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Category: 103:6

How the U.S. Constitution Shapes International Tax Law: Instrument Choice in Tax Agreements

Posted on by Noam Noked, Young Ran (Christine) Kim & Reuven Avi-Yonah
Noked, Kim & Avi-Yonah_How the U.S. Constitution Shapes International Tax LawDownload

Abstract

The U.S. Constitution’s Treaty Clause, which requires Senate approval by a two-thirds vote for treaties, has significantly influenced the development of international tax law. This Article examines the implications of Senate supermajority requirements on bilateral and multilateral tax treaties and agreements, alternative instruments, relevant international tax standards, and global tax governance.

Historically, tax treaties have been approved exclusively as Article II treaties requiring Senate approval. The difficulty of entering into treaties with the United States has influenced the instrument choice and design of U.S. and international tax standards. To address this challenge, several U.S. and international tax reforms have employed “treaty avoidance” strategies, including coordinated unilateralism and reliance on executive agreements. While these approaches may circumvent the need for Senate approval, they may result in second-best solutions, violate existing treaty obligations, or raise additional concerns, such as extraterritoriality and lack of legitimacy.

This Article examines the increasing use of executive agreements. Since 2011, while approval of U.S. bilateral tax treaties has nearly ceased, there has been a significant increase in executive agreements, primarily for information exchange for tax purposes. Furthermore, the use of congressional-executive agreements in international taxation may continue to expand, drawing on precedents from international trade law and other legal fields. For example, the Biden administration considered implementing the Pillar One reform through a congressional-executive agreement—an approach that may be followed in future international tax reforms. In addition, pending legislation would provide statutory treaty-like tax benefits and approve a tax treaty with Taiwan as a congressional-executive agreement. These developments represent an erosion of the tradition of approving tax treaties as Article II treaties and a shift toward greater reliance on alternatives, such as the use of executive agreements.

Nonetheless, it remains uncertain to what extent executive agreements will replace Article II treaties in the international tax domain. Failure to revisit the instrument choice in international taxation may compromise U.S. interests and global cooperation as the U.S. treaty ratification process makes it unlikely that the United States will participate in any future convention for global tax governance. If other countries enhance their international tax cooperation without U.S. participation, this may lead to further bifurcation of the international tax governance system. This would raise the risk of eroding U.S. influence in global tax matters, potentially leading to international standards less favorable to U.S. stakeholders. A bifurcated system without U.S. participation may result in standards inferior to those that could have been achieved with U.S. participation.

Introduction

International tax cooperation is needed to address various global challenges, including combating cross-border tax avoidance and evasion, allocating taxing rights over the revenues of cross-border businesses, and reducing compliance and administrative costs.[4] Treaties generally serve as important legal instruments for coordination among states to address transnational problems.[5] However, the supermajority requirement for treaty approval in the U.S. Senate makes it difficult and even unfeasible to implement international tax reforms through treaties with U.S. participation. This Article examines the implications of Senate supermajority requirements on bilateral and multilateral tax treaties and agreements, alternative instruments, international tax standards, and the broader landscape of global tax governance.

The U.S. Constitution’s Treaty Clause provides that the President “shall have Power, by and with the Advice and Consent of the Senate, to make Treaties, provided two thirds of the Senators present concur.”[6] Additionally, Senate rules require a sixty-senator majority to end debate and proceed to a vote on a treaty or a bill.[7] As discussed in Part I, U.S. international agreements generally fall into two categories: Article II treaties, which require the Senate’s advice and consent, and executive agreements that do not require such Senate approval. There has been a longstanding debate, which has not been resolved by the courts, on whether Article II treaties are fully interchangeable with congressional-executive agreements.[8]

Historically, tax treaties have been exclusively approved as Article II treaties, as discussed in Part II.[9] Since 2011, Senator Rand Paul has blocked the approval of tax treaties, and the Senate has resorted to cloture votes to end debate and approved treaties and protocols on two occasions.[10] During the same period, there has been a sharp increase in bilateral executive agreements for information exchange for tax purposes.[11] However, executive agreements have not been adopted instead of Article II treaties in tax matters more broadly. This may change if the U.S.-Taiwan Expedited Double-Tax Relief Act is enacted. This pending legislation—passed by the House of Representatives in early 2025 and now before the Senate—provides statutory treaty-like tax benefits and a new statutory framework for approving a tax treaty as a congressional-executive agreement.[12]

The Treaty Clause has influenced international tax standards and reforms, as discussed in Part III. The United States is party to one multilateral tax treaty—the Convention on Mutual Administrative Assistance in Tax Matters (MAAC)—approved in 1991 as an Article II treaty.[13] The United States has not joined subsequent multilateral tax agreements, including the 2010 protocol amending the MAAC, the BEPS Multilateral Instrument in 2017 (MLI), and the 2023 multilateral convention to implement Amount A of Pillar One.[14] The Biden administration considered implementing Pillar One’s convention through a congressional-executive agreement but did not carry out this plan. It remains uncertain whether future tax treaties and conventions will be implemented as congressional-executive agreements.[15]

The difficulty of entering into treaties with U.S. participation has affected the form and contents of several international tax standards. Designing a standard that likely requires a treaty reduces the likelihood of U.S. participation, as illustrated by Pillar One.[16] To address this challenge, several international tax standards follow what we call “treaty avoidance” strategies, which include (i) coordinated unilateralism—implementing reforms through the coordinated adoption of domestic rules in different countries without any formal international agreement[17]—and (ii) reliance on agreements the United States can implement as executive agreements.[18] These strategies affect both the form of the legal instruments and the contents of the legal norms. For example, to combat tax avoidance by multinational enterprises (MNEs), the United States can conduct information exchange through executive agreements and strengthen transfer pricing rules through Treasury regulations, but it is unlikely to join a treaty that changes taxing rights or tax collection mechanisms. While standards employing these treaty avoidance strategies may circumvent the need for Senate approval, they may represent second-best solutions, violate existing treaty obligations, or raise additional concerns, such as extraterritoriality, as seen in Pillar Two.[19]

This issue has broader implications for global tax governance. As discussed in Part IV, global tax governance is becoming increasingly bifurcated: There is a growing split between the United States and other countries that enhance multilateral cooperation among themselves. While the Senate approved the OECD Convention in 1961, U.S. lawmakers have strongly criticized the role the OECD plays in promoting international tax reforms. The Biden and Trump administrations have opposed the United Nations’ work on developing a UN Framework Convention on International Tax Cooperation.[20] Even if the rest of the world accepts the U.S. administration’s demands, it is far from certain that a two-thirds majority in the Senate would approve any treaty that aims to increase international cooperation on tax matters. These trends raise risks to U.S. interests, as non-participation in multilateral treaties may erode U.S. influence in global tax matters and lead to international standards less favorable to U.S. stakeholders. It may also result in standards inferior to those that would have been achieved with U.S. participation.[21]

This Article is organized as follows: Part I provides general background on the instrument choice in U.S. international agreements. Part II examines the impact of Senate supermajority requirements on U.S. bilateral tax agreements. Part III explores the implications of the difficulty of entering into treaties with the United States on the instrument choice and design of international tax standards. Part IV considers the implications on global tax governance.

I. Instrument Choice in U.S. International Agreements

In general, U.S. international agreements are either treaties or executive agreements.[22] U.S. treaties (referred to as Article II treaties) enter into force after they receive the Senate’s advice and consent by a two-thirds majority and are ratified by the President upon exchanging signed ratification instruments with the treaty partners.[23] Executive agreements are entered into by the executive branch without the Senate’s advice and consent under the Treaty Clause.[24] There are three categories for such agreements. First, congressional-executive agreements are authorized under legislation enacted by Congress either before or after the agreements are concluded. Second, executive agreements can be made under authority provided in an existing treaty. Third, “sole” executive agreements can be made without any legislation or treaty where the agreements are based on the President’s constitutional powers.[25]

There has been a longstanding, unresolved debate on whether congressional-executive agreements are interchangeable with Article II treaties.[26] As described by Oona Hathaway:

Since at least the 1940s, most scholars of U.S. international lawmaking have fallen into two broad camps—opposite sides in what is often called “the interchangeability debate.” On one side stand those who argue that congressional-executive agreements and Article II treaties are and should be treated as wholly interchangeable. On the other are those who say that they are not and should not be: treaties and congressional-executive agreements have appropriately separate spheres that can be described and justified with legal and analytical reasons.[27]

According to the Congressional Research Service, “[j]udicial opinions thus far have not resolved this issue, in part because courts have dismissed constitutional challenges to executive agreements as non-justiciable political questions or for lack of standing.”[28]

At a high level, how would the interchangeability debate apply to tax treaties?[29] Are tax treaties and conventions—traditionally approved as Article II treaties—interchangeable with congressional-executive agreements? The “full interchangeability” camp would argue that such treaties and conventions could be approved as congressional-executive agreements.[30] If Congress approves the U.S.-Taiwan Expedited Double-Tax Relief Act, discussed in Part II below, it will set a precedent for a congressional-executive agreement used instead of an Article II treaty for a bilateral tax treaty.[31]

Another position is that tax treaties and conventions should be approved exclusively as Article II treaties. The main factor supporting this position is the longstanding, exclusive practice of approving tax treaties as Article II treaties.[32] As discussed in Part III, a proposal to depart from this practice was criticized by Republican senators as “a dramatic shift from past precedent.”[33] A variation of this position is that a convention that amends treaties approved as Article II treaties must also be approved as an Article II treaty.[34]

The contrary position is that tax treaties require congressional-executive agreements or implementing legislation.[35] Rebecca Kysar argues that tax treaties fall within the scope of the Origination Clause,[36] which should not be overridden by the Treaty Clause, and thus require bicameral approval.[37] She acknowledges that the bicameral approval mechanism she suggests “would be a dramatic deviation from tax treaty-making in the United States.”[38] According to John Yoo’s thesis, “Congress can resort to congressional-executive agreements in areas over which Congress already possesses plenary constitutional authority, such as international trade and finance.”[39] He further notes that “[n]ot only are congressional-executive agreements acceptable, but in areas of Congress’s Article I, Section 8 powers, they are—in a sense—constitutionally required.”[40] Yoo acknowledges that the practice of approving tax treaties as Article II treaties is inconsistent with his thesis, but he explains that Congress has chosen to implement tax treaty obligations through sections of the Internal Revenue Code (the Code) and can override treaties through legislation.[41]

Executive agreements have become the primary instruments for international agreements involving the United States. As observed by Bradley and Goldsmith, “over the course of American history, the U.S. government in making binding international obligations has come to rely much more heavily on executive agreements . . . than on treaties.”[42] While treaties represented 69 percent of the U.S. international agreements between 1789 and 1839, they have represented less than 7 percent since World War II.[43] The continued exclusive approval of tax treaties as Article II treaties appears somewhat anomalous given this general trend and the approval of agreements in another area of international economic law—trade agreements—as executive agreements.

International trade agreements have long been approved as congressional-executive agreements. As Spiro noted, “[t]he use of the congressional-executive agreement for trade-related undertakings has not merely been routine, but exclusive; there does not appear to be a single important postwar trade agreement that was approved as an Article II treaty.”[44] For example, the North American Free Trade Agreement (NAFTA), the U.S.-Mexico-Canada Agreement (USMCA) and the agreement establishing the World Trade Organization (WTO) were all entered into through congressional-executive agreements.[45] Until the early 1930s, international trade agreements were generally approved as Article II treaties, which resulted in very few major trade agreements.[46] However, following the Smoot-Hawley tariffs, “Congress began a decades-long trend of ceding the authority to lay and collect customs duties to the executive branch.”[47] This trend included the Reciprocal Trade Agreements Act of 1934 (authorizing the president to negotiate reciprocal bilateral trade agreements and to adjust tariff rates), the Trade Expansion Act of 1962 (broadening this authority to include multilateral trade negotiations),[48] and the Trade Act of 1974 (providing the president with a “fast-track” authority to enter into trade agreements subject to an ex post congressional approval).[49] Recent years have seen an increase in trade agreements where it is unclear “to what extent they are based on the President’s inherent constitutional authority versus powers Congress has delegated or ceded to executive agencies.”[50]

International investment agreements represent another interesting example. In general, international investment agreements are either standalone bilateral investment treaties or investment chapters in free trade agreements.[51] Bilateral investment treaties have been approved as Article II treaties, subject to the Senate’s advice and consent.[52] In contrast, investment chapters in free trade agreements have been approved as congressional-executive agreements as their approval follows the framework that applies to such agreements.[53]

The State Department generally considers several factors when determining the appropriate form for an agreement.[54] These factors include, among others, congressional preferences, past U.S. practice and general international practice for similar agreements, the effect of the agreements, and the need for implementing legislation.[55] Nonetheless, the choice between congressional-executive agreements and Article II treaties is ultimately political, given that there has never been a successful constitutional challenge against such a choice.[56]

II. Impact on Bilateral Tax Agreements

This Part examines how the Senate supermajority requirements have impacted the bilateral tax agreements entered into by the United States. Section A examines the obstacles that have almost halted Senate approval of new U.S. bilateral tax treaties. Section B explores the sharp rise in executive agreements in tax matters. Section C considers the proposed U.S.-Taiwan Expedited Double-Tax Relief Act, which could enable the approval of a bilateral tax treaty as a congressional-executive agreement for the first time.

A. U.S. Bilateral Treaty Network

Tax treaties are negotiated and signed by the executive branch, submitted to the Senate for approval as Article II treaties, and then come into effect after the President exchanges signed ratification instruments with the respective treaty partners.[57] These treaties are “self-executing” in the sense that they require no additional legislation to be implemented.[58] This self-executing operation is supported by section 894(a)(1) of the Code, which states that the provisions of the Code “shall be applied to any taxpayer with due regard to any treaty obligation of the United States which applies to such taxpayer.”[59] While a treaty does not require legislation to take effect, Congress can enact laws overriding tax treaties.[60]

The U.S. bilateral income tax treaty network covers over sixty jurisdictions.[61] The United States’ first income tax treaty was signed with France in 1932 and approved by the Senate in the same year.[62] Most income tax treaties were entered into between 1970 and 2010.[63] The last new tax treaty—with Chile—was approved by the Senate in 2023.[64] All of these tax treaties and the protocols amending these treaties were approved as Article II treaties.[65] In addition, estate and gift taxes are covered under separate Article II treaties with several treaty partners.[66] While the U.S. tax treaty network covers most of the country’s trading partners, it “has substantial gaps and is much less extensive than the treaty networks of other countries, such as the United Kingdom or the Netherlands.”[67]

Prior to 2011, the need to obtain Senate advice and consent by a two-thirds vote did not hinder the expansion of the U.S. bilateral tax treaty network. While the Senate raised objections to certain elements of some treaties, most treaties and protocols were approved.[68] The “Senate generally gave its advice and consent to these treaties within a year or two of their signing.”[69] Several factors may explain this bipartisan support; namely, (1) tax treaties generally reduce taxes and have long been supported by the business community, (2) they were not viewed as a partisan issue, and (3) Senate partisanship was generally lower.

This pattern of bipartisan support has changed since Senator Rand Paul joined the Senate in 2011.[70] Senator Paul has objected to information-sharing provisions of tax treaties, which he claims violate taxpayers’ right to privacy under the Fourth Amendment.[71] He also contends that disclosing U.S. taxpayers’ information to foreign tax authorities violates the taxpayers’ due process rights.[72] Due to his objections, there has not been unanimous consent in the Senate to move to a vote on tax treaties and protocols.[73] While the Senate can invoke cloture and end the debate with a sixty-senator vote, this has been done in this context only twice since 2011: to approve the protocols amending the treaties with Spain, Switzerland, Japan, and Luxembourg in 2019,[74] and to approve a new treaty with Chile in 2023.[75] Other tax treaties, such as the treaties signed with Croatia, Poland, and Vietnam, as well as the 2010 protocol amending the MAAC, are still awaiting Senate approval.[76]

As noted by Diane Ring:

[A]lthough a single senator’s power to block legislation may seem adequately counterbalanced by the option of cloture, the practical realities of pursuing cloture limit its effectiveness. Tax treaties, which apply only to cross-border taxpayers, were unlikely to have been a priority issue for most U.S. voters. When the treaties were sent back to the Senate Foreign Relations Committee, other more controversial matters and treaties occupied the forefront of foreign policy discussions . . . .[77]

Considering the difficulty of approving bilateral tax treaties and protocols due to Senator Paul’s objections and the apparent lack of political pressure on Senator Paul outside the legislative process, it is possible that U.S. presidential administrations have not prioritized expanding and updating the U.S. tax treaty network.

It is not the Treaty Clause’s two-thirds vote requirement that limits the U.S. government’s ability to expand and update its bilateral treaty network—these treaties typically enjoy overwhelming support when they reach a vote in the Senate.[78] However, the ability of a senator to block a vote and the need for a cloture vote to overcome it under Senate rules have made it hard to expand and update the U.S. treaty network.

B. Executive Agreements

This Section discusses the increasing use of executive agreements in tax matters. Over the past decade especially, while approval of U.S. bilateral tax treaties has nearly ceased, there has been a significant increase in bilateral executive agreements, primarily for information exchange for tax purposes.

1. Tax Information Exchange Agreements (TIEAs)

These agreements generally resemble the information exchange clauses in U.S. income tax treaties.[79] Current TIEAs cover many low-tax jurisdictions and tax havens, as well as countries in Central and South America with which there is no tax treaty.[80]

Entering TIEAs with specific Caribbean Basin countries is explicitly authorized under Code section 274(h)(6)(C)(i), which provides that “[t]he Secretary is authorized to negotiate and conclude an agreement for the exchange of information with any beneficiary country.” The term “beneficiary country” includes Bermuda and any beneficiary country under section 212(a)(1)(A) of the Caribbean Basin Economic Recovery Act.[81] This section does not authorize entering information exchange agreements with non-beneficiary countries (i.e., countries that are not “beneficiary countries” within this definition).

Section 274(h) further provides that an exchange of information agreement shall generally

provide for the exchange of such information (not limited to information concerning nationals or residents of the United States or the beneficiary country) as may be necessary or appropriate to carry out and enforce the tax laws of the United States and the beneficiary country (whether criminal or civil proceedings), including information which may otherwise be subject to nondisclosure provisions of the local law of the beneficiary country such as provisions respecting bank secrecy and bearer shares.[82]

The position that Congress has authorized the executive branch to enter information exchange agreements with non-beneficiary countries has relied on a broad judicial interpretation of the now-repealed section 927(e)(3). Section 927(e)(3) provided that the term “foreign sales corporation” (FSC) shall not include any foreign corporation unless there is between the corporation’s country and the United States “a bilateral or multilateral agreement described in section 274(h)(6)(C) (determined by treating any reference to a beneficiary country as being a reference to any foreign country . . . ).” Unlike section 274(h)(6)(C), section 927(e)(3) did not explicitly authorize the executive branch. It merely granted special status to specific foreign corporations where there is an information exchange agreement with the country of such corporations.

Yet, the Fifth Circuit in Barquero v. United States[83] found that section 927(e)(3) “authorizes the President to enter into TIEAs” with any country, not only specific beneficiary countries. The court stated:

Prior to 1986, only beneficiary countries that had entered into TIEAs with the United States could serve as host countries for FSCs. However, Congress, through the 1986 amendments, opted to allow any foreign country to enter into a TIEA and become eligible to be a host country . . . . If the Executive lacked the power to enter into TIEAs with non-beneficiary countries, the 1986 amendment to § 927(e)(3) would serve no apparent purpose—an absurd result. Thus, we believe §§ 274(h)(6)(C) and 927(e)(3), when read together, provide specific congressional authorization for the President’s decision to enter into the challenged TIEA.[84]

Congress repealed section 927 in 2000 as part of the repeal of the FSC regime,[85] following a successful WTO challenge.[86] After the repeal of this section, there is no statutory authorization for entering into exchange of information agreements with countries other than specific Caribbean Basin countries. Consequently, one could argue that the executive branch has had no statutory pre-approval to enter into information exchange agreements with non-beneficiary countries since 2000.[87] Susan Morse, expressing a different view, noted that the repeal of section 927 “need not be interpreted as a congressional retreat from the endorsement of Treasury’s negotiations of TIEAs,” partly because this section was repealed for an unrelated trade reason.[88] She further noted that “the U.S. has over the last several years entered into a significant number of TIEAs that follow the OECD’s information-on-request model. These are generally treated as valid agreements despite the lack of Senate advice and consent.”[89] The weakness in this position is that congressional-executive agreements must have legislation approving them either ex ante or ex post. There is no such legislation for any agreement signed with non-beneficiary countries since 2000. Thus, the legal status of such agreements is questionable.

2. FATCA Intergovernmental Agreements (IGAs)

The Foreign Account Tax Compliance Act (FATCA), enacted in 2010, requires foreign financial institutions (FFIs) to identify their U.S. account holders and report them directly to the Internal Revenue Service.[90] FFIs that fail to comply with FATCA face steep penalties in the form of a 30 percent withholding tax on certain U.S. source payments.[91] The FATCA Intergovernmental Agreements (IGAs) follow two models.[92] Under Model 1 IGAs, FFIs report the required information to their domestic tax authorities, which then pass it on to the IRS. Under Model 2 IGAs, FFIs report the information directly to the IRS.[93] Since around the time FATCA implementation started in 2014, more than 100 jurisdictions have entered into IGAs (most of which follow Model 1) with the U.S. Treasury.[94] These IGAs offer several advantages for governments and FFIs, including government-to-government reporting under Model 1 IGAs (thereby removing problems of domestic-law restrictions on direct reporting from FFIs to the IRS), fewer withholding tax obligations and risks, somewhat simpler compliance obligations, and broader exemptions.[95] The IRS has entered into around eighty FATCA competent authority arrangements (CAAs) with IGA partners, covering many financial centers and offshore jurisdictions.[96]

FATCA itself does not provide any statutory pre-approval for IGAs. Section 1474(f) authorizes the Treasury Secretary to “prescribe such regulations or other guidance as may be necessary or appropriate to carry out the purposes of, and prevent the avoidance of, this chapter.”[97] In addition, section 1471(b)(2) generally provides that an FFI may be treated as meeting the FATCA requirements if it meets the requirements prescribed by the Treasury Secretary or is a member of a class of FFIs with respect to which the Secretary has determined that the application of FATCA is not required to carry out the purposes of FATCA.[98] While these sections authorize the Treasury Secretary to promulgate regulations and issue guidance, they do not include any congressional authorization to enter into international agreements.

The preamble to the FATCA regulations explains that the IGAs aim to “facilitate the effective and efficient implementation of FATCA in a manner that removes domestic legal impediments to compliance, fulfills FATCA’s policy objectives, and further reduces burdens on FFIs located in partner jurisdictions.”[99] However, the FATCA regulations do not identify the legal basis for these agreements. Different versions of the IGAs have been developed for situations where there is a preexisting tax treaty or TIEA and situations where there is no such agreement in place.[100]

As observed by Allison Christians, the legal pedigree of IGAs is uncertain.[101] These agreements are not congressional-executive agreements because there is no statutory pre-authorization for the Treasury Department to enter into them.[102] Several IGAs have been entered into with jurisdictions with which there is no tax treaty or TIEA in place.[103] Such agreements cannot be considered as executive agreements entered into under the authority of an existing treaty. Several IGAs are with non-beneficiary countries and jurisdictions (such as Hong Kong and Singapore) with which TIEAs have been entered after the repeal of section 927(e)(3), putting into question the validity of these TIEAs and the respective IGAs.[104] Regarding IGAs with treaty jurisdictions, Christians questions whether the IGAs can be considered as agreements entered into under the authority of an existing treaty.[105] She argues that the IGAs go far beyond interpreting existing treaty provisions, as “their purpose is to incorporate a newly enacted U.S. law,” which overrides treaties “by more than doubling the typical rate of tax called for under the treaty unless the new information gathering and reporting regimes are adopted and implemented.”[106] Furthermore, other countries (with some exceptions) have treated the IGAs as international agreements that override existing treaties and require internal ratification in order to come into effect.[107] In response, Morse argues that the IGAs could be considered as treaty-based agreements pursuant to the information exchange provisions in U.S. treaties. She further contends that FATCA is consistent with U.S. treaties because it “only imposes an information requirement relating to certification of treaty eligibility in order to avoid a withholding tax.”[108]

If IGAs are not congressional-executive agreements or agreements entered into under the authority of an existing treaty, the remaining category is sole executive agreements. Christians noted, “Sole executive agreements are extremely controversial in U.S. law. Constitutional scholars either reject them outright as a viable alternative to treaties and congressional-executive agreements or begrudgingly allow that they might be viable for administrative or routine matters.”[109]

The Sixth Circuit in Crawford v. Department of the Treasury dismissed a constitutional challenge to the validity of the IGAs on standing grounds.[110] The plaintiffs argued that the IGAs are “unconstitutional sole executive agreements that exceed the scope of the President’s constitutional power because they are not authorized by Congress through the ordinary legislative process.”[111] They contended that:

[T]he only constitutionally permissible means by which the executive branch may make international agreements are by the Treaty Clause, an Act of Congress, a provision in an existing treaty, or the President’s independent constitutional foreign-affairs power—which Plaintiffs claim does not include the power to impose a tax or to create a tax-collection mechanism like the IGAs.[112]

However, as noted, these claims were dismissed on standing grounds.[113]

3. Competent Authority Agreements for Country-by-Country Reporting

The OECD published the country-by-country reporting (CbCR) standard in 2015.[114] It is an important part of the OECD’s project on Base Erosion and Profit Shifting (the BEPS project), which aims to curb cross-border corporate tax avoidance.[115] CbCR requires in-scope MNEs to report certain information about their operations in every jurisdiction where they operate.[116] After the MNE’s ultimate parent entity (UPE) files the report for the whole MNE with the UPE jurisdiction’s tax authority, the UPE jurisdiction is expected to share the reported information with other jurisdictions where the MNE group operates if there is an information exchange relationship with these jurisdictions and they meet certain requirements regarding confidentiality and appropriate use.[117]

The U.S. government started implementing CbCR in 2016 without any new legislation or treaty.[118] The U.S. Treasury imposed the reporting obligations on U.S. MNEs by promulgating regulations pursuant to section 6038 of the Code.[119] This section provides that the Treasury Secretary may prescribe reporting requirements for U.S. persons with respect to any foreign business entity they control.[120] This information may include the foreign business’s name, principal place, nature, country of incorporation, balance sheet, and transactions with the U.S. person or entities controlled or owned by that person; information regarding other U.S. owners; and “any other information which is similar or related in nature” to the information items above.[121] It is uncertain whether this section authorizes the Treasury Secretary to mandate the reporting of all the information required under CbCR. Jason Osborn and Warren Payne note,

Although section 6038 provides Treasury with the authority to collect a variety of data, it does not explicitly authorize Treasury to collect some of the information required for the full implementation of [CbCR]. For example, section 6038 does not clearly authorize Treasury to collect information on profits or losses or employees, each of which is explicitly required under [CbCR].[122]

To facilitate the exchange of the CbCR information, the IRS entered into over fifty CAAs for the CbCR information exchange.[123] These CAAs were made pursuant to a TIEA, tax treaty, or the MAAC.[124] The IRS notes,

The IRS will exchange Form 8975 information automatically with tax authorities with which the United States enters into a bilateral Competent Authority Arrangement. However, a U.S. MNE group’s information will only be exchanged with those countries in which the U.S. MNE group reports doing business. Exchanged information is confidential and protected pursuant to the applicable legal instrument permitting exchange.[125]

Osborn and Payne question whether the Treasury had the authority to enter into these CAAs and conduct this information exchange. They note that “section 6038 does not provide any authority for Treasury to share that information with other countries. Although U.S. tax treaties permit Treasury to share certain information with the treaty partner the scope of the information sharing in [CbCR] may exceed what Treasury is authorized to provide to the treaty partner.”[126] However, this critique is questionable where the CAA is entered into pursuant to a valid agreement authorizing the automatic exchange of information for tax purposes.

4. Shipping and Aviation Agreements

The final category of commonly used international tax agreements includes shipping and aviation agreements. The U.S. government has entered into over forty reciprocal shipping and aviation agreements.[127] Sections 872(b) and 883(a)(1) provide a reciprocal exemption for income from certain shipping and aviation activities if the other country provides an equivalent exemption to U.S. taxpayers. Treasury regulations provide that an “equivalent exemption may exist where the foreign country . . . exchanges diplomatic notes with the United States, or enters into an agreement with the United States, that provides for a reciprocal exemption for the purpose of section 883.”[128] The IRS has published revenue rulings containing “a list of countries that grant an equivalent exemption as evidenced by a diplomatic note exchanged with the United States.”[129] These publications also include a list of countries that grant an equivalent exemption to U.S. corporations without an agreement with the United States.[130]

These are sole executive agreements. They are unlikely to be considered congressional-executive agreements because there is no statutory authority for the executive branch to enter into these agreements. They are not entered into pursuant to any existing treaty.

These agreements serve an important role in implementing the reciprocal statutory shipping and aviation exemptions. The executive branch needs to determine which countries grant an equivalent exemption to the reciprocal U.S. exemption. The agreements’ main function is to confirm that the foreign jurisdiction provides a reciprocal exemption, which provides certainty regarding the application of the U.S. statutory exemption. The statutory U.S. reciprocal exemption is self-executing in the sense that it applies automatically if the relevant foreign country grants a similar exemption to U.S.-owned ships.[131] As discussed in the next section, pending legislation proposes adopting a similar model for statutory reciprocal treaty-like tax benefits that apply if the other jurisdiction provides similar benefits.

C. United States-Taiwan Expedited Double-Tax Relief Act

While U.S. administrations have increased the use of executive agreements for information exchange for tax purposes, tax treaties have remained within the domain of the Senate’s advice and consent authority. This may soon change if Congress passes the United States-Taiwan Expedited Double-Tax Relief Act.[132] The House of Representatives passed this bill in January 2025, and it is now in the Senate Committee on Finance.[133] The bill includes two parts. The first part (titled “United States-Taiwan Expedited Double-Tax Relief Act”) provides statutory treaty-like tax benefits to Taiwanese residents, provided that Taiwan reciprocates by granting similar benefits to U.S. persons.[134] This follows the model of the shipping and aviation statutory reciprocal exemption but expands it to broader treaty benefits, such as reduced withholding taxes on dividends, interest, and royalties, and other standard tax treaty provisions. The bill provides the Treasury Secretary with the authority to determine that Taiwan provides reciprocal benefits[135] and to issue regulations or guidance consistent with the provisions of the U.S. model income tax treaty.[136]

The second part of the bill (titled “United States-Taiwan Tax Agreement Authorization Act”) provides a statutory framework for a tax treaty to be approved as a congressional-executive agreement. After determining that Taiwan provides reciprocal tax benefits to U.S. persons, “the President is authorized to negotiate and enter into a tax agreement relative to Taiwan.”[137] The agreement should conform to the U.S. model treaty and will take effect upon the enacting of certain legislation and confirmation by the Treasury Secretary that Taiwan has taken the actions required to implement the agreement.[138] The President is required to consult with Congress during the negotiations.[139] After an agreement is reached, it must be approved by Congress in so-called “Approval Legislation” (to be referred to the Committee on Foreign Relations in the Senate) and “Implementing Legislation” (to be referred to the Committee on Finance in the Senate). The Ways and Means Committee in the House of Representatives will hear both the Approval Legislation and the Implementing Legislation.[140]

The bill acknowledges that the United States has addressed issues of double taxation with foreign countries through bilateral Article II tax treaties.[141] However, “[d]ue to Taiwan’s unique status, the United States is unable to enter into an article II tax treaty with Taiwan, necessitating an agreement to address issues with respect to double taxation.”[142] The “Statement of Policy” in the bill notes, “It is the policy of the United States to . . . continue to provide for bilateral tax relief with sovereign states to address double taxation and other related matters through entering into bilateral income tax conventions, subject to the Senate’s advice and consent to ratification pursuant to article II of the Constitution.”[143] Thus, Congress signals that this innovation—approving a tax treaty as statutory reciprocal treaty-like benefits and a congressional-executive agreement—is intended exclusively for Taiwan. While this statement may reflect Congress’s future intentions, it is unlikely to resolve any constitutional issues arising from using a congressional-executive agreement rather than the Article II treaty process. If the Constitution mandates approval of bilateral tax treaties as Article II treaties, considerations unique to Taiwan and Congress’s intent to continue Article II approvals for other treaties are unlikely to justify an exception.

