Dec 21, 2021 Kristin HickmanTax Law
“Don’t sweat the small stuff” was one of my father’s favorite sayings. It’s the thought that has always come to my mind whenever thinking about, and teaching, de minimis rules in the tax code. De minimis rules keep the IRS from seeming petty, for example by allowing an employer that provides free bagels in the break room from having to report the bagels as income to its employees. De minimis rules also allow taxpayers to avoid complexity and hassle when the dollar amounts at stake are small, for example by permitting taxpayers to immediately deduct many small capital expenditures, rather than having to amortize or depreciate them over several years. In short, I have always thought of de minimis rules as making a hugely complicated tax system just a little easier to navigate, and perhaps just a little kinder. At worst, de minimis rules have always seemed fairly harmless — “the equivalent of rounding errors in the design of the tax law.” Reading The Surprising Significance of De Minimis Tax Rules by Leigh Osofsky and Kathleen DeLaney Thomas has forced me to rethink these long-held intuitions.
Osofsky and Thomas begin their analysis of de minimis tax rules with an overview and a typology of sorts. Functionally, some de minimis tax rules indeed eliminate taxpayer burdens and protect unsophisticated taxpayers from finding themselves ensnarled in complexity. The IRS also benefits in these instances, by avoiding enforcement and other administrative costs. Other de minimis tax rules, however, are simply the result of rent-seeking behavior and benefit only sophisticated taxpayers pursuing complicated transactions. While de minimis tax rules can protect taxpayers from complexity, they also create complexity. And sometimes, de minimis tax rules that seem small turn out not to be so small after all, whether due to unintended consequences or interpretative choices that expand their scope. Continue reading "Perhaps We Should Sweat The Small Stuff"
Apr 20, 2021 Kristin HickmanAdministrative Law
Agency reliance on subregulatory guidance to advise the public is a perennial topic of discussion among regulatory practitioners and administrative law scholars. We want agencies to be forthcoming in sharing their thoughts regarding the laws that they administer, yet we fret that they rely inappropriately on subregulatory guidance to avoid their procedural responsibilities, and we struggle to balance the two.
The use of artificial intelligence in the administration of government statutes and programs is another hot topic these days, and rightly so. Optimism abounds that agencies will be able to harness the machines to make administration fairer and more efficient, yet of course we should think critically as well about the problems that relying on computer algorithms to achieve administrative ends may raise. In Automated Legal Guidance, Joshua Blank and Leigh Osofsky extend their wonderful work on “simplexity” in tax administration to put these concepts together and offer a critique of government reliance on artificial intelligence to provide guidance to the public. Continue reading "Artificial Intelligence Meets Simplexity"
Oct 29, 2020 Kristin HickmanTax Law
Mention the IRS, and for most, the first thought to come to mind is not alleviating poverty. Most people think of the IRS as the nation’s tax collector, processing tax returns and enforcing the tax laws to finance the government. Yet, for many years now, the IRS also has served as one of the federal government’s most significant antipoverty agencies. The IRS administers the Earned Income Tax Credit (EITC) and the Child Tax Credit (CTC), providing billions of dollars of social welfare benefits each year to millions of families and individuals. The EITC and CTC are very popular, at least in part because they are perceived by Congress as especially efficient relative to other antipoverty programs. Consistent with that popularity, both programs have grown a lot since their inception. But their administration by the IRS, while efficient, presents its own set of difficulties—including for the very beneficiaries these programs are intended to help. In her book, Tax Credits for the Working Poor: A Call for Reform, Michelle Drumbl takes a deep dive into the challenges as well as the benefits of giving the IRS responsibility for administering these important social welfare programs.
