Writing and Enacting Tax Legislation
Tax laws greatly affect our economy. This
is because the amount of revenue raised
through taxes largely decides the amount of
services that the government can afford to
provide.
The Congress takes steps known as the
legislative process to pass a Federal law.
This process begins when a Senator or
Representative prepares a proposed law,
called a "bill." It ends when Congress
approves the bill and sends it to the
President. When the President signs the bill,
it then becomes law.
The Constitution says that "all bills for
raising revenue shall originate in the House
of Representatives" and that "Congress shall
have the power to lay and collect taxes."
Presidents can, and frequently do, recommend
changes to current tax laws, but only
Congress can make the changes.
Most recommendations for new tax
legislation come from the President. Many
people are involved in shaping these
recommendations. Months of preparation may go
into new proposed legislation before the
President makes his recommendations to
Congress. The Treasury Department has primary
responsibility for drafting the President's
tax recommendations. Advice and assistance
also come from other government agencies,
such as the (IRS) or people in
business or professional fields.
Once drafted, the Treasury Department
sends the legislation to the White House for
review by the President and his advisors. The
President may direct the Treasury Department
to make changes to the legislation or to
remove or add some provisions. Then, the
Treasury Department makes the changes and
provides the President with any additional
information he requests. Next, the President
sends a message to the Congress as he
formally submits the proposed
legislation.
The President may send tax proposals to
Congress any time. In practice, however, the
President will propose only one major tax
bill each year. He often mentions his tax
proposals in his annual State of the Union
address. In addition, the President will also
discuss any proposed tax legislation in the
Economic Report of the President, which goes
to the Congress every January. Usually, the
President sends proposed tax legislation to
Congress during the first few months of the
year.
Under the United States Constitution, all
legislation concerning taxes must "originate"
in the House of Representatives. The House
usually must take action on the legislation
before the Senate can begin its
consideration.
Legislation begins its trip through the
Congress in the House Ways and Means
Committee, which is responsible for
considering all tax legislation. Thus, it is
among the most powerful Congressional
Committees. Tax legislation is so important
that most Committee members must serve in the
House for many years before they get
appointed to the Ways and Means.
The Ways and Means Committee schedules
hearings so that people can testify on the
proposal. The Secretary of the Treasury is
the first to speak. Other Administration
officials, such as the Director of the Office
of Management and Budget, may follow.
Committee members also hear testimony from
representatives of private interest groups.
These witnesses answer questions from
Committee members on how the proposal will
affect the economy and specific groups.
During this period, many people seeking
changes in the bill will privately contact
the members of the Ways and Means Committee.
This is one force that helps sway the opinion
of members.
When Committee concludes its hearings, the
Committee members meet in executive session.
At this time, the proposal is "marked up."
These markup sessions are usually informal
and are concerned with revising the
proposals. Committee staff members, along
with staffs of the Treasury Department and
the Congressional Joint Committee on Internal
Revenue, may provide information, advice, and
assistance. These sessions are open to the
public and many observers are present, from
both the news media and interest groups. The
Administration sends representatives to watch
and to advise Committee members.
As the Committee reaches tentative
decisions on the proposals, they draft them
into legislative language. It also prepares a
detailed report on the proposed Legislation.
The report can be longer than the bill
itself, and presents the Committee's reasons
for recommending the bill. The Internal
Revenue Service and the courts may use this
Committee report as an interpretation of the
legislation. Once the bill and the report are
completed, they get introduced in the House
of Representatives for consideration.
Like the House Ways and means Committee,
the Senate Finance Committee is very powerful
and prestigious. It is responsible for all
Senate legislation dealing with tax
matters.
This Committee begins its formal work on
the legislation after the House has passed
its version of the bill. It holds hearings
similar to those held earlier by the House
Ways and Means Committee. Instead of
considering the tax proposals made by the
Administration, however, it considers the
bill passed by the House. Witnesses appear at
the Committee hearings in the same order as
in the Ways and Means Committee. They direct
their testimony to the House version of the
bill.