Both parts of the bill are unprecedented and may affect future developments of U.S. tax treaties and agreements. When approving tax treaties as Article II treaties would be challenging, Congress may prefer to pass legislation granting statutory treaty-like tax benefits conditioned on reciprocity. It is possible that such legislation can be passed through a reconciliation process, subject to a simple majority vote in the Senate in addition to a simple majority vote in the House of Representatives.[144]

Moreover, approving this tax treaty as a congressional-executive agreement sets a precedent in the interchangeability debate concerning tax treaties, as it establishes that tax treaties may be approved as either Article II treaties or congressional-executive agreements.[145] The bill’s Statement of Policy explains that this mechanism is not intended to change the U.S. policy of approving tax treaties as Article II treaties.[146] Nonetheless, this is a break in tradition and a precedent that may be followed in the future.

III. Impact on International Tax Standards

This Part explores how the difficulty of entering into treaties with the United States has influenced the instrument choice and design of international tax standards. Section A discusses the only multilateral tax convention to which the United States is a party. Section B examines the failed Pillar One reform, which the Biden administration considered implementing through a congressional-executive agreement. Section C discusses international tax standards which employ treaty avoidance strategies.

A. Convention on Mutual Administrative Assistance in Tax Matters

The MAAC is the only multilateral tax treaty to which the United States is a party.[147] It was developed by the OECD and the Council of Europe in 1988 and subsequently amended in 2010.[148] According to the OECD, the MAAC “is the most comprehensive multilateral instrument available for all forms of tax co-operation to tackle tax evasion and avoidance,”[149] with the participation of over 150 jurisdictions.[150] The convention facilitates various administrative assistance forms, including all types of information exchange, simultaneous tax examinations, assistance in recovery of tax claims, and other forms of administrative assistance.[151]

The United States signed the original 1988 convention in 1989, and the Senate approved it as an Article II treaty in 1991.[152] It entered into force in 1995.[153] The U.S. administration signed the 2010 protocol amending the convention and submitted it for the Senate’s advice and consent in 2012.[154] As discussed in Part II, the protocol has not proceeded to a Senate vote because of Senator Paul’s objection.[155] This makes the United States the only country that is a signatory to the original convention but not to the 2010 protocol.[156] Unlike with the four tax treaty protocols approved in 2019 and the new tax treaty with Chile in 2023, the Senate has not used cloture to end debate on the protocol amending the MAAC.

B. Pillar One

This attempted international tax reform has stalled because of congressional inaction.[157] Pillar One, agreed upon in 2021 by the Biden administration and over 130 jurisdictions, aims to change the way the residual profits of large MNEs are taxed.[158] If implemented, this reform would allocate certain residual profits (referred to as “Amount A”) of in-scope MNEs to market jurisdictions.[159] This reform would apply to MNEs with a global turnover above 20 billion euros and profitability above 10 percent.[160] Amount A will be calculated as 25 percent of the in-scope MNEs’ residual profits, defined as profits in excess of 10 percent of revenues.[161] Market jurisdictions where goods are used or services are consumed will have the right to tax the Amount A allocated to them.[162]

Amount A is to be implemented through a multilateral convention (MLC), which was originally expected to be signed in 2022 and become effective in 2023.[163] In addition to the MLC, countries may need to enact domestic laws and regulations for the implementation of Pillar One.[164] The OECD published the MLC in October 2023 after a long delay.[165] By design, the MLC can only come into effect if the United States ratifies it. This is because the MLC will take effect when it is ratified by countries “representing a total of 600 points or more as set out in Annex I” of the MLC.[166] The United States is allocated 486 points out of a total of 999 points,[167] which means that meeting the 600-point threshold requires U.S. ratification. Since the publication of the MLC in 2023, it has not been opened for signature,[168] likely because the U.S. government is not expected to ratify it.

The conventional way for the United States to implement Pillar One would require Senate approval for the MLC as an Article II treaty and a legislative amendment to the Code.[169] According to Mindy Herzfeld, “domestic legislation might still be needed because the dispute resolution process contemplated by Congress requires the IRS to negotiate and sign off on matters involving U.S. taxpayers using authority the agency doesn’t already have.”[170] Other elements of Pillar One may also require legislation.[171]

However, the MLC was unlikely to ever receive two-thirds support in the Senate. As Herzfeld observed, the “U.S. Senate has struggled to ratify even bilateral tax agreements in recent years, and there is even less likelihood of ratification of a multilateral agreement with uncertain benefits for the U.S. fisc and potentially detrimental impact on U.S. benefits.”[172]

Given this reality, the Biden administration considered alternative ways to implement Pillar One without approving it as an Article II treaty. Mindy Herzfeld noted, “[m]embers of the Biden administration have repeatedly said they are looking for ways to implement [Pillar One] that would not involve Senate ratification of a multilateral tax treaty. None of those paths are linear, and it is far from certain whether any can be accomplished.”[173] Then-Treasury Secretary Janet Yellen stated in a Senate hearing in 2022 that “the ratification requires Congress’s approval. I think there is no doubt about it, but the form that that needs to take is still to be determined.”[174] Neil MacBride, the Treasury Department’s general counsel, said in his nomination hearing that Pillar One implementation “could occur through several means, such as through an Article II treaty, a congressional executive agreement, or through legislation overriding the existing treaties.”[175]

On October 8, 2021, Senators Mike Crapo, James Risch, and Pat Toomey—then the ranking members of the Senate Finance, Foreign Relations, and Banking Committees, respectively—sent a letter to Secretary Yellen noting that they were “extremely concerned with the Administration’s recent suggestions it is considering circumventing the Senate’s constitutional treaty authority.”[176] They referred to the possibility of implementing Pillar One through a congressional-executive agreement or legislation overriding existing treaties. They argued that “the nature of changes required to implement Pillar One necessitates the conclusion of a treaty, not a congressional-executive agreement or other legislative override.” They expressed the position that significant changes to Article II treaties should be approved through an Article II treaty.[177] The letter noted, “Bypassing this process to override our bilateral tax treaties would irreparably erode the exclusive treaty authority the Constitution provides to the Senate.”[178] Additionally, the letter raised concerns about U.S. companies’ competitiveness if Pillar One were to be implemented without a multilateral treaty that provides a binding dispute resolution system.[179] Finally, the letter criticized the Biden administration for failing to “meaningfully consult our members on the potential treaty or legislative action that would be necessary to fully carry out the Pillar One agreement.”[180] In another letter from December 2021, the Republican members of the Senate Finance Committee raised similar concerns, stating that “any suggestion that Pillar One can be implemented absent treaty ratification is a dramatic shift from past precedent and calls into question the binding nature of any such agreement, thereby threatening the very tax certainty that many of our companies, and this Administration, claim to seek under Pillar One.”[181]

These letters argue that an Article II treaty is not interchangeable with a congressional-executive agreement in this context. The fact that the interchangeability debate has not been resolved by the courts adds to the uncertainty regarding potential constitutional challenges: There is a risk that courts may void the MLC if it is approved as a congressional-executive agreement. As noted by Herzfeld, “[t]he odds of such an agreement holding up become even slimmer once the judiciary is taken into account.”[182]

Eventually, the Biden administration did not make any public effort to advance Pillar One, which was described as “dead on arrival” in Congress.[183] The fact that the MLC takes effect only if the United States ratifies it gives a minority in the Senate (assuming the MLC should be approved as an Article II treaty) a veto power over the international rollout of Pillar One.[184] Robert Goulder asked, “[w]hy delegate effective veto power to the United States when it’s abundantly clear that the MLC will never get close to 67 votes in the Senate?”[185] He noted,

Seen for what it is, the MLC’s point system is the equivalent of the French revolutionaries asking Louis XVI for permission to storm the Bastille. The point scheme makes sense only if you accept the premise that nothing can happen in international taxation without U.S. consent. OK, I get that it’s the world’s biggest economy—but if those are the ground rules, why bother to contemplate transformative change when the United States is content with the status quo?[186]

Even if Pillar One were to be implemented through legislation authorizing a congressional-executive agreement, it is unclear whether the required legislation could be passed through the reconciliation process to avoid the sixty-vote threshold for cloture in the Senate.[187] Herzfeld commented that “it’s really questionable whether the reconciliation process could be used for something like an international agreement.”[188] In particular, it is doubtful whether Pillar One’s dispute resolution mechanism satisfies the requirements under the Byrd rule.[189]

There are several lessons from the Pillar One saga. First, an international tax reform that requires U.S. Senate approval as an Article II treaty is likely to fail absent broad, bipartisan support. Second, future U.S. administrations may try to break from tradition and approve international tax reforms as congressional-executive agreements. While such agreements are more likely to be approved than Article II treaties, especially if they can be passed through the reconciliation process, it is uncertain whether this route is viable, either politically or constitutionally.

C. “Treaty Avoidance” Strategies

In addition to the failure of Pillar One, the difficulty of entering into treaties with the United States has influenced the development of other international tax standards. The most important impact has been the adoption of what we refer to as “treaty avoidance” strategies by U.S. administrations and foreign governments in the design of international tax standards: designing international tax reforms that can be implemented effectively without needing U.S. Senate approval for an Article II treaty.[190]

The first relevant category comprises standards that do not require any form of international agreement or treaty. Pillar Two,[191] changes to transfer pricing rules,[192] and some other international tax standards and reforms follow what has been described as “coordinated unilateralism” in international taxation. According to Ruth Mason, coordinated unilateralism involves “nonbinding standards that reflect pooled technical expertise, are set cooperatively, and are implemented via domestic law or administrative regulation rather than a treaty.”[193] Rebecca Kysar stated that “the structure of the global tax deal shows that leveraging ‘coordinated unilateralism,’ or domestic measures that are heavily synchronized and enforced through multilateral processes, is a promising avenue for international economic governance as opposed to pursuing true multilateral treaties. Such unilateralism is most likely effective when coupled with mechanisms incentivizing adoption or discouraging defection.”[194]

The second relevant category includes standards that require international agreements that can be entered into as executive agreements. As noted, TIEAs have been implemented through executive agreements. CbCR has been implemented through Treasury regulations and executive agreements (CAAs) that facilitate the information exchange pursuant to existing treaties, the MAAC, or TIEAs, which can also be entered into as executive agreements.[195] The Crypto-Asset Reporting Framework could be partially implemented in a similar manner.[196]

When considering the use of executive agreements in lieu of Article II treaties in this context, it is helpful to distinguish between two distinct issues concerning the approval of tax agreements as Article II treaties. The first is the difficulty of approving bilateral tax treaties due to Senator Paul’s objections. The second is the broader congressional opposition to certain international tax reforms, such as Pillar One. Executive agreements have been used to address, to some extent, the first problem by entering into TIEAs and other executive agreements that would have likely been blocked had they been submitted to the Senate as Article II treaties. However, it would be difficult for the executive branch to use executive agreements without congressional approval to address the second problem. To implement controversial reforms, congressional-executive agreements with explicit congressional approval are likely to face fewer political and legal challenges than agreements without clear congressional authorization.

Multilateral treaties continue to play an important role, but only where U.S. non-participation does not undermine the treaties’ purpose. A notable example is the Multilateral Instrument (MLI)—a multilateral convention used to modify bilateral tax treaties to implement reforms from the BEPS project.[197] Since its opening in 2017, over 100 jurisdictions, including nearly all OECD countries, have signed it.[198] The United States, however, has indicated no intention to join it.[199] Unlike Pillar One, U.S. non-participation does not prevent other countries from adopting the relevant reforms by joining the MLI. The broad participation of many states—including EU member states, the United Kingdom, India, China, and others—shows that the rest of the world is able and willing to enter into treaties to implement international tax standards, leaving room for treaties where they can serve their role without U.S. participation.[200]

These strategies impose constraints on the possible forms of legal instruments and the contents of legal norms. For example, to address problems of tax avoidance or evasion, the U.S. government can conduct information exchange standards like CbCR through executive agreements and strengthen transfer pricing rules through regulations. However, considering the difficulty of obtaining Senate approval for a treaty, the United States is unlikely to join treaties that change the allocation of taxing rights or adopt tax collection mechanisms.[201] This means that treaty avoidance strategies may lead to second-best reforms where the best solutions require treaties with U.S. participation. These strategies may raise additional concerns. Pillar Two, for example, has been criticized for potentially violating existing tax and investment treaties and for applying extraterritorial measures lacking legitimacy.[202] Another concern is that future U.S. administrations may find it easier to withdraw from executive agreements and reverse the actions of previous administrations.[203] Legislation offers more stability, and there is a debate on the President’s power to terminate treaties.[204]

Proponents of treaty avoidance strategies would argue that they provide solutions where treaty-based standards are not feasible given the likely inability to implement them with U.S. participation. Concerns raised by these strategies should be assessed against the benefits from the relevant standards.[205]

IV. Impact on Global Tax Governance

This Part considers how the difficulty of entering into treaties with the United States may influence developments in global tax governance, including the risks of growing bifurcation and problems arising from U.S. non-participation.

The global tax governance system is decentralized.[206] In general, countries’ fiscal sovereignty means that each country can adopt its own tax rules independently.[207] However, international cooperation is needed to address problems of tax avoidance and evasion, resolve disputes, allocate taxing rights, and reduce compliance and administration costs.[208]

The OECD is the leading international organization in international tax policy.[209] The United States is a founding member of the OECD and its largest funder.[210] The U.S. Senate approved the Convention on the Organisation for Economic Co-operation and Development[211] as an Article II treaty in 1961.[212] Especially over the past decade, the OECD has played a central role in developing international tax reforms, negotiating with both OECD and non-OECD countries, reaching agreements, and monitoring their implementation.[213] As observed by Miranda Stewart, “[t]he OECD has been quite successful in building global governance of tax administration.”[214]

Per the OECD Convention, the OECD’s decisions and recommendations “shall be made by mutual agreement of all the Members” and “[n]o decision shall be binding on any Member until it has complied with the requirements of its own constitutional procedures.”[215] This consensus requirement raises concerns that OECD policies may reflect the lowest common denominator agreed upon by all OECD members.[216] Nevertheless, the OECD Secretariat has managed to reach consensus on significant international tax reforms, such as the Common Reporting Standard (2014), the BEPS project (2015), and the Two-Pillar reforms.[217]

Importantly, the OECD has played a key role in developing international tax standards that can be implemented without any congressional action.[218] This has angered U.S. lawmakers, with one arguing that the “OECD global tax project is effectively controlled by Europe” and that “the deck is stacked against America at the OECD.”[219] Another Republican lawmaker noted that “[m]y colleagues in the House of Representatives and I are already working to revoke funding for the OECD. We should not be the largest funding source for an organization that wants to collude to steal away U.S. jobs and tax revenues.”[220] Against this backdrop, it appears unlikely that the Senate will approve any new treaty to facilitate a global governance mechanism for international tax reforms that may not be aligned with U.S. interests.

The United Nations is now working toward establishing a UN Framework Convention on International Tax Cooperation (the UN Tax Convention).[221] This initiative responds to shortcomings in the current system, which arguably lacks adequate legitimacy and inclusiveness.[222] The convention aims to transform global tax governance, as its objectives are to “[e]stablish fully inclusive and effective international tax cooperation in terms of substance and process” and “[e]stablish a system of governance for international tax cooperation capable of responding to existing and future tax and tax-related challenges on an ongoing basis.”[223] Both the Biden and Trump administrations have opposed this project, citing concerns that the convention may not follow a consensus-based approach to decision making.[224]

In February 2025, the U.S. government walked out of the negotiations, stating the following:

The United States takes this opportunity to state firmly and clearly that the goals of a future UN Framework Convention on International Tax Cooperation are inconsistent with U.S. priorities and represent unwelcome overreach. We do not plan to participate further in this organizational session, process, or negotiating United Nations Framework Convention on International Tax Cooperation text.

. . . .

. . . The United States intends to reject the outcomes of this Framework Convention process and oppose them. We welcome others to join us in opposition.[225]

Even if the UN Tax Convention met the U.S. government’s requirements—including its demand for consensus-based decision making similar to the OECD—there is no guarantee that the convention would be approved by the Senate as an Article II treaty. The Republican stance on the OECD and international tax governance indicates that the Senate may oppose any treaty aiming to facilitate international tax coordination and reforms. Consequently, the U.S. government may have little bargaining power in the negotiations, as it cannot reliably commit to participating in any treaty for global tax governance even if its requirements are met. This may influence other countries to design the convention without regard to the U.S. position given its likely non-participation.

The international tax system is becoming increasingly bifurcated, with different international tax standards applying to the United States and the rest of the world.[226] If countries enhance their cooperation through a treaty-based tax governance framework without U.S. participation, it will likely further exacerbate this bifurcation. From a U.S. perspective, this may erode U.S. influence in global tax matters. It may also lead to international tax standards less favorable to U.S. stakeholders. However, the United States will likely continue to have a significant influence even if it remains outside international tax standards and governance mechanisms.[227] Other countries would need to address problems arising from U.S. non-participation, which may undermine the effectiveness of certain international tax standards.[228]

Conclusion

The Treaty Clause and other Senate supermajority requirements have shaped international tax law by forcing both U.S. administrations and the global tax community to seek alternative legal instruments instead of treaties and laws requiring a supermajority approval. At the U.S. domestic level, the near-century-long tradition of approving tax treaties as Article II treaties may be eroding. While the approval of Article II treaties in the Senate has almost ceased since 2011, there is a sharp increase in the use of executive agreements for information exchange for tax purposes. The pending legislation for approving a tax treaty with Taiwan as a congressional-executive agreement may serve as a precedent for future international tax agreements. Future administrations may attempt to pass multilateral tax reforms as congressional-executive agreements, as considered by the Biden administration for Pillar One. Yet it remains uncertain whether and to what extent executive agreements will be used instead of Article II treaties in tax matters in the future.

At the international level, the inability to enter into tax treaties with the United States has influenced the legal design of several international tax reforms. Several reforms employ treaty avoidance strategies, such as coordinated unilateralism and reliance on executive agreements. However, standards employing these strategies may produce inferior outcomes and raise additional concerns such as treaty violation, extraterritoriality, and lack of legitimacy.

The global tax governance landscape is likely to become more bifurcated if other countries enhance their cooperation through treaties, which the Senate is unlikely to approve. This raises the risks of eroding U.S. influence in global tax matters, potentially leading to international standards less favorable to U.S. stakeholders and inferior to those that would have been achieved with U.S. participation. Understanding these effects is important for policymakers, academics, practitioners, and others seeking solutions to the problems of cross-border tax avoidance and evasion.

  1. * Associate Professor, Faculty of Law, The Chinese University of Hong Kong. ↑

  2. ** Professor of Law, Yeshiva University Benjamin N. Cardozo Law School. ↑

  3. *** Irwin I. Cohn Professor of Law, University of Michigan Law School. We are grateful to participants of the Washington University Law Review’s Symposium, Amanda Leon, Lawrence Liu, and Diane Ring, for helpful comments. Nur Zeynep Karageldi and Daniel Katz provided excellent research assistance. ↑

  4. . See, e.g., EU Tax Observatory, Global Tax Evasion Report 2024 (2024), https://
    http://www.taxobservatory.eu//www-site/uploads/2023/10/global_tax_evasion_report_24.pdf [https://perma
    .cc/F5ZL-TF86]. ↑

  5. . See generally Richard Gardiner, Treaties (2023). ↑

  6. . U.S. Const. art. II, § 2, cl. 2. Throughout this Article, any reference to Senate approval of Article II treaties means the Senate’s advice and consent with respect to these treaties. ↑

  7. . See generally Valerie Heitshusen, Cong. Rsch. Serv., RL30360, Filibusters and Cloture in the Senate (2017). While this Article focuses on the Treaty Clause’s supermajority requirement, Senate rules concerning cloture and budget reconciliation are also relevant, as discussed infra Parts II and III. A detailed discussion of these rules is outside the scope of this Article. ↑

  8. . See infra Part I. ↑

  9. . Tax treaties discussed here are generally bilateral conventions between the U.S. government and the governments of other countries for the avoidance of double taxation and the prevention of tax evasion. For further discussion, see IRS Pub. No. 901, U.S. Tax Treaties (2024), https://www.irs.gov/
    pub/irs-pdf/p901.pdf [https://perma.cc/G8ZC-NMZK]. ↑

  10. . See infra Section II.A. ↑

  11. . See infra Section II.B. ↑

  12. . See infra Section II.C. ↑

  13. . See infra Section III.A. ↑

  14. . See infra Section III.B. ↑

  15. . See infra Section III.B. ↑

  16. . See infra Section III.B. ↑

  17. . See infra Section III.C. ↑

  18. . See infra Section III.C. ↑

  19. . See infra Section III.C. ↑

  20. . See infra Part IV. ↑

  21. . See infra Part IV. ↑

  22. . See Stephen P. Mulligan, Cong. Rsch. Serv., LSB11048, International Agreements (Part I): Overview and Agreement-Making Process (2023), https://www.congress
    .gov/crs-product/LSB11048 [https://perma.cc/Q6GG-UFKF]. ↑

  23. . See id.; U.S. Const. art. II, § 2, cl. 2. ↑

  24. . See Mulligan, supra note 19, at 2. ↑

  25. . See id. ↑

  26. . See id. For an in-depth discussion of this debate, see Oona A. Hathaway, Treaties’ End: The Past, Present, and Future of International Lawmaking in the United States, 117 Yale L.J. 1236, 1243–48 (2008). ↑

  27. . Id. at 1243. ↑

  28. . Mulligan, supra note 19, at 2. For further discussion, see Rebecca M. Kysar, On the Constitutionality of Tax Treaties, 38 Yale J. Int’l L. 1, 49–51, 55 (2013). ↑

  29. . A comprehensive discussion of the interchangeability debate in this context is outside the scope of this Article. This short discussion outlines some of the key positions on this issue. ↑

  30. . See, e.g., Restatement (Third) of the Foreign Rels. L. of the U.S. § 303 cmt. e (Am. L. Inst. 1987) (“The prevailing view is that the Congressional-Executive agreement can be used as an alternative to the treaty method in every instance.”). ↑

  31. . See infra Section II.C. ↑

  32. . See generally Peter J. Spiro, Treaties, Executive Agreements, and Constitutional Method, 79 Tex. L. Rev. 961 (2001) (analyzing historical practices to establish constitutional norms). ↑

  33. . Letter from Mike Crapo et al., U.S. Sens., to Janet Yellen, Sec’y, Dep’t of the Treasury (Dec. 22, 2021), https://www.finance.senate.gov/imo/media/doc/republican_letter_to_treasury_oecd.pdf [https
    ://perma.cc/WKZ7-ZPR4]. ↑

  34. . This position was raised by Republican senators in the context of Pillar One. See infra Section III.B. However, regular tax legislation can override existing tax treaties. A convention approval through regular legislation is not substantially different from any other treaty override. For a discussion of treaty overrides, see the sources cited infra note 57. ↑

  35. . Kysar, supra note 25, at 5. ↑

  36. . U.S. Const. art. I, § 7, cl. 1 (“All Bills for raising Revenue shall originate in the House of Representatives; but the Senate may propose or concur with Amendments as on other Bills.”); Kysar, supra note 25, at 24–28. ↑

  37. . Kysar, supra note 25, at 6. ↑

  38. . Id. at 5. She further notes that congressional-executive agreements may be easier to enact than Article II treaties. See id. at 36 n.221 (“In some circumstances, however, congressional-executive agreements may be easier to enact than Article II treaties. After all, the two-thirds requirement of the Treaty Clause exceeds the simple majority vote required to pass a congressional-executive agreement. At least partially due to the high voting requirement of the Treaty Clause, nearly fifty treaties remain pending before the Senate, with the oldest dating back to 1949. Although congressional-executive agreements may be subject to a filibuster, such an act entails political costs and can be overcome by a lower sixty-vote supermajority on cloture. Additionally, some congressional-executive agreements follow a fast track process that waives the possibility of a filibuster. See, e.g., Trade Act of 1974 § 151, Pub. L. No. 93-617, 88 Stat. 1978, 2001 (1975) (codified at 19 U.S.C. § 2191 (2006)) (expired 2007). Also, Article II treaties proceed through the Senate Foreign Relations Committee, while congressional-executive agreements move through the relevant subject matter committees. As a result, congressional-executive agreements may face less opposition when the subject matter committees are less hostile to the international agreement than the Senate Foreign Relations Committee. Of course, the opposite may also be true.” (citations omitted)). ↑

  39. . John C. Yoo, Laws as Treaties?: The Constitutionality of Congressional-Executive Agreements, 99 Mich. L. Rev. 757, 821 (2001). ↑

  40. . Id. at 823. ↑

  41. . Id. at 811 n.218. ↑

  42. . Curtis A. Bradley & Jack L. Goldsmith, Presidential Control over International Law, 131 Harv. L. Rev. 1201, 1209 (2018). ↑

  43. . See id. at 1210. ↑

  44. . Spiro, supra note 29, at 1002. ↑

  45. . Christopher T. Zirpoli, Cong. Rsch. Serv., R47679, Congressional and Executive Authority over Foreign Trade Agreements, at 3 (2023), https://www.congress.gov/crs_external
    _products/R/PDF/R47679/R47679.1.pdf [https://perma.cc/KN9F-YV5P]. ↑

  46. . Douglas A. Irwin, From Smoot-Hawley to Reciprocal Trade Agreements: Changing the Course of U.S. Trade Policy in the 1930s, in The Defining Moment: The Great Depression and the American Economy in the Twentieth Century 325, 331 (Michael D. Bordo, Claudia Goldin & Eugene N. White eds., 1998) (“As a practical matter, the congressionally set tariff proved to be nonnegotiable. Under his foreign policy powers, the president could always negotiate a tariff reduction treaty with another country. However, the measure would not just require the approval of two-thirds of the Senate but implicitly require House approval as well because it would involve a revenue matter. Knowing that the executive could not commit to the implementation of any signed agreement, foreign countries were reluctant to negotiate with the United States. Just three major trade agreements—with Canada (1855–66), Hawaii (1876–1900), and Cuba (1903–34)—were enacted during this period.”). Several laws authorized the executive branch to negotiate and reduce tariffs, although “these measures . . . amounted to half-hearted tinkering and proved to be short lived.” Id. at 332. ↑

  47. . Adam Looney & Elena Patel, Why Does the Executive Branch Have So Much Power Over Tariffs?, Brookings Inst. (Jan. 15, 2025), https://www.brookings.edu/articles/why-does-the-executive
    -branch-have-so-much-power-over-tariffs/ [https://perma.cc/BD2U-RDNS]. ↑

  48. . See id. ↑

  49. . Zirpoli, supra note 42, at 7–8. The “fast-track” trade authority, formally known as the Trade Promotion Authority (TPA), was used to negotiate and implement bilateral and regional free-trade agreements. The TPA “expired on July 1, 2021, leaving this framework for congressional-executive trade agreements unavailable unless Congress chooses to reauthorize it.” Id. at 5. ↑

  50. . Zirpoli, supra note 42, at ii. The ongoing debate on these sole executive agreements or “hybrid” agreements in trade is outside the scope of this Article. ↑

  51. . Matthew Schaefer, Self-Executing International Agreements and Private Rights of Action: Revisiting the 4th Restatement of Foreign Relations Law in the Context of International Trade and Investment Agreements, 45 U. Pa. J. Int’l L. 743, 764 (2024) (“The first United States BIT entered into force in 1989, and the most recent one with Rwanda entered into force in 2012. The United States also has an investment chapter in its free trade agreements with twenty additional countries that have provisions mimicking BIT provisions, i.e., essentially BITs engrafted into free trade agreements, but those trade agreements with investment chapters are approved as [congressional-executive agreements].”). ↑

  52. . See id.; Martin A. Weiss & Shayerah I. Akhtar, Cong. Rsch. Serv., IF10052, U.S. International Investment Agreements (IIAs) 1 (2022), https://www.congress.gov/crs-product/IF
    10052 [https://perma.cc/YN83-FYAP]. ↑

  53. . See Schaefer, supra note 48, at 764. ↑

  54. . 11 U.S. Dep’t of State, Foreign Affs. Manual § 720 (2006), https://fam.state.gov/fam/11fam/11fam0720.html [https://perma.cc/NR94-3788]. ↑

  55. . Id. § 723.3. ↑

  56. . See Yoo, supra note 36, at 771–73; Zirpoli, supra note 42, at 7 (“As a practical matter, courts are unlikely to entertain claims that congressional-executive FTAs are an unconstitutional alternative to treaties, as at least one appellate court has dismissed such a lawsuit as presenting a ‘political question’ to be decided by Congress and the President.”). ↑

  57. . Diane Ring, When International Tax Agreements Fail at Home: A U.S. Example, 41 Brook. J. Int’l L. 1185, 1194–97 (2016). ↑

  58. . See id. at 1195. For further discussion on whether tax treaties are self-executing, see Kysar, supra note 25, at 22–23. ↑

  59. . I.R.C. § 894(a)(1). See Ring, supra note 54, at 1195. Cf. Kysar, supra note 25, at 24 (contending that tax treaties fall within the scope of the Constitution’s Origination Clause and thus require bicameral approval); U.S. Const. art. I, § 7, cl. 1. ↑

  60. . For a discussion of treaty overrides, see, for example, Reuven S. Avi-Yonah, Tax Treaty Overrides: A Qualified Defense of U.S. Practice, in Tax Treaties and Domestic Law 65, 69 (Guglielmo Maisto ed., 2006); Anthony C. Infanti, Curtailing Tax Treaty Overrides: A Call to Action, 62 U. Pitt. L. Rev. 677 (2001); Mark J. Wolff, Congressional Unilateral Tax Treaty Overrides: The “Latter in Time Doctrine” Is Out of Time!, 9 Fla. Tax Rev. 699 (2009). ↑

  61. . United States Income Tax Treaties – A to Z, IRS (Jan. 3, 2026), https://www.irs.gov/busin
    esses/international-businesses/united-states-income-tax-treaties-a-to-z [https://perma.cc/5R9H-CPLS]. The treaties with Russia and Belarus have been partially suspended. Id. The treaty with Hungary has been terminated. Id. For a discussion of the different functions of tax treaties, see Reuven S. Avi-Yonah, Double Tax Treaties: An Introduction, in The Effect of Treaties on Foreign Direct Investment: Bilateral Investment Treaties, Double Taxation Treaties, and Investment Flows 99 (Karl P. Sauvant & Lisa E. Sachs eds., 2009); Reuven Avi-Yonah, Guest Editorial, Does the US Need Tax Treaties?, 54 Intertax 244 (2026); Rebecca M. Kysar, Unraveling the Tax Treaty, 104 Minn. L. Rev. 1755 (2020). ↑

  62. . See Reuven Avi-Yonah, Guest Editorial Note, The First US Tax Treaty and Its Influence, 52 Intertax 5, 5–6 (2024). France ratified the treaty in 1935. See id. ↑

  63. . See Table 3. List of Tax Treaties, IRS (Sept. 26, 2025), https://www.irs.gov/pub/irs-lbi/table-3-list-of-tax-treaties.pdf [https://perma.cc/5T2V-WBNH]; United States Income Tax Treaties – A to Z, supra note 58. ↑

  64. . Tax Convention, U.S.-Chile, Feb. 4, 2010, S. Treaty Doc. No. 112-8 (entered into force Dec. 19, 2023). ↑

  65. . Spiro, supra note 29, at 1003 n.195 (“Extradition, bilateral investment, and tax agreements, for example, all appear exclusively to have been concluded as Article II treaties.”). ↑

  66. . Estate & Gift Tax Treaties (International), IRS (Sept. 8, 2025), https://www.irs.gov/busines
    ses/small-businesses-self-employed/estate-gift-tax-treaties-international [https://perma.cc/5KK2-JKFJ]. ↑

  67. . Rocco V. Femia & Layla J. Aksakal, The Use of Tax Treaty Status in Legislation and the Impact on U.S. Tax Treaty Policy, 58 Tax Notes Int’l 341, 341 (2010). ↑

  68. . See, e.g., id. at 342 n.5 (discussing the Senate’s objections to treaties with Brazil and Argentina). ↑

  69. . Senate Gives Advice and Consent to Ratification of Four Bilateral Tax Treaties, 113 Am. J. Int’l L. 818, 818 (2019). ↑

  70. . See id. ↑

  71. . See Ring, supra note 54, at 1197. ↑

  72. . See id. at 1197–98. ↑

  73. . See Senate Gives Advice and Consent to Ratification of Four Bilateral Tax Treaties, supra note 66, at 819. ↑

  74. . See Senate Gives Advice and Consent to Ratification of Four Bilateral Tax Treaties, supra note 66, at 819–20. ↑

  75. . 169 Cong. Rec. S2157–58 (daily ed. June 21, 2023). ↑

  76. . See Jason R. Connery, Seth Green & Quyen Huynh, KPMG LLP, Current Status of U.S. Tax Treaties and International Tax Agreements 4–5, 10 (Jan. 1, 2026). ↑

