A Tax Limitation Constitutional Amendment: Issues and Options Concerning A Super-Majority Requirement
CRS Report for Congress
Received through the CRS W eb
A T ax Limitation Constitutional Amendment:
Issues and Options Concerning a
Specialist on the Congress
Government and Finance Division
Proposals t o limit the federal government’s authority to raise t ax es have been made
several times i n recent years. Most frequent l y, t h ese proposals call for limits on
Congress’s ability to pass revenue measures. Typically, limitation proposal s w o u l d
allow i ncreases in tax revenues only under one of two circumstances. First, t ax revenues
could i ncrease under ex i sting t ax laws as a r esult o f economic upturns. Alternatively,
t h ey coul d i ncrease b ecause of a n ew l aw, but onl y i f i t were p assed b y a super-m aj ori t y
(typ ically two-thirds or three-fifths). Questions about h o w s u c h proposals might be
appl i ed i n p ract i ce h ave not been cl earl y answered. C ongress has p revi ousl y consi d ered
such proposals i n 1996, 1997, 1998, 1999, 2000, and 2001. In each case t he proposal
has failed t o achieve the t wo-thirds m aj ority necessary for passage.
Most recently, t he House considered H.J . Res. 96 on J une 12, 2002. The m easure
failed t o achieve t h e n eces sary two-thirds, 227-178. This report will be updated t o
reflect any further legi slative actions on such proposals.
In recent years, there h ave b een a number o f p roposals t o p lace limits on the federal
government’s authority to raise t ax es. S om e p roposals would hold t otal revenues t o a set
percentage of some economic indicator, such as gross domestic product (GDP) o r gross
national p roduct (GNP), while others would limit increases in tax es t o a percentage of the
growth of a p articular economic indicator (s uch as n ational i n c o m e ) . T he term “tax
limitation” is also used to d escribe legi sla tive proposals t hat would limit Congress’s
ability to consider revenue meas ures , regardles s of t heir effect on the l evel or growth of
tax revenues, by requiring a s uper-majority (typ ically two-thirds or three-fifths) for thei r
passage. This t ype o f l i mitation would allow i ncreases in tax es only under one of two
circumstances. First, t ax revenues could i ncrease under ex i sting t ax laws as a r e s u l t o f
Congressional Research Service ˜ The Library of Congress
econom i c upt urns. Al t ernat i v el y, t h ey coul d i ncrease b ecause of a n ew l aw, but onl y i f
it were passed b y a super-majority.1
Such proposals h ave o ften been asso ciated with proposed b a l a n ced budget
constitutional amendments.2 This associ ation i s based on the i dea t hat a tax limitation
provision is needed so that Congress would b e l es s l i k el y t o rai se t ax es rat her t han cut
s p ending in order t o p roduce a required b alanced budget. For ex ample, th e S e n a t e
J udiciary C ommittee h as twice reported p roposed balanced budget amendments th at
included a provision limiting i ncreases in recei p t s t o a rate not greater than “the rate of
increase i n n ational i ncome” (S.J .Res. 5 , 9 8 th Congress, S.Rept. 98-628, and S .J .Res. 13,
99th Congress, S . Rept. 99-162). Neither proposal received floor consideration. P roposals
t o limit the l evel or rate of growth of revenues were considered on the House fl o o r i n
conjunction with consideration of p ropos ed balanced budget am endments in the 101st ,
102nd, and 103rd Congresses. The first floor consideration o f a freestanding proposal to
limit congressional consideration of t ax legi slation occurred i n t he 104 th Congress.
Legi sl ati ve Hi s tor y
Ac tion in the 1 0 7 th Congress. On J une 6, 2002, H.J . Res. 96 was i ntroduced by
Representative P ete S essions, along with 150 cosponsors, a n d r eferred t o t he House
J udiciary C ommittee. As introduced, H.J .Res . 96 contains the following provisions:
Section 1. Any bill, resolution, or other l egis l a t i ve measure changing t he internal
revenue laws shall r equire for f inal adoption i n each House t he concurrence of t wo-
thirds of the M embers of that House voting and present, unless t hat bill, resolution,
or other l egislative measure i s determi ned at t he time of adoption, in a r easonable
manner prescribed by l aw, not to increase t h e i nternal revenue by more than a de
minimis a mount. For purposes of determining any increase in the internal revenue
under t his s ection, the r e s h all be excluded any increase r esulting from t he lowering
of an effective r ate of a ny tax. On any vote f or which t he concurrence of t wo-t hirds
is required under t his article, t he yeas and nays of t he Members of either House s hall
be entered on t he J ournal of t hat House.
