15 Aug 2022


How Tax Legislation Is Made

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Academic level: College

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The economy is significantly dependent on the amount of revenue raised through taxes as set by tax laws. The government’s service provision to citizens also relies on the amount of money levied on individuals and organizations such as Limited Liability Companies (LLC). The congress has the mandate of taking steps to pass a bill into Federal law. This paper will elucidate the process by which a piece of tax legislation becomes law.

The constitution stipulates that the House of Representatives is responsible for creating all revenue increase-related bills. The congress, on the other hand, has the power to lay and collect levies while the President can recommend adjustments in the existing tax legislation, whose implementation must only be executed by Congress (Slemrod, 2018). The Executive plays a critical role in the Tax Legislation process. Usually, the President liaises with the relevant teams like the Treasury and individuals to prepare new proposed legislation.

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There exist several differences between tax bills from the House of Representative and Senate. For instance, the 2017 tax cut bills presented by both houses exhibited notable discrepancies in their income tax brackets and timing as well as matters affecting state and local tax deductions. While the Senate bill maintained seven brackets, the House targeted a deduction from seven to three ( Rappeport, 2017 ).

The constitution allows for the involvement of the public in the tax legislation process. Citizens can participate in the informal tax legislation process, which involves contacting their political leaders such as elected officials and members of Congress. Other notable public involvement means are lobbying efforts and voting for particular candidates who exhibit the potential to propose certain bills affecting taxes (Baudot, Roberts & Wallace, 2017).

In brief, the tax legislation process involves a series of activities and parties from the branches of the government. The origin of any tax bill must be the House, while Senate and the Executive take subsequent actions of debates and signing the bill into law, respectively. Most presidents are known to propose recommendations regarding the current laws affecting taxes and work with individuals and the Treasury to draft these proposals.


Baudot, L., Roberts, R. W., & Wallace, D. M. (2017). An examination of the US public accounting profession’s public interest discourse and actions in federal policy making.  Journal of Business Ethics 142 (2), 203-220.

Rappeport, A. (2017). The House and Senate Still Have Very Different Tax Bills. Here’s How They Compare.    Nytimes.com . Retrieved 15 December 2019, from https://www.nytimes.com/2017/11/16/us/politics/the-house-and-senate-still-have-very-different-tax-bills.html 

Slemrod, J. (2018). Tax reform and tax experts.  The Journal of the American Taxation Association 40 (2), 83-88.

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