Legislative, Executive, and Judicial Policymaking Actions
Legislative Policymaking Actions
- Congress has passed at least one tax bill each year since 2001 and an average of one tax bill each year since 1940.
- Those bills lowered the top individual income tax rate from 91 percent in 1962 to 70 percent in 1980 and to 35 percent today.
- The top corporate income tax rate was 46 percent in 1980. Today, it is 35 percent.
- The Economic Recovery Tax Act of 1981 (ERTA) indexed some parameters of the individual income tax for inflation (effective in 1985), reducing "bracket creep" where inflation pushed taxpayers into ever-higher tax brackets.
- The Tax Reform Act of 1986 reduced the number of tax brackets from 11 to two. Tax acts in 1990, 1993, and 2001 added four more brackets.
- Tax acts since 1986 have created the child tax credit; increased the earned income tax credit (EITC) and the dependent care credit; and added tax incentives for retirement savings, education, and health insurance.
- President Obama held a conference call with a bipartisan group of mayors and community leaders from around the country to discuss preventing an income tax increase on middle-class families. Several of the mayors asked some of their constituents who had shared what a $2,000 tax increase next year would mean for their families to join the call as well.
- Executive orders may demand budget cuts from state government when the state legislature is not in session, and economic conditions take a downturn, thereby decreasing tax revenue below what was forecast when the budget was approved. Depending on the state constitution, a governor may specify by what percentage each government agency must reduce by, and may exempt those that are already particularly underfunded, or cannot put long-term expenses (such as capital expenditures) off until a later fiscal year.
- The Congress, after the president proposes a tax cut or a tax increase, can vote on the bill thus either rejecting it or passing it back to the President to approve. If the tax cut or tax increase is rejected, it is passed to the other House so that they can vote on the bill. They have a large part in taxation because they affect the tax changes that happen in the economy.
- The judicial branch have the power to declare a tax proposition either constitutional or unconstitutional. These courts are served by judges who do have the Article III protections of service during good behavior or exemption from salary reductions. The administration of these courts are governed by the policies of the Judicial Conference of the United States. Most of the federal courts were established by the Congress to carry out a legislative power, such as the determination of taxes.