Section 2. T he Co n gr e s s may waive the r equirements of t his article when a
declaration of war is in effect. T he Co n gr e s s may also waive this article when the
United States i s engaged in military confl i c t w h i ch causes an i mmi nent and s erious
threat to national s ecurity and i s s o declared by a j oint resol u t i o n , adopted by a
maj ority of the whole number of each House, which becomes l aw. Any increase i n
the i nternal r evenue enacted under s uch a waiver shall be effective f or not longer than
1 T here have also been proposals t o r equire that measures to increase r evenues pass by a maj ority
of the t otal membership of each house r ather t han a maj ority of Members voting, a quorum being
present ( as is typically required) as well as proposals t hat would r equire a r ollcall vote but these
are not discussed i n t his r eport.
2 For more on t he legi slative history of proposed balanced budget amendments, s ee CRS Report
by J a me s V . Saturno.
On J une 12, 2002, the p roposal was co n s i d e r e d by the House under t he terms o f
H.Res. 439, a s pecial rule providing for its consideration. H.Res. 439 p r o v i ded for 2
hours o f general debate, and one additional hour of debate on an amendment i f o ffered b y
the minority lead e r ( o r h is design ee), although n o amendment was offered. On final
passage, H.J .Res. 9 6 failed t o achieve the n ecessary two-thirds, 227-178. 3
Previously, R eprese n t ative S essions introduced H.J . Res. 41 on March 22, 2001.
That meas ure was referred t o t he House J udici ary C ommittee and subsequently reported
on April 20, 2001 (H.Rept. 107-43). On April 25, 2001, the p roposal was considered by
the House under t he terms o f H.Res. 118, a s peci al rule providing for its consideration.
H.Res. 118 provided for 2 hours o f general debate, and one additional hour of debate on
an amendment i f o ffered b y t he minority lead er (or h is design ee), although n o amendment
was o ffered. On final p assage, H.J .Res. 4 1 failed t o achieve the necessary t w o - t h i r ds,
Ac t i o n i n t h e 1 0 6 th Congress. In the 106th Congress, the House of
Representatives considered proposals f or a t ax limitation constitutional amendment i n
both s essions. On M arch 11, 1999, Representative Barton i ntroduced H.J . Res. 37, ath
proposal similar i n m ost respects t o t hose voted on in the 105 Congress. H.J . Res. 37 was
deliberated in the House o n April 15, 1999, under t he terms o f H.Res. 139, a s pecial rule
providing for its consideration. H.Res. 139 provided for 3 hours o f general debate, and
one additional hour of debate on an amendmen t i f o ffered b y t he minority leader (or h is
design ee), although n o amendment was offered. On final p assage, H.J .Res. 3 7 failed t o
achieve the n ecessary two-thirds, 229-199. 5
On April 6 , 2000, Representative P ete S e s s i o n s introduced H.J . Res. 94. The
measure was deliberated in the House o n April 12, 2000, under t he terms o f H.Res. 471,
a s pecial rule providing for its consideration. H.Res. 471 provided for 2 hours o f general
debate, and one additional hour of deba t e o n an amendment i f o ffered b y t he minority
leader (or h is design ee), although n o a m e n d m ent was offered. H.J . Res. 94 failed t o6
achieve the n ecessary two-thirds, 234-192.
Action in the 105th Congress. In the 105th Congress, the House of
Representatives considered proposals f o r a t ax limitation constitutional amendment i n
both s essions. On M arch 11, 1997, Represent a t i v e J oe Barton introduced H.J . Res. 62.