  77. . Ring, supra note 54, at 1201. ↑

  78. . The protocols with Spain, Japan, Switzerland, and Luxembourg, and the treaty with Chile were approved by the votes of at least 93 senators. 169 Cong. Rec. S2157–58; Senate Gives Advice and Consent to Ratification of Four Bilateral Tax Treaties, supra note 66, at 819–20. ↑

  79. . See Tax Information Exchange Agreements (TIEAs), U.S. Dep’t of the Treasury, https://home.treasury.gov/policy-issues/tax-policy/tax-information-exchange-agreements-tieas [https://
    perma.cc/HC6T-9ZYQ]; U.S. Model Income Tax Convention, art. 26 (U.S. Dep’t of the Treasury, 2016). While these agreements aim to deter and detect tax evasion, their effectiveness might have been limited. See, e.g., David M. Kemme, Bhavik Parikh & Tanja Steigner, Tax Havens, Tax Evasion and Tax Information Exchange Agreements in the OECD, 23 Eur. Fin. Mgmt. 519, 521 (2017). However, these agreements and the information exchange provisions in tax treaties can be seen as an important step in developing the information exchange framework that later evolved into more effective automatic exchange of information standards. ↑

  80. . For a complete list of TIEAs in force, see Connery et al., supra note 73, at 9–10 (listing the following jurisdictions as having TIEAs in force with the United States: Antigua & Barbuda, Argentina, Aruba, Bahamas, Bermuda, Brazil, British Virgin Islands, Cayman Islands, Colombia, Costa Rica, Dominica, Dominican Republic, Ecuador, Gibraltar, Grenada, Guernsey, Guyana, Honduras, Hong Kong, Isle of Man, Jersey, Liechtenstein, Marshall Islands, Mauritius, Monaco, Netherlands Antilles, Panama, Peru, Singapore, St. Lucia, Uruguay; this publication also lists TIEAs with Mexico, Barbados, Jamaica, and Trinidad & Tobago that were subsequently replaced with tax treaties with the United States). ↑

  81. . I.R.C. §§ 212(a)(1)(A), 274(h)(6)(B), (C)(i). ↑

  82. . I.R.C. § 274(h)(6)(C)(i). I.R.C. § 274(h)(6)(C)(ii) allows for the nondisclosure of certain qualified confidential information sought for civil tax purposes if specific requirements are met. I.R.C. § 274(h)(6)(D) provides that such exchange of information agreement “shall be treated as an income tax convention for purposes of section 6103(k)(4),” which permits the disclosure of a return or return information to foreign competent authorities “to the extent provided in, and subject to the terms and conditions of, such convention or bilateral agreement.” I.R.C. § 6103(k)(4). I.R.C. § 274(h)(6)(D) also provides that the “Secretary may exercise his authority under subchapter A of chapter 78 to carry out any obligation of the United States under an agreement referred to in subparagraph (C).” ↑

  83. . 18 F.3d 1311, 1314 (5th Cir. 1994). ↑

  84. . Id. ↑

  85. . FSC Repeal and Extraterritorial Income Exclusion Act of 2000, Pub. L. No. 106-519, § 2, 114 Stat. 2433, 2433. ↑

  86. . Susan Morse, Why FATCA Intergovernmental Agreements Bind the U.S. Government, 70 Tax Notes Int’l 245, 246 (2013). ↑

  87. . Agreements with non-beneficiary countries entered after the repeal of I.R.C. § 927 include, among others, TIEAs with Brazil, Colombia, Costa Rica, Ecuador, Gibraltar, Guernsey, Hong Kong, Isle of Man, Jersey, Liechtenstein, Mauritius, Monaco, Panama, Singapore, and Uruguay. Connery et al., supra note 73, at 9. ↑

  88. . Morse, supra note 83, at 246. Congress repealed the FSC rules following World Trade Organization rulings. ↑

  89. . Id. ↑

  90. . Hiring Incentives to Restore Employment Act, Pub. L. No. 111-147, §§ 501–535, 124 Stat. 71, 97–115 (2010). For further background about FATCA, see William H. Byrnes, LexisNexis Guide to FATCA and CRS Compliance (2025); Noam Noked, FATCA, CRS, and the Wrong Choice of Who to Regulate, 22 Fla. Tax Rev. 77 (2018). FATCA is described by the IRS as “an important development in U.S. efforts to combat tax evasion by U.S. persons holding accounts and other financial assets offshore.” Summary of FATCA Reporting for U.S. Taxpayers, IRS (Sept. 18, 2025), https://www.irs.gov
    /businesses/corporations/summary-of-fatca-reporting-for-us-taxpayers [https://perma.cc/7WFG-D995]. Empirical studies have documented multi-billion-dollar reductions in investment flows from tax havens following FATCA implementation. See, e.g., Lisa de Simone, Rebecca Lester & Kevin Markle, Transparency and Tax Evasion: Evidence from the Foreign Account Tax Compliance Act (FATCA), 58 J. Acct. Rsch. 105 (2020). As discussed below, much of the global FATCA implementation is facilitated under the IGAs. While FATCA has significantly increased tax transparency, more reforms are required in order to counter tax evasion effectively. See, e.g., Noam Noked, Tax Evasion and Incomplete Tax Transparency, 7 Laws, issue no. 3, art. no. 31 (2018); Noam Noked & Zachary Marcone, The International Response to the U.S. Tax Haven, 48 Yale J. Int’l L. 177 (2023); Noam Noked & Zachary Marcone, Closing the “Shell Bank” Loophole, 64 Va. J. Int’l L. 119 (2023). ↑

  91. . I.R.C. § 1472(a). ↑

  92. . FATCA Information for Governments, IRS (Feb. 5, 2026), https://www.irs.gov/businesses
    /corporations/fatca-governments [https://perma.cc/9BPG-TJ2J]. ↑

  93. . See id. ↑

  94. . For a list of the IGAs, see Foreign Account Tax Compliance Act, U.S. Dep’t of the Treasury, https://home.treasury.gov/policy-issues/tax-policy/foreign-account-tax-compliance-act [http
    s://perma.cc/R2KN-ANUY]. ↑

  95. . For further discussion, see Noked, FATCA, CRS, and the Wrong Choice of Who to Regulate, supra note 87, at 85–86. ↑

  96. . See Competent Authority Arrangements, IRS (Jan. 15, 2026), https://www.irs.gov/individuals
    /international-taxpayers/competent-authority-arrangements [https://perma.cc/F6D2-4J4N%5D. The CAAs are made pursuant to the IGAs to implement the procedures provided therein. ↑

  97. . I.R.C. § 1474(f). ↑

  98. . I.R.C. § 1471(b)(2). ↑

  99. . Preamble to Final Regulations Relating to Information Reporting by FFIs and Withholding on Certain Payments to FFIs and Other Foreign Entities, 78 Fed. Reg. 5874, 5874–78 (Jan. 28, 2013) (to be codified at 26 C.F.R. pts. 1, 301). ↑

  100. . Foreign Account Tax Compliance Act, supra note 91. ↑

  101. . See Allison Christians, The Dubious Legal Pedigree of IGAs (and Why It Matters), 69 Tax Notes Int’l 565 (2013). ↑

  102. . See id. at 566. As discussed in Section II.B.1, there is little support for the position that IGAs with non-beneficiary countries should be considered exchange of information agreements pre-authorized by Congress under I.R.C. § 274(h)(6)(C)(i). ↑

  103. . See Foreign Account Tax Compliance Act, supra note 91. ↑

  104. . See supra Section II.B.1. ↑

  105. . See Christians, supra note 98, at 566–67. ↑

  106. . See id. at 567. ↑

  107. . Id. ↑

  108. . Morse, supra note 83, at 247. She also expresses the position that the IGAs bind the U.S. government as administrative guidance even if they are not legally valid as international agreements. Id. ↑

  109. . See Christians, supra note 98, at 567. ↑

  110. . Crawford v. Dep’t of the Treasury, 868 F.3d 438, 450 (6th Cir. 2017). ↑

  111. . Id. ↑

  112. . Id. ↑

  113. . Id. For further discussion, see Erika K. Lunder & Carol A. Pettit, Cong. Rsch. Serv., R44616, FATCA Reporting on U.S. Accounts: Recent Legal Developments 10–11 (2016). ↑

  114. . See OECD, Transfer Pricing Documentation and Country-by-Country Reporting, Action 13: 2015 Final Report 9 (2015), https://www.oecd.org/content/dam/oecd/en/publications
    /reports/2015/10/transfer-pricing-documentation-and-country-by-country-reporting-action-13-2015-fin
    al-report_g1g58cf0/9789264241480-en.pdf [https://perma.cc/VJC3-3A3L]. For further discussion on CbCR and its importance, see Trade Union Advisory Comm. to the OECD, The Case for Making Country-by-Country Public (2016), https://tuac.org/wp-content/uploads/2017/12/1606t_beps_cbc-rev-1.pdf [https://perma.cc/5GJX-BFYY] (noting that CbCR “is rightly considered to be a game changer on the anti-tax avoidance front”); Noam Noked, Public Country-by-Country Reporting: The Shareholders’ Case for Mandatory Disclosure, 90 Tax Notes Int’l 1501 (2018). ↑

  115. . See OECD, supra note 111. ↑

  116. . Id. ↑

  117. . Id. at 23. ↑

  118. . See James R. McTigue, Jr. et al., U.S. Gov’t Accountability Off., GAO-17-103, International Taxation: Information on the Potential Impact on IRS and U.S. Multinationals of Revised International Guidance on Transfer Pricing 7 (2017), https://
    http://www.gao.gov/assets/gao-17-103.pdf [https://perma.cc/X56S-98F8]; Jane G. Gravelle, Cong. Rsch. Serv., R44900, Base Erosion and Profit Shifting (BEPS): OECD/G20 Tax Proposals 26 (2021). ↑

  119. . Treas. Reg. § 1.6038-4. ↑

  120. . I.R.C. § 6038(a)(1). ↑

  121. . Id. ↑

  122. . Jason M. Osborn & Warren S. Payne, OECD Releases Country-by-Country Reporting Implementation Package; U.S. Implementation Unclear, Mayer Brown (June 15, 2015), https://www.
    mayerbrown.com/-/media/files/perspectives-events/publications/2015/06/oecd-releases-countrybycoun
    try-reporting-implement/files/get-the-full-report/fileattachment/150615-update-tax-it.pdf [https://perma.
    cc/3TR4-A9AN]. ↑

  123. . Country-by-Country Reporting Jurisdiction Status Table, IRS (July 14, 2025), https://
    http://www.irs.gov/businesses/country-by-country-reporting-jurisdiction-status-table [https://perma.cc/8U8T
    -5YH4]. ↑

  124. . See id. For the three model CAAs, see Country-by-Country Reporting Guidance, IRS (May 20, 2025), https://www.irs.gov/businesses/international-businesses/country-by-country-reporting-guid
    ance [https://perma.cc/D4FG-KYV5]. ↑

  125. . U.S. Multinational Enterprises, IRS (Jan. 16, 2026), https://www.irs.gov/businesses/inter
    national-businesses/us-multinational-enterprises [https://perma.cc/4F6F-6LKT]. ↑

  126. . Osborn & Payne, supra note 119. ↑

  127. . Connery et al., supra note 73, at 14–15. ↑

  128. . Treas. Reg. § 1.883-1(h)(1)(iii) (an equivalent exemption may also exist where the foreign country generally does not impose income tax or provides an exemption for the shipping or aviation income, “either by statute, decree, income tax convention, or otherwise”); Treas. Reg. § 1.872-2(a)(2) does not mention the option of exchanging a diplomatic note or entering into an agreement with the United States. ↑

  129. . Rev. Rul. 2008-17, 2008-12 I.R.B. 626, 626–27. This Revenue Ruling updated the previous ruling. Rev. Rul. 2001-48, 2001-2 C.B. 324. ↑

  130. . See Rev. Rul. 2008-17, 628–32; see also Rev. Rul. 2001-48. ↑

  131. . See Jim Border, U.S. Ends Hong Kong Transportation Agreement: The ‘Principle of Least’ Upended?, Law Off. of James R. Border (June 28, 2022), https://globaltaxes.net/2022/06/28/u-s-ends
    -hong-kong-transportation-agreement-the-principle-of-least-upended/ [https://perma.cc/HA79-JHD7]. ↑

  132. . H.R. 33, 119th Cong. (as passed by House, Jan. 15, 2025). ↑

  133. . Id. ↑

  134. . Id. sec. 102, § 894(e)(1) (“This section shall not apply to any period unless the Secretary has determined that Taiwan has provided benefits to United States persons for such period that are reciprocal to the benefits provided to qualified residents of Taiwan under this section.”); id. § 894(e)(2) (“The President or his designee is authorized to exchange letters, enter into an agreement, or take other necessary and appropriate steps relative to Taiwan for the reciprocal provision of the benefits described in this section.”). ↑

  135. . Id. ↑

  136. . S. 199, 119th Cong. sec. 102, § 894A(f) (2025). ↑

  137. . H.R. 33 sec. 203(a). ↑

  138. . Id. sec. 203(b)(4). ↑

  139. . Id. sec. 204. ↑

  140. . Id. sec. 207. ↑

  141. . Id. sec. 210(a)(1). ↑

  142. . Id. sec. 210(a)(3). ↑

  143. . Id. sec. 210(b)(2). ↑

  144. . See generally Bill Heniff Jr., Cong. Rsch. Serv., RL30862, The Budget Reconciliation Process: The Senate’s “Byrd Rule” (2022); Megan S. Lynch & James V. Saturno, Cong. Rsch. Serv., R44058, The Budget Reconciliation Process: Stages of Consideration (2021). Whether such legislation would satisfy the requirements of the Byrd rule is beyond the scope of this Article. ↑

  145. . See supra text accompanying note 24. Notably, the requirement to approve an agreement by the Foreign Relations Committee means that it cannot be approved by budget reconciliation, and thus it may need a cloture vote of sixty senators to end debate. See the sources cited supra note 141 for information about the budget reconciliation process. ↑

  146. . See supra text accompanying note 140. ↑

  147. . See Connery et al., supra note 73, at 9. ↑

  148. . For further background, see Convention on Mutual Administrative Assistance in Tax Matters, OECD, https://www.oecd.org/en/topics/convention-on-mutual-administrative-assistance-in-tax-matters
    .html [https://perma.cc/W9F9-GURH] [hereinafter OECD, Topics: MAAC]. For a discussion of the 2010 protocol and its amendments, see S. Exec. Rep. No. 114-8 (2016), https://www.congress.gov/committee
    -report/114th-congress/executive-report/8/1 [https://perma.cc/8DXS-6SPB]. ↑

  149. . Id. For further discussion on the MAAC and its importance, see Michael Littlewood, Multilateral Tax Reform, in International Tax at the Crossroads 193, 207–08 (Craig Elliffe ed., 2023). ↑

  150. . Jurisdictions Participating in the Convention on Mutual Administrative Assistance in Tax Matters, OECD (Feb. 17, 2026), https://www.oecd.org/content/dam/oecd/en/topics/policy-sub-issues
    /convention-on-mutual-administrative-assistance-in-tax-matters/status_of_convention.pdf [https://perm
    a.cc/3L5C-VVEB] [hereinafter Jurisdictions Participating in the MAAC]. ↑

  151. . See OECD, Topics: MAAC, supra note 145. ↑

  152. . See Jurisdictions Participating in the MAAC, supra note 147, at 6. The approval was subject to several reservations, which excluded assistance in recovery of taxes, as well as other provisions. See Bruce Zagaris, OECD Convention on Mutual Administrative Assistance in Tax Matters, 24 Int’l Law. 872 (1990). ↑

  153. . Convention on Mutual Administrative Assistance in Tax Matters, June 28, 1989, S. Treaty Doc. No. 101-15 (entered into force Apr. 1, 1995), https://www.state.gov/wp-content/uploads/2019
    /02/95-401-Multilateral-Taxation-OECD.pdf [https://perma.cc/7KPN-5544]; Protocol Amending the Convention on Mutual Administrative Assistance in Tax Matters, May 27, 2010, S. Treaty Doc. No. 112-5, https://www.congress.gov/treaty-document/112th-congress/5/document-text [https://perma.cc/8
    XQ3-4G36]. ↑

  154. . Id. at III (“The proposed Protocol amends the existing Convention in order to bring it into conformity with current international standards on exchange of information, as reflected in the Organization for Economic Co-operation and Development’s (OECD) Model Tax Convention on Income and Capital and the current U.S. Model Income Tax Convention. Furthermore, it updates the existing Convention’s rules regarding the confidentiality and permitted uses of exchanged tax information, and opens the existing Convention to adherence by countries other than OECD and Council of Europe members.”). ↑

  155. . See supra Section II.A. ↑

  156. . See Jurisdictions Participating in the MAAC, supra note 147. ↑

  157. . See Noam Noked, “Congress-Proof” International Tax Reforms, 100 Tul. L. Rev. (forthcoming 2026), https://papers.ssrn.com/sol3/papers.cfm?abstract_id=5256594 [https://perma.cc/E8
    JA-H4TB]. ↑

  158. . Statement on a Two-Pillar Solution to Address the Tax Challenges Arising from the Digitalisation of the Economy, OECD (Oct. 8, 2021), https://www.oecd.org/tax/beps/statement-on-a-two-pillar-solution-to-address-the-tax-challenges-arising-from-the-digitalisation-of-the-economy-octobe
    r-2021.pdf [https://perma.cc/3XZ4-DQZU] [hereinafter Statement on a Two-Pillar Solution]. For further discussion on Pillar One and its potential importance, see Reuven S. Avi-Yonah & Young Ran (Christine) Kim, The International Tax Revolution (2025); John Vella, What Is Wrong with the International Business Tax System?, 27 J. Int’l Econ. L. 596 (2025). ↑

  159. . See Statement on a Two-Pillar Solution, supra note 155, at 1–3. ↑

  160. . Id. The threshold is expected to decrease to 10 billion euros after seven years of successfully implementing Pillar One and a one-year review period. Id. ↑

  161. . Id. ↑

  162. . Id. at 2. The OECD estimated in 2023 that Pillar One is “expected to allocate taxing rights on about USD 200 billion in profits to market jurisdictions annually,” which is “expected to lead to annual global tax revenue gains of between USD 13–36 billion, based on 2021 data.” See Press Release, OECD, Revenue Impact of International Tax Reform Better than Expected (Jan. 18, 2023), https://www.oecd.org/en/about/news/press-releases/2023/01/revenue-impact-of-international-tax-refor
    m-better-than-expected.html [https://perma.cc/E2D3-LQNN]. ↑

  163. . See Statement on a Two-Pillar Solution, supra note 155, at 3. ↑

  164. . See id. ↑

  165. . Multilateral Convention to Implement Amount A of Pillar One, OECD (Oct. 11, 2023), https://www.oecd.org/en/topics/sub-issues/reallocation-of-taxing-rights-to-market-jurisdictions/multila
    teral-convention-to-implement-amount-a-of-pillar-one.html [https://perma.cc/MK6J-A595]. ↑

  166. . Id. at art. 48(b). ↑

  167. . Id. at Annex I, tbl.2. ↑

  168. . See Pillar One Update from the Co-Chairs of the Inclusive Framework on BEPS, OECD (Jan. 13, 2025), https://www.oecd.org/content/dam/oecd/en/topics/policy-issues/beps/pillar-one-update-co-chair-statement-inclusive-framework-on-beps-january-2025.pdf [https://perma.cc/S4V6-TCY3]. ↑

  169. . See Doug Sword & Cady Stanton, A Look Ahead: World Still Moving on OECD Work, Even with Stasis on Capitol Hill, 113 Tax Notes Int’l 149, 150 (2024). ↑

  170. . Mindy Herzfeld, Can the United States Make Good on Its International Tax Commitments?, 104 Tax Notes Int’l 731, 734 (2021). ↑

  171. . For example, the United States may need to change its charging provisions or source rules to tax foreign income classified as Amount A allocated to the United States. ↑

  172. . Mindy Herzfeld, How to Think About How the U.S. Congress Thinks About International Tax Reforms, 2022 British Tax Rev. 504, 525. ↑

  173. . Herzfeld, supra note 167, at 735. ↑

  174. . The President’s Fiscal Year 2023 Budget: Hearing Before the S. Comm. on Fin., 117th Cong. 15 (2022) (testimony of Treasury Sec’y Yellen). ↑

  175. . Herzfeld, supra note 167, at 731. ↑

  176. . Letter from Mike Crapo, James E. Risch & Pat Toomey, U.S. Sens., to Janet Yellen, Sec’y of the Treasury (Oct. 8, 2021), https://www.finance.senate.gov/imo/media/doc/crapo_risch_toomey
    _letter_to_treasury.pdf [https://perma.cc/4C3R-N3PA]. ↑

  177. . Id. at 2 (“This fundamental change in taxing rights would require provisions within all of the United States’ existing bilateral tax treaties to be modified or overridden. Each of these bilateral tax treaties was approved in the same manner—by a two-thirds vote of the Senate. Sweeping changes to modify these treaties and alter long-established protocols under these agreements must be processed through the same constitutionally mandated process.”). ↑

  178. . Id. ↑

  179. . Id. This argument does not explain why a multilateral agreement (with a binding dispute resolution system) cannot be approved through a congressional-executive agreement together with implementing domestic legislation. ↑

  180. . Id. ↑

  181. . Letter from Mike Crapo et al. to Janet Yellen, supra note 30. ↑

  182. . See Herzfeld, supra note 169, at 525. ↑

  183. . See, e.g., Reuven Avi-Yonah & Ajitesh Kir, Building the Gateway: Why the Two Pillars Need Each Other, 52 Intertax 591 (2024). ↑

  184. . See Noked, supra note 154. ↑

  185. . Robert Goulder, Expectations for 2024: Pillar 1 Finds an Off-Ramp, 112 Tax Notes Int’l 1819, 1820 (2023). ↑

  186. . Id. ↑

  187. . Robert Goulder, Pillar 1, Tax Treaties and Congressional Approval, Forbes: Tax Notes (Aug. 11, 2021), https://www.forbes.com/sites/taxnotes/2021/08/11/pillar-1-tax-treaties-and-congressio
    nal-approval/ [https://perma.cc/7JA5-ZGM4]. ↑

  188. . Id. ↑

  189. . Herzfeld, supra note 167, at 734–35 (discussing whether the MLC would satisfy the requirements of the Byrd rule). This discussion is outside the scope of this Article. ↑

  190. . See Noked, supra note 154 (discussing design strategies that do not require any congressional action). ↑

  191. . See id. See generally Avi-Yonah & Kim, supra note 155 (further discussing Pillar Two and its importance). ↑

  192. . These include various changes, such as BEPS Actions 8–10 and Pillar One’s Amount B, among others. See Noked, supra note 154. ↑

  193. . See Ruth Mason, The Transformation of International Tax, 114 Am. J. Int’l L. 353, 374 (2020). ↑

  194. . See Rebecca M. Kysar, The Global Tax Deal and the New International Economic Governance, 74 Tax L. Rev. 171, 180–81, 240 (2024). ↑

  195. . See supra Section II.B.3. ↑

  196. . See Noked, supra note 154. Legislation is required for the reporting of controlling persons of entity crypto owners because “[t]he IRS does not have authority to require digital asset exchanges to report on controlling persons of many shell companies and therefore cannot provide that information to other countries.” President’s Working Grp. on Digit. Asset Mkts., Nat’l Econ. Council, Strengthening American Leadership in Digital Financial Technology 137 (2025), https://
    http://www.whitehouse.gov/wp-content/uploads/2025/07/Digital-Assets-Report-EO14178.pdf [https://perma
    .cc/7B5N-FPZH]. It appears that other reporting obligations under this reporting standard can be implemented within the existing statutory framework. Id. ↑

  197. . BEPS Multilateral Instrument, OECD, https://www.oecd.org/en/topics/sub-issues/beps-multilateral-instrument.html [https://perma.cc/6TDL-8HPB]. ↑

  198. . Signatories and Parties to the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting, OECD (Jan. 12, 2026), https://www.oecd.org
    /content/dam/oecd/en/topics/policy-sub-issues/beps-mli/beps-mli-signatories-and-parties.pdf [https://p
    erma.cc/Q2HF-ESZS]. ↑

  199. . See Gravelle, supra note 115, at 27. ↑

  200. . See Noked, supra note 154. ↑

  201. . Pillar One is an example of a treaty that changes the allocation of taxing rights, as discussed supra Section III.B. Anonymous withholding models were previously considered as measures to tackle offshore tax evasion, but automatic information exchange standards have been preferred over withholding models. See Itai Grinberg, The Battle Over Taxing Offshore Accounts, 60 UCLA L. Rev. 304 (2012). ↑

  202. . For an in-depth discussion, see Noked, supra note 154. ↑

  203. . See Christians, supra note 98, at 565; Curtis A. Bradley, Exiting Congressional-Executive Agreements, 67 Duke L.J. 1615, 1615 (2018) (discussing the President’s unilateral authority to terminate congressional-executive agreements). ↑

  204. . For further discussion, see Kristen E. Eichensehr, Treaty Termination and the Separation of Powers, 53 Va. J. Int’l L. 247 (2013); Harold Hongju Koh, Presidential Power to Terminate International Agreements, 128 Yale L.J.F. 432 (2018). ↑

  205. . See Eichensehr, supra note 201; Koh, supra note 201. ↑

  206. . See H. David Rosenbloom, Noam Noked & Mohamed S. Helal, The Unruly World of Tax: A Proposal for an International Tax Cooperation Forum, 15 Fla. Tax Rev. 57, 77–78 (2014); for a discussion of various aspects of global tax governance and a review of the extensive literature, see Irma Mosquera Valderrama, Global Tax Governance, in The Oxford Handbook of International Tax Law 1007 (Florian Haase & Georg Kofler eds., 2023). ↑

  207. . See Tsilly Dagan & Alice Pirlot, Special Feature Editorial, Global Tax Governance: Taking Stock of the Past and Looking Forward, 27 J. Int’l Econ. L. 591, 591 (2024). ↑

  208. . For further discussion on the need for global tax cooperation, see Martin Hearson & Thomas Rixen, The Political Science of Global Tax Governance, in Research Handbook on International Taxation 218 (Yariv Brauner ed., 2020); Matti Ylönen & Yauri Finér, Global Tax Governance, in Handbook on Critical Political Economy & Public Policy 341 (Christoph Scherrer, Ana Garcia & Joscha Wullweber eds., 2023). ↑

  209. . Arthur J. Cockfield, The Rise of the OECD as Informal ‘World Tax Organization’ Through National Responses to E-commerce Tax Challenges, 8 Yale J.L. & Tech. 136, 149–61 (2006). ↑

  210. . Member Countries’ Budget Contributions, OECD, https://www.oecd.org/en/about/budget
    /member-countries-budget-contributions.html [https://perma.cc/R8AY-4XJF] (showing that the United States contributes 18% of the OECD budget). ↑

  211. . Convention on the Organisation for Economic Co-operation and Development, Dec. 14, 1960, 12 U.S.T. 1728, 888 U.N.T.S. 179 [hereinafter OECD Convention]. ↑

  212. . Richard Schwartz, Are the OECD and UNCTAD Codes Legally Binding?, 11 Int’l Law. 529, 529–30 (1977) (noting that the Senate’s consent was given “with the interpretation and explanation of the intent of the Senate that nothing in the Convention . . . confers any power on the Executive to bind the United States to substantive matters beyond what the Executive now has, or to bind the United States without compliance with applicable procedures imposed by domestic law” (quoting OECD Convention, supra note 208, 12 U.S.T. at 1751)). ↑

  213. . Centre for Tax Policy and Administration, OECD, https://www.oecd.org/en/about/director
    ates/centre-for-tax-policy-and-administration.html [https://perma.cc/L9EZ-6XAV]. ↑

  214. . Miranda Stewart, International Institutions in Global Tax Governance, 27 J. Int’l Econ. L. 618, 619 (2025). ↑

  215. . OECD Convention, supra note 208, art. 6. ↑

  216. . See Rosenbloom et al., supra note 203, at 65. ↑

  217. . See, e.g., Mason, supra note 190 (discussing the OECD’s work on the BEPS reforms and its role in global tax governance). ↑

  218. . See Noked, supra note 154. ↑

  219. . Biden’s Global Tax Surrender Harms American Workers and Our Economy: Hearing Before the Subcomm. on Tax of the H. Comm. on Ways & Means, 118th Cong. 2 (2023) (statement of Rep. Mike Kelly, Chairman, Subcomm. on Tax). ↑

  220. . Ron Estes, Letter to the Editor, OECD Pillar 2 Is a Bad Deal for America, 179 Tax Notes Fed. 1031, 1032 (2023). ↑

  221. . For further background, see Leopoldo Parada, International Cooperation on Tax Matters at the United Nations, 5 Carib. Tax L.J. 10 (2024); Steven Dean, Erin Ryu & Danna Lopez-Flores, Boston Univ. Global Dev. Pol’y Ctr., Gegi Pol’y Brief No. 031, Back to the Future: How the Pre-OECD Global Tax Landscape Offers Lessons for Today (2025), https://www.bu.edu/gdp
    /files/2025/04/GEGI-PB-031-FIN.pdf [https://perma.cc/R6RM-CYPS]. ↑

  222. . See, e.g., Shu-Yi Oei & Diane M. Ring, The Conflictual Core of Global Tax Cooperation, 16 World Tax J. 663, 663 (2024); Irma Johanna Mosquera Valderrama, Inaugural Lecture on the Acceptance of Her Position as Professor of Tax Governance at Leiden University: Global Tax Governance: Legitimacy and Inclusiveness. Why it Matters (June 30, 2023), https://globtaxgov.weblog
    .leidenuniv.nl/files/2023/06/33_009140-Oratie-Mosquera-Valderrama-total-2.pdf [https://perma.cc/Q2
    ZK-DGGV]; Afton Titus, The Role of the United Nations in Ensuring Equitable Tax Policies for Developing Countries, 27 J. Int’l Econ. L. 624 (2025); Assaf Harpaz, Global Tax Wars in the Digital Era, 75 Am. U. L. Rev. 77 (2025). ↑

  223. . Kudzai Mataba, UN Convention on Tax: What Happened at Recent Negotiations, and What’s Next?, Int’l Inst. for Sustainable Dev. (Feb. 14, 2025), https://www.iisd.org/articles/explainer
    /United-Nations-International-Tax-Convention-Negotiations [https://perma.cc/KZ86-UNKP]. ↑

  224. . See Jonathan Shrier, U.S. Deputy Representative to the U.N. Econ. & Soc. Council, Explanation of Vote on the United Nations Framework Convention on International Tax Cooperation (Aug. 16, 2024), https://usun.usmission.gov/explanation-of-vote-on-the-united-nations-framework-con
    vention-on-international-tax-cooperation/ [https://perma.cc/YQ9M-234Q]. ↑

  225. . Jonathan Shrier, U.S. Acting Representative to the U.N. Econ. & Soc. Council, Statement at the Session for the Intergovernmental Negotiating Committee on the U.N. Framework Convention on International Tax Cooperation (Feb. 3, 2025), https://usun.usmission.gov/statement-at-the-session-for-the-intergovernmental-negotiating-committee-on-the-un-framework-convention-on-international-tax-cooperation/ [https://perma.cc/3ESJ-K7V2]. ↑

  226. . The most notable examples are automatic exchange of information standards (the United States implements FATCA, whereas the rest of the world implements CRS) and Pillar Two (U.S. MNEs should be exempted from top-up taxes (the Income Inclusion Rule and the Undertaxed Profits Rule) under the “side-by-side” safe harbor). As of January 2026, the United States is the only jurisdiction identified by the OECD as having a tax system that qualifies for this safe harbor. See Central Record for Purposes of the Global Minimum Tax: Qualified SbS Regimes, OECD (Jan. 5, 2026), https://www
    .oecd.org/en/topics/sub-issues/global-minimum-tax/central-record-of-legislation-with-transitional-qual
    ified-status.html# [https://perma.cc/7BK2-BBF9]. This is unsurprising, as this safe harbor was designed to exclude U.S. MNEs from the IIR and UTPR. While some other jurisdictions may qualify for the safe harbor in the future, most countries implementing Pillar Two or affected by it are unlikely to qualify. For the safe harbor requirements, see OECD/G20 Base Erosion and Profit Shifting Project, Tax Challenges Arising from the Digitalisation of the Economy – Global Anti-Base Erosion Model Rules (Pillar Two), Side-by-Side Package (2026), https://www.oecd.org/content/dam/oecd
    /en/topics/policy-sub-issues/global-minimum-tax/side-by-side-package.pdf [https://perma.cc/M2QP-Y
    MRB]. ↑

  227. . For example, this influence has recently been seen in the agreement to adopt a “side-by-side” system, which will benefit U.S. MNEs. See OECD/G20 Base Erosion and Profit Shifting Project, supra note 223. ↑

  228. . See Noked, supra note 154. ↑

Noked, Kim & Avi-YonahDownload

Symmetry and Speech: Nonprofits and the First Amendment

Posted on by Miranda Perry Fleischer
Fleischer_Symmetry and SpeechDownload

Abstract

In the spring of 2025, President Trump threatened Harvard’s tax-exempt status, accusing it of “pushing political, ideological, and terrorist inspired/supporting ‘Sickness.’” In the following months, the Administration has continued to threaten nonprofits with which it disagrees, such as those advocating critical race theory, Palestinian rights, and climate change, in a variety of ways. As this Article shows, these threats violate the First Amendment. Although this conclusion will likely be uncontroversial to most readers, stopping there misses the deeper lesson.

