Rebecca Kysar, On the Constitutionality of Tax Treaties, 38 Yale J. Int’l L. (forthcoming 2012) available at SSRN.

In a forthcoming article entitled On the Constitutionality of Tax Treaties, Rebecca Kysar argues that current tax treaties are unconstitutional under the Origination Clause because they alter the tax law without the involvement of the House of Representatives.

Kysar builds her argument though careful historical and doctrinal analysis.  She shows that the Origination Clause was an important concession to the large states that acted as a counterbalance to some of the prerogatives of the Senate, including the treaty power.  She shows that although the text of the Origination Clause requires only that “bills for raising revenue” originate in the House, the Supreme Court has interpreted the clause to refer to legislation that increases or decreases revenue.  Thus, Kysar argues that, even if the net effect of tax treaties were to reduce tax revenues, the Origination Clause should still apply to them because their “primary purpose” is a revenue purpose, and it is the law’s “primary purpose” that matters for the Origination Clause.  Among many other court cases, Kysar discusses at length two relevant Supreme Court precedents.  First is Missouri v. Holland, in which the Supreme Court upheld against a Tenth Amendment challenge a properly ratified treaty that sought to accomplish a goal outside the enumerated powers of Congress.  In Holland, the Court further held that the Necessary and Proper Clause permitted Congress to pass legislation to accomplish treaty goals that Congress could not accomplish by regulation alone (the treaty involved the regulation of hunting of migratory birds).   The other relevant precedent was Reid v. Covert, in which a plurality of the Court held that a treaty could not override individual rights guaranteed by the Sixth Amendment.  Kysar makes the argument that tax treaties should be analyzed more like the individual rights in the Sixth Amendment, and less like the reservation of powers in the Tenth Amendment since the Origination Clause represents an exclusive grant of power.   Furthermore, where appropriations, another exclusive prerogative of the House, is concerned, it has long been policy to seek implementing legislation for treaties.  Kysar traces procedure to the Jay Treaty, in which the House asserted its right to enact implementing legislation, and she convincingly argues that the failure of the House to similarly assert its constitutional prerogative under the Origination Clause with respect to tax treaties could not cure any constitutional infirmity in such treaties. Continue reading "Are Tax Treaties Unconstitutional?"

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