The comprehensiveness of Drumbl’s treatment alone makes this book a valuable addition to the tax policy literature. She offers plenty of statistics; a thorough survey of pros, cons, and policy alternatives; and a wonderful synthesis of existing scholarship. But the book’s true strength is the human story that it tells. Too often, discussions of the EITC and CTC focus wonkishly on economic efficiency, comparisons of bureaucratic expertise, and statistics alone. Drumbl’s account does not neglect that side of the equation. But she also draws upon her experience running a low-income taxpayer clinic to tell the stories of EITC and CTC beneficiaries, who often suffer the downside consequences of relying on tax officials to administer social welfare programs on the cheap. Continue reading "Pursuing Good Rather than Harm with the EITC and CTC"
May 28, 2020 Kristin HickmanAdministrative Law
The cooperation of public and private actors to achieve public goals is not new. More than 80 years ago, Louis Jaffe lauded the longstanding and substantial involvement of private groups in the regulatory sphere. The scope, range, and legal significance of coordination between the public and private spheres have expanded since then. Modern governance is a complicated web of relationships between public and private actors, command and cooperative structures, and hard law versus soft guidance. A robust academic literature assigns different labels to this phenomenon: privatization, public/private partnerships, and new governance, to name just a few.
By necessity, these arrangements entail the exercise of policymaking discretion by private actors, to varying degrees depending upon the scenario. The result is a diffusion of governmental power that neither Congress nor the courts are likely to roll back substantially. With The New Gatekeepers: Private Firms As Public Enforcers, Rory Van Loo identifies and explores yet another way in which government relies on private actors—by looking to large corporations to serve as “enforcer firms” or “gatekeepers” ensuring compliance with federal law. Continue reading "A New Kind of Public/Private Partnership"
Sep 30, 2019 Kristin HickmanTax Law
Jonathan H. Choi,
The Substantive Canons of Tax Law, 72
Stan. L. Rev. ___ (forthcoming 2020), available at
SSRN.
Jurists and legal scholars who think about methods and approaches for resolving questions of statutory meaning like to talk about traditional tools of statutory interpretation and the metaphorical toolbox in which those tools are kept. Textualism versus purposivism; the relative merits of text, history, and purpose; and the meaning and utility of both semantic and substantive canons are all common fodder for discussion and debate. Adding to the literature at the intersection of statutory interpretation and tax, Jonathan Choi offers an interesting and thorough treatment of why we ought to think of tax anti-abuse doctrines like the economic substance doctrine, the step transaction doctrine, and the assignment-of-income doctrine as substantive canons of statutory interpretation. (Helpfully, Choi provides a nice appendix, including footnotes, in which he catalogues substantive tax canons, including a couple of “not a canon” entries.)
Choi begins his article by surveying all of the reasons we ought to be dissatisfied with the status quo of tax anti-abuse doctrines. Courts and the IRS do not apply tax anti-abuse doctrines consistently. The Internal Revenue Code’s own terms sometimes contradict a particular tax anti-abuse doctrine, for example by requiring form to trump substance notwithstanding the doctrine preferencing substance over form, exacerbating the difficulty. Also, because tax anti-abuse doctrines are purposivist by nature and origin, they do not mix very well with the more textualist approach to statutory interpretation adopted by contemporary courts. Overall, the picture that Choi paints of tax anti-abuse doctrines is one of confusion and inconsistency. Continue reading "Refashioning Anti-Abuse Doctrines As Substantive Canons"
Apr 2, 2019 Kristin HickmanAdministrative Law
In 2011, Chief Justice John Roberts notoriously criticized the legal academy when he declared at a judicial conference, “Pick up a copy of any law review that you see and the first article is likely to be, you know, the influence of Immanuel Kant on evidentiary approaches in 18th-century Bulgaria, or something, which I’m sure was of great interest to the academic that wrote it, but isn’t of much help to the bar.” Legal scholars were unimpressed, to say the least, by Chief Justice Roberts’s flippant dismissal of their work. Perhaps the best response was Professor Orin Kerr’s tongue-in-cheek Green Bag essay in which he documented that, in fact, the Bulgarians really only became interested in Kant’s pronouncements in the late-19th Century and even then mostly ignored his ideas as “obscure and awkward.” Nevertheless, although Chief Justice Roberts’s criticism was a gross exaggeration, like most such overstatements it grew from at least a small kernel of truth—echoing similar, if more soberly presented concerns raised almost twenty years earlier by D.C. Circuit Chief Judge Harry T. Edwards about a “growing disjunction between legal education and the legal profession.”