More importantly, revisiting the relationship between free speech principles and nonprofits in “easy” cases such as Harvard’s yields two insights. First, it reminds us how they should apply in more fraught contexts. The guardrails that protect Harvard and progressive nonprofits also protect right-leaning organizations that progressives may view as engaging in hate speech and misinformation, no matter how heinous. Second, limiting nonprofit speech is antithetical to the role nonprofits play in our pluralistic society. Restricting it risks turning the sector into a governmental mouthpiece, which directly contradicts its role as a counterweight to governmental power. It also silences voices that challenge prevailing viewpoints, which are more likely to be labeled dangerous. This undermines the sector’s ability to provide alternative solutions to societal problems ranging from COVID-19 to climate change, and to effectuate social change. Recall, for example, that the civil rights movement began as an unpopular expression of contrarian values. These arguments should appeal across the ideological spectrum. Conservatives who are sympathetic to the Administration’s current crackdown should be wary of jettisoning the First Amendment’s guardrails, because if and when the winds change, a future administration could retaliate against them. And progressives should remember that the principles that protect them now will also protect those with whom they disagree in the future.

Introduction

In the spring of 2025, President Trump threatened Harvard’s tax-exempt status, accusing it of “pushing political, ideological, and terrorist inspired/supporting ‘Sickness’” and announcing that “Tax Exempt Status is totally contingent on acting in the PUBLIC INTEREST!”[2] A few months later, the Administration announced that it will crack down on nonprofits that “foment[], facilitate[], and engage[] in violence,” hinting that it will use a variety of means, and an expansive definition of those terms, to silence nonprofits with which it disagrees.[3] As several scholars have argued in the media, these threats violate the First Amendment.[4] This conclusion will be uncontroversial to most readers, who are likely sympathetic to Harvard and other charities around whose status rumors are swirling.

Yet revisiting the relationship between free speech principles and nonprofits in “easy” cases such as Harvard’s yields two insights. First, it reminds us how they should apply in more fraught contexts. The guardrails that protect Harvard and progressive nonprofits also protect right-leaning organizations accused of hate speech and misinformation, no matter how heinous.[5] Second, limiting nonprofit speech is antithetical to the role nonprofits play in our pluralistic society. The values underpinning the First Amendment apply in a unique manner to the sector, given its distinct function. Even if Congress and the IRS could constitutionally deny exemption for hate speech, misinformation, or any other subject, they should not.

This Article explores the relationship between free speech and the charitable tax subsidies. Part I provides an overview of tax exemption under Section 501(c)(3) and the charitable contributions deduction under Section 170(c).[6] It describes their theoretical justifications as well as the requirements for eligibility. Four stand out. All exempt organizations, regardless of statutory purpose, may neither contravene “fundamental public policy,” engage in substantial illegal activities, nor support terrorism.[7] Educational organizations face another limit; they may “advocate” for a position only if they provide a “full and fair exposition” of its factual basis.[8]

Next, Part II explores the constitutional issues. It is a bedrock First Amendment principle that once the government chooses to provide a benefit, it cannot discriminate based on a recipient’s views. The Supreme Court regularly characterizes tax exemption as a benefit,[9] and the D.C. Circuit recently echoed this conclusion, stating that “in administering the tax code, the IRS may not discriminate on the basis of viewpoint.”[10] The unconstitutional conditions doctrine buttresses this conclusion, and neither the government’s ability to speak on its own nor its authority to choose what activities to fund allows it to engage in viewpoint discrimination in this context.

Part III then applies these principles, starting with current threats to nonprofits that discuss critical race theory, the Middle East, global warming, and other progressive causes. These attacks take a variety of forms. One is to distort existing doctrines such as Bob Jones and the Methodology Test to limit the subsidies to “approved” messages. Another is to implement explicit new limits on what nonprofits can say and do through executive orders, grant conditions, and potential amendments to Sections 170 or 501(c). A third is to selectively enforce legitimate restrictions, such as prohibitions on nonprofit campaign activity, illegality, financing terrorist activity, and incitement.

As the principles described above show, regardless of the approach, denying the benefits of Sections 170 or 501(c) to Harvard, Wikipedia, or any other nonprofit because of its viewpoint would be unconstitutional. Importantly, Part III also argues that the same principles would apply to future calls (if and when the political winds shift) to deny subsidies to groups that engage in “hate speech” or “misinformation,”[11] rendering such proposals unconstitutional as well.[12]

Part IV zooms out, arguing that the underlying First Amendment principles are especially vital in this context for two reasons. First, differentiating “good” and “bad” speech is exceedingly difficult and getting it wrong undermines the sector’s unique role. Incorrectly distinguishing misinformation and unwelcome information silences minority viewpoints, which are more likely to be seen as misinformation instead of plausible arguments. This hampers the provision of alternative solutions to problems, whether relating to COVID-19 or climate change. Drawing a line between harmful speech and merely unpopular speech likewise thwarts the sector’s promotion of dissenting views in other matters, which is necessary for it to effectuate social change. Recall, for example, that the civil rights movement began as an unpopular expression of contrarian values. Whether incorrectly deemed “misinformation” or “hate speech,” suppressing speech hampers the sector’s role in minimizing market failures in the marketplace of ideas.

Second, even if we could make these distinctions, we should not. Going beyond a reluctant admission that line-drawing is too difficult, free speech provides benefits that are especially relevant to the nonprofit sector.[13] Take free speech’s role as a check on government. Given that nonprofits also serve as counterweights to government power, regulating their speech undermines that role directly and risks turning them into governmental mouthpieces. Allowing “bad” speech also provides information about the breadth of support for disfavored views. One cannot adequately counter untrue beliefs about Ivermectin, for example, without knowing how widespread those views are. Lastly, allowing all speech simultaneously promotes toleration in listeners, which is necessary in our pluralistic society, and provides a safety valve for speakers, who can use words instead of violence.

The Article concludes by emphasizing that these arguments should appeal across the political spectrum. Conservatives who are sympathetic to the Administration’s current crackdown should be wary of jettisoning the First Amendment’s guardrails, because if and when the winds change, a future administration could retaliate against them. And progressives should remember that the principles that protect them now will also protect those with whom they disagree in the future.

I. Overview of the Charitable Tax Subsidies

Charities have enjoyed privileged tax status for over 100 years.[14] Most importantly, Section 501(c)(3) exempts such organizations from federal income taxation, and Section 170 allows individuals to deduct charitable contributions from income.[15]

A. General Principles

To qualify for these benefits, organizations must both be formed for a “religious, charitable, scientific, literary, or educational purpose”[16] and comply with a host of negative requirements. Groups meeting these requirements are generally referred to as “charitable organizations,” even if they serve a specific purpose (such as religion or education) instead of the more general “charitable purpose.”[17] The statutory language is broad and encompasses a wide array of organizations and activities—covering all “educational” organizations and not simply schools, for example, and all “religious” organizations, not just houses of worship. Although Congress could have limited these benefits only to certain types of organizations serving these purposes—choosing to favor schools but not museums, perhaps—it did not.[18]

Neither Section 501(c)(3) nor Section 170 defines these purposes; instead, regulations, judicial precedent, and administrative materials have developed content-neutral definitions that forgo explicit judgments about what is “good” for society in favor of diversity.[19] For example, institutions such as museums qualify as educational if they provide “instruction of the public on subjects useful to the individual and beneficial to the community,” but the regulations do not specify what is “useful to the individual” or “beneficial to the community.”[20] As a result, groups ranging from a barbed wire museum to street art initiatives to modern dance troupes all qualify. Likewise, neither the IRS nor courts define a church based on the content of its belief. Instead, they apply a facts-and-circumstances test that examines characteristics such as having a distinct creed, form of worship, literature, rituals, and religious history; youth instruction and clergy training; and regular services and congregations. This allows organizations as disparate as the Church of Body Modification, Wiccan covens, and mainstream churches, mosques, and synagogues all to qualify.

The Supreme Court has repeatedly described Sections 170(c) and 501(c)(3) as subsidies, reasoning that:

Both tax exemptions and tax deductibility are a form of subsidy that is administered through the tax system. A tax exemption has much the same effect as a cash grant to the organization of the amount of tax it would have to pay on its income. Deductible contributions are similar to cash grants of the amount of a portion of the individual’s contributions.[21]

Scholars offer a variety of sometimes overlapping rationales for these subsidies.[22] What I have previously termed “the traditional subsidy theory” justifies subsidies on the grounds that nonprofits do “good things” for society. They provide alternative and creative solutions to problems both big and small, offer diverse artistic and cultural viewpoints, act as a counterweight to state power, further experimentation and pluralism, and relieve governmental burdens such as poverty relief.[23]

To avoid the normative judgments inherent in the traditional subsidy theory, later theorists focused on economics. The “economic subsidy theory” argues that subsidizing charities helps them to provide public goods, which are often underproduced by the market due to free-rider problems and contract failure.[24] Although the government can use its taxing power to fund the production of some public goods, it will only do so for goods supported by the median voter.[25] Subsidizing charities overcomes this “government failure.” People who support projects other than those favored by the median voter—such as the opera—band together in an “I’ll scratch your back; you scratch mine” coalition.[26] Each agrees to provide a little bit of support, but not full funding, to the others’ projects. As the cost of a given project drops, the median voter’s support for it increases.

Additional work explores the advantages of using the tax system instead of direct grants to provide these subsidies. One benefit is efficiency. A tax deduction or credit better matches the cost of a given good or service with how much someone values it. People who highly value a given project pay more by donating to it in addition to funding it indirectly via taxation. Low demanders pay less, funding it only indirectly through the tax system. In contrast, direct grants would likely require across-the-board tax increases unrelated to taxpayers’ differing subjective values.[27]

Using the tax system also enhances pluralism by allowing individuals more direct say in how to allocate the subsidies. Saul Levmore, for example, characterizes the charitable deduction as allowing taxpayers to vote on which activities to subsidize. Since a taxpayer must make a contribution to trigger the subsidy, the subsidy better matches public enthusiasm for a project than direct grants would. He theorizes that giving taxpayers this type of input makes them more tolerant of redistribution and the public funding of various goods and services, deepens their commitment to nonprofit organizations, and encourages them to be more active volunteers and monitors.[28] David Schizer likewise argues that this mechanism increases donor generosity and enhances monitoring.[29]

Crucially, the traditional subsidy theory and the economic subsidy theory can complement each other. Even if the economic theory better explains as a descriptive or positive matter why the subsidies exist, the traditional subsidy theory highlights their positive externalities. Given those benefits, one should be careful about reforms to the sector that undercut them.

B. The Negative Limitations

In addition to fulfilling a statutory purpose, charities must also comply with a host of negative prohibitions such as prohibitions on private inurement and private benefit, the commerciality doctrine, and limits on lobbying and political activity. These rules theoretically cabin the vagueness of the positive charitable purpose requirement: If a charity is neither benefiting specific individuals nor acting in a manner that too closely resembles a for-profit commercial enterprise, then it must be doing something good for the community that merits a subsidy. Of these negative requirements, three are particularly relevant to this Article due to their unique susceptibility to being used as an ideological weapon against disfavored views: the illegality doctrine, the fundamental public policy requirement, and limitations on “propaganda” for educational organizations.[30]

The illegality doctrine and the fundamental public policy requirement are associated with Bob Jones University v. United States, in which the Supreme Court upheld the revocation and/or denial of exempt status to two schools with racially discriminatory policies.[31] In so doing, it layered common law principles of charity atop the plain language of Section 501(c)(3), reading into it two requirements from charitable trust law not specifically elucidated in the statute. The first (the illegality doctrine) holds that an exempt organization may not have an illegal purpose. This requires more than showing that an organization or its employees have violated a law. Instead, courts and the IRS have invoked the illegality doctrine only when the organization itself has an illegal purpose (such as drug trafficking[32] or promoting polygamy[33] or the sexual exploitation of minors) or is so entwined with illegal activity (such as tax evasion and burglary of IRS offices[34]) that it is impossible to separate those activities from the organization’s goals.[35]

The second is that exempt organizations cannot engage in activities “contrary to fundamental public policy,” a requirement referred to as either the “fundamental public policy requirement” or simply the “public policy requirement.” The Court reasoned that “[c]haritable exemptions are justified on the basis that the exempt entity confers a public benefit . . . . [A]n institution . . . must demonstrably serve and be in harmony with the public interest.”[36] It acknowledged that identifying what counts as a “public benefit” or “public policy” is sensitive and emphasized that exemption should be denied only where there is “no doubt” the activity contravenes fundamental public policy.[37] The Court reasoned that however one defines those terms, racial discrimination in education violates them. Although it avoided crafting its own definition as a substantive matter, it suggested that a long-standing and consistent history of congressional action, executive orders, and its own decisions could illuminate what counts as fundamental public policy.[38] To date, the IRS has rarely applied Bob Jones’s public policy requirement beyond the limited context of race discrimination in education against minority groups,[39] although there are frequent calls for its expansion. Some on the left argue that groups advocating white supremacist views or religious organizations that refuse to acknowledge same-sex marriage are violating Bob Jones,[40] while some on the right have argued that groups promoting critical race theory; advocating for diversity, equity, and inclusion initiatives; or criticizing Israel are the ones whose activities are contrary to public policy.[41]

In addition to the two requirements of Bob Jones (which applies regardless of the specific enumerated purpose for which an organization is formed), an additional test applies to organizations formed for “educational purposes.” This test stems from a requirement in the regulations that allows educational organizations to “advocate” for a given position, so long as they provide a “sufficiently full and fair exposition” of the factual basis for that position.[42] After the D.C. Circuit found that the “full and fair exposition” test, standing alone, was unconstitutionally vague,[43] the IRS published the methodology test (“Methodology Test”) in an effort to cure the identified flaws in the regulatory test.[44] This test attempts to provide an objective basis for determining when organizations that advocate for a particular viewpoint are educational by focusing on how the organization advances its arguments. In laying out the test, the IRS explains that:

The method used by the organization will not be considered educational if it fails to provide a factual foundation for the viewpoint or position being advocated, or if it fails to provide a development from the relevant facts that would materially aid a listener or reader in a learning process.[45]

To that end, the presence of any of the following suggests that an organization is not educational:

1. The presentation of viewpoints or positions unsupported by facts is a significant portion of the organization’s communications.

2. The facts that purport to support the viewpoints or positions are distorted.

3. The organization’s presentations make substantial use of inflammatory and disparaging terms and express conclusions more on the basis of strong emotional feelings than of objective evaluations.

4. The approach used in the organization’s presentations is not aimed at developing an understanding on the part of the intended audience or readership because it does not consider their background or training in the subject matter.[46]

Neither the Supreme Court nor a federal appeals court has ruled on whether the Methodology Test does, in fact, cure the shortcomings of the full and fair exposition test. That said, the Tax Court held that it was constitutional, and the D.C. Circuit upheld the denial of exemption to a white supremacist group without directly ruling on the constitutional question.[47] Like Bob Jones, the IRS uses it sporadically but not frequently, including applying it to some anti-abortion activists.[48] Also like Bob Jones, many have called for its expansion as a means of denying exemption to hate groups and groups that traffic in misinformation.[49]

II. Tax Exemption and the First Amendment

As a legal matter, the First Amendment almost certainly prohibits Congress and the IRS from engaging in viewpoint discrimination with respect to tax-exemption and the charitable deduction. Applying this fundamental rule to the current situation yields two insights. First, it protects the nonprofit sector from current threats to its tax status. But more importantly, it demonstrates that calls for reform that many readers likely find more sympathetic—such as proposals to limit hate speech or misinformation—are also unconstitutional.

A. The Relevant First Amendment Principles

This conclusion follows from untangling a knot of potentially applicable overlapping doctrines. On one hand, the First Amendment clearly prohibits the government from banning, restricting, or punishing purely private speech based on viewpoint—including by imposing fines.[50] On the other hand, the government is allowed to speak for itself and to choose which viewpoints it voices.[51] There is nothing unconstitutional about the government speaking out against, say, tobacco use.[52]

In the middle are situations where the government provides a benefit to a private individual or organization and attaches speech-related conditions to that benefit. Some such cases are still relatively easy, as when the government is simply outsourcing its own speech to a third party. As part of a public health initiative, the government could fund private groups to mount anti-smoking campaigns and condition the funding on the message conveying an anti-smoking viewpoint. In that situation, the government does not also have to fund private groups who wish to mount pro-smoking campaigns.[53]

The tricky cases arise when the government provides a less-targeted, more broadly available benefit and attaches speech-based restrictions. When is withholding a benefit akin to punishing an individual or organization for certain views, and when is it simply reflective of a legitimate government decision about which types of speech and which messages to subsidize? What emerges is the principle that although the government may choose whether or not to provide certain benefits in the first instance, once it does so, it may not engage in viewpoint discrimination unrelated to the purpose of the benefit.[54]

The Supreme Court has repeatedly affirmed this principle in numerous contexts, ranging from direct financial subsidies for student newspapers to the more intangible advantage of trademark protection and the indirect benefit of tax exemption. With respect to tax subsidies, the 1958 case Speiser v. Randall struck down a California law denying property tax exemptions (such as one available to veterans) to people or groups that advocated the overthrow of the U.S. government or who advocated support for foreign governments in the event of a conflict with the United States. [55] The Court recognized that tax exemption was a privilege, but reasoned that denying a privilege—be it tax exemption, use of the postal system, or public employment—based on one’s speech is akin to imposing a fine for that speech.[56] Such denials, the Court continued, “have the effect of coercing the claimants” and are “frankly aimed at the suppression of dangerous ideas.”[57] As such, the limit was not a “reasonable” condition on the privilege of receiving a tax exemption.[58]

Three decades later, the Court extended this analysis to tax-deductible contributions and clarified its contours in the 1983 case Regan v. Taxation with Representation of Washington.[59] In that case, the Court examined whether prohibiting 501(c)(3) organizations—but not 501(c)(4)s—from substantial lobbying violates the First Amendment.[60] The key differences are that the former can receive tax-deductible contributions but cannot engage in “substantial” lobbying, while the latter can do all the lobbying they like but donors to them cannot deduct contributions. As a result, organizations that lobby can receive the subsidy from tax-exemption, but not the extra subsidy from deductibility. The Court held that this structure was a permissible viewpoint-neutral decision not to subsidize lobbying activities, as there is no right to have one’s constitutionally protected right to lobby subsidized.[61] The organization could still lobby, and it could still be tax-exempt; it just had to lobby with non-deductible funds instead of tax-subsidized funds.[62]

Two points are relevant. First, the Court distinguished Speiser on the grounds that Speiser denied an independent benefit based on the veterans’ speech. The property tax exemption was not meant to further a given governmental message, rendering the law in Speiser a fine or punishment for speech, as opposed to a decision about which governmental messages to subsidize.[63] This reasoning echoes a distinction drawn in Rust v. Sullivan between conditions placed on the recipient of a subsidy that prohibit them from engaging in a constitutional right at all, versus conditions placed on receipt of funds for a specific program or service (such as family planning).[64]

Second, even though the lobbying prohibition in Regan was content based, it was viewpoint neutral. All substantial lobbying was prohibited, not just lobbying for or against certain causes. The Court explicitly stated that “[t]he case would be different if Congress were to discriminate invidiously in its subsidies” against “dangerous ideas.”[65] It found no suggestion, however, that the lobbying prohibition was meant to suppress certain viewpoints.[66] Regan reaffirms that although Congress can pick and choose what types of speech to subsidize via the tax code, once it decides to subsidize a certain type of speech, it cannot pick and choose among views within that group.[67]

Since Regan, the Supreme Court has reconsidered the issue of selective benefits in a variety of contexts. In the 1995 case Rosenberger v. Rector and the Visitors of the University of Virginia, the Court considered a subsidy for student publications that was denied to a religious student newspaper.[68] In holding that the denial violated the students’ First Amendment free speech rights, the Court forcefully reiterated that although the government is not required to subsidize speech, it cannot engage in viewpoint discrimination once it “expends funds to encourage a diversity of views from private speakers.”[69] The Court elaborated that the chilling effect from allowing the government to determine which ideas are palatable and which are not is especially dangerous in the university setting, given its vital role in “the Nation’s intellectual life.”[70]

Two strands of the Court’s reasoning are especially important. First, the Court analogized the provision of the subsidies to the creation of a limited public forum, albeit a “metaphysical” one.[71] Although the government may create limited forums with specific purposes,[72] once it opens that forum up, it cannot bar speech when the prohibition is not reasonably related to the purpose of the forum or is based on viewpoint.[73] This is especially true when the point of the forum is to foster the exchange of ideas,[74] as was the case with the subsidy for student newspapers in Rosenberger.

Second, the Court distinguished between subsidizing others’ speech, which must be done in a viewpoint-neutral manner under Regan, with the government’s own speech. When the government itself is speaking, it may of course determine the message.[75] The same is true when the government spends money to promote a favored viewpoint or conduct a specific program, such as an anti-smoking campaign. But subsidizing speech generally, as in Rosenberger, does not transform private speech into government speech or a government program. In Rosenberger, the students’ speech was not the University’s.[76] Therefore the First Amendment required that the subsidy be viewpoint neutral.

After Rosenberger, the Court has twice revisited the distinction between general subsidies and programs designed for a specific purpose. In National Endowment for the Arts v. Finley, it rejected a facial challenge to a National Endowment for the Arts (NEA) requirement that grant applicants be judged partly on “general standards of decency and respect.”[77] The Court described the NEA grant process as inherently content-based, noting that due to NEA’s mandate to make “esthetic judgments” and “limited resources . . . it must deny the majority of the grant applications that it receives.”[78] In a competitive process, the government can use criteria that would be impermissible if used to directly regulate or punish speech.[79] This distinguished the grant process from the Rosenberger/public fora cases, as well as from other situations where benefits such as mailing privileges or use of a school auditorium were allocated on an objective basis.[80] In dicta, however, the Court added a key caveat to the government’s ability to award grants on a subjective basis:

If the NEA were to leverage its power to award subsidies on the basis of subjective criteria into a penalty on disfavored viewpoints, then we would confront a different case. . . . [E]ven in the provision of subsidies, the Government may not ‘ai[m] at the suppression of dangerous ideas.’[81]

A few years later, in Agency for International Development v. Alliance for Open Society International, the Court reaffirmed that even when it comes to funds or subsidies for specific programs, speech-related conditions must be related to the purpose of the program.[82] That case concerned federal grants to private groups fighting HIV overseas; the grants required not only that grant funds not be used to promote prostitution or sex trafficking, but also that recipient organizations have an explicit organizational policy opposing prostitution and sex trafficking.[83] The recipient organizations did not challenge the first condition, as it was clearly constitutional under Rust.[84] With respect to the second, the Court characterized past case law (including Rust and Regan) as creating a distinction between “conditions that define the federal program and those that reach outside it.”[85] (This distinction is also consistent with the reasoning in Speiser and Rosenberger, although the Court did not address those cases.) While acknowledging that the line between the two can be murky, it felt “confident that the Policy Requirement falls on the unconstitutional side of the line” and therefore held that it violated the First Amendment.[86]

And most recently, the Court in 2017 considered how these precedents apply to the intangible benefit of trademark protection. In Matal v. Tam, a plurality held that denying a trademark to a rock band named “The Slants” under a rule that excluded “disparaging” trademarks from various protections was unconstitutional viewpoint discrimination.[87] As an initial matter, the majority opinion held that trademark protection does not constitute a seal of approval that transforms private speech into government speech.[88] In reaching this conclusion, the Court distinguished a pro-beef campaign funded by the Department of Agriculture, a small city park containing 15 monuments, and specialty license plates.[89] With respect to the latter two situations, the Court noted that monuments and license plates are closely identified with the government by the public and are often used to convey the government’s own messages. In contrast, nobody conceptualizes trademarked speech as the Government’s due to the trademark; the public understands it remains private speech.[90] This echoes the reasoning in Rosenberger that the students’ speech was not the University’s.[91]

Next, a plurality found the exclusion of “disparaging” trademarks to be unconstitutional viewpoint discrimination.[92] It first rejected the government’s contention that trademark protection was akin to providing cash subsidies for a specific program or type of activity, as in Rust, NEA, and Open Society.[93] It therefore did not discuss the circumstances under which the government can impose viewpoint restrictions on cash subsidies (although it did mention that tax benefits are “comparable” to cash subsidies). Instead, the plurality analogized to the Rosenberger line of limited public fora cases.[94] Even though the prohibition was evenhanded and applied equally no matter who was being disparaged, it still “[was] viewpoint discrimination: Giving offense is a viewpoint.”[95]

B. The Charitable Tax Subsidies as a Limited Public Forum

Assessing how these principles apply to the denial of tax-exempt status based on a charity’s views, the messages it promotes, or the government’s subjective opinion of the programs it conducts requires several steps. As an initial matter, the Court has repeatedly recognized that tax-exempt status and the ability to receive tax-deductible contributions are valuable benefits akin to cash subsidies.[96] The precedents just discussed that concern cash subsidies thus control. And of these precedents, Rosenberger’s limited public forum analysis is especially applicable. As explained in more detail below, the charitable tax subsidies are neither government speech nor subsidies for nonprofits to carry out a specific activity or transmit a specific message. Instead, they subsidize a wide range of activities that often involve communicating viewpoints, and this triggers the public forum analysis. In Lamb’s Chapel, for example, the Court used that analysis to invalidate a school district policy allowing the after-hours use of facilities for social, civic, and recreational—but not religious—purposes.[97] Rosenberger thus controls even though the charitable tax subsidies are not meant to subsidize speech per se (in contrast to the publication subsidies at issue in Rosenberger), but rather a wide range of activities.

To flesh the public fora analogy out, recall what the charitable tax subsidies do: They provide benefits to an extraordinarily broad array of organizations based on objective criteria.[98] A group must serve a “religious, charitable, scientific, literary, or educational purpose”; what counts as educational, religious, or charitable, for example, is defined in a viewpoint-neutral manner and assessed using process-based tests.[99] Organizations must also comply with prohibitions against private inurement, private benefit, commerciality, excessive lobbying, and election advocacy.

As long as organizations meet these objective and viewpoint-neutral criteria, they receive exemption, and denial of exempt status is extraordinarily rare. In 2018, for example, the IRS denied only 72 out of 91,981 applications—a measly 0.078%.[100] The subsidies therefore differ from the arts grants at issue in the NEA case, in which the government was using numerous subjective criteria to choose a few grant recipients from among a large pool of applicants.[101] Instead, they are akin to programs that allocate based on objective criteria, such as the student activities funding in Rosenberger or the provision of school facilities during non-school hours to community groups for social, civic, and recreational purposes, as in Lamb’s Chapel.[102]

What results is an incredibly diverse array of subsidized groups. In 2023, there were over 1.5 million organizations exempt under Section 501(c)(3),[103] with a cacophony of purposes, messages, and goals. These include educational organizations ranging from Harvard University to Montessori kindergartens to think tanks across the ideological spectrum to the International Paper Hall of Fame, the Barbed Wire Museum, and the Mustard Museum. Catholic, evangelical, Wiccan, Jewish, and Muslim houses of worship all qualify as religious organizations—as do the Church of Body Modification and American Atheists. The charitable prong covers environmental groups and public interest legal groups ranging from the ACLU to the conservative Pacific Legal Foundation, as well as arts galleries in rural areas and large metropolitan hospitals.

This diversity illustrates why the charitable tax subsidies resemble the student subsidies in Rosenberger, the school use policy in Lamb’s Chapel, and other limited public forums that are open to all participants meeting viewpoint-neutral criteria. In contrast, they differ from the subsidies in Rust, Open Society, and other government speech cases. Although the government is perfectly free to fund charitable organizations and other third parties to promote specific messages or conduct identifiable programs with narrow goals, that is not what Sections 501(c)(3) or 170(c) are for.[104] Quite the opposite. Consider that the following pairs of groups all benefit from the charitable tax subsidies:

• The National Rifle Association Foundation (which is “committed to safeguarding our Second Amendment rights by promoting safe and responsible firearms ownership”)[105] and Brady United (which seeks stronger firearms laws through a combination of policy reform, cultural change, and industry oversight);

• ProLife Across America (which provides anti-abortion education) and the National Abortion Federation (which “unites, supports, and represents abortion providers and the people they serve, in pursuit of accessible and equitable abortion care”)[106];

• The NAACP’s Legal Defense Fund (which litigates in favor of affirmative action) and Students for Fair Admissions (which litigates against affirmative action);

• Progressive think tanks such as the Center for American Progress and the Progressive Policy Institute as well as conservative think tanks such as the Cato Institute and the Heritage Foundation;

• The Reading League (which advocates for a return to phonics-based reading instruction in lieu of balanced literacy) and the Children’s Literacy Initiative (which de-emphasizes phonics).

Both the sheer diversity of exempt organizations and the subsidization of so many groups with diametrically opposing viewpoints mean that the charitable tax subsidies cannot plausibly be characterized as “government speech” or “government activity.” How can the government be both for and against affirmative action, for and against phonics, for and against abortion, and so on, all at the same time? In rejecting the contention that trademark protection rendered trademarked speech “government speech,” the Court wrote: “If the federal registration of a trademark makes the mark government speech, the Federal Government is babbling prodigiously and incoherently. It is saying many unseemly things. . . . It is expressing contradictory views.”[107] The same is true of exempt status. If exempt status renders the activity government activity, then the government is likewise expressing contradictory views and pursuing contradictory outcomes and goals.

Scholars, policymakers, and the Court all celebrate this diversity not simply as a mere side benefit, but instead as one of the raisons d’être of the sector. In Justice Powell’s Bob Jones concurrence, for example, he laments that the majority opinion “ignores the important role played by tax exemptions in encouraging diverse, indeed often sharply conflicting, activities and viewpoints. . . . [P]rivate, nonprofit groups receive tax exemptions because ‘each group contributes to the diversity of association, viewpoint, and enterprise essential to a vigorous, pluralistic society.’”[108]

Even more crucially, this diversity enables the sector to serve as a counterweight to the government itself. As Powell’s concurrence emphasizes, “[f]ar from representing an effort to reinforce any perceived ‘common community conscience,’ the provision of tax exemptions to nonprofit groups is one indispensable means of limiting the influence of governmental orthodoxy on important areas of community life.”[109] And in illustrating the extent to which the subsidies tolerate divergent views by listing a grab-bag of exempt organizations, he notes that many of these views are at odds with the government’s.

For these reasons, the charitable tax subsidies should be treated like UVA’s payment of printing expenses for student organizations.[110] In Rosenberger, the Court recognized that the government had “expend[ed] funds to encourage a diversity of views from private speakers.”[111] And that is exactly what the charitable tax subsidies do.

III. The (Un)Constitutionality of Current Threats to Charities

This context helps us assess current threats to the sector, which are unfortunately numerous. These attacks take a variety of forms. One is to interpret existing doctrines such as the fundamental public policy requirement and the Methodology Test to limit the subsidies to “approved” messages. Another is to implement explicit new limits on what nonprofits can say and do through executive orders, grant conditions, and potential amendments to Sections 170 or 501(c). A third is to weaponize legitimate restrictions, such as the illegality doctrine, anti-terrorism rules, and prohibitions on threats, incitement, and nonprofit speech. As the principles described above show, regardless of the approach, denying the benefits of Sections 170 or 501(c) to Harvard, Wikipedia, Students for Justice for Palestine, or any other nonprofit because of its viewpoint would be unconstitutional. And when the political winds shift, the same principles will protect organizations on the other side of the political spectrum, such as the Alliance Defending Freedom, the Family Research Council, and those challenging affirmative action programs.