After the hearings are finished, the
Committee marks up the House bill, similar to
the markup by the Ways and Means Committee.
When the Committee completes its markup, the
bill is usually very different from the one
passed by the House. It then gets reported to
the full Senate for floor action. A report
gets filed along with the bill. The report
explains in detail the amendments made by the
Finance Committee.
The entire Senate debates the bill as
reported by the Committee. During the debate,
the Senators may further amend the bill
before they bring it to a vote. Normally, the
legislation does not get considered again if
the Senate fails to pass the bill.
If the Senate passes the House version of
the bill, without amendments, it gets sent
directly to the President. Usually, however,
the Senate passes its amended version of the
House bill. Then, there is further
Congressional action required. This is
because there are now two versions of the
bill -- the bill passed by the House and the
House bill as amended and passed by the
Senate.
The bill with the Senate amendments gets
returned to the House of Representatives.
Next, the House usually adopts a motion to
disagree with the Senate amendments. A
Conference Committee then gets appointed to
adjust the differences between the two
versions of the bill.
Conference Committee members get appointed
by the Speaker of the House and the President
of the Senate. Each chamber votes as a unit.
Members of the majority party control each
unit. Representatives of the Administration
and interest groups again try to have the
Conferees support or oppose aspects of the
bill.
The Conference Committee reports its
version back to both the House and Senate,
which then vote on the Committee's compromise
version. If it gets adopted, the revised bill
gets sent to the White House.
Before the President decides to sign or
veto a tax bill, he receives advice from the
Secretary of the Treasury on the bill's
provisions.
The President also solicits comments from
other Federal agencies and then makes a final
decision. If he decides to veto the bill, he
returns it to the House along with a
statement of why he opposes various portions
of the bill. The House must then attempt to
override the veto, or make those changes that
the President wants.
If the President signs the bill, the
responsible agencies must take action to
carry out the bill. Officials in the Treasury
Department issue regulations, while the
Internal Revenue Service develops tax forms
and instruction booklets for taxpayers.
Under the Constitution, the American
public has the right to a representative form
of government. Members of Congress and the
President must be elected to office. They
must win reelection for another term to
continue serving the public.
The First Amendment to the Constitution
grants citizens the right to "petition the
government for a redress of grievances."
Citizens may act on their own behalf, as
individuals, or organize into groups for
influencing government officials.
Citizens may make their views known to
those who represent them in Congress. They do
this by writing letters or by visiting
elected officials' offices in their district
or State. They may also contribute time or
money to a candidate's campaign, vote in the
primaries and general elections, and join
groups that share their ideas.
Pressure groups that get formed to achieve
a certain goal often strongly influence
Members of Congress. Most, known as "special
interest" groups, are concerned only with a
narrow set of issues. There are also "public
interest groups" that are concerned with
issues that affect the public at large, not
just their own members.
Pressure groups use many tactics to
achieve their goals. They attempt to
influence the voting public through paid
advertising, public speaking, and direct mail
campaigns. By swaying public opinion, they
hope to influence indirectly the actions of
Congress or officials in the Executive
Branch. These groups also attempt to
influence members of Congress more directly.
Also, they organize letter-writing campaigns
and contribute time and money to help get
candidates elected. These groups also present
members of Congress with proposed
legislation, supply background information or
statistics to support their viewpoints, and
testify at Congressional hearings. Many
groups have an office in Washington for these
activities.
"Lobbying" is the name of the practice
they use to influence the course of
legislation, and developed many years ago.
This was because people waited in the lobbies
outside the House and Senate chambers, hoping
to speak with the lawmakers as they entered
or left. Today, lobbying is an accepted part
of the legislative process. Members of
Congress often view lobbyists as useful
sources of information and political support.
They see the pressure groups that lobbyists
represent as a valuable tool for citizens to
present their views before members of
Congress.
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