The m eas ure was referred t o t he House J udici ary C ommittee, an d a hearing was held by
the S ubcommittee on t he Constitution on M arch 18. H.J .Res. 62 was reported on April
10, 1997 (H.Rept. 105-50), a n d considered by the House o n April 15, 1997, under t he
terms o f H.Res. 113, a s pecial rule providing f o r its consideration. This special rule
allowed 3 hours o f d ebate and provided for the s elf-ex ecuting adoption o f an amendment
to cl arify t he application of H.J .Res . 62 by adding language stating t hat “Fo r t he purposes
of determining any i n c r e a s e i n t he intern al revenue under t his s ection, there s hall be
3 See vote no. 225 in the Congressional Record, daily edition, vol. 148, J une 12, 2002, p. H3480.
4 See vote no. 87 in the Congressional Record, daily edition, vol. 147, Apr. 25, 2001, p. H1582.
5 See vote no. 90 in the Congressional Record, daily edition, vol. 145, Apr. 15, 1999, p. H2097.
6 See vote no. 119 in the Congressional Record, daily edition, vol. 146, Apr. 12, 2000, p. H2146.
ex cl uded any increas e res ulting from t he lowering of an effective rat e of any tax .” As t hus
amended, the m easure failed t o achieve the n ecessary two-thirds majority, 233-190.7
On February 28, 1998, Representative J oe Barton again i ntroduced a p roposed tax
limitation amendment (H.J .Res. 11 1 ) . T his m eas ure was subsequently modified and
deliberated under t he terms o f H.Res. 407, a s p ecial rule for its consideration t hat was
adopted on April 22, 1998. H.Res. 407 provided for 3 hours o f general debate and one
additional hour of debate on an amendmen t i f o ffered b y t he minority leader (or h is
design ee), although n o amendment was offe red. As amend e d , H . J . Res. 111 failed t o
achieve the n ecessary two-thirds, 238-186. 8
Ac tion in the104 th Congress. The first floor consideration o f a proposal to limitth
congressional consideration o f t ax l egi sl at i o n o ccurred i n t he 104 C o ngress. On
February 1, 1996, Representative J oe Bart on introduced H.J . Res. 159. The m easure was
referred t o t he J udici ary C ommittee and a hearing was held by the S ubcommittee on t he
Constitution o n M arch 6, 1996. On April 15, 1996, the j oint resolution was considered
by the House under t he term s of H .R es . 395. On final passage, t he measure failed t o
achieve the n ecessary two-thirds, 243-177. 9
Issues and O ptions
A t the beginning of the 104 th Congress, the House adopted a new provision in its
rules, now in Rule XXI, clause 5(b), to limit certain increas es in federal i ncome t ax rates.th 10
This rule was s ubsequently modified at the b eginning of the 105 Congress. Some tax
limitations advocates, however, argue that Hous e R ule XXI, clause 5 (b) i s not sufficient,
and t hat a permanent, broad-based limitation needs t o be imposed by the C onstitution.
They argu e t hat whereas House rules m u s t b e r eadopted every 2 years, a constitutional
am endment i s m uch m ore difficult to change. Further, t hey assert that a t ax limitation
would b enefit the U.S. economy, and t hat states with tax limitations have a comparative
advantage i n t erms of economic growth over s tates without such limitations.
Advocates of a tax limitation amendment point to polls that suggest the public
supports the i dea o f m aking i t d ifficult for t he federal governme n t t o r aise t ax es.
However, opponents argue that a s uper-majority requirement would b e anti-democratic,
and s hould not be imposed. In addition, they poi nt out that although s everal states operate
with various types of t ax limitations, i t i s not cl ear that thes e would be directly applicable
to the federal government. Further, t hey s uggest that sign ificant questions remain about
the l anguage of proposed tax limitation constitutional amendments, and how it might be
interpreted, either by Congress or the C ourts, and point to difficulties i n applyi ng Houseth
Rule XXI, clause 5 (b) i n t he 104 Congress.