A. Explicit Prohibitions

One hazard to the sector is the explicit prohibition on expressing disfavored viewpoints (such as those related to diversity, equity, and inclusion). These threats currently take the form of executive orders and grant conditions that apply only to subsets of the nonprofit sector, but these rules could also serve as a model for amending Sections 170 and 501(c)(3) themselves. In either case, these prohibitions are unconstitutional.

Consider the following condition attached to DHS grants to high-risk nonprofits to pay for additional physical security and cybersecurity. Recipients of such grants cannot “operate any programs that advance or promote DEI, DEIA, or discriminatory equity ideology in violation of Federal anti-discrimination laws.”[112] The DHS guidelines punt to Executive Order 14190 to define “discriminatory equity ideology” as:

(b) [A]n ideology that treats individuals as members of preferred or disfavored groups . . . and minimizes agency, merit, and capability in favor of immoral generalizations, including that:

(i) Members of one race, color, sex, or national origin are morally or inherently superior to members of another . . . ;

(ii) An individual, by virtue of the individual’s race, color, sex, or national origin, is inherently racist, sexist, or oppressive, whether consciously or unconsciously;

(iii) An individual’s moral character or status . . . is primarily determined by the individual’s race, color, sex, or national origin;

. . .

(v) An individual, by virtue of the individual’s race, color, sex, or national origin, bears responsibility for, should feel guilt, anguish, or other forms of psychological distress because of . . . actions committed in the past by other members of the same race, color, sex, or national origin, in which the individual played no part;

. . .

(vii) Virtues such as merit, excellence, hard work, fairness, neutrality, objectivity, and racial colorblindness are racist or sexist or were created by members of a particular race, color, sex, or national origin to oppress members of another race, color, sex, or national origin; or

(viii) the United States is fundamentally racist, sexist, or otherwise discriminatory.[113]

Almost-identical language permeates a flurry of other federal orders and state legislation. For example, various executive orders on workplace training[114] and Florida’s so-called “Stop Woke” Act[115] ban discussions of the ideas elucidated above unless the discussions are “in an objective manner without endorsement . . . .”[116] These explicitly prohibit speech expressing certain opinions: Arguing that the idea of merit is racist or that white individuals often engage in unconscious stereotyping is forbidden, while disputing these claims is allowed. The Eleventh Circuit thus held that Florida’s law was unconstitutional viewpoint discrimination, recognizing that “the First Amendment keeps the government from putting its thumb on the scale” and that these types of prohibitions “penalize[] certain viewpoints—the greatest First Amendment sin.”[117]

For these reasons, explicit prohibitions on discussing DEI, critical race theory, the 1619 Project, Palestinian rights, global warming, and other causes disfavored by the Trump Administration would almost certainly meet a similar fate. This is true whether the ban is in the form of a directive in an executive order that applies to the sector, a condition in some type of grant, or a potential amendment to Sections 501 or 170 themselves. In all such cases, the government would either be restricting speech directly or imposing an unconstitutional condition on a benefit that is made broadly available on an objective basis.[118]

Importantly, these principles would also apply to outright bans on speech that progressives find abhorrent. Although legislation explicitly prohibiting “hate speech” by nonprofits or denying exemption to “hate groups” has not been introduced, one can imagine what such a prohibition might look like. The Southern Poverty Law Center, for example, defines a “hate group” as an “organization that—based on its official statements or principles, the statements of its leaders, or its activities—has beliefs or practices that attack or malign an entire class of people, typically for their immutable characteristics.”[119] Several university policies could also easily serve as a template for amending Sections 170 and 501(c)(3) or the regulations thereunder. Barnard College, for example, defines prohibited harassment to include “epithets, slurs, or negative stereotyping”; “denigrating jokes”; “offensive or derogatory displays or circulations”; and “written or graphic material that disparages or shows hostility or aversion toward an individual or group.”[120] Colgate University’s definition includes “unwelcome, demeaning, intimidating or graphic comments; using ethnic, racial, religious, or other slurs to refer to a person or group” and “creating or displaying racially, ethnically, or religiously offensive pictures, symbols, flags, cartoons, or graffiti that disparages another person or group because of . . . [a] Protected Characteristic[].”[121] And in the 1990s, campus speech codes like Stanford’s, which prohibited speech “intended to insult or stigmatize an individual . . . on the basis of their sex, race, color, handicap, religion, sexual orientation, or national and ethnic origin,” proliferated.[122]

These types of prohibitions would face two problems. First, as Lloyd Mayer has explored, defining “hate speech” in a constitutional manner is incredibly difficult.[123] Are analyses of potential innate differences between men and women denigrating and derogatory? What about discussions of crime statistics vis-à-vis various racial categories, or studies of illegal immigration? It is far from clear that the proxy definitions above would survive a vagueness challenge.

But even assuming that a workable definition could be found, the bigger problem is that bans on hate speech are, by definition, bans on specific viewpoints and would be unconstitutional on those grounds. The First Amendment flatly prohibits the government from picking and choosing what viewpoints tax-exempt organizations may express. Hate speech is no exception. Recall that in Matal v. Tam, a plurality of the Court invalidated a ban on “disparaging” trademarks, concluding that the ban “[was] viewpoint discrimination: Giving offense is a viewpoint.”[124]

B. Expanding Existing Doctrines

A second threat to the sector is the use of existing rules such as Bob Jones and the Methodology Test. And in fact, conservative legislators and lawyers are already deploying these tactics against organizations such as Students for Justice for Palestine and Wikipedia.[125] On the opposite end of the spectrum, several progressive academics and policymakers have suggested using these tests to deny or revoke exemption to hate groups.[126] In 2019, for example, the Ways and Means Oversight Subcommittee held a hearing examining “How the Tax Code Subsidizes Hate.” In opening remarks, the Chair of the House Ways and Means Committee urged that “groups that propagate white supremacy, anti-Semitism, hatred for the LGBTQ community, among others, do not deserve government subsidy through tax exemptions. Hate is not charitable, and it is not educational.”[127] John Lewis, then the chair of the Oversight Subcommittee, concurred, arguing that “organizations [that] promote hate based on race, gender, religion, sexual orientation, or ethnic background . . . . taint the good work of all tax-exempt organizations.”[128]

Both Bob Jones’s public policy requirement and the Methodology Test raise serious First Amendment concerns. Not only should calls to expand their use be resisted, but they should be repealed altogether.[129] Although the government has deployed them very sparingly in the past, this is largely due to its own self-restraint and not due to any effective guardrails on their use. This lack of constraint risks rendering these doctrines both unconstitutional—as explored immediately below—and bad policy, as explored in Part IV.

1. Not Facially Neutral?

As an initial matter, it is plausible that some of these rules—specifically the fundamental public policy requirement and the Methodology Test—are unconstitutional because they are not facially neutral. To illustrate, consider the evolution of Bob Jones. The Supreme Court itself took pains to determine what constituted fundamental public policy in a neutral manner, looking to Court decisions and “myriad Acts of Congress and Executive Orders” spanning over two decades.[130] And to be clear, using Bob Jones in this manner and limiting its application to conduct that undermines established public policy would be facially constitutional.[131] The government can, without implicating the First Amendment, condition tax exemption on the recipient’s conduct (so long as it applies those conditions equally across the board).

Unfortunately, recent calls to broaden the fundamental public policy doctrine risk extending its reach beyond conduct in ways that would be unconstitutional. First, they minimize the emphasis on concrete expressions of public policy by actual governmental bodies, focusing more on arguments that a certain type of conduct does not serve a vaguely defined “public interest” or provide a vaguely defined “community benefit.” This opens the door to regulating more than conduct. These calls also seem to go beyond policing conduct to policing advocacy.[132] In Bob Jones, the problem was the school’s discriminatory conduct, not the fact that it advocated discrimination. The conduct/advocacy distinction was again highlighted in Christian Legal Society v. Martinez, which held that a public law school could refuse to recognize a student group that did not comply with a nondiscriminatory membership policy while reaffirming that the school could not discriminate against the group due to its views.[133]

Extending Bob Jones to advocacy and speech that contradicts public policy thus risks rendering it facially unconstitutional. At first glance, this extension might sound appealing—how can speech that denigrates and disparages groups of people based on race, sex, ethnicity, and so on possibly serve the public interest? In fact, does it not undermine the goal of providing a community benefit? But determining what is or is not “in the public interest” turns on the viewpoint expressed. A group that publishes a newsletter portraying a given group in a positive manner is subsidized as being in the public interest, but a newsletter portraying that same group in a negative manner is denied a subsidy as being counter to the public interest. What is the difference? The viewpoint expressed. That is the very definition of viewpoint discrimination. Similarly, substantial portions of the Methodology Test—namely, the third factor—are facially not neutral. Whether language is inflammatory, emotional, or disparaging turns on the viewpoint of the content expressed—again, the type of viewpoint discrimination precluded by the First Amendment.

2. As Applied Discrimination/Vagueness

The larger problem—which also underscores how dangerous these tests are as a policy matter—is that Bob Jones and the Methodology Test inevitably involve discriminatory application. Both presume a set of shared values and an epistemic framework that does not currently exist, and perhaps never did.[134] The values question embedded in Bob Jones—whether private schools should be allowed to racially discriminate—was hotly contested at the time, as the furor over the Court’s decisions showed. At most, one might argue that there was less epistemic fracturing at the time with respect to factual matters (in contrast to today, where even basic factual matters are viewed differently from different political vantage points). At the time of Bob Jones, there were three television networks, more Americans attended mainstream churches, experts such as professors and scientists were accorded more deference, and so on.[135] Truth was still revered as an ideal, even if it was elusive, and we had not yet fully entered our “post-truth” world.[136]

Given the fracturing of that framework and the proliferation of alternative sources of information and epistemic bubbles, however, it is impossible to apply these tests today without engaging in viewpoint discrimination. And that is unconstitutional. In another context, the Court recently struck down a Minnesota ban on “political” apparel at polling places on First Amendment grounds.[137] That case concerned the more lenient standards applicable to nonpublic forums, in which the state may impose content-based restrictions to preserve a forum’s intended purpose. These rules, however, must be “reasonable and not an effort to suppress expression merely because public officials oppose the speaker’s view.”[138] In holding that the prohibition was unconstitutional even under that more permissive standard, the Court emphasized the expansive nature of the word “political.” In theory, it could apply to “anything ‘of or relating to government, a government, or the conduct of governmental affairs’ . . . or anything ‘[o]f, relating to, or dealing with the structure or affairs of government, politics, or the state.’”[139] This indeterminacy made the ban ripe for abuse; allowing an official’s “own politics [to] shape his views on what counts as ‘political.’”[140] The same principles apply in this context.

Starting with the Methodology Test, one could argue that since it defines “educational” based on the existence of facts and the rational development of an argument, it is theoretically viewpoint neutral. Even if true, it is exceedingly difficult to apply in a way that precludes its discriminatory application based on the listener’s priors, as evaluation of its factors turns on the listener’s attitude toward the viewpoint expressed.

Consider the first two factors, that the “presentation of viewpoints or positions unsupported by facts is a significant portion of the organization’s communications” and whether “the facts that purport to support the viewpoints or positions are distorted.”[141] A listener who is skeptical of a given viewpoint is much more likely to conclude that said viewpoint is not adequately supported by facts and/or any facts given are distorted. To illustrate, imagine a newsletter arguing that there are only two sexes[142] that offers supporting facts that discuss gametes, and gametes alone. Readers who believe there are only two sexes will feel that this viewpoint is supported by facts and that those facts are undistorted. In their view, the newsletter is educational. In contrast, readers who believe sex is a spectrum and/or find the newsletter’s views hateful will likely conclude that this viewpoint is unsupported by facts or that those facts are distorted.[143]

The third factor, whether the “organization’s presentations make substantial use of inflammatory and disparaging terms and express conclusions more on the basis of strong emotional feelings than of objective evaluations” faces similar shortcomings.[144] First, identifying what counts as “inflammatory” and “disparaging” necessarily entails distinguishing among the viewpoints expressed. Does the viewpoint calm, or inflame? Does it praise a group, or denigrate it? These are questions that by definition turn on the viewpoint. Second, listeners will again judge whether something is inflammatory or disparaging based on their own views. Some hear the phrase “From the River to the Sea” as inflammatory and the term “Zionist” as disparaging, others do not. Some believe “illegal alien” to be disparaging and inflammatory, others do not. In both cases, the split likely turns on the listener’s views about these issues.

An additional consideration is that even-handed and strict enforcement of the Methodology Test would disqualify numerous groups widely seen as benign—or even positive. One could imagine, for example, a group dedicated to fighting animal abuse that uses inflammatory language and appeals to emotion.[145] Given the unlikeliness of widespread application to groups universally considered harmless, it is highly likely that in reality, the only groups that will be targeted are ones considered controversial. Unless the IRS applies the test more widely to these types of groups, its use will be discriminatory in application.[146]

Like the Methodology Test, the fundamental public policy requirement of Bob Jones invites viewpoint discrimination in two respects. First, recall that in holding that racial discrimination in education was against public policy, the Court looked at its own opinions, as well as “myriad Acts of Congress and Executive Orders.”[147] Theoretically, canvassing such materials to discern what fundamental public policy is objective—one reads them and identifies what they say. But the choice of how widely to cast a net, and what materials to rely on or discard, is fraught with subjectivity. Should state laws be considered? Or only federal?[148] If the former, which states? Red, blue, or all? What if state or local law diverges from federal law, as in the case of marijuana use or sanctuary cities? Given our federalist system, identifying a single “public policy” when it comes to numerous policy issues is almost impossible.[149]

Second, many current invocations of Bob Jones eschew identifying concrete laws and policies, instead arguing that hate and other disfavored groups do not provide a “community benefit,” do not further the “public interest,” or are not “charitable.”[150] These terms are just as indeterminate and expansive as the word “political” in the disfavored Minnesota ban on “political” apparel at polling places. As the Court noted about the Minnesota ban, this inevitably invites the decisionmaker to imbue these terms with their own substantive preferences.[151]

Just as almost anything related to the “structure or affairs of government, politics, or the state,” can be deemed political, almost any type of advocacy, education, or effort to change the status quo can be deemed antithetical to established public policy. Does advocacy for or against Palestinian statehood provide a community benefit? The United States has had a firmly pro-Israel policy for many decades. What about arguing for or against the repeal of the Nineteenth Amendment, which has been in effect for over a century? What about advocating for a change in abortion laws? Abortion was recognized as a constitutional right for almost fifty years—until it wasn’t. One’s ideological priors will inform how one interprets vague terms like “community benefit” and “public interest,” rendering such tests unconstitutional. Importantly, this guardrail protects both progressive groups from current threats and conservative groups from future threats.

C. Weaponizing Legitimate Restrictions

A final threat to nonprofit expression is the weaponization of otherwise legitimate restrictions. The First Amendment is not absolute; it does not protect incitement, and it allows prohibitions on nonprofits’ political advocacy, illegal activities, and financing terrorism.[152] These exceptions, however, are limited in scope. They are inapplicable to much activity targeted by the current administration, just as they will be inapplicable to activity conducted by conservative nonprofits that future administrations may abhor. Moreover, the selective deployment of these doctrines for ideological reasons is unconstitutional, protecting both progressive nonprofits from the current Administration as well as nonprofits with contrary views in the future.[153]

1. Illegality

First, the Administration has signaled that it will wield the illegality doctrine expansively. For example, it recently revised the public interest loan forgiveness program to exclude organizations with a “substantial illegal purpose”;[154] many fear that this is a precursor to using the doctrine outright to deny exemption to disfavored groups. And in fact, several Republican legislators have urged the IRS to use the doctrine against groups supporting Palestinian rights.[155] Likewise, a conservative nonprofit has urged the IRS to invoke the doctrine against several nonprofits, including the Gates Foundation, with scholarship and similar programs for under-represented minorities.[156]

Although the doctrine has a long history in charitable trust law, it is rarely deployed in the nonprofit context—only when the organization’s purpose is violating a criminal law itself or inducing others to commit crimes. Most recently, for example, it was used to deny exemption to an organization that engaged in drug trafficking and another whose sole purpose was to encourage the sexual exploitation of minors.[157] In those cases, the whole reason for the organization was to encourage the performance of criminal activities. The doctrine was also deployed against a group that engaged in such numerous and repeated acts of tax fraud that the criminal tax fraud became part and parcel of the organization.[158]

In contrast, the doctrine is not deployed when organizations engage in illegal acts—even repeatedly—when those acts are not criminal, not substantial and not the raison d’être of the organization. Notably, the Supreme Court opinion that solidified the doctrine’s standing as one requirement for tax exemption did not rely on the doctrine itself in holding that the schools in question did not deserve exemption even though the schools had repeatedly violated civil rights laws.[159] Instead, the Court used the fundamental public policy doctrine, emphasizing that more than twenty-five years of legislation, judicial decisions, and executive orders illustrated that racial segregation in education was not worthy of the charitable tax subsidies. Despite this history, the revisions to the PSLF program indicate the Administration plans to wield the illegality doctrine more bluntly. It lists several purposes the Administration now considers sufficient to invoke the rule, such as engaging in activities that are illegal in some states but not others (such as related to medical care for youth with gender dysphoria); violating civil rights laws; and even minor infractions like trespassing.[160] This is a vast and dangerous expansion of the doctrine.

Broadening it to include civil laws as well as criminal, to include minor violations, and to include violating state laws that are not uniform across the country invites the selective use of the doctrine. Luckily for those nonprofits espousing now-disfavored views, constitutional prohibitions against selective enforcement should protect them. And in the future, those same guardrails will protect conservative nonprofits that might picket abortion clinics or protest government policies favored by a liberal administration.

2. Incitement, Terrorism, and Political Violence

A second line of attack is to link groups with disfavored views to terrorism and violence, threatening them with various criminal investigations or violations of Section 501(p), which denies exempt status to terrorist organizations. Last fall, for example, the Trump Administration tried to paint recent acts of political violence such as the murder of Charlie Kirk, assassination attempts on President Trump and Supreme Court Justice Kavanaugh, and attacks on ICE officers, as a “culmination of sophisticated, organized campaigns of targeted intimidation, radicalization, threats, and violence.”[161] To that end, it directed numerous government actors, including the Attorney General, the Department of Justice, the National Joint Terrorism Task Force, the Treasury Department, and the IRS to “investigate and disrupt networks, entities, and organizations that foment political violence.”[162] And in Congress, several Republicans have introduced legislation that would allow the Treasury Secretary to suspend the tax-exempt status of any charity he or she determines to be “terrorist-supporting” while bypassing traditional IRS processes.[163]

Nonprofits, like all other actors, are bound both by general criminal laws and more specific anti-terrorist laws. And the First Amendment does not protect true threats of violence or incitement. But heated rhetoric—even when it includes harsh criticism of government officials, vague calls to action, or derogatory language—is not the same as a call to political violence, domestic terrorism, or incitement. Incitement is punishable only if it is intended to and likely to provoke imminent unlawful action (that is, within hours or a few days), while more general advocacy of lawbreaking or violence at some indefinite time remains protected.[164] True threats may be banned or punished, but this too has a specific meaning: “Statements where the speaker means to communicate a serious expression of an intent to commit an act of unlawful violence to a particular individual or group of individuals.”[165] And revoking exemption on the grounds that a group is a terrorist organization requires a lengthy procedural process and an opportunity to challenge that designation.

The narrowness of these exceptions thus protects nonprofits currently accused of fomenting violence, such as several pro-Palestinian organizations and groups that use heated rhetoric to fight for racial justice.[166] On the flip side, cabining these exceptions will also protect organizations expressing contrary views in the future. Hate speech is not the same as incitement or calls to violence. Both sides should therefore be wary of recasting it as “stochastic terrorism” and arguing that speech that denigrates/dehumanizes certain groups causes others to engage in violence.[167]

IV. Policy Arguments

In addition to legal constraints, numerous policy reasons counsel against restricting “disfavored” nonprofit expression or excluding nonprofits with “dangerous” views or that advocate for unpopular aims from the charitable tax subsidies. Namely, the values that underpin the First Amendment apply in a unique manner to the nonprofit sector, given its distinct role in our society.[168] To that end, even if Congress and the IRS could constitutionally deny exemption on the grounds that certain speech is not educational or that a given nonprofit’s mission undermines public policy, they should not as a policy matter.

Before turning to those arguments, however, two words about scope and context. The literature on free speech is vast. This Article focuses on those defenses (and critiques thereof) relevant to the unique role that the sector plays, similar to literature discussing why freedom of speech principles are particularly important to a free press, given its role. Second, as described in Part I, scholars have offered numerous and competing theories to justify both the nonprofit sector’s existence and the charitable tax subsidies.[169] Some—the “traditional subsidy” theories—focus on intangible “big picture” benefits as being the sector’s raison d’être.[170] Other theories—the “economic subsidy” arguments—emphasize the role of the sector as a provider of public goods that would otherwise be under-produced due to market and political failures. It seems likely that even those who believe the economic arguments provide the better initial justification for the subsidies also recognize that the subsidies have second-order benefits, those that are celebrated by the traditional subsidy theorists. To that end, the following analysis of the “role” or “benefits” of the sector is relevant regardless of how one initially justifies the charitable tax subsidies.

The policy arguments for a hands-off approach to nonprofit expression fall into roughly two groups. First, even if there might be reasons to try to distinguish between good and bad speech, doing so is a fraught exercise with dangerous consequences for the charitable sector if we get it wrong. Second, there are affirmative, intrinsic benefits to allowing people to express heinous views. The expression of such views—not just a reluctant decision to tolerate such views out of necessity—is in and of itself valuable and necessary for the sector to fulfill its promise. We thus shouldn’t even try to distinguish between good and bad speech.

A. Attempts to Limit Harmful Speech Will Sweep in Beneficial Speech

As an initial matter, even if refusing to subsidize certain types of speech has theoretical merit, the difficulty of drawing the appropriate line between harmful and beneficial speech creates two problems. First, some speech will be incorrectly categorized as harmful; second, other beneficial speech will be voluntarily stifled out of fear of crossing the line. Both undermine a crucial aspect of the interaction between underlying First Amendment principles and the nonprofit sector. For the latter to effectively offer creative and diverse solutions to society’s problems, counter governmental power, and enhance pluralism and experimentation,[171] a strong “marketplace of ideas” must exist.[172] Trying to identify harmful speech or misinformation particularly risks suppressing the minority and dissenting views that are key to a healthy marketplace of ideas.[173]

1. The Sector’s Role in Offering Solutions to Societal Problems

Consider, for example, the role the sector plays in offering solutions to societal problems. Doing this requires that the truth has, in First Amendment litigator Greg Lukianoff’s words, “a fighting chance.”[174] Knowing what the problem is and what can fix it absolutely requires that truth and accuracy have the best chance of coming forward. And that means, perhaps counterintuitively, rejecting rules that attempt to separate fact from opinion or weed out “incorrect” information—including several tests that have been floated by scholars or policymakers as methods for combatting disfavored views and misinformation. Any such rules will inevitably be overinclusive in ways that undercut the sector’s benefits.

Consider the ways that Congress, Treasury, or the IRS might distinguish inflammatory propaganda and misinformation from “truly” educational speech. To illustrate, take the Methodology Test, which exemplifies the type of test that might be used to accomplish this task. One factor that it uses to identify non-educational speech is the use of inflammatory and strong language that is designed to evoke emotion rather than reason. But limiting the manner in which nonprofits can communicate their message hamstrings them and their ability to attack societal problems. Consider the example discussed by the D.C. Circuit in Big Mama Rag: a picture of a skull and crossbones with the slogan “Smoking rots your lungs” versus a text-only ad with the tamer language that “Smoking is hazardous to your health.”[175] Convincing the public that a problem exists, and encouraging them to pursue a given solution, often requires the use of emotion. If applied even-handedly, this type of test would foreclose groups with noncontroversial missions—such as anti-smoking groups, or groups that encourage people to wear sunscreen, obtain cancer screenings, adopt stray puppies, or eat less sugar—from using emotion to express their messages.[176]

A second factor that the Methodology Test considers is the use of distorted facts. Even if deployed in a viewpoint-neutral manner, determining whether facts are distorted or not can be incredibly difficult in many situations. Consider, for example, a nonprofit that opines on the origins of COVID-19 or the efficacy of medical transition for minors with gender dysphoria—questions that depend on complex scientific facts that everyday people are ill-equipped to judge.

Asking the IRS to evaluate the strength and sufficiency of a given set of facts is problematic for two reasons. As others have observed, almost anyone can cherry-pick facts that support their position. Someone without substantive knowledge might be able to determine whether a fact in isolation is distorted or not (for example, they might be able to confirm that a cited study argues that COVID-19 naturally mutated from animals to humans). But without substantive knowledge, they might be unable to determine whether that study is deployed inaccurately, such as might be the case if a group cites the single study out of 1,000 that argues X instead of Y, without acknowledging the contrary 999 studies.

Fully determining whether factual support for a given position is distorted therefore often requires expert knowledge. But experts are fallible humans like everyone else. They can sometimes be wrong—such as with lobotomies in the 1940s and ’50s and the recovered memory and multiple personality disorder panic of the 1990s. Experts can also be subject to biases and peer pressure, just like everyone else.[177] The joint production of expert knowledge requires sustained effort and robust debate among numerous groups because it is often an evolving process. While this process tends toward the truth, it can take a while and yield some dead ends in the interim.

These reasons counsel humility in analyzing whether the IRS can accurately assess complex factual claims. Here, getting it “wrong” undermines the goals of the sector in several ways. It diminishes the sector’s ability to offer alternative methods for tackling societal problems, and silences minority viewpoints (whose arguments are much less likely to be seen as factually valid). And by stifling information, it distorts the educational process. Thus, even reforms like imposing a Daubert-like standard on the second prong of the Methodology Test[178] or as a test for determining when information furthers a public purpose are detrimental.[179]

2. The Sector’s Role in Offering Alternative Viewpoints and Furthering Social Change

Next consider the sector’s role in offering creative and diverse viewpoints, furthering social change, and countering government power. Trying to weed out harmful nonprofit expression or activities almost inevitably encompasses speech and activities which are merely unpopular—yet crucial to the sector’s ability to achieve this second set of aims.[180] Consider a recent example from New Zealand.[181] Its Supreme Court recently upheld the denial of tax benefits to a group that promotes traditional conservative views about marriage and family on the grounds that “discriminatory” groups cannot be charitable organizations.[182] This seems like an over-extension of what it means to be “discriminatory.” A group promoting the view that marriage is between a man and a woman and that children should be born to married parents likely holds an unpopular opinion, but is it “discriminatory” or “harmful”? An affirmative answer seems to imply that any value judgments about behavior are also discriminatory and harmful. Closer to home, any attempt to define anti-Semitic or Islamophobic speech would almost certainly sweep within it language over the Israeli-Palestinian conflict that should be protected.

This overreach undermines the purpose of the nonprofit sector as a purveyor of dissenting and minority viewpoints and a vector for social change and is untenable. Many social movements start out as unpopular—the Civil Rights Movement is a quintessential example, as is the more recent fight for marriage equality. In the 1980s, for example, polling data suggested that only about one in ten Americans supported same-sex marriage.[183] Even at that time, less than half of Americans supported interracial marriage; in the 1950s, that number was under one in twenty.[184] Both are legal now but were illegal in the past. Fighting to make them legal could have been seen as advocating for changes that undermined established public policy.[185] These examples illustrate that, by definition, advocating for societal change often means advocating against the accepted public policy of the day.

B. The Affirmative Value of Not Drawing a Line

But the risk of drawing the line in the wrong place is not the only reason to avoid drawing a line when it comes to nonprofit expression and activity. In addition, there are numerous reasons related to the sector’s purpose to welcome all viewpoints—even if vile, heinous, hateful, or misleading. As this Section shows, most relate to the sector’s role in serving as a counterweight to governmental power, fostering pluralism, and providing a forum for minority viewpoints.

1. Countering Governmental Power

One of the most common justifications for expansive free speech rights is to serve as a check on governmental power.[186] One concern is that giving the government the right to regulate speech allows it to stifle speech with which it disagrees—including not only speech that is directly critical of it, but also speech that simply advances contrary views.[187] Given the role of the nonprofit sector as a third space and a counterweight to governmental power, we should be especially careful to not allow it to become a mouthpiece for the government.

To illustrate, consider a nonprofit whose purpose is to investigate the origins of the COVID-19 pandemic. After an investigation, it argues in favor of the lab-leak hypothesis and ties the source lab to funding from the U.S. government. Recall that in the early stages of the pandemic, the theory that the virus had escaped from a lab was considered a racist, xenophobic, right-wing conspiracy. The ability to deny this group exemption for spreading a “hateful” message would here allow the government to silence its critics and hide its mistakes.[188]

Similar considerations apply not just in the context of checking the government for factual accuracy or calling it to account for mistakes, but also when it comes to issues of contested social values.[189] In our pluralistic society, what is hateful, harmful, or contrary to the public interest from one perspective is a necessary alternative viewpoint and counterweight to the government imposition of a monoculture to the other side. What the Trump administration considers hate speech, progressives and supporters of Black Lives Matter and critical race theory view as crucial discussions of the role of race in society. And what the latter might consider harmful white supremacy, others may see as a necessary defense of a colorblind society.[190] Allowing unpopular beliefs is absolutely necessary to prevent the government from imposing social values top-down, and to prevent the start of a tit-for-tat spiral that can be used against minorities and to stifle dissent.[191]

A distinct but related concern is that a key feature of informed self-governance—which is also necessary to counteract governmental overreach—is the ability of citizens to freely engage in debate. And a free debate means letting all views in, not just acceptable views. This is somewhat akin to the toleration principle discussed below—if one of the sector’s roles is countering government and fostering pluralism, it needs to itself provide a structure for people to practice those skills.

2. Informational Theory

A second justification for tolerating vile, heinous, hateful, and misleading speech and activity is so that we accurately know what people think. And this in and of itself is educational. In some ways, this is like the reasons for subsidizing art. We value and subsidize art not because it conveys a truthful message, but because it tells us about human nature—what people feel, think, and believe.

This too counsels in favor of not denying subsidies even to groups that promulgate what would uniformly be considered hateful or harmful or clearly incorrect views, because we need an accurate picture of how widespread those beliefs are and how strongly they are held. Start with hate speech. As free speech litigator Greg Lukianoff has explained, “It is of course absolutely crucial to know if someone is a bigot.”[192] This knowledge is necessary on two levels. Broadly, it is helpful to know about the tensions in our communities. Closer to home, it helps us decide whether to interact with that person, from hiring them to asking them to join your book club.

With respect to misinformation, take the Front Line COVID-19 Critical Care Alliance (FLCCC).[193] The FLCCC, which is tax-exempt, advocates for using Ivermectin to treat COVID. We should support the FLCCC’s speech not because it might ultimately be correct, but because we need to know the extent to which people believe Ivermectin can cure COVID. (Note that this is a distinct argument from the humility argument discussed above.) Only by knowing the breadth and depth of this belief can we adequately counter it.[194] This does not necessarily mean that we counter it in the sense that accurate information about Ivermectin wins (which invokes the truth-seeking function of the marketplace). Perhaps we never convince some people that Ivermectin is ineffective, but knowing those beliefs allows us to find a work-around.

As applied to the nonprofit sector, if one role is to provide information about our society and foster creative and diverse solutions to society’s problems, we need an accurate picture of what those problems are. Likewise, if one goal is to enhance pluralism, then that means not picking and choosing among views. A counter to this argument is that we do not need to subsidize these groups to know people think this way. But if we are subsidizing groups with opposing views and not these views, then we get an unrepresentative view of what people think and we underappreciate the demons lurking in our society.

3. Toleration and Safety Valves

Additional reasons for allowing even hateful views and misinformation within the nonprofit ecosphere relate to its role in fostering pluralism. First, part of the sector’s role in fostering pluralism should be helping citizens develop the skills necessary to live in a pluralistic society. A key aspect of promoting pluralism in speakers is promoting an appreciation for pluralism in listeners—that is, in fostering tolerance, which brings up the tolerance theory identified by Lee Bollinger. Bollinger argues that pluralism requires tolerating views with which we disagree—which is hard, given the natural temptation to punish people with whom we disagree. Tolerating the most offensive speech—such as extremely offensive racist hate speech—fosters toleration more generally.[195] By putting “aside our beliefs [and] overcoming the instinct to have things our own way, to control, to dominate,” we can “live in a world of difference, and to do so comfortably.”[196]

Another potential reason to affirmatively tolerate hateful speech and activity is that allowing people who hold those views to speak (and form nonprofits engaging in such speech) might act as a safety valve.[197] If people can express their opinions and emotions peacefully, they are less likely to resort to violence. Providing such a safety valve helps ensure a violence-free marketplace of ideas, which relates to the sector’s role in enhancing pluralism and overcoming market failures. Relatedly, distrust of experts and our sorting into epistemic bubbles are at an all-time high. Americans of all political stripes are extraordinarily suspicious right now that their viewpoint is being suppressed. As a result, any whiff of the government picking and choosing acceptable viewpoints will simply anger people more, whereas a broader embrace of viewpoints can avoid triggering more anger.[198] The underlying idea is that if people can peacefully express their views on controversial issues, they may be less likely to resort to violence to get their point across. Moreover, a broad understanding of free expression might make deliberation among groups more likely, not less, which in turn could either enhance each side’s understanding of the other, or at least increase acceptance of the fact that people hold different views.