Legal scholars know, of course, that quite a lot of the scholarship they collectively produce is of use to practitioners, courts, and legislators. Simultaneously, however, legal scholars must, and I think do, acknowledge that not all legal scholarship is useful or of interest to nonacademic readers. Legal scholars sit at the sometimes-awkward intersection of a larger academic community and the practicing bar, each with its own goals, values, norms, and needs. The fact that some legal scholarship appeals more to the former than the latter audience merely reflects that reality and does not diminish its value. Nevertheless, it is in our own interest as legal scholars to counter the narrative promoted by Chief Justice Roberts and others by calling attention to legal scholarship that may be of use to the more practical of our two audiences, even while it appeals to the more academic as well. Nick Parrillo’s groundbreaking work on federal agency guidance is an exemplar of this kind of legal scholarship. Continue reading "In Praise of Practical Scholarship"
Dec 10, 2018 Kristin HickmanTax Law
Clint Wallace,
Congressional Control of Tax Rulemaking, 71
Tax L. Rev. 179 (2017), available at
SSRN.
In its 2011 decision in Mayo Foundation for Medical Education and Research v. United States, the Supreme Court held that most if not all general authority Treasury regulations carry the force of law and, thus, are eligible for judicial review and deference under the Chevron standard. In reaching that conclusion, the Court reiterated its general presumption in favor of “maintaining a uniform approach to judicial review of administrative action” and, correspondingly, rejected “an approach to administrative review good for tax law only.” But the Court qualified that presumption at least a bit—noting the taxpayer’s failure to “advance[] any justification for applying a less deferential standard of review to Treasury Department regulations,” and thereby suggesting that good reasons for tax exceptionalism might exist on another occasion. With Congressional Control of Tax Rulemaking, Clint Wallace advocates at least some amount of tax exceptionalism in judicial review of Treasury/IRS regulatory interpretations of the Internal Revenue Code. Or does he?
In the wake of Mayo, scholars writing about tax administration have divided loosely into exceptionalist and anti-exceptionalist camps. The exceptionalists may not reject Mayo’s particular holding, but they otherwise prefer the pre-Mayo status quo and seek to justify tax exceptionalism from one or many administrative law requirements, doctrines, or norms. The anti-exceptionalists see independent value in bringing tax administration more into line with general administrative law, so they would impose a higher bar—e.g., an affirmative statement of congressional intent—before permitting tax exceptionalism. Obviously, this characterization is over-generalized, as it is more accurate to portray exceptionalism and anti-exceptionalism as two ends of a continuum rather than a pure binary choice. Still, much scholarship in this area adopts a tone and reflects assumptions and preferences that clearly lean one way or the other. And yet, although Wallace’s article advances an exceptionalist argument, to the eye of this anti-exceptionalist writer, his reasoning and analysis suggest that the two camps may not be so far apart after all—at least not with respect to statutory interpretation. Continue reading "Bridging Exceptionalism and Anti-Exceptionalism with the JCT Canon"
Oct 9, 2018 Kevin C. WalshCourts Law
Kristin Hickman pursues a “modest” goal in Symbolism and Separation of Powers in Agency Design: “to raise a few reservations regarding judicial refashioning of agency design via [a] severance remedy for separation of powers violations.” This understated approach commands attention to Hickman’s analysis. In this contribution to a Notre Dame symposium on “Administrative Lawmaking in the Twenty-First Century,” Hickman clearly identifies and carefully analyzes problems arising out of what might otherwise have passed as unremarkable applications of existing severability doctrine. With an eye toward big-picture legitimacy of courts and agencies, and with attention toward doctrinal and statutory detail, Hickman provides fresh reasons for judges to rethink this doctrine. And the increased attention earned by relatively restrained criticisms like Hickman’s may eventually move the law in the direction of more radical critiques that have started to receive an audience at the Supreme Court.
