when determining taxation for a given company. Though...

Upcoming CPE Webinars

Jul 31
In this session Excel expert David Ringstrom helps beginners get up to speed in Microsoft Excel. However, even experienced Excel users will learn some new tricks, particularly when David discusses under-utilized aspects of Excel.
Aug 5
This webcast will focus on accounting and disclosure policies for various types of consolidations and business combinations.
Aug 20
In this session we'll review best practices for how to generate interest in your firm’s services.