Not surprisingly, these arguments are contested. One could also imagine that such speech could plausibly create and/or exacerbate conflict.[199] Perhaps the most common current iteration of this argument is that hate speech marginalizes identifiable groups and people. This marginalization impedes full participation in the political process, erodes the respect each citizen deserves, and contributes to mental distress and social ostracization—all of which, in turn, could balloon into open social conflict. Another version of this argument is that unfettered free speech brings conflict and polarization out into the open, which could (1) cause latent conflicts to metastasize once the broader public becomes aware of them, and/or (2) allow other actors to exploit such conflicts for their own gain. Finally, allowing hate speech and the like could allow the recruiting of new members, who could then be encouraged to commit acts of violence.

Whether free speech does, in fact, serve as a safety valve is ultimately an empirical question. Although somewhat difficult to measure, a recent paper from Vanderbilt found a negative correlation between freedom of expression and increased social conflict, suggesting that in democracies, the safety valve effect is real.[200]

Conclusion

The nonprofit sector plays a crucial role in our society. It facilitates creative solutions to societal problems, fosters value pluralism, offers alternative viewpoints in arts and literature, and counters governmental power. Regardless of how narrowly Congress could have constructed the charitable tax subsidies, their current breadth—both legally and in application—renders them limited public forums. The charitable tax subsidies are not government speech, nor are they instances of the government subsidizing third parties to convey specific messages.

Instead, the statutes’ generality and the neutral, procedurally focused rules that determine eligibility have created a system whereby the government is subsidizing expressive activity as a general matter, for the very purpose of generating a diversity of views. Precisely because of that breadth, the First Amendment precludes the government from denying the subsidies to groups of whose message it disapproves. It may not prohibit speech expressing specific views on DEI, climate change, the conflict in the Middle East, or any other topic—where those prohibitions are written into Sections 170 or 501 directly or imposed indirectly through conditions on grants and other programs. It may not use doctrines such as the fundamental public policy requirement or the Methodology Test to suppress disfavored views; in fact, the very subjectivity of those tests and their susceptibility to abuse likely renders them unconstitutional. Nor may it selectively apply otherwise constitutional rules, such as those against illegality, incitement, and supporting terrorism. These constitutional guardrails protect progressive and liberal nonprofits from current threats—and will also protect nonprofits with opposing views when the political winds shift.

More importantly, attempts to limit the nonprofit sector to groups whose viewpoints the government agrees with undermine the role of the sector. Such attempts limit minority voices and viewpoints that are necessary for the sector to effectively find solutions to societal problems, for they undermine the search for truth. Allowing the government to determine what messages get expressed turns the sector into its mouthpiece, rendering it impossible for the sector to counter governmental power and hold the government accountable for its mistakes. It also dampens pluralism, risking turning our society into a monoculture. And finally, it inhibits social change such as the civil rights movement. For these reasons, progressives and conservatives alike should be wary of calls to align the sector with government-approved viewpoints.

  1. * Thanks to Ellen Aprill, Sam Brunson, Conor Clarke, Brian Galle, Ben Leff, Jill Manny, Lloyd Mayer, David Pozen, David Schizer, Maimon Schwarzschild, Eugene Volokh, Alex Zhang, and participants at the Washington University Law Review’s Symposium on Taxing, Spending, and the Constitution, the Columbia Law School Interdisciplinary Workshop on Nonprofits, and the 2024 Experienced in Tax Conference. ↑

  2. . Tyler Pager, Andrew Duehren, Maggie Haberman & Jonathan Swan, Trump Threatens Harvard’s Tax Status, Escalating Billion-Dollar Pressure Campaign, N.Y. Times (Apr. 15, 2025), https://www.nytimes.com/2025/04/15/us/politics/trump-harvard-tax-status.html [https://perma.cc/TKC
    8-FWCY]. ↑

  3. . Zolan Kanno-Youngs, Andrew Duehren, Kenneth P. Vogel & Katie Rogers, Trump Invokes Kirk’s Killing in Justifying Measures to Silence Opponents, N.Y. Times (Sept. 22, 2025), https://www.nytimes.com/2025/09/16/us/politics/trump-kirk-free-speech-hate-speech-left.html [https://
    perma.cc/MC9R-8BHC]. ↑

  4. . Moreover, the President lacks the power to order the IRS to revoke exemptions. Ellen P. Aprill, Once and Future Revocation of Tax Exemption for Pursuit of DEI and Other Alleged Violations of Section 501(c)(3), Tax Law. (forthcoming), https://papers.ssrn.com/sol3/papers.cfm?abstract_id=
    5233657 [https://perma.cc/YDQ6-K7RP]; Neal Katyal, Opinion, The Law Bars Trump from Threatening Harvard’s Tax Exemption, Wall St. J. (May 11, 2025), https://www.wsj.com/opinion/the-law-bars-trump-from-threatening-harvards-tax-exemption-irs-political-influence-f6c9386d [https://per
    ma.cc/9WCM-E6U6]. ↑

  5. . Eugene Volokh has discussed these arguments before Congress. See, e.g., Eugene Volokh, The First Amendment and Tax Exemptions for “Hate” Groups, Reason: Volokh Conspiracy (Sept. 19, 2019), https://reason.com/volokh/2019/09/19/the-first-amendment-and-tax-exemptions-for-hate-groups/ [https://perma.cc/9QEZ-XMC5]. However, no in-depth law review analysis concludes that denying exemption to these groups is unconstitutional. Most argue the opposite. ↑

  6. . See Miranda Perry Fleischer, Theorizing the Charitable Tax Subsidies: The Role of Distributive Justice, 87 Wash. U. L. Rev. 505 (2010). Organizations qualifying for one benefit almost always qualify for the other. “Nonprofit,” “charity,” and “tax-exempt” are all used colloquially to refer to such groups. ↑

  7. . Bob Jones Univ. v. United States, 461 U.S. 574, 592–98 (1983). ↑

  8. . Treas. Reg. § 1.501(c)(3)-1(d)(3)(i) (2009); Rev. Proc. 86-43, 1986-2 C.B. 729 (elucidating the methodology test (“Methodology Test”)). ↑

  9. . Speiser v. Randall, 357 U.S. 513 (1958); Regan v. Taxation with Representation of Wash., 461 U.S. 540 (1983); Rosenberger v. Rector & Visitors of Univ. of Va., 515 U.S. 819 (1995). ↑

  10. . Z Street v. Koskinen, 791 F.3d 24, 30 (D.C. Cir. 2015) (addressing delays in processing exemption applications). ↑

  11. . See, e.g., Ways and Means Democrats (@WaysMeansCmte), X (Sept. 19, 2019), https://x
    .com/WaysMeansCmte/status/1174726669900419083 [https://perma.cc/N4NQ-U4KD]; Samuel D. Brunson, Addressing Hate: Georgia, the IRS, and the Ku Klux Klan, 41 Va. Tax Rev. 45, 84 (2021); Darryll K. Jones, Stochastic Terrorism, Speech Incantations and Federal Tax Exemption, 54 N.M. L. Rev. 69 (2024). ↑

  12. . See Matal v. Tam, 582 U.S. 218 (2017); Minn. Voters All. v. Mansky, 585 U.S. 1 (2018). ↑

  13. . See Conor Clarke, The Conservative Case for Leaving Harvard Alone, The Atlantic (Apr. 18, 2025), https://www.theatlantic.com/ideas/archive/2025/04/harvard-trump-irs-nonprofit/682507/ [https://perma.cc/SB4F-7GDC] (exploring a similar tension between nonprofit purposes and strengthening Bob Jones). ↑

  14. . For a more in-depth history, see Fleischer, supra note 5. ↑

  15. . This Article will focus on organizations that qualify for both tax-exemption and the ability to receive deductible contributions, setting aside 501(c)(4) social welfare organizations and other non-charitable exempt organizations. ↑

  16. . I.R.C. § 170(c)(2)(B); see also I.R.C. § 501(c)(3). ↑

  17. . Although the two statutes contain slightly different wording, organizations qualifying for exemption almost always qualify to receive deductible contributions and vice versa. The terms “nonprofit,” “tax-exempt,” and “charity” are all colloquial terms for these organizations, and this Article uses all three interchangeably. ↑

  18. . Of course, any such limits would have to comply with the constitutional constraints discussed in Part II. Although Congress could choose to subsidize schools and not museums, it cannot choose to subsidize only schools and museums that promote a certain viewpoint while withholding subsidies from schools and museums that offer an opposing viewpoint. Similarly, Congress could not choose to exempt only Catholic or Protestant churches and not Jewish synagogues. ↑

  19. . See Lloyd Hitoshi Mayer, Nonprofits, Taxes, and Speech, 56 Loy. L.A. L. Rev. 1291, 1348 (2023). ↑

  20. . Treas. Reg. § 1.501(c)(3)-1(d)(3)(i) (2009). Although the IRS and Treasury—like Congress—could have crafted narrower definitions, any such definitions would have to be viewpoint neutral. See infra Part II. ↑

  21. . Regan v. Taxation with Representation of Wash., 461 U.S. 540, 544 (1983). ↑

  22. . David E. Pozen, Remapping the Charitable Deduction, 39 Conn. L. Rev. 531, 552–53 (2006) (“In Congress, the courts, the media, and now academia, the deduction is widely viewed not as a means to reify the ideal tax base . . . but as a tax expenditure used to promote charitable giving and thereby the ultimate well-being of society. That is, the deduction is widely viewed as a government subsidy . . . .”). A minority of scholars disagree, arguing that Sections 170(c) and 501(c)(3) are necessary to measure income. See, e.g., William D. Andrews, Personal Deductions in an Ideal Income Tax, 86 Harv. L. Rev. 309, 314–16 (1972); Boris I. Bittker & George K. Rahdert, The Exemption of Nonprofit Organizations from Federal Income Taxation, 85 Yale L.J. 299, 307–14 (1976); Johnny Rex Buckles, The Community Income Theory of the Charitable Contributions Deduction, 80 Ind. L.J. 947, 952 (2005). ↑

  23. . See Fleischer, supra note 5, at 518. ↑

  24. . See, e.g., John D. Colombo & Mark A. Hall, Theoretical Foundations of the Donative Theory, in The Charitable Tax Exemption 99, 100–08 (1995); Mark P. Gergen, The Case for a Charitable Contributions Deduction, 74 Va. L. Rev. 1393, 1396–406 (1988); Burton A. Weisbrod, Toward a Theory of the Voluntary Nonprofit Sector in a Three-Sector Economy, in The Economics of Nonprofit Institutions 21 (Susan Rose-Ackerman ed., 1986); Henry Hansmann, The Rationale for Exempting Nonprofit Organizations from Corporate Income Taxation, 91 Yale L.J. 54, 72 (1981). But see David A. Brennen, A Diversity Theory of Charitable Tax Exemption—Beyond Efficiency, Through Critical Race Theory, Toward Diversity, 4 Pitt. Tax Rev. 1 (2006) (pushing back on the economic subsidy theory). ↑

  25. . This stems from the democratic process that turns on majority preferences. If the median voter supports national defense but not the opera, then only the former receives funding. ↑

  26. . Colombo & Hall, supra note 23, at 107–08. ↑

  27. . Gergen, supra note 23, at 1399–406. ↑

  28. . Saul Levmore, Taxes as Ballots, 65 U. Chi. L. Rev. 387, 405–12 (1998). ↑

  29. . David M. Schizer, Subsidizing Charitable Contributions: Incentives, Information, and the Private Pursuit of Public Goals, 62 Tax L. Rev. 221, 229–42, 256–67 (2009). ↑

  30. . Of course, other rules can and have been used ideologically. In particular, accusations that the IRS enforces the prohibition on political campaign activity selectively on a partisan basis have been rampant for decades. Because of the long-standing nature of these accusations, a rich debate already addresses the constitutionality of these limits, their desirability as a normative matter, and problems with their selective enforcement. Instead of revisiting well-worn ground, this Article sets those limitations aside to focus on rules that have gained attention as ideological weapons only in the last decade or so. For a sampling of the debate surrounding the campaign intervention rules, see Ellen P. Aprill, Amending the Johnson Amendment in the Age of Cheap Speech, 2018 U. Ill. L. Rev. Online 1; Ellen P. Aprill, Churches, Politics, and the Charitable Contribution Deduction, 42 B.C. L. Rev. 843 (2001); Samuel D. Brunson, Dear IRS, It Is Time to Enforce the Campaigning Prohibition. Even Against Churches, 87 U. Colo. L. Rev. 143 (2016); Samuel D. Brunson, A New Johnson Amendment: Subsidy, Core Political Speech, and Tax-Exempt Organizations, 43 Yale L. & Pol’y Rev. 354 (2025); Johnny Rex Buckles, Not Even a Peep? The Regulation of Political Campaign Activity by Charities Through Federal Tax Law, 75 U. Cin. L. Rev. 1071 (2007); Laura Brown Chisolm, Politics and Charity: A Proposal for Peaceful Coexistence, 58 Geo. Wash. L. Rev. 308 (1990); Roger Colinvaux, The Political Speech of Charities in the Face of Citizens United: A Defense of Prohibition, 62 Case W. Rsrv. L. Rev. 685 (2012); Roger Colinvaux, Political Activity Limits and Tax Exemption: A Gordian’s Knot, 34 Va. Tax Rev. 1 (2014); Brian Galle, Charities in Politics: A Reappraisal, 54 Wm. & Mary L. Rev. 1561 (2013); Benjamin M. Leff, Fixing the Johnson Amendment Without Totally Destroying It, 6 U. Pa. J.L. & Pub. Affs. 115 (2020); Benjamin M. Leff, “Sit Down and Count the Cost”: A Framework for Constitutionally Enforcing the 501(c)(3) Campaign Intervention Ban, 28 Va. Tax Rev. 673 (2009); Mayer, supra note 18; Lloyd Hitoshi Mayer, Grasping Smoke: Enforcing the Ban on Political Activity by Charities, 6 First Amend. L. Rev. 1 (2007); Donald B. Tobin, Political Campaigning by Churches and Charities: Hazardous for 501(c)(3)s, Dangerous for Democracy, 95 Geo. L.J. 1313 (2007); Philip Hamburger, Liberal Suppression: Section 501(c)(3) and the Taxation of Speech (2018). ↑

  31. . 461 U.S. 574 (1983). The IRS had gestured toward the illegality doctrine in earlier revenue rulings. See Rev. Rul. 71-447, 1971-2 C.B. 230. However, its inclusion in Bob Jones increased its importance. For an in-depth history of the doctrine, see Lauren Libby, Tax-Exemption and the Shadow of Law (Nov. 28, 2025) (unpublished manuscript), https://papers.ssrn.com/sol3/papers.cfm?abstract
    _id=5824182 [https://perma.cc/YJR6-DS8Z]. ↑

  32. . Iowaska Church of Healing v. Werfel, 105 F.4th 402, 414 (D.C. Cir. 2024); Mysteryboy Incorporation v. Comm’r, 99 T.C.M. (CCH) 1057, *19 (2010). ↑

  33. . I.R.S. Priv. Ltr. Rul. 201323025 (June 7, 2013). ↑

  34. . Church of Scientology of Cal. v. Comm’r, 83 T.C. 381, 505–06 (1984). ↑

  35. . For more on the illegality doctrine, see Professors of Tax’n & Nonprofit L., Comment Letter Proposed Changes to Public Service Loan Forgiveness (Sept. 16, 2025) [hereinafter PSLF Comment Letter], https://www.regulations.gov/comment/ED-2025-OPE-0016-8696 [https://perma.cc/83QK-6A
    UZ]; Libby, supra note 30 (arguing that the institutional constraints on using the illegality doctrine are weak, rendering it a “loaded weapon” waiting to be used against disfavored groups). ↑

  36. . Bob Jones, 461 U.S. at 591–92. ↑

  37. . Id. at 592. ↑

  38. . Id. at 592–95. ↑

  39. . See Alex Zhang, Antidiscrimination and Tax Exemption, 107 Cornell L. Rev. 1381 (2022). ↑

  40. . Arguments from the left side of the political spectrum to expand Bob Jones come from both policymakers and academics. See, e.g., Corey Brettschneider, Democratic Persuasion and Freedom of Speech: A Response to Four Critics and Two Allies, 79 Brook. L. Rev. 1059, 1069–74 (2014) (arguing that “organizations that discriminate or advocate hateful beliefs should not enjoy the tax privileges that come with 501(c)(3) status” on the grounds that attacking “the public good of free and equal citizenship” is not charitable); Samuel D. Brunson & David J. Herzig, A Diachronic Approach to Bob Jones: Religious Tax Exemptions After Obergefell, 92 Ind. L.J. 1175, 1204–17 (2017) (proposing three methods for clarifying and expanding the public policy requirement); Jones, supra note 10 (arguing that hate groups are by definition not charitable); Lynn D. Lu, Who’s Afraid of Bob Jones? “Fundamental National Public Policy” and Critical Race Theory in a Delicate Democracy, 25 CUNY L. Rev. 93 (2022) (contending that the lessons of critical race theory should inform the public policy analysis); Richard Schmalbeck, Bob Jones and the Public Policy Doctrine, 35 Years Later, Nat’l Ctr. on Philanthropy & L. Conf. Proc., 2018, at 34–37, https://ncpl.law.nyu.edu/wp-content/uploads/2022/
    07/Richard-L.-Schmalbeck.pdf [https://perma.cc/Q6P6-WVGX] (exploring whether a sufficiently objective public policy test could be created that would deny exemption to “White supremacy [and] Holocaust denial” groups); Zhang, supra note 38, at 1401 (arguing the doctrine should cover discrimination based on any protected characteristic in addition to race). ↑

  41. . In contrast to arguments from the left side of the political spectrum, arguments from the right to expand Bob Jones tend to come not from academics but from politicians, policymakers, and other advocates. See, e.g., sources cited infra note 124. For descriptions and academic discussions of these calls for expansion from the right, see Aprill, supra note 3 (extensively cataloguing and analyzing current threats to liberal nonprofits); David A. Brennen, Race Conscious Affirmative Action by Tax Exempt 501(c)(3) Institutions After Students for Fair Admission v. Harvard and UNC, 21 Pitt. Tax Rev. 49 (2023) (assessing conservative arguments that recent Supreme Court jurisprudence renders traditional affirmative action for minorities contrary to public policy); Roger Colinvaux, Charitable Giving and Civil Rights: A Defense of Private Remedial Action, 135 Yale L.J. 549 (2025) (asserting that affirmative action programs by tax-exempt organizations are not at odds with public policy, contrary to assertions by the Trump Administration); Samuel D. Brunson & Ellen P. Aprill, The University, Ideology, and Tax Exemption, 168 Tax Notes Fed. 1037 (Aug. 10, 2020) (discussing the charge that opposition to requiring foreign students to take at least one class in-person violates public policy). ↑

  42. . Treas. Reg. § 1.501(c)(3)-1(d)(3)(i) (2009). ↑

  43. . Big Mama Rag, Inc. v. United States, 631 F.2d 1030, 1039–40 (D.C. Cir. 1980). ↑

  44. . Rev. Proc. 86-43, 1986-2 C.B. 729. ↑

  45. . Id. § 3.02. ↑

  46. . Id. § 3.03. ↑

  47. . Nationalist Movement v. Comm’r, 102 T.C. 558, 583–90 (1994); Nat’l All. v. United States, 710 F.2d 868, 876 (D.C. Cir. 1983) (“We do not . . . reach the question whether the application of the Methodology Test, either as a matter of practice or under an amendment to the regulations would cure the vagueness found in the regulation by this court in Big Mama.”). ↑

  48. . See, e.g., Denial Letter from Paul M. Harrington, Dist. Dir., Internal Revenue Serv., to Applicant, (Apr. 22, 1996) (denying recognition of tax-exempt status under I.R.C. § 501(c)(3)), https://www.irs.gov/pub/irs-lafa/den0266r.pdf [https://perma.cc/YB7N-UK3T]; Mayer, supra note 18, at 1309 n.80 (collecting instances of its use). Most observers believe the IRS only invokes the Methodology Test in “extreme” cases, but proving this point empirically is difficult. See, e.g., Email from Lloyd Mayer to author (Apr. 8, 2026) (on file with author). ↑

  49. . See, e.g., Brunson, supra note 10, at 84 (arguing that the Methodology Test be used to deny the charitable tax subsidies to hate groups); Alex Reed, Subsidizing Hate: A Proposal to Reform the Internal Revenue Service’s Methodology Test, 17 Fordham J. Corp. & Fin. L. 823, 862–69 (2012). In the same spirit, Darryll Jones has proposed replacing the Methodology Test with a test that would distinguish education from indoctrination in order to preclude subsidizing hate groups. See Jones, supra note 10, at 92–107; see also Eric Franklin Amarante, Why Don’t Some White Supremacist Groups Pay Taxes?, 67 Emory L.J. Online 2045, 2065–67 (2018) (arguing that “educational purposes” should be redefined to include schools and organizations like museums while excluding advocacy groups). ↑

  50. . Speiser v. Randall, 357 U.S. 513, 518–19 (1958). As discussed later, there are exceptions for true threats and incitement to violence. See discussion infra Section III.C. ↑

  51. . Matal v. Tam, 582 U.S. 218, 234 (2017); Rust v. Sullivan, 500 U.S. 173, 193 (1991). ↑

  52. . Matal, 582 U.S. at 234–35. ↑

  53. . Rust, 500 U.S. at 192–94; Agency for Int’l Dev. v. All. for Open Soc’y Int’l, Inc., 570 U.S. 205, 217 (2013). ↑

  54. . See, e.g., Rust, 500 U.S. at 194–95 (distinguishing between “a general law singling out a disfavored group on the basis of speech content” and “the Government refusing to fund activities, including speech, which are specifically excluded from the scope of the project funded”). ↑

  55. . 357 U.S. at 516, 518–19. ↑

  56. . Id. at 518. ↑

  57. . Id. at 519 (quoting Am. Commc’ns Ass’n v. Douds, 339 U.S. 382, 402 (1950)). ↑

  58. . Id. at 518–19. ↑

  59. . 461 U.S. 540 (1983). ↑

  60. . Such groups were still eligible for tax-exemption under Section 501(c)(4), but they were ineligible for exemption from Section 501(c)(3), to which attaches the ability to receive deductible contributions under Section 170(c). ↑

  61. . Regan, 461 U.S. at 545–46. ↑

  62. . Id. at 545. One key fact is that 501(c)(3)s can easily create sister 501(c)(4) organizations to lobby. ↑

  63. . Id. at 545–47. ↑

  64. . Rust v. Sullivan, 500 U.S. 173, 197 (1991). The Court addressed this distinction again in Agency for Int’l Dev. v. All. for Open Soc’y Int’l, Inc., 570 U.S. 205 (2013). See infra notes 81–85 and accompanying text. ↑

  65. . Regan, 461 U.S. at 548 (citing Cammarano v. United States, 358 U.S. 498, 513 (1959)). ↑

  66. . Id. ↑

  67. . See also Rosenberger v. Rector & Visitors of Univ. of Va., 515 U.S. 819, 829 (1995) (“When the government targets not subject matter, but particular views taken by speakers on a subject, the violation of the First Amendment is all the more blatant.”). ↑

  68. . Id. at 827, 834. The denial was based on the grounds that the newspaper was a “religious activity,” meaning that it “promote[d] or manifest[ed] a particular belie[f] in or about a deity or an ultimate reality” and as such, was not eligible for the subsidy. Id. at 827. ↑

  69. . Id. at 834; see also Regan, 461 U.S. at 548. ↑

  70. . Rosenberger, 515 U.S. at 836. The Court also considered whether the subsidies violated the Establishment Clause, finding no violation since the subsidies were neutral. Id. at 840. ↑

  71. . Id. at 829–30. ↑

  72. . The government may also condition the use of limited public forums on complying with neutral rules related to conduct. See, e.g., Christian Legal Soc’y v. Martinez, 561 U.S. 661, 693 (2010). In addition, it may impose viewpoint-neutral restrictions in nonpublic forums such as polling places. See Minn. Voters All. v. Mansky, 585 U.S. 1, 11–13 (2018); infra note 136 and accompanying text. ↑

  73. . Rosenberger, 515 U.S. at 829. ↑

  74. . Cornelius v. NAACP Legal Def. & Educ. Fund, Inc., 473 U.S. 788, 800 (1985) (“Because a principal purpose of traditional public fora is the free exchange of ideas, speakers can be excluded from a public forum only when the exclusion is necessary to serve a compelling state interest and the exclusion is narrowly drawn to achieve that interest.”). ↑

  75. . Rosenberger, 515 U.S. at 834–35; Rust v. Sullivan, 500 U.S. 173, 194 (1991). ↑

  76. . Rosenberger, 515 U.S. at 834–35. ↑

  77. . 524 U.S. 569, 576, 587–88 (1998). ↑

  78. . Id. at 586, 585. ↑

  79. . Id. at 587–88. ↑

  80. . Id. at 586–87. ↑

  81. . Id. at 587. ↑

  82. . 570 U.S. 205 (2013). ↑

  83. . Id. at 208. ↑

  84. . Id. at 217–18. ↑

  85. . Id. ↑

  86. . Id. ↑

  87. . 582 U.S. 218 (2017). ↑

  88. . Id. at 235 (“But while the government-speech doctrine is important—indeed, essential—it is a doctrine that is susceptible to dangerous misuse. If private speech could be passed off as government speech by simply affixing a government seal of approval, government could silence or muffle the expression of disfavored viewpoints. For this reason, we must exercise great caution before extending our government-speech precedents.”). ↑

  89. . Id. at 237–39. ↑

  90. . Id. ↑

  91. . Rosenberger v. Rector & Visitors of Univ. of Va., 515 U.S. 819, 834–35 (1995). ↑

  92. . Matal, 582 U.S. at 246–47. ↑

  93. . Id. at 239–43. ↑

  94. . Id. at 243–44. ↑

  95. . Id. at 243. ↑

  96. . Regan v. Taxation with Representation of Wash., 461 U.S. 540, 544 (1983); see also Bob Jones Univ. v. United States, 461 U.S. 574, 591 (1983). ↑

  97. . Lamb’s Chapel v. Ctr. Moriches Union Free Sch. Dist., 508 U.S. 384, 393–95 (1993) (finding the rule prohibiting religious uses not viewpoint neutral). ↑

  98. . See supra Section I.A. ↑

  99. . See John D. Colombo, The Role of Access in Charitable Tax Exemption, 82 Wash. U. L.Q. 343 (2004) (discussing the tests used to determine if an organization serves a “charitable” purpose); James J. Fishman, Stephen Schwarz & Lloyd Hitoshi Mayer, Nonprofit Organizations: Cases and Materials 396–414, 417–30 (6th ed. 2021) (explaining the tests used for “educational” and “religious” organizations, respectively). ↑

  100. . Zhang, supra note 38, at 1395–96. Historically, the most common reason for denial is some sort of violation of the private inurement rule. Terri Lynn Helge, Rejecting Charity: Why the IRS Denies Tax Exemption to 501(c)(3) Applicants, 14 Pitt. Tax Rev. 1, 30 (2016). It should be noted, however, that this number does not include applications that are never ruled on by the IRS because they are withdrawn or incomplete, and that there can be thousands of such applications each year. See Email from Lloyd Mayer, supra note 47. ↑

  101. . Nat’l Endowment for the Arts v. Finley, 524 U.S. 569, 585, 588 (1998). ↑

  102. . Lamb’s Chapel, 508 U.S. at 386–87. ↑

  103. . See SOI Tax Stats – Tax-Exempt Organizations and Nonexempt Charitable Trusts – IRS Data Book Table 14, Internal Revenue Serv. (May 29, 2025), https://www.irs.gov/statistics/soi-tax-stats-tax-exempt-organizations-and-nonexempt-charitable-trusts-irs-data-book-table-14 [https://perma.cc/6R
    XH-9UJF ]. ↑

  104. . Could the Department of Health and Human Services fund outside groups to provide educational programs about safe gun use without funding groups with a contrary message? Absolutely. Just as it could fund an outside group to provide abstinence counseling without funding abortion counseling, or vice versa. But that is not what the charitable tax subsidies are for. ↑

  105. . Amanda McLennan, Supporting Second Amendment Freedoms: The NRA Foundation’s Impact, Friends of NRA (Sept. 24, 2024), https://www.friendsofnra.org/content/supporting-second-amendment-freedoms-the-nra-foundation-s-impact/ [https://perma.cc/9AFH-2QV9]. ↑

  106. . Mission, Vision, & Leadership, Nat’l Abortion Fed’n, https://nationalabortionfederation.
    org/mission-leadership/ [https://perma.cc/4DWK-AURJ]. ↑

  107. . Matal v. Tam, 582 U.S. 218, 236 (2017). ↑

  108. . Bob Jones Univ. v. United States, 461 U.S. 574, 609 (1983) (Powell, J., concurring) (citing Walz v. Tax Comm’n, 397 U.S. 664, 689 (1970)). ↑

  109. . Id. ↑

  110. . But see Jones, supra note 10, at 113–14 (disputing the use of limited public forum analysis in this context). Because Jones believes this analysis is inapposite, he also rejects the unconstitutional conditions doctrine in this context. To that end, one argument he offers against subsidizing hate groups is that since the government itself cannot speak in a hateful manner, it cannot subsidize others to do so. Id. at 78. This, however, misconstrues the subsidies as purchasing specific public goods or services. ↑

  111. . Rosenberger v. Rector & Visitors of Univ. of Va., 515 U.S. 819, 834 (1995). ↑

  112. . FY 2025 DHS Standard Terms and Conditions, U.S. Dep’t of Homeland Sec. (Apr. 18, 2025), https://www.dhs.gov/sites/default/files/2025-08/2025_0418_fy2025_dhs_terms_and_conditions
    _version_3.pdf [https://perma.cc/SP96-NABZ]. Presumably, the limiting phrase “in violation of Federal anti-discrimination law” is meant to protect against charges of viewpoint-based discrimination by governing what types of conduct are prohibited. In theory, restricting grants to organizations that comply with anti-discrimination laws is a conduct-based requirement that does not implicate the First Amendment. The catch is that current hostile work environment precedent might support a claim that diversity trainings with certain viewpoints violate federal anti-discrimination law. See Chislett v. N.Y.C. Dep’t of Educ., 157 F.4th 172 (2d Cir. 2025) (finding that trial court erred in granting defendant’s motion for summary judgment on plaintiff’s hostile work environment claim). Assuming that the Trump Administration shares this view, its logical extension is that trainings with certain viewpoints are prohibited, thus collapsing the distinction between speech and conduct in this context. ↑

  113. . Exec. Order No. 14190, 90 Fed. Reg. 8853 (Feb. 3, 2025). ↑

  114. . See, e.g., Exec. Order No. 13950, 85 Fed. Reg. 60683 (Sept. 22, 2020). ↑

  115. . The law’s official title is the Individual Freedom Act. Fla. Stat. Ann. § 760.10(8)(a) (West 2025). ↑

  116. . Id. § 760.10(8)(b); see, e.g., Exec. Order No. 13950, § 10(b), 85 Fed. Reg. 60683, 60688 (Sept. 22, 2020). ↑

  117. . Honeyfund.com Inc. v. Governor, 94 F.4th 1272, 1275, 1277 (11th Cir. 2024). ↑

  118. . The DHS grant, for example, should be treated as the same type of broad benefit as the charitable tax subsidies themselves. ↑

  119. . S. Poverty L. Ctr., Methodology: How Hate Groups Are Identified and Categorized (2020), https://www.splcenter.org/resources/reports/methodology-how-hate-groups-are-identified-and-categorized/ [https://perma.cc/P9DN-F53F]. ↑

  120. . Barnard Coll., Policy Against Discrimination and Harassment and Related Procedures 5 (2024), https://www.fire.org/sites/default/files/2025/01/Barnard%20College%20Policy
    %20Against%20Discrimination%20and%20Harassment%20%26%20Procedures.pdf [https://perma.cc
    /5E3Q-CXZR]. ↑

