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Centralized oversight of agency policymaking and spending by the President’s Office of Management and Budget is a hallmark of the modern administrative state. But tax regulations have almost never been subject to centralized review. The Trump administration recently proposed to require centralized review of tax regulations, but it is unclear what regulations would be subject to such review or how it would be conducted.

This Article examines the normative desirability of the longstanding approach of exempting tax regulations from centralized review, and the alternative of imposing such review. Scholars and policymakers have provided various incomplete justifications for excepting tax policy from centralized review, including concerns about politicizing tax administration, analytical challenges, and ossification. I conclude that none of the reasons offered in the past for a default rule of no review is sufficient in light of the potential normative benefits of centralized review. The analysis here brings to the fore multiple functions of tax regulations: some rules are focused on shaping private behavior, whereas others focus on raising revenue or implementing precise congressional directives. I make the case that centralized review can facilitate productive coordination with other parts of government, increase political accountability, and introduce analytical rigor through quantified analysis. This Article outlines the limitations of current centralized review conventions, and proposes some specific adjustments for tax regulations, including setting a threshold for review based on revenue estimates, and producing revenue estimates and distributional analysis as part of the regulation-drafting process.

The major tax legislation Congress enacted at the end of 2017 included numerous broad delegations. Thus, tax regulations will reshape the tax system significantly, and the Trump administration is poised to begin some version of centralized review of tax regulations, although many important issues remain unresolved. Recognizing the strengths and weaknesses of centralized review as applied to tax policy will help to establish consistent and productive oversight of the tax regulatory process.


Originally published in Alabama Law Review and used here with permission.