The t erm “revenue” appears i n t his contex t i n Article I, section 7 of t he Constitution,
the s o-called Origi nation C lause. As interpreted by t he Suprem e C ourt, the phras e “al l
7 See vote no. 78 in the Congressional Record, daily edition, vol. 143, Apr. 15, 1997, p. H1506.
8 See vote no. 102 in the Congressional Record, daily edition, vol. 144, Apr. 22, 1998, p. H2170.
9 See vote no. 243 in the Congressional Record, daily edition, vol. 142, Apr. 15, 1996, p. H3304.
10 For more on t his r ule, see CRS Report RL31197, Revenue Measures in Congress: Procedural
Considerations , by J ames V. Saturno.
bills raising revenue” h as t ypi cal l y m eant m easures rai s i n g revenue t o support governm ent
generally, but not necessarily measures that raise funds to support s pecific governmental
programs. 11 This constitutional understanding of the term “revenue” m ay therefore d iffer
from “internal revenue” as i nte nded i n recent limitation p roposals.
R el at edl y, not al l t yp es of recei pt s t o t he federal g o v e r n m e n t are current l y t reat ed
alike i n t he budget pro c e s s. Collections from t he public based o n t he government’s
ex ercise of its sovereign powers are generally treated as revenues (e.g. , p ersonal i ncome
tax es). C ollections by the government from busines s or m arket-oriented activities are
generally treat ed as offset s t o outlays (e.g., various royalties and licen sing fees ). Thes e
o ffs et ting collections are sometimes applied against the outlays of a speci fic agency o r
program and sometimes against the outlays of the government generally.
In an effort t o cl ari fy t he appl i cat i o n o f a super-majority requirement, t he terms
“i n t ernal revenue” and “i nternal revenue laws” have sometimes been used. As with
House R ule XXI, t hese terms ar e intended t o limit the application o f p roposed
am endments to legi slation c o n cern i ng ex plicit changes i n t ax laws, rat her t han all
l egi sl at i o n effect i n g revenues, however, t hese t erm s h ave not been s u b j e c t t o ri go rous
interpretation by t he courts. Therefore, how the application of s uch a limitation might be
interpreted rem ai ns unclear. It i s possible t hat a limitation on t ax increas es could apply
only t o m easures that raise m oney for the general fund of the federal government, but not
t o s o me funds raised for s pecific p rograms o r for some types o f fees paid to the federal
government or government entities. Fo r ex ample, at one time President C linton proposed
that fees b e imposed by the Federal Deposit In surance C orporation (FDIC ) and the
Federal R eserve f o r t h e ex am i n at i o n o f both FDIC-insured b anks and b ank holding
com p ani es. It i s not cl ear whet her s uch fees, t i ed t o a part i cul ar, cl o sel y rel at ed s ervi ce,
might be regarded as revenues for the purposes of this type of limitation amendment.
Conversely, t h e p h rase “increasing revenue,” as used in these p roposals could b e
interpreted t o apply t hese requirements b ro adly to a wide variety of meas ures . S uch a
provision might apply not only t o m easures that would i ncrease revenues b y i ncreasing
t h e rat e o f t ax at i on, but al so t o m eas u r e s t h a t woul d i ncrease revenues b y l oweri n g t he
rate of tax ation while increasing either the t ax able base or the volume of t ax able activity,
or both. Broadly i nterpreted, s uch a provisi on could h ave an impact on a l arge portion o f
the l egislation considered by Congress. Legi slation t hat has the direct or indirect effect
of stimulating economic (hence tax able) activ ity and t hereby increasing revenues might
be covered b y a tax limitation p rovision. For m ost recent p roposals t he question o f rate
increases versus revenue increases is not resolved, although revenue increased resulting
fro m l o w ered rat es w ere s peci fi cal l y ex cl uded from t he appl i cat i o n o f H .J .R es. 3 7 and
H.J . Res. 94 (106th Congress).
11 JusticeJosephV.Story,inCommentaries on t he Constitution of t he United States (Boston:
Hilliard, Gray & Co., 1833; reprint edition Littleton, CO: Fred B. Rothman & Co., 1991) vol.