  121. . Student Non-Discrimination and Anti-Harassment Policy, Colgate Univ., https://www.
    colgate.edu/about/offices-centers-institutes/equity-and-diversity/non-discriminationsexual-misconduct-2/student [https://perma.cc/73T7-JL5F]. ↑

  122. . Noah R. Feldman & Kathleen M. Sullivan, First Amendment Law 106–07 (9th ed. 2026) (citing Corry v. Leland Stanford Junior Univ., No. 740309 (Cal. Super. Ct. Feb. 27, 1995)). ↑

  123. . Mayer, supra note 18, at 1348–49. ↑

  124. . Matal v. Tam, 582 U.S. 218, 243 (2017). ↑

  125. . See, e.g., Letter from Jason Smith, Chairman, H. Comm. on Ways & Means, to Daniel Werfel, Comm’r, IRS (Sept. 20, 2024) [hereinafter Smith Letter], https://waysandmeans.house.gov/wp-content/uploads/2024/09/Tax-Exempt-Status-Revocation-Letters.pdf [https://perma.cc/3V69-T73N]; Letter from Edward R. Martin, Jr., U.S. Att’y for D.C., to Wikimedia Foundation, Inc. AKA Wikipedia (Apr. 24, 2025), https://upload.wikimedia.org/wikipedia/commons/e/e0/Letter_from_interim_US
    _attorney_for_DC_Ed_Martin_to_Wikimedia_Foundation_2025.pdf [https://perma.cc/FM4R-ED2B] (accusing Wikipedia of engaging in propaganda instead of education); Aprill, supra note 3. ↑

  126. . See generally sources cited supra note 39. ↑

  127. . Hearing on How the Tax Code Subsidizes Hate Before the Subcomm. on Oversight of the H. Comm. on Ways & Means, 116th Cong. 8–9 (2019) (statement of Richard Neal, Chairman, H. Comm. on Ways & Means). ↑

  128. . Id. at 11. ↑

  129. . This Article sets aside the larger question of whether Bob Jones was wrongly decided as a matter of statutory interpretation or agency authority, although the author believes that it was. See, e.g., Bob Jones Univ. v. United States, 461 U.S. 574, 612–23 (1983) (Rehnquist, J., dissenting). Instead, it focuses on the doctrine’s constitutionality under the First Amendment and the implications of the public policy requirement for the sector’s broader role in society. ↑

  130. . Id. at 593. ↑

  131. . Darryll Jones relies on this distinction to argue that Congress could deny exemption to hate groups on the grounds that they teach others to hate, which constitutes discriminatory conduct and seeks an outcome which is not charitable. Jones, supra note 10, at 111. He makes a similar outcome/conduct argument based on the language of Regulation 1.501(c)(3)-1(d)(2) that defines “charitable” purposes to include “eliminating prejudice and discrimination.” That definition, he argues, means that since hate groups do the exact opposite by increasing prejudice and discrimination, they are by definition not charitable. Jones, supra note 10, at 88. The problem with these arguments, however, is that they still turn on the viewpoint expressed and therefore cannot escape that they are not viewpoint neutral. ↑

  132. . I.R.S. Priv. Ltr. Rul. 201323025 (June 7, 2013) illustrates the porous nature of this line. The group at issue, Principle Voices of Polygamy, conducted a variety of activities that included both advocating for changing anti-polygamy laws and providing support for people who engaged in polygamy. It did not itself engage in activities that were illegal. At times, however, the letter ruling reads as if the group’s advocacy activities were in and of themselves contrary to public policy by attempting to change public opinion and ultimately laws about polygamy, which would be a facially unconstitutional interpretation of Bob Jones. ↑

  133. . 561 U.S. 661, 693–94, 696 (2010). ↑

  134. . I thank David Pozen for this point. ↑

  135. . See, e.g., Douglas Blanks Hindman & Kenneth Wiegand, The Big Three’s Prime-Time Decline: A Technological and Social Context, 52 J. Broad. & Elec. Media 119 (2008); M. Anthony Mills & Price St. Clair, The Strange New Politics of Science, Issues Sci. & Tech., Spring 2025, at 40; Gregory Smith et al., Pew Rsch. Ctr., Decline of Christianity in the U.S. Has Slowed, May Have Leveled Off 375 app. C (2025); Brian Kennedy & Alec Tyson, Pew Rsch. Ctr., Americans’ Trust in Scientists, Positive Views of Science Continue to Decline (2023). ↑

  136. . See generally Cass R. Sunstein, #Republic: Divided Democracy in the Age of Social Media 1–30 (2017); Claudia Deane, Americans’ Deepening Mistrust of Institutions, Trend, Fall 2024, at 8. ↑

  137. . Minn. Voters All. v. Mansky, 585 U.S. 1, 23 (2018). ↑

  138. . Id. at 12 (citing Perry Educ. Ass’n v. Perry Loc. Educators’ Ass’n, 460 U.S. 37, 46 (1983)). ↑

  139. . Id. at 17 (citations omitted). ↑

  140. . Id. at 22. ↑

  141. . Rev. Proc. 86-43, 1986-2 C.B. 729. ↑

  142. . I am specifically referring to “sex” and not “gender.” There is an academic debate about whether biological sex itself is a spectrum or whether it is binary. See, e.g., Agustín Fuentes, Sex Is a Spectrum: The Biological Limits of the Binary (2025); Claire Ainsworth, Sex Redefined, 518 Nature 288 (2015). ↑

  143. . See, e.g., Julia Marnin, Neuroscience Professor Removed from APA Discussion After Saying There Are Only Two Sexes, Newsweek (May 17, 2021), https://www.newsweek.com/neuroscience-professor-removed-apa-discussion-after-saying-there-are-only-two-genders-1591697 [https://perma.cc/
    M2LF-MVN9]; Jon Levine, Maine University in Uproar After Professor Insists There Are Only 2 Sexes, N.Y. Post (Oct. 8, 2022), https://nypost.com/2022/10/08/maine-college-in-uproar-after-professor-gender-claim/ [https://perma.cc/YFA6-MB2K]; Meimei Xu, Biology Lecturer’s Comments on Biological Sex Draw Backlash, Harv. Crimson (Aug. 12, 2021), https://www.thecrimson.com/article/
    2021/8/11/biology-lecturer-gender-comments-backlash/ [https://perma.cc/SY6T-FS97]. ↑

  144. . Rev. Proc. 86-43, 1986-2 C.B. 729. ↑

  145. . See Big Mama Rag, Inc. v. United States, 631 F.2d 1030, 1039 (D.C. Cir. 1980) (discussing an example of anti-smoking advocacy). ↑

  146. . See Frederick Douglass Found. v. District of Columbia, 82 F.4th 1122, 1142–43 (D.C. Cir. 2023). ↑

  147. . Bob Jones Univ. v. United States, 461 U.S. 574, 593 (1983). ↑

  148. . In Bob Jones itself, the Court relied on federal sources such as its own decisions, executive orders, and federal legislation, suggesting that at the time, it interpreted fundamental public policy as meaning federal, not state, public policy. Given the other ways in which the public policy and illegality doctrines are being stretched in ways that appear to exceed the Court’s original vision for the doctrine, however, one can imagine an argument that public policy should not necessarily be limited to federal public policy. ↑

  149. . For a thoughtful discussion of “safe harbor” approaches to defining public policy that would be viewpoint neutral, see Brunson & Herzig, supra note 39, at 1204–17 (suggesting tying the definition to strict scrutiny, the Civil Rights Act, or clearly delineated Treasury pronouncements). ↑

  150. . See, e.g., Jones, supra note 10, at 85–87 (invoking Bob Jones to argue that hate groups are not “charitable”). ↑

  151. . Minn. Voters All. v. Mansky, 585 U.S. 1, 19–23 (2018). ↑

  152. . This Article does not discuss the prohibition on political activity, other than to emphasize that its selective enforcement is unconstitutional. Allegations that the IRS enforces these rules selectively against a given administration’s political opponents are nothing new, and other scholars have extensively covered these allegations and the normative merits of the political activity rules themselves. See sources cited supra note 29. ↑

  153. . See Frederick Douglass Found. v. District of Columbia, 82 F.4th 1122 (D.C. Cir. 2023) (discussing the selective prosecution of protestors chalking “Black Pre-Born Lives Matter” but not those chalking “Black Lives Matter”). ↑

  154. . Exec. Order No. 14235, 90 Fed. Reg. 11885 (Mar. 12, 2025). ↑

  155. . Smith Letter, supra note 124. ↑

  156. . Press Release, Am. All. for Equal Rts., American Alliance for Equal Rights Files Request to IRS to Examine Racial Practices at Three Tax-Exempt Foundations: Gates Foundation, Lagrant Foundation and Creative Capital Foundation (Apr. 1, 2025), https://www.prnewswire.com/news-releases/american-alliance-for-equal-rights-files-request-to-irs-to-examine-racial-practices-at-three-tax
    -exempt-foundations-gates-foundation-lagrant-foundation-and-creative-capital-foundation-302417428
    .html [https://perma.cc/6RUL-8VV7]. ↑

  157. . Mysteryboy Incorporation v. Comm’r, 99 T.C.M. (CCH) 1057, *19 (2010); Iowaska Church of Healing v. Werfel, 105 F.4th 402, 414 (D.C. Cir. 2024). ↑

  158. . Church of Scientology of Cal. v. Comm’r, 83 T.C. 381, 506 (1984). ↑

  159. . See Bob Jones Univ. v. United States, 461 U.S. 574, 591 (1983); PSLF Comment Letter, supra note 34, at 3. ↑

  160. . William D. Ford Federal Direct Loan (Direct Loan) Program, 90 Fed. Reg. 48966, 49000–02 (Oct. 31, 2025) (to be codified at 34 C.F.R. pt. 685). ↑

  161. . National Security Presidential Memorandum on Countering Domestic Terrorism and Organized Political Violence, 2025 Daily Comp. Pres. Doc. 958 (Sept. 25, 2025). ↑

  162. . Id. ↑

  163. . See, e.g., Stop Terror-Financing and Tax Penalties on American Hostages Act, H.R. 9495, 118th Cong. (2024). ↑

  164. . Brandenburg v. Ohio, 395 U.S. 444, 447–49 (1969); Eugene Volokh, The First Amendment and Related Statutes 4 (8th ed. 2024). This distinction holds even when the statements at issue take place during rallies, demonstrations, and public gatherings at which it is not entirely unforeseen that some participants may engage in illegal activity. Even in such cases, general discussions and exhortations to violence remain protected. See Brandenburg, 395 U.S. at 448 (suggesting, at a KKK rally, that “revengeance” might need to be taken against Jewish people and African Americans and announcing a later march on Congress was not incitement); Hess v. Indiana, 414 U.S. 105, 107 (1973) (claiming “We’ll take the fucking street later” after police removed anti-war protestors who had blocked a street was not incitement); NAACP v. Claiborne Hardware Co., 458 U.S. 886, 902 (1982) (NAACP leader did not engage in incitement by saying “If we catch any of you going in any of them racist stores, we’re gonna break your damn neck” and that boycott violators would be “disciplined”). In contrast, incitement usually includes concrete and specific exhortations and instructions. For a fuller exploration of the distinction between these two, see Alan Z. Rozenshtein & Jed Handelsman Shugerman, January 6, Ambiguously Inciting Speech, and the Overt-Acts Rule, 37 Const. Comment. 275, 290–92 (2022) (exploring these distinctions in more detail and arguing that an “overt acts” requirement for a finding of incitement is a constitutional way of minimizing ambiguity). ↑

  165. . Virginia v. Black, 538 U.S. 343, 359 (2003). ↑

  166. . See, e.g., Elena Moore, JD Vance Hosts ‘The Charlie Kirk Show,’ Paying Tribute With Top White House Officials, NPR (Sept. 15, 2025), https://www.npr.org/2025/09/15/nx-s1-5542176/jd-vance
    -charlie-kirk-show [https://perma.cc/A7LN-6PSQ] (“Vance said the administration intended to ‘go after the NGO network that foments, facilitates and engages in violence . . . .’”). ↑

  167. . See, e.g., Jones, supra note 10 (although Jones notes that hate speech is not the same as incitement, he does call it “stochastic terrorism” and proffers several other provocative justifications for denying exemption to hate groups). ↑

  168. . Scholars have discussed certain of these reasons, such as enhancing pluralism and providing goods suffering from both market and government failure. See, e.g., Mayer, supra note 18, at 1349. The relationship of the First Amendment to other justifications for the sector, however, remains un- or under-explored. ↑

  169. . See, e.g., Brennen, supra note 23. ↑

  170. . See Fleischer, supra note 5, at 518. ↑

  171. . Id. ↑

  172. . See, e.g., Abrams v. United States, 250 U.S. 616, 630 (1919) (Holmes, J., dissenting); Heather Templeton Dill et al., Opinion, We Disagree on Many Things, but We Speak With One Voice in Support of Philanthropic Pluralism, Chron. of Phil. (Apr. 13, 2023), https://www.philanthropy.com
    /opinion/we-disagree-on-many-things-but-we-speak-with-one-voice-in-support-of-philanthropic-plural
    ism/ [https://perma.cc/4HWB-PC77] (discussing the relationship of a marketplace of ideas and the role of the philanthropic sector). ↑

  173. . See Mayer, supra note 18, at 1349 (arguing that limits on hate speech or fake news counteract the purposefully vague definitions of education and charitable). ↑

  174. . Greg Lukianoff, Coronavirus and the Failure of the ‘Marketplace of Ideas,’ FIRE (Mar. 13, 2020), https://www.fire.org/news/blogs/eternally-radical-idea/coronavirus-and-failure-marketplace-ideas [https://perma.cc/W536-RRTF]. ↑

  175. . Big Mama Rag, Inc. v. United States, 631 F.2d 1030, 1039 (D.C. Cir. 1980). ↑

  176. . In many cases, in fact, emotion can facilitate learning and long-term memory. See, e.g., Chai M. Tyng, Hafeez U. Amin, Mohamad N.M. Saad & Aamir S. Malik, The Influences of Emotion on Learning and Memory, 8 Frontiers Psych., Aug. 2017, art. no. 1454. This suggests that in some instances, discouraging the use of emotional language may impede learning. ↑

  177. . It is also plausible that there is pressure to not report accurate scientific findings that could theoretically be used for vile purposes by nefarious actors. For example, even though almost all monkeypox cases involve sexual activity between males, there is dispute about whether communicating that fact is stigmatizing and some concern that the link is being understated to the detriment of those most likely to contract it. Compare Monkeypox Misinformation Is Stigmatising Gay and Bi Men, Rainbow Project, https://www.rainbow-project.org/news/monkeypox-misinformation-is-stigmatis
    ing-gay-and-bi-men/ [https://perma.cc/8PJ3-9UU6] (criticizing messaging about monkeypox that emphasizes the ease with which it spreads through certain types of sexual contact as stigmatizing gay and bisexual men), with Marcelo Agudo Pujol, Monkeypox and What Health Experts Are Not Saying About Sexual Transmission, Think Glob. Health (Aug. 9, 2022), https://www.thinkglobal
    health.org/article/monkeypox-and-what-health-experts-are-not-saying-about-sexual-transmission [https
    ://perma.cc/9QV4-LF3Y] (critiquing current public health messaging around monkeypox and the LGBTQ+ community and contending that “linking monkeypox to sexual transmission would equip gay and bisexual men with the health information they need to protect themselves”), and Kai Kupferschmidt, Opinion, We Can Fight Monkeypox Without Hysteria or Homophobia, N.Y. Times (Aug. 4, 2022), https://www.nytimes.com/2022/08/04/opinion/monkeypox-communication.html [https://perma.cc/AK
    7K-RMWE] (acknowledging monkeypox is spread primarily between men having sex with men and arguing that messaging needs to acknowledge that fact so that “those most vulnerable to infection . . . have information that allows them to make decisions to stay healthy”). ↑

  178. . The Daubert framework provides a multi-factor test to determine when specialized expert testimony should be accepted by the court. Daubert v. Merrell Dow Pharms., Inc., 509 U.S. 579 (1993). These factors are whether the theory or technique being offered “can be (and has been) tested”; whether it has “been subjected to peer review and publication”; “the known or potential rate of error”; the “existence and maintenance of standards controlling the technique’s operations”; and its “general acceptance.” Id. at 594. For a thought-provoking argument in favor of using a Daubert-like standard to better define the second prong of the Methodology Test, see Jordanne Miller, Note, Preventing Tax-Exempt Propaganda: The Case for Defining the Second Prong of the Methodology Test, 68 Cath. L. Rev. 551 (2019). ↑

  179. . Moreover, encouraging groups to dress up hateful ideas with a veneer of facts can have unintended consequences. See, e.g., Nadine Strossen, Hate: Why We Should Resist It With Free Speech, Not Censorship 142–43 (2018). It obscures the intrinsically hateful message with a cloak of respectability, which can make it easier for such ideas to gain legitimacy. Consider, for example, the Institute for Historical Review, which intermixes Holocaust Denial writings with items criticizing Israel from mainstream sources (which, on May 19, 2026, included The New York Times, New York Magazine, The Telegraph, and Ron Paul). See Inst. for Hist. Rev., https://ihr.org [https://perma.cc/94QX-EFXD]. By making Holocaust denial look more academic, IHR is in some ways more dangerous than the openly and brazenly white supremacist group denied exemption in National Alliance v. United States, 710 F.2d 868, 871–73 (D.C. Cir. 1983). ↑

  180. . Mayer, supra note 18, at 1351. ↑

  181. . Id. at 1352. ↑

  182. . Id. ↑

  183. . Tom W. Smith, Public Attitudes Toward Homosexuality, NORC at the Univ. of Chicago (Sept. 2011), https://www.norc.org/content/dam/norc-org/pdfs/GSS_Public%20Attitudes%20Toward%
    20Homosexuality_Sept2011.pdf [https://perma.cc/Y9NM-G2L7]. ↑

  184. . Frank Newport, In U.S., 87% Approve of Black-White Marriage, vs. 4% in 1958, Gallup (July 25, 2013), https://news.gallup.com/poll/163697/approve-marriage-blacks-whites.aspx [https://
    perma.cc/QWC6-4E6A]. ↑

  185. . See, e.g., Gay Student Servs. v. Tex. A&M Univ., 737 F.2d 1317, 1322 (5th Cir. 1984) (Texas A & M unsuccessfully sought to deny recognition to gay student group in the 1970s on the grounds that its “activities run . . . counter to the traditions and standards of Texas A & M University”). ↑

  186. . Lee C. Bollinger, Commentary, The Tolerant Society: A Response to Critics, 90 Colum. L. Rev. 979, 980 (1990). ↑

  187. . Brunson, supra note 10, at 80; Vincent Blasi, The Checking Value in First Amendment Theory, 1977 Am. Bar Found. Rsch. J. 521. ↑

  188. . See Kent Greenawalt, Free Speech Justifications, 89 Colum. L. Rev. 119, 142–43 (1989) (discussing whether accommodating the expression of minority interests enhances social stability); Blasi, supra note 186. ↑

  189. . See Greenawalt, supra note 187, at 145–46 (free speech is necessary for better decision-making in a deliberative democracy as well as trust in the decision-makers). ↑

  190. . See, e.g., Nadine Strossen, The Interdependence of Racial Justice and Free Speech for Racists, 1 J. Free Speech L. 51, 63 (2021) (describing how various parties each consider “Black Lives Matter,” “Blue Lives Matter,” and “All Lives Matter” to be racist). ↑

  191. . Strossen also reminds us that quite frequently, any attempt to censor hateful or unpopular ideals inevitably turns against minorities. Id. at 62–64. Indeed, the rhetoric of the current administration illustrates this very point. See also Stephen G. Calabresi, Freedom of Expression and the Golden Mean, 79 Brook. L. Rev. 1005, 1011 (2014) (warning, in 2014, that “[a]n effort to revoke the tax exempt status of the Boy Scouts . . . would rapidly lead to a counter effort by social conservatives to revoke the tax exempt status of groups that support, for example, gay rights”); Jacob Mchangama, From Safety Valve to Pressure Cooker: When Silencing Speech Fuels Extremism, Comm’n for Countering Extremism (July 2025), https://assets.publishing.service.gov.uk/media/689b34f5ebe5217ba73d0c1f
    /CE01_Jacob_Mchangama.pdf [https://perma.cc/UE6U-A67V] (describing the use of hate speech laws to stifle dissent). ↑

  192. . Lukianoff, supra note 173. ↑

  193. . Mayer, supra note 18, at 1293–94. ↑

  194. . Lukianoff, supra note 173. ↑

  195. . See, e.g., Lee C. Bollinger, The Tolerant Society: Freedom of Speech and Extremist Speech in America (1986). ↑

  196. . Bollinger, supra note 185, at 986. ↑

  197. . See Whitney v. California, 274 U.S. 357, 375 (1927) (Brandeis, J., concurring); Ashutosh Bhagwat, Free Speech Without Democracy, 49 U.C. Davis L. Rev. 59, 111 (2015); Christian Bjørnskov & Jacob Mchangama, Freedom of Expression and Social Conflict (IFN Working Paper No. 1473, 2023), https://doi.org/10.2139/ssrn.4578663 [https://perma.cc/BW5L-NU7Z]; Steven G. Gey, The First Amendment and the Dissemination of Socially Worthless Untruths, 36 Fla. St. U. L. Rev. 1, 10–11 (2008); Greenawalt, supra note 187, at 142 (discussing whether accommodating the expression of minority interests enhances social stability); Mchangama, supra note 190. ↑

  198. . I thank David Pozen for this point. ↑

  199. . See Bjørnskov & Mchangama, supra note 196, at 4–7 (summarizing these counterarguments). ↑

  200. . Id. at 16. ↑

Against Doctrinal Siloing:Harmonizing Fiscal Federalism and the U.S. Constitution

Posted on by David Gamage & Darien Shanske
Gamage & Shanske_Against Doctrinal SiloingDownload

Introduction

The founders have been credited with “splitting the atom of sovereignty” in creating our federal system.[3] Yet this revolutionary achievement has fractured into a bewildering array of doctrinal silos, each with its own tests, exceptions, and internal contradictions.

Federal regulatory incursions into state fiscal authority trigger Commerce Clause analysis, while federal spending that pressures states invokes distinct Spending Clause jurisprudence. State revenue measures face scrutiny under the Dormant Commerce Clause, a doctrine that mysteriously transmutes its analytical framework depending on whether states regulate or tax. The Eleventh Amendment shields state treasuries through yet another doctrinal apparatus.[4] Meanwhile, limits on the federal taxing power proceed through their own isolated analyses, even when justified as protecting the very state fiscal interests at stake in these other doctrines.

This incoherent fragmentation creates more than theoretical confusion. The different tests lead to contradictory results in similar cases. Current sovereign immunity doctrine bars Congress from imposing any liability upon states using an Article I power, in part to protect state revenues.[5] Yet Congress can preempt state revenue powers outright using Article I’s commerce power, and it remains unclear how Congress’s power is limited in this sphere at all.[6] So a state is protected from minor tort judgments related to its own constitutional violations but not from sweeping dislocations of its revenue power? How can that be the right answer?

The problems run deeper still because the confused doctrine often does not point to answers at all. When the founders crafted our federal system, many of the biggest issues facing fiscal federalism had not yet manifested. There was little need to plumb the depths of what constituted “interstate commerce” because there was not much to consider. Thus, Hamilton could confidently claim (one might even say sing) in Federalist No. 32 that the federal government could not interfere with state taxing power because there was no such authority in the new Constitution. Yet Congress has done precisely that many times since 1959, plausibly grounding preemptive laws on its power over interstate commerce.[7] We don’t know what the founders would have said about this, and even in 2025 the courts remain uncertain how to analyze federal preemption of state taxing powers.

In this Article, we argue that such questions of federal power versus state fiscal power can best be addressed through a form of proportionality review that we propose as a default rubric. We develop a unified constitutional framework to synthesize the currently fragmented doctrinal silos, which we call “Fiscal Federalism Proportionality Review” (FFPR). Our framework emerges from both the American constitutional tradition and the structural logic of federalism itself.[8] The Federal Constitution is short and written using broad principles. It was drafted against a backdrop of common law judging, where judges refined different areas of law in ways that advanced underlying values while aiming at analytically tractable solutions. As Chief Justice Marshall anticipated, issues of national versus state powers “will probably continue to arise, so long as our system shall exist.”[9] Our project builds both on these foundations and on related transnational innovations in constitutional analysis.

Proportionality review asks the right questions when fundamental principles clash. When an individual right conflicts with a collective need, or when state autonomy confronts federal authority, neither principle should categorically “win.” Instead, one must yield, but only to the extent necessary. Current fiscal federalism doctrine often fails this test.

Our proportionality framework offers a structured alternative. The test we propose evaluates: (1) the asserted federal interest, (2) the state interest at stake, (3) whether there is reasonable tailoring between means and ends, and (4) whether the federal benefit is proportional to the burden on state autonomy. This approach is not only analytically superior but also consistent with key strands of existing doctrine: from Pike balancing under the Dormant Commerce Clause to the “congruent and proportional” test for legislation justified by Section 5 of the Fourteenth Amendment.[10]

We propose FFPR as an organizing default to reduce doctrinal siloing and promote coherence across fiscal federalism doctrines. However, we in no way claim that every clause should be governed by the same test. Where constitutional text, history, structure, or purposes genuinely diverge, different tests may be warranted. Our claim is narrower: Departures from FFPR should be justified by those differences, not by happenstance or inertia. Our goal is principled harmonization and coherent reason-giving, not sameness for its own sake.

The Article proceeds in three parts. Part I develops our analytic framework, explaining proportionality review’s theoretical foundations and its specific application to fiscal federalism. We show how this approach differs from both categorical rules and undifferentiated balancing tests.

We also emphasize the limits of our argument. A well-recognized benefit of proportionality review is the forced articulation of reasoning, to the benefit of the public, legislators, and other judges.[11] Typically, this argument focuses on the benefit of reasoning within the rubric, but it can also force articulation from those who would depart from it. Suppose, as we argue, that FFPR should be the default rubric because, among other things, there should be a presumption of symmetry as to similar questions. But also suppose that one believes, say on textual or historical grounds, that FFPR is not the right test, say for issues relating to sovereign immunity, and there should instead be a rule, as in current doctrine. Even so, the presumption that FFPR is the right test forces a defender of a different approach to explain their position and not just start their analysis assuming a different doctrinal approach for every similar constitutional silo.

Part II applies FFPR to federal limits on state revenue powers. We first examine Congress’s powers both to pressure states under the Spending Clause and to preempt state taxes under the Commerce Clause, using the Internet Tax Freedom Act as a case study. We then turn to the Dormant Commerce Clause, demonstrating how FFPR can synthesize its many tests into a coherent principle. Throughout, we show how FFPR both explains existing doctrines and provides guidance for novel questions.

Part III extends FFPR to constitutional limits on federal revenue powers. As a precursor to our argument for its broad use, this section starts with two areas in which FFPR already has an uneasy home: Eleventh and Fourteenth Amendment jurisprudence. Though proportionality review is not formally part of sovereign immunity jurisprudence, attending to background principles of federalism is already part of this jurisprudence and thus undergirds our approach. Further, in the case of the Fourteenth Amendment, the Court has been drawn to a form of proportionality review, but it has not done so following the analytic structure set forth in this Article. We argue that both areas of law would be improved through use of FFPR as a default.

Using this foundation, we next address whether and how FFPR could address the distinction between direct and indirect taxes, the apportionment requirement, and the uniformity requirement. To the extent that these limits on the federal taxing power exist to protect state fiscal autonomy—as recent jurisprudence and scholarship suggest—then they should be analyzed in a manner coherent with the framework governing other fiscal federalism questions.

Throughout, we argue that FFPR equips courts to navigate not only today’s challenges but tomorrow’s as well. As technology transforms commerce through digital taxation and artificial intelligence, as governments experiment with novel revenue measures, and as new struggles emerge over fiscal control between federal and state authorities, courts need a principled framework to guide their decisions. FFPR provides this framework while respecting both constitutional text and federalism’s functional purposes. In an era demanding both innovation and constitutional fidelity, FFPR offers the principled flexibility our federal system requires.

I. The Analytic Framework of Fiscal Federalism Proportionality Review

A. Brief History and Evaluation

Our proportionality framework offers a structured alternative to the binary, categorical approach that too often at least seems to dominate fiscal federalism analysis. For example, one supposed simple binary is whether an activity is “commerce” or not. Yet law need not work through binaries when fundamental principles clash.[12] When principles collide—as when free speech confronts public safety, or state autonomy meets federal authority—one should yield, but only to the extent necessary.[13] A key strength of proportionality review is its ability to calibrate this balance with increasing precision.[14]

There is nothing in the Constitution or our tradition that requires formalistic rules, detached from the real underlying issues. For instance, when it comes to protecting states under the doctrine of sovereign immunity, the Court has relied heavily on background principles of federalism to craft rules that attempt to make decisions based on the principles at issue.[15] Or consider that the Constitution grants Congress power over “commerce . . . among the several states.” This phrase is not self-executing, and the Court continues to believe that there is an implicit requirement that the interstate element be “substantial.”[16] Thus, the Court, interpreting the Commerce Clause, has ample precedent not to consider the enumerated powers to be simple on-and-off switches.

The modern story of proportionality analysis begins with the German legal system. Interestingly, the story in Germany starts with an extensive modern law code (that of Prussia) in which a powerful government accepted some limitation on its power vis-à-vis individuals to be enforced by courts.[17] This mode of analysis, though not uniform or universal, has nevertheless come to dominate transnational and trans-substantive constitutional discourse.[18] Versions of it appear throughout U.S. jurisprudence in the form of various balancing tests, from Pike balancing to intermediate scrutiny to the undue burden standard.[19]

We think the explanation for this success lies with the fact that, at its core, this test asks the right questions. Proportionality review typically applies when an individual’s right (say to privacy or due process) clashes with a collective right (say to freedom from harm).[20] The proportionality principle permits abridging the individual right, but only if the collective need is sufficiently important and only to the extent necessary to satisfy that need.

That the proportionality test is analytically correct is important to emphasize. Our argument elevates this framework based on its analytical merits and its deep roots within the American constitutional tradition. Further, this test is not analytically superior because it always gives the same answer or a determinate answer. We think that the test’s strength lies in part in giving different answers based on the context. Yet the uncertainties in applying the test at least apply to the real issues and, as such, provide guidance.

B. Brief Literature Review

While proportionality review has gained widespread acceptance internationally, its application to fiscal federalism, particularly in the American context, remains underdeveloped. Most of the development of the proportionality principle has occurred in the context of individual rights. Yet the principle of proportionality is found in the Treaty on European Union as it relates to federalism.[21] There is thus a command in EU law for the Court of Justice of the European Union (CJEU) to apply the principle of proportionality to relations between the EU and member states. The CJEU’s application of proportionality has been controversial, with a complaint being that the court has been too quick to find that EU legislation trumps national law.[22] Still, the fact remains that this framework is rightly seen as appropriate in a federalism context.

We should acknowledge that not only have other commentators argued for the benefits of proportionality review, but several have connected that review to federalism.[23] Nevertheless, these other treatments are distinguishable from our arguments in this Article. We are not aware of a prior discussion that is as specific in applying a proportionality test to fiscal federalism matters as we aim for here, nor are we aware of a prior account proposing a unified approach to proportionality analysis across multiple constitutional clauses dealing with fiscal federalism.[24]

In distinguishing our approach from that of others, we emphasize our granularity and subject matter. We aim here to provide a specific test that we will use repeatedly as to America’s implicit fiscal constitution. We may be wrong in proposing this as the best test (even just as a default), but our goal is to be clearly wrong at the very least[25]—to provide a framework specific enough to be tested and refined. Here, roughly following the literature and judicial practice in other countries,[26] is the test we propose:

(1) The asserted federal interest must be evaluated. Courts should not accept at face value the federal government’s articulation of its objectives or their strength. At a minimum, the government must identify a valid, non‑pretextual objective. Most importantly, the federal government must articulate some interest; a fit of pique or constituent service should not count for much.

(2) The state interest must also be evaluated. Even in areas of traditional state control, such as health and public safety, that strong general interest may be weaker in a particular case. Proportionality rejects strict categorization.

(3) There must be reasonable tailoring between the federal government’s means and ends. The federal government must use among “the least intrusive of all equally effective means.”[27] That does not require the least intrusive means, as doing so sets the bar too high and grants courts excessive discretion.