Hickman describes three cases or sets of cases in which the Supreme Court or the D.C. Circuit held an agency design unconstitutional based on separation of powers principles and then “fixed” the problem by “severing” a structural provision of the statutory agency design. These cases addressed the structure of the Public Company Accounting Oversight Board, the Copyright Royalty Board, and the Consumer Finance Protection Bureau. Continue reading "Severability, Separation of Powers, and Agency Design"
May 15, 2018 Kristin HickmanAdministrative Law
In the Fifth Edition of the Administrative Law Treatise, released in 2010, Richard Pierce described a raging debate within the academic community and the courts at that time over the appropriate role of democratic values and institutions in the administrative state. This debate encompassed such topics as the validity of unitary executive theory, how best to resolve disagreements between Congress and the President, and how to manage the risk that courts would become “the primary architects of national policy through their efforts to keep agencies within legal boundaries.” Eight years later, that same debate over the values, institutions, and structures of contemporary governance still rages on. A trio of pieces published last fall by Harvard Law Review both exemplifies and contributes to that ongoing conversation. As the author of this academic year’s Harvard Law Review Foreword, Gillian Metzger has penned a bold and provocative defense of the modern administrative state. Aaron Nielson and Mila Sohoni provided thoughtful response essays. Collectively, these pieces demonstrate scholarly engagement at its best.
As one might expect of the Foreword, Metzger’s article is masterful in its articulation and support of two separate but related propositions. The first is her identification of a combined political, jurisprudential, and scholarly trend that she labels “anti-administrativism” and characterizes as the contemporary resurrection of a very old fight. As she opens her piece, “Eighty years on, we are seeing a resurgence of the antiregulatory and antigovernment forces that lost the battle of the New Deal.” Metzger characterizes as anti-administrativist various actions and initiatives of the Trump Administration and the Republican Congress to reduce regulatory burdens, downsize the federal government, and reform the Administrative Procedure Act. Other presidents have pursued a similar agenda, but Metzger says their “promises … largely went unfulfilled” as compared to present efforts. Metzger also classifies as anti-administrativist a number of Supreme Court and D.C. Circuit cases—some from the 2016 Term, others predating it—concerning separation of powers principles, the Chevron and Auer standards of judicial review, and other constitutional issues. Continue reading "Administrative Law Scholarship in Our Present Political Moment"
Oct 24, 2017 Adrian VermeuleAdministrative Law
Kristin Hickman and Nicholas R. Bednar,
Chevron’s Inevitability, 85
Geo. Wash. L. Rev. 5 (2017), available at
SSRN.
Chevron deference is the cause of more wasted energy than any other doctrine in administrative law. True, the hopes and illusions that spur Chevron’s opponents onwards are perfectly intelligible. In some cases, the cause is a fervent, if cockeyed, constitutional vision; in other cases, a principled free-market libertarianism that becomes associated with opposition to Chevron (even though it is hardly obvious that Chevron has any intrinsic pro-regulatory bias); or a principled legalistic concern that judges, rather than agencies, should “say what the law is” (even though the law may itself mandate deference). But the result is so much less than the effort. A handful of lower-court judges, including then-Judge Gorsuch, have criticized the doctrine on constitutional grounds; so has one Justice, Clarence Thomas. But of course Justice Gorsuch might or might not see the issue the same way from his new seat, and the Court’s other Justices range themselves somewhere between “comfortable with the prevailing approach,” on one end of the spectrum, and “inclined to cabin Chevron around the edges,” on the other end. But there is no realistic prospect of a majority to overrule Chevron or even to narrow it to death.
Hickman and Bednar’s calm, learned and commonsensical paper explains why Chevron isn’t going anywhere. Part of the problem is that “Chevron” denotes a particular case decided in 1984, but connotes a far broader and more enduring phenomenon of deference, one that results from long-run structural and institutional causes. Deference to executive officials on questions of law predates Chevron by decades, at the least. With convincing examples, including an illuminating analysis of AT&T Co. v. United States (U.S. 1936), Hickman and Bednar show that there has long been a category of cases, involving difficult questions of public policy, in which judges know that they don’t know enough to spell out in detail what exactly ambiguous statutes should mean. In such cases, “deference” is just shorthand for the entirely pragmatic thought that if the front-line decision maker hasn’t obviously gone off the rails, the judges aren’t likely to make things better by substituting in their own judgments, which may perhaps be ill-informed, eccentric, harmful or politically unacceptable. Continue reading "Chevron as a Legal Framework"
