Tax Legislation: Becoming Law

Tax law, or revenue law, is a body of rules and procedures that public or sanctioned authorities such as federal, state, and municipal governments use to assess and collect taxes. In the US, the process of formal tax legislation is defined by the US Constitution. This process requires the consent of both houses of Congress and presidential approval. The proposed tax laws start as a bill in the House of Representatives before moving to the Senate and, if approved, the president. If the president vetoes the bill, Congress can make the requested changes or override the veto with a two-thirds vote in each house.

The bill must be introduced in the House of Representatives

In the United States, the process of formal tax legislation is how a proposed tax rule or change may become law. This process requires the consent of both houses of Congress – the Senate and the House of Representatives – as well as the President's approval.

The proposed tax law starts as a bill, and it must be introduced in the House of Representatives first. This is because the House is meant to represent individual citizens, rather than whole states, which is the case with the Senate.

The bill originates in the House of Representatives and is referred to the Ways and Means Committee. This committee will debate and discuss the bill until an agreement is reached. Once the committee members have come to an agreement, the proposed tax law is written. This is a crucial step in the process as it sets the foundation for the rest of the legislative journey.

After the bill has been drafted, it goes back to the full House for further debate, amendment, and approval. This is where the details of the bill are scrutinized and changes may be made. The House of Representatives plays a key role in shaping the final version of the bill before it moves on to the next stage.

The House of Representatives is an important check and balance in the legislative process, ensuring that the proposed tax legislation considers the interests and needs of individual citizens. This step in the process allows for a thorough examination of the bill and provides an opportunity for amendments to be made before it advances further.

Once the bill has been approved by the House, it will then be passed on to the next stage of the legislative process, moving closer to becoming a law.

The bill goes to the Ways and Means Committee

The Ways and Means Committee has jurisdiction over all bills relating to taxes and other revenue-generation measures, as well as spending programs like Social Security, Medicare, and unemployment insurance. The committee also has influence over other policies, such as tariffs, reciprocal trade agreements, U.S. bonded debt, and revenue aspects of social service programs.

The committee's power comes from Article I, Section VII of the Constitution, which states, "All Bills for raising Revenue shall originate in the House of Representatives." This means that all tax-related bills must pass through the Ways and Means Committee, giving the committee and its members significant influence over other representatives, committees, and public policy.

The committee has six subcommittees: Health, Oversight, Social Security, Select Revenue Measures, Trade, and Worker and Family Support. Members of the Ways and Means Committee are generally not allowed to serve on any other House Committee unless they receive a special waiver from their party's congressional leadership.

The bill goes to the Senate

Once a tax bill has been through the House of Representatives, it is passed to the Senate for review. The Senate is designed to represent whole states, rather than individual citizens, as is the case with the House of Representatives.

The Senate will review the bill, and the Finance Committee may make changes to the proposal before it is presented to the full Senate. The Finance Committee may rewrite the proposal, and it is then presented to the full Senate for debate, amendment, and approval. The Senate will discuss the bill and can make changes to it. This is a crucial stage in the process, as the bill must be approved by the Senate before it can progress any further.

The Senate's role is to carefully consider the bill and ensure it is in the best interests of the states and the country as a whole. Senators will debate the merits of the bill and may propose amendments to improve it or address any concerns they have. This back-and-forth discussion is an essential part of the legislative process, as it allows for a thorough examination of the bill and helps to ensure that it is well-considered and effective.

After the Senate has finished its review, the bill will be put to a vote. If the bill receives a majority of votes, it is approved and can move on to the next stage. If it fails to receive a majority, it may be sent back to the House of Representatives for further revisions.

The bill is sent to the President

Once a tax bill has been passed by Congress, it is sent to the President, who has the power to sign it into law or veto it. If the President signs the bill, it becomes law, and the relevant agencies, such as the Treasury Department and the Internal Revenue Service (IRS), must take action to implement it.

The President's power to collect taxes is outlined in the US Constitution. Article 1, Section 8, Clause 1, also known as the Taxing and Spending Clause, states:

> "The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States."

The Sixteenth Amendment to the US Constitution, ratified in 1913, further reinforces this power, stating:

> "The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration."

If the President chooses to veto the tax bill, it is returned to the House of Representatives, along with a statement outlining the reasons for their opposition. At this point, Congress has two options: they can make the changes the President has requested, or they can override the veto with a two-thirds vote in both the House and the Senate. If the veto is overridden, the tax bill becomes law without the President's signature.

The bill is signed into law or vetoed

Once a tax bill has passed both the House and the Senate, it is sent to the President to be signed into law. This is the final step in the formal tax legislation process, as outlined by the U.S. Constitution. The President has the power to veto the bill, in which case it is returned to the House with a statement of opposition. If the President signs the bill, the relevant agencies, such as the Treasury Department and Internal Revenue Service (IRS), must take action to carry out the bill.

The President's signature signifies the completion of the legislative process, and the bill becomes law. This law now takes precedence over any previous legislation on the same topic. The new law will outline the rules and procedures for assessing and collecting taxes, and it will be used by authorities to legally enforce taxation. Federal, state, and municipal governments in the U.S. will refer to this law to collect taxes from individuals, entities, and corporations.

The President's role in signing tax legislation into law is a critical part of the checks and balances system in the U.S. government. It ensures that tax laws are not imposed without proper consideration and agreement from the executive branch. This process also allows for a unified approach to taxation, ensuring that the various government agencies involved in tax collection operate under the same rules.

While the President has the power to veto tax legislation, Congress can override this veto with a two-thirds vote in both houses. In such a case, the tax bill becomes law without the President's signature. This scenario underscores the collaborative and sometimes contentious nature of lawmaking, where the legislative and executive branches must work together or use their respective powers to push through tax legislation.

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