(4) There should be a final balancing between the federal interest and the state interest. This is the proportionality analysis itself. The federal government’s tailored intervention may still amount to a significant burden on state autonomy. If the benefit to the federal government is significantly out of proportion to the cost to state autonomy, then the federal intervention is disallowed.

This framework will guide our analysis throughout the remainder of this Article, as we apply it to various contexts in fiscal federalism.

C. Formalism Versus Functionalism; Rules Versus Standards; Statutes Versus the Constitution; Oh My!

This Article would never end if we were to attempt to address all relevant issues of interpretation, much less the special issues raised by interpreting our particular Constitution. Our goal in this subsection is to situate our arguments as just a small step beyond many current and widely accepted approaches and doctrines. Though, of course, small steps can be significant (and possibly mistaken).

We propose our FFPR framework as a default for organizing and improving analysis across fiscal federalism silos. The point is coherence in reasons, not uniformity in outcomes. Where text, history, or institutional function genuinely differ, calibrated divergence is appropriate, but differences should then be explained in those terms rather than by happenstance.

To begin with, there is a prominent school of thought that emphasizes that our Constitution should be understood according to its original public meaning.[28] Some supposed benefits of this approach are that it fixes the meaning of our Constitution and restricts the power of judges. At first glance, our approach here might seem to be in opposition, but we think this impression is mistaken.

For one thing, an underlying normative draw of our approach is that it protects a strong role for the states, a goal with much support in the text and historical understanding of the founders. Moreover, our approach is largely compatible with a preference that judges provide rules. Once a decision has been made as to the proper application of proportionality review, then that decision can be applied as a rule going forward rather than as a standard. Proportionality review is not itself a rule, but it can produce rules.

Formalism and functionalism need not be adversaries here. Formal constraints can continue to do real work. FFPR can operate helpfully alongside those constraints; it can assist courts in classifying and encourage designs that respect the state fisc, all without displacing the constitutional text where that text speaks in categorical terms. Our claim is not that proportionality swallows categorical limits but that those limits and proportionality interact. Where the Constitution speaks specifically or where history supplies a settled understanding, FFPR’s role may be just to inform classification and design rather than to override.

We acknowledge that certain results likely cannot be arrived at through proportionality review. But this pluralism is not a deep objection. Certain issues, such as the required age minimum of the President (thirty-five), don’t lend themselves to proportionality review.[29] And there might be some issues upon which there are legitimate disagreements as to whether they should be analyzed using our test or some other test. Perhaps some believe that sovereign immunity is an on/off switch like the age rule. We are inclined to disagree, but we would argue that this disagreement ought not undermine the direct utility of our framework as to many other cases.

Further, it seems universal, and this certainly includes former Justice Scalia, that a more harmonious law is to be aspired to,[30] even if, of course, this is not the only value. Such harmonization advances the rule of law through predictability and, conversely, tamps down regulatory arbitrage. Thus, as a presumption, different tests for similar doctrines is a disfavored state of affairs.

Two other objections ought to be quickly considered. First, a particular camp of pure functionalists might not be convinced that our test is the right one because it assumes that federalism is a constitutional value with dignity that ought to be considered with other such values. Guilty as charged. We think that the Court is right that our particular Constitution is a federal one and that ignoring that would be a serious interpretive error. Happily, we also believe—as do many others—in the merits of federalism and so ground our test in two overlapping rationales: one more formally legal and one more pragmatic. This is not to say that this is the only core value, hence the need for proportionality review to adjudicate between different core values.

Second, some may feel discomfort with balancing tests of the kind we are proposing. Even if it be granted that what we are proposing is more apt than what it would replace, one might still object that what is needed are more uniform rules and not this more refined standard. To this we would say, as we have from the start, that in many areas of constitutional adjudication there are no such rules[31] and that the subject matter of federalism demands at least a structured standard given the multiplicity of issues it implicates.

Furthermore, consider a weakness in reasoning, such as poor judgment as to relative interests, which would undermine the use of proportionality review. Such a weakness is also likely to undermine legal reasoning throughout the law (consider tort compensation or criminal sentencing), including the law of federalism as it currently stands (consider Pike balancing or whether a federal law has a “substantial” effect on interstate commerce).[32] The task of theorists and judges and educators is not to develop perfect approaches but to develop better approaches, including approaches that institutions and individuals can learn to apply better. We contend that a coherent and grounded approach to federalism is ultimately an approach that all actors can learn to apply well (or at least better), as opposed to the current confusion. We think the continuity between our approach and what judges are asked to do in so many other areas of law is a strength.

D. The Symmetry Presumption

We propose FFPR as a presumptive rubric because it captures the key normative issues in this area and for this reason can be applied by judges and understood by other parties. Further, as in all law, we think it appropriate that this approach be applied in all similar areas of the law. Using different tests with different biases in similar areas would lead to odd results that we think are hard to justify. Suppose the federal taxing rules are more restrictive than the Commerce Clause rules as to the powers of the federal government. That would mean the federal government could be barred from imposing a particular tax because it impermissibly interferes with state taxing capacity yet retain the power to completely preempt that very same state and local tax capacity. We thus argue for a presumption of symmetry.

But this symmetry goal is just a presumption for at least two reasons. At this late stage in our constitutional history, principles of stare decisis (and the rule of law generally) militate against overturning precedent inconsistent with FFPR. This is one reason why we will demonstrate that FFPR is consistent with much current law, but we do not contend it is consistent with all such law.

Second, we accept at least the theoretical argument that some of these doctrinal silos should remain governed by some other test. Perhaps, for example, textual and historical reasons imply that the categorical test governing sovereign immunity is the right one. Or consider the federal taxing powers in Article I. To the extent the federal taxing power is seen as implicating federalism concerns (as, for instance, Justices Thomas and Gorsuch argued in their dissent in Moore v. United States),[33] then we think the presumptive test should be FFPR because these doctrines address the same core phenomenon: enabling both state and federal revenue power, but neither too much. But one might believe otherwise, that this is an area that requires a rule-like analysis or a different analysis altogether.

Assessing all such arguments is beyond our scope, but we think our analysis at least establishes that if federalism concerns are implicated, then FFPR should be the default, and the burden should be on those who argue otherwise. That is, we argue that FFPR should be a rebuttable default, and that those who would depart from FFPR in any silo should then carry the justificatory burden: to be grounded in text, history, or other competing considerations, but not in mere happenstance.

II. Federal Limits on State Revenue Power

The fragmented doctrines governing fiscal federalism create their most visible contradictions when federal power confronts state revenue authority. Congress can seemingly preempt entire categories of state taxation under its Commerce Clause power, yet the limits of this authority remain frustratingly unclear. Meanwhile, courts police state tax measures under the Dormant Commerce Clause, a protean doctrine that shapeshifts depending on whether states tax or regulate. FFPR offers a coherent framework for both contexts, demonstrating how a single analytical approach can bring clarity to these fractured doctrines.

A. The Spending Clause, the Positive Commerce Clause Power, and the Power to Preempt

Our first stop in framing our analysis and contribution is the Spending Clause, which is already governed by a form of the proportionality test, though an inchoate one. The Court has said, as to the Medicaid expansion in the ACA, that Congress cannot, in effect, use spending to coerce “too much.”[34] But how much is that? As a preliminary matter, note that the Court is implying a proportionality test into a provision that does not have one, because the Spending Clause requires that Congress only spend for the “general welfare.”[35] There could be a categorical test, but the Court has wisely not chosen that route. Furthermore, the Court has given some clues as to what would be too much, such as using large spending provided years ago as leverage to force more activity of a kind the federal government wants in the present.[36] Using our framework, we can say that the Medicaid expansion failed due to the Court’s assessment of its tailoring (Step 3) and that the size of its blow to state finances was disproportionate to the federal interest (Step 4).

Our second stop is the positive Commerce Clause power and, in particular, its use to preempt state taxes. Current doctrine makes clear that Congress may displace at least some state tax rules, so long as it does not commandeer state officials and there is a “substantial relation” to interstate commerce.[37] What is missing, however, is any analogue to the Spending Clause’s anti‑coercion principle: The Court has never articulated a general “too far” limit tailored to preemption of state taxing power. Scholarship therefore treats this boundary question as open and undecided. Such scholarship includes a prior essay we wrote in 2016[38] and a recent article written by Bradley Joondeph that does an excellent job of discussing the boundary question with much greater depth than we can here.[39]

Using our framework, as to prior Commerce Clause cases, we would say that the Court found certain interventions (say, relating to guns near schools) to involve too large a displacement of state power (there are a lot of schools) relative to the federal interest. Of course, this fact about the number of schools should also have weighed in favor of a substantial national interest.[40] Yet our argument here is ultimately not about old cases but about achieving greater rigor and predictability as to future cases: That is, because Congress’s enumerated powers regulation is at least constrained by a fit inquiry, using the same clause to preempt entire categories of state taxation should be subject to an explicit, structured proportionality review rather than an unarticulated “too much” intuition.

Consider our discussion below of Justice Thomas’s analysis of the role of the direct tax provision of the Federal Constitution. According to Justice Thomas, this rule is supposed to protect the fiscal capacity of states from federal encroachment that would occur through the too-free federal imposition of federal taxes. Again, it would be a strange result if the federal government could, following his view, not impose a tax itself because state revenue powers must be shielded from the federal government, but the federal government could still simply preempt state revenue power without restraint.

If one takes the view that, once Congress is acting within an enumerated power, there are only categorical limits and no functional constraints on preempting state taxes, then our approach may have limited application to this area. By contrast, if one accepts that there should be some limits on how far Congress may go in disabling state revenue authority, FFPR supplies a structured way to specify those limits. We cannot fully repeat here all of the arguments from our earlier essay and from Joondeph’s article (and from other related scholarship) about why such limits should exist,[41] but instead we now build on that work by showing that, once the existence of some constraint is accepted, proportionality review provides a coherent way to implement it.

To that end, in the next subsection we will apply our framework to a current example relating to preemption. Again, we should want our constitutional tests to be responsive to context, but we do not want fundamental powers to change in haphazard ways. There can be changes and differences, but their reasons should be forced into the light. As we will explain below, FFPR provides a structured analysis to guide judges and policymakers as to determining how much is too much with respect to many similar issues.

1. A Case Study of Applying FFPR to the Internet Tax Freedom Act

Consider how FFPR applies to the Internet Tax Freedom Act (ITFA),[42] a preemption statute that bars discrimination against “electronic commerce.” This bill does—or might do—many different things. We will assess one strong claim as an example here, that “any taxation of property, goods, services, or information that is inherently unique to the Internet would be discriminatory, because there is no non-Internet property, goods, services, or information that is similar and that the State generally taxes.”[43] To be clear, as we will elaborate below, we disagree with this claim as to the best interpretation of the ITFA, but we nonetheless view it instructive to assess this claim via FFPR as if the claim were interpretatively correct. Accordingly, assuming for the moment that this claim is accurate as to what the ITFA actually does, can it do so as a matter of federal constitutional law? That is, if there are such unique products, say a social media network, could Congress bar states from imposing a tax on such activities?

Following our four-part test:

(1) The asserted federal interest must be evaluated. The ITFA allegedly aims to prevent discrimination against electronic commerce. At least in principle, this represents a potentially legitimate federal concern about protecting a form of interstate commerce from possibly protectionist state taxation. Courts should not simply take Congress’s word that this interest is sufficiently important, but protecting channels of interstate commerce from discriminatory treatment is a traditional federal concern that seems at least plausibly to justify a weighty federal interest.

(2) The state interest must also be evaluated. Even in 1998, and certainly by 2025, states have a significant interest in taxing electronic commerce. This represents not just revenue interests but also the states’ ability to maintain tax neutrality between different forms of commerce. If states cannot tax electronic commerce while physical commerce remains taxable, this creates its own economic distortion and tax-burden unfairness.

(3) There must be reasonable tailoring between means and ends. Here the analysis becomes more complex. The ITFA bars discrimination against electronic commerce. The interpretation of “discrimination” that we are addressing in this example argues that any taxation of products that exist only in electronic form would violate the ITFA. If this interpretation is correct, then the statute in this aspect would seem to fail the tailoring requirement. Protecting electronic commerce from discrimination does not require exempting all electronic commerce from taxation in a manner that would amount to an effective subsidy. There is a substantial difference between preventing discriminatory treatment (the federal interest) and granting categorical immunity.

(4) The proportionality analysis reveals another fundamental problem. Even assuming that Congress has a valid interest in protecting electronic commerce from all taxation, completely exempting major and growing sectors of the economy from state taxation is disproportionate to that interest. In a world where electronic commerce represents an ever-larger share of economic activity, denying states this tax base altogether cannot be justified by anti-discrimination concerns alone. The temporal dimension matters: what might have been proportional in 1998 becomes increasingly disproportionate as electronic commerce shifts from exception to norm.

This analysis demonstrates how FFPR provides more guidance than current doctrine’s vague inquiry into whether Congress has interfered “too much.” Rather than asking an ungrounded question about the degree of interference, FFPR focuses on the relationship between federal objectives and the means chosen to achieve them.

2. Reconciliation with Current Doctrine

Note that our analysis so far is largely consistent with current doctrine, so that adopting FFPR would preserve stability while providing clearer guidance. The clear statement rule[44] and the presumption against broad preemption[45] would both lead to results similar to those reached here through FFPR: that the ITFA should not be read to preempt all taxation of electronic commerce.

Yet those interpretive doctrines are controversial and inconsistently applied.[46] We think one reason for this ad hoc application is that existing doctrines are not strongly tethered to fundamental constitutional norms. By contrast to FFPR, these doctrines do not provide as grounded and reasoned of an approach to answering fundamental questions about the federal-state balance.

For instance, suppose Congress were to clearly preempt all state taxation even incidentally related to electronic commerce. The clear statement rule would not help because the statute would be clear, and thus we would be left considering whether Congress has interfered “too much” by drawing on vague notions from Spending Clause cases. FFPR, by contrast, would provide a structured answer: Courts would assess the interests involved, the fit between means and ends, and whether the burden on state autonomy is proportional to the federal benefit. Knowing this would be the test, lawmakers would be deterred from simply shooting from the hip and would be incentivized to instead aim for transparent, reasoned, and tailored interventions.

B. Dormant Commerce Clause Analysis

The Dormant Commerce Clause represents a negative implication of the Commerce Clause, protecting congressional prerogative by limiting state interference with interstate commerce even absent specific federal legislation. Ideally, the DCC test should have ground rules coherent with those governing the positive power granted to Congress under the Commerce Clause. It would certainly be anomalous for the DCC to limit states more in the absence of specific federal legislation as compared to the potential limits that Congress would have the power to impose through specific legislation.[47]

Yet the actual DCC tests are many and do not obviously map onto proportionality review. The problem here is not doctrinal silence but rather cacophony and chaos. For instance, there is a two-part test for regulations but a four-part test for taxes.[48] This would be bad enough given that taxes and regulations are generally policy substitutes, but one of the two tests for regulations (Pike balancing) is uncertain in its application.[49] As to the four-part test for taxation, one prong has been eviscerated and another prong arguably added.[50] In short, this whole doctrinal area is a mess, a crazy quilt of inconsistent tests that confounds practitioners and theorists alike.

1. Applying FFPR to Contemporary DCC Issues

Consider a live question in the world of the DCC that demonstrates how FFPR brings clarity to this confused doctrine. Suppose a state imposes a tax on large corporations where, as it happens, no corporations of that size are located in the state. Size would therefore seem to be a proxy for a firm being out of state. Consider, as an example, a simplified version of a tax Maryland has imposed on gross receipts of digital advertisers.[51] The tax kicks in at 10 percent for any advertiser with at least $100 million in gross receipts in the state. There are no such firms currently in Maryland, but there is also nothing in the law that would exempt such local firms from taxation.

Evaluated through FFPR, the analysis proceeds in four steps. First, the federal interests policed by the DCC would seem to be preventing economic protectionism and preserving the integrity of the national market. Preventing facial or proxy discrimination is an important interest. Second, the state also possesses substantial interests in raising revenue from the value created by access to its consumer base.

Third, the tailoring analysis here would evaluate the fit. The federal interest in preventing facial discrimination should not be offended by the Maryland statute. The federal interest in avoiding clever use of proxies is, we believe, ill-fitting with this fact pattern without more evidence. Can California not tax tobacco because it is all grown out of state? The answer seems clear and we can say why: The state is not taxing tobacco as a proxy for out-of-stateness but because of its other characteristics that are reasonable to tax. There is a fit between the state tax’s rationale and out-of-state taxpayers, and this also protects the legitimate federal interest in nondiscrimination. So too with Maryland and these platforms. Maryland may be seeking to tax consumption or supernormal profits or a problematic business model. There are no indications that Maryland is seeking to tax out-of-state businesses as such, even by proxy.

Fourth, the proportionality balance weighs the federal and state interests against each other. Here, no evidence suggests the threshold was designed to protect local champions or that there are or could be such champions, and thus the federal interest in invalidation remains abstract and speculative, while the state’s interest in taxing actual economic rents (or consumption, etc.) from current and vast market access is concrete and substantial. Under these circumstances, FFPR should sustain the tax.

However, if a state coupled its size threshold with carve-outs that systematically exempted local competitors, that poor tailoring and protectionist effect might well tip the proportionality balance toward invalidation.

This structured analysis demonstrates how FFPR organizes and clarifies existing DCC doctrine, including placing current tests into a larger context. Rather than navigating today’s doctrinal “crazy quilt,” courts applying FFPR would follow a single analytical framework that demands transparent reasoning at each step.

2. Reconciling and Synthesizing Current DCC Doctrine

There are strands of current doctrine that would reach these sensible results. For example, there is a strong argument that the internal consistency test is not a standalone DCC test unmoored from its constitutional grounding and is, in effect, a proxy for fair apportionment.[52] And we believe that the fair apportionment requirement should be understood as part of our test and part of narrow tailoring in particular. However, we concede, there are also strands and dicta pointing in other directions.[53]

To transform current doctrine into a coherent application of FFPR would require only a few clarifying steps.

First, as to the bifurcated test for regulations (discrimination and then Pike balancing), we need only follow suggestions from the Justices that Pike balancing is just a special case of presumptive discrimination.[54] Why would a state overburden interstate businesses for little gain if not to advantage local businesses? We thus have one master norm governing taxes and regulations.

Second, as to taxes, we should recognize that all the different tests and subtests derive from the same anti-discrimination norm.[55] The concern with fair apportionment, for instance, reduces to a concern with discrimination: If a tax is misapportioned, then interstate businesses risk paying more than in-state businesses. As we saw, Maryland’s tax was not misapportioned and so did not fail the tailoring step.

Third, now that we see how both taxes and regulations are governed by the anti-discrimination norm, we should recognize this is the same norm and the same test.[56]

Fourth, we should appreciate that the universal “don’t discriminate” standard would benefit from articulation through proportionality review just like the command that Congress not coerce “too much.” Certain applications of current doctrine, such as the mechanical application of the “internal consistency” test, would be shown to be lacking from this perspective. The internal consistency test is based on hypothetical taxes; as a general matter, hypothetical burdens on the national marketplace should be given less weight than actual state revenue collection.

Many pieces of current doctrine should then survive as parts of presumptive proportionality analyses, but the proportionality test should be understood as the master test, there to fill gaps and ground—and possibly limit—these heuristic subtests. Facial discrimination is unlikely to survive proportionality review given the harm it causes, but it is not impossible, which is why some quarantine laws can survive DCC review, for example.[57]

III. Constitutional Limits on the Federal Government’s Fiscal Powers

A. Collateral Constitutional Limits: The Eleventh and Fourteenth Amendments

Before examining the express clause-based limits on the federal taxing power (apportionment and uniformity), we consider two doctrines that illuminate how proportionality review already operates—albeit imperfectly—in fiscal federalism contexts: sovereign immunity under the Eleventh Amendment and Congress’s enforcement power under Section 5 of the Fourteenth Amendment.

1. The Eleventh Amendment and Sovereign Immunity

The Eleventh Amendment reads: “The Judicial power of the United States shall not be construed to extend to any suit in law or equity, commenced or prosecuted against one of the United States by Citizens of another State, or by Citizens or Subjects of any Foreign State.”[58]

On its face, this provision provides states only limited protection, solely from suits in federal courts by citizens of other states. Nevertheless, the Court has interpreted it to protect states even in their own courts and even from their own citizens. Indeed, states are protected from any liability that might be imposed upon them by Congress using an Article I power, such as the Commerce Clause.[59] At the same time, the Court has recognized “plan of the Convention” exceptions under several Article I powers (notably bankruptcy, eminent domain, and war powers), underscoring the doctrine’s policy‑inflected and selectively formalist character.[60]

The Eleventh Amendment jurisprudence is directly supportive of our approach in one sense: Though the lead cases will often discuss murky concepts like the dignity of states,[61] these vague concerns are explicitly anchored in the protection of state revenue powers as an essential aspect of state sovereignty.[62] Further, by arguing that the Eleventh Amendment is itself only a partial codification of sovereign immunity, the Court has shown itself willing to go beyond the text of the Constitution to its implied background principles.[63] By contrast, we do not think that any of our proposed reforms would come close to the Court’s willingness in this context to prioritize background principles over plain text.

Yet this area of jurisprudence also demonstrates why our approach is only a presumption. We think that FFPR should apply in this area and could lead to different results. Yet analyzing this is beyond the scope of our Article, and so we will instead concede that if one has a really strong commitment to a particular combination of formalism and textualism, then one might eschew FFPR altogether in this context. However, if one is so committed, then one would also have to accept the asymmetric results, namely that Congress’s power to preempt state revenue power seems far broader than its ability to grant individuals a remedy when wronged by their states.

This discussion yields at least two important insights for our broader project. First, the stark asymmetry between the Court’s approaches reveals a troubling incoherence. Congress seemingly cannot authorize even modest damage awards against states for constitutional violations under its Article I powers, yet it seemingly can ban entire categories of state taxation through preemption or coerce state compliance through conditional spending. This disparity makes little functional sense to the extent that the underlying concern is protecting state fiscal autonomy.

The asymmetry itself strengthens our argument for applying FFPR in the contexts where Congress retains power. To the extent that sovereign immunity bars monetary remedies in private suits, courts should apply heightened scrutiny when Congress uses its preemption or spending powers to displace state revenue. FFPR should require Congress to articulate sufficiently important federal interests, demonstrate that its intervention is narrowly tailored to those interests, and include safeguards that preserve state fiscal authority where possible. That is, categorical protection in one domain at least justifies more rigorous proportionality review in others.

Second, should the Court ever reconsider the scope of sovereign immunity—whether through revisiting abrogation doctrine or reconsidering available remedies—FFPR offers a principled alternative to the current all-or-nothing approach. Rather than categorically barring all monetary remedies or permitting unlimited liability, courts could better calibrate remedies to both the federal interest in enforcement and the genuine fiscal risks to state treasuries. The Court has already chosen not to interpret Congress’s power to spend, regulate, or preempt in categorical terms. Is the case for sovereign immunity really so strong?

2. The Fourteenth Amendment Section 5 Power

The Court—or at least some Justices, some of the time—seemingly agrees that proportionality review has a place in federalism analysis. The Fourteenth Amendment explicitly gives Congress the power to enforce its provisions. This could be a very great federal power given the sweep of the Fourteenth Amendment. Yet the Court has held that Congress’s remedial actions under Section 5 must be congruent and proportional.[64]

In so doing, we believe the Court has accepted the aptness of proportionality review. However, we would argue, along with many others (such as Justice Breyer),[65] that the Court has not applied this test correctly. Fully analyzing this failure is beyond our scope.[66] Nevertheless, we think that this doctrine demonstrates that a form of proportionality review (beyond just balancing) does have a home in U.S. constitutional jurisprudence but that what is required is more careful application.

To be more specific about some of the problems with the current application of the doctrine, the Court often considers costs yet does so through an undertheorized methodology that produces divergent outcomes that are hard to rationalize. In Garrett, the Court treated accommodation expenses as providing an argument for narrowing the constitutional violation Congress could remedy (because of the additional fiscal burden on the states) and thus did not uphold the statute.[67] By contrast, in Hibbs, the statute’s modest fiscal footprint—unpaid leave, strict eligibility thresholds, and categorical exclusions—counted as evidence for the federal remedy’s proportionality and thus the statute’s constitutionality.[68] These cases reveal a tacit principle—that fiscal design features bear on the congruence and proportionality analysis—yet the Court has not articulated consistently when such features matter, how much weight they carry, or what distinguishes permissible fiscal considerations from impermissible ones.

FFPR supplies this missing analytical structure. When Section 5 legislation imposes compliance costs on states, courts should explicitly acknowledge these burdens and evaluate them within the proportionality framework—not at the underlying rights stage[69] but as factors bearing on remedial scope and design (Steps 3 and 4 in particular). This evaluation should examine whether Congress has incorporated mechanisms to mitigate fiscal impacts while still achieving its remedial objectives. Courts should look for specific design features: targeted coverage formulas and triggering mechanisms; statutory defenses that prevent open-ended liability; graduated implementation schedules allowing fiscal adjustment; calibrated remedial schemes with damages or prospective relief proportioned to documented constitutional harm; and, where enforcement legislation intersects with federal spending programs, cost-sharing arrangements rather than unfunded mandates. The presence of such structural safeguards demonstrates congressional respect for state fiscal autonomy and weighs in favor of proportionality; their absence, particularly when coupled with sweeping substantive requirements, suggests disproportion to the constitutional injury documented. This approach extends the transparent, structured reasoning we advocate throughout fiscal federalism doctrine to the specific context of Fourteenth Amendment enforcement.

B. Express Clause-Based Limits on the Federal Taxing Power

We now turn to assessing the Constitution’s express clause-based limits on federal taxation—principally the Apportionment Clauses (for direct taxes) and the Uniformity Clause (for duties, imposts, and excises)—along with also assessing how FFPR clarifies the classification line between these categories. The jurisprudence governing that classification question, plus that governing the questions of how to apply the limitations imposed by each of the uniformity requirement and the apportionment requirement, has been developed and justified, at least in part, as protecting state fiscal autonomy. Prima facie, we think these doctrines do indeed relate to questions of federal versus state power. Thus, to the extent that this functionalist protective principle animates these doctrines, we now argue that courts should aim to apply it coherently through FFPR rather than through disconnected categorical rules.

We first consider the classification question, then turn to the uniformity and apportionment tests, and finish with a synthesis discussion of how FFPR can be applied to harmonize these doctrines to combat incoherent siloing.

1. The Classification Question

The Constitution distinguishes between: (1) direct taxes, which must be apportioned among the states by population; and (2) duties, imposts, and excises (sometimes called “indirect taxes,” although that term is not in the Constitution), which must instead be geographically uniform. While the Sixteenth Amendment exempted “taxes on incomes” from apportionment,[70] the classification question retains vital importance, especially for proposed wealth taxes and mark-to-market reforms, and also possibly for other current or proposed tax provisions for which the classification is uncertain.[71]

This section examines how FFPR illuminates the classification question when—and to the extent that—these clauses are understood as protecting state fiscal interests. We first map the interpretive landscape to show the diversity of views about these clauses’ purpose, then focus on the specific strand of jurisprudence that treats classification as a tool for protecting state fiscal autonomy. For that strand, we demonstrate how FFPR provides a structured methodology that can help resolve current doctrine’s internal contradictions while respecting the legitimate federalism concerns at stake.

a. Competing Functional Accounts of the Classification Question

The contemporary debate over the Apportionment and Uniformity Clauses reflects fundamental disagreements about their continuing purpose in our constitutional structure. Many scholars view the apportionment requirement as a constitutional anachronism, what Hemel calls nonfunctionalism.[72] For instance, Bruce Ackerman and Calvin Johnson both argue that the clauses are “foul-ups” tied to the odious compromise over slavery and the pre-constitutional requisition system, deserving minimal enforcement in modern jurisprudence.[73] From this perspective, courts should defer broadly to Congress’s choice of tax instruments, treating the classification question as essentially irrelevant, or just allow all or most forms of taxation to survive as uniform duties, imposts, or excises (without requiring apportionment).

A more nuanced position—so we think—comes from one of us (Gamage) in prior writings with John R. Brooks.[74] Brooks and Gamage argue that apportionment should be reconceptualized, not as a barrier, but as simply an alternative path for federal taxation. Under their “two paths” thesis, Congress can choose between apportionment and uniformity as alternative meta-rules for ensuring interstate equity, with the two rules relatively more suitable for different forms of taxation. As we will discuss further below, Brooks and Gamage argue that modern fiscal federalism’s extensive transfer programs can address any geographic disparities created by apportionment, while a broad interpretive principle they term the “excise canon” should permit Congress to structure most (but not necessarily all) taxes as uniform excises on privileges or activities rather than direct impositions on property. Under this view, classification thus becomes primarily a question of legislative design with relatively low stakes, rather than a high-stakes question of constitutional restriction.

An older strand of scholarship, exemplified by Erik Jensen, emphasizes individual liberty concerns, arguing that direct taxes are uniquely “dangerous” because individuals cannot avoid them through behavioral changes.[75] This liberty-protective account, while methodologically somewhat formalist, argues that the classification question serves a functionalist purpose of protecting individual freedom from oppressive federal impositions. Yet this individual-liberty focus has found little traction in recent jurisprudence or scholarship, which has instead gravitated toward structural federalism concerns when it has given the classification question substantive bite.

By contrast, contemporary functionalist arguments for treating the classification question as constitutionally momentous primarily come from those who frame the Apportionment and Uniformity Clauses as safeguards for state fiscal autonomy. Justice Thomas, dissenting in Moore v. United States, argued that the apportionment requirement was designed to be deliberately cumbersome to discourage Congress from encroaching upon the states’ traditional property tax bases.[76] This functionalist argument claims that protection of critical state revenue sources was intended to preserve the federal-state fiscal balance.

Relatedly, David Schizer and Steven Calabresi argue that the apportionment requirement was designed to prevent “fiscal raids” whereby coalitions of states might use federal taxing power to target assets concentrated in other regions, effectively forcing wealth transfers from particular states to the federal treasury.[77] While this concern famously applied to slavery, they demonstrate it was a general principle meant to protect any region-specific economic interest.

Note that this view is inherently similar to the Brooks and Gamage view that the classification question was designed to impose one of two meta-rules for ensuring interstate equity. Preventing fiscal raids and ensuring interstate equity are highly related and overlapping (if not essentially the same) purposes, at least conceptually. The key difference in these views is that Schizer and Calabresi, like Justice Thomas, view the apportionment requirement as deliberately intended to be more cumbersome than the uniformity requirement, and so they view the classification question as designed to impose the (in their view, more restrictive) apportionment requirement in scenarios in which concerns about fiscal raids are relatively greater.

It is this state-fiscal-autonomy strand of interpretation—that both Justice Thomas and Schizer and Calabresi argue for—that makes the classification question particularly amenable to analysis through FFPR. Unlike individual liberty concerns, which involve different constitutional values, or nonfunctionalist accounts, the functionalist state-fiscal-protection theories explicitly invoke the same federalism interests that FFPR was designed to balance. To the extent that the classification question matters because it protects state revenue systems and prevents sectional exploitation, then FFPR provides a principled framework for weighing those concerns against legitimate federal interests.

b. Applying FFPR to the Classification Question

The value of applying FFPR to the classification question becomes apparent when we examine current doctrine’s internal contradictions. Congress has repeatedly exercised its Commerce Clause power to completely preempt certain forms of state taxation when such taxes burden interstate commerce. Federal law currently bars states from taxing railroad property more heavily than other commercial property, for example.[78] Yet according to the state-protective interpretation of the Apportionment and Uniformity Clauses, Congress would be constitutionally forbidden from imposing its own uniform tax on such property if the tax were deemed “direct.”[79] This asymmetry produces an incoherence: the doctrine permits complete federal displacement of state taxing authority while potentially forbidding the lesser intrusion of concurrent federal taxation that would preserve state revenue powers. To the extent that the justification for interpreting the classification question restrictively is the functionalist purpose of protecting state fiscal autonomy, this result seems backwards.[80]

Rather than just asking whether a tax is “direct” in some categorical sense, FFPR directs attention to whether applying apportionment or uniformity would better serve the competing constitutional interests at stake. The framework’s four-step analysis—evaluating federal interests, assessing countervailing state concerns, examining the tailoring of means to ends, and weighing proportionality—transforms classification from a purely formalistic labeling exercise into a contextually richer evaluation of fiscal federalism values.

Consider how this analysis could apply to a broad-based federal wealth tax on net worth exceeding (say) $50 million.[81] The federal government’s primary interest would presumably be revenue generation, potentially reinforced by concerns about repairing gaps in the income tax system created by wealthy taxpayers