2 , c h a p . X III, s e c . 877, p. 343, wr ote t hat only bills to raise t axes in the s trict s ense of the word
are “bills for r aising revenue”; and t hat bills for other purposes, which may i ncidentally create
r e ve n u e , a re not included. T his principle has been upheld by the Supreme Court i n s eve r a l
instances (for example, Twin City Bank v. Ne beker 167 U.S. 196 (1897), Millard v. Roberts 202
U.S. 429 (1906), a nd, more recently, United States v. Munoz-Flores 495 U.S. 385 (1990)). For
more on the i nterpretation of t he term reve nue, s ee CRS Report RL31399, The Origination
Cl ause of t he U.S. Constitution: Interpretation and Enforcement , by J ames V. Saturno.
To overcome s ome o f t he imprecision in such definitions, s everal proponents h ave
t ri ed t o d evel op l anguage t h at focuses m ore o n t he t erm s o f t he m easures t h a n o n t h ei r
effect on revenues. During the 104th Congress, one such proposal would h ave required
“Any bill to levy a new tax or i ncreas e t he rate or base of any t ax may p ass only b y a two-
thirds majority of the whole number o f each House o f C ongress” (H.J .Res. 159, S . J . Res.
was p artly on the form o f a measure rather t han o n its effect. E ach proposal specifies that
it would apply t o m easures “changi n g internal revenue laws,” although i t qualifies t hat
phrase b y ex cluding measures whose effect w ould not be to increase i nternal revenue by
more than a de minimis amoun t . 12 T h e l angu age i n H.J .Res. 9 4 (106 th Congress), and
H.J . Res. 41 (107th Congress) takes t his one step further b y s pecifying t he super-majority
requirement would not apply t o any legi slation p rojected to produce i ncreased revenue as
a resul t o f “l o weri ng of an effect i v e rat e.”
Again, the l angu age i s s uch t hat s ome i nter pretation would b e required t o fulfill the
measure’s m andate. For ex ample, Presiden t C linton p roposed limiting d eferrals of gains
associ at ed wi t h ex changes o f l i k e-ki nd propert y u sed i n a t rade o r busi n ess o r for
investment to only t hose ex changes locat ed within the U n ited S tates. Would t his
narrowing of the p rovision to ex clude ex chan ges o f p roperty l ocated outside the United
States be seen as a change i n t he t a x a b l e b ase and therefore s ubject the p roposal to a
super-majority requirement? Also, would t he ex tension o f a tax due to ex pire be seen as
a n ew tax and thus require two-thirds to pass?
However, proposals i n t his v ein generally fo cus o n t he effect of revenue legi slation.
For ex ample, one typical proposal “P rohibits a b ill to increase receipts from b ecoming l aw
unl ess approved b y a t h ree-fi ft hs m aj o ri t y i n each House” (S .J .R es. 12, 105 th Congress).
It is no t clear whet her a limitation on i ncreas ing revenues could also be applied t o
m easures whi ch i ncrease t ax rat es t o a l evel i nt ended t o i nhibit an activity (e.g., a possible
increase i n t ax es on tobacco products) and thus lower t ax es collected. T he intended effect
in such a case m ay be a reduction i n r e v e n u e s, due to the i nhibitory effect of making
som et h i n g cost m ore, rat h er t h an an i n crease i n revenues due t o t h e h i g h e r rat e. The
question rem ai ns as to how a limitation amendment would be applied t o s uch a provision:
so that the l on g- t e r m i n tended effect of such a m easure would ex empt i t from t he
restrictions of a t ax limitation provision by offsetting any temporary upsurge in revenues
due to the i ncreased rate, o r s o t hat t he short-term revenue increase would b e s ufficient
to require the m easure t o b e p assed b y a super-majority.
In the above ex ample, questions concer ning the rate at which revenues wou l d
decreas e, and possibly when, could m ake revenue es timates a critical , and controversial,
fact or in determining t he applicability of a t ax limitation constitutional amendment. Who
would m ake s uch estimates (possibly t he J oint Tax Committee, the C ongressional Budget
Offi ce, t h e T reasury D epart m ent , o r t he Offi ce of Management and Budget)? Relatedly,
would estimates focus on rev e n ues generated i n t he nex t fiscal year or some longer
period? In addition, t h e r el i a b ility of estimates, al ready a significant fact or in the
budgeting o f federal ex penditures, would likely b e at i ssue.
12 T he phrase “more than a de minimis amount,” is generally understood to mean more 0.1% of
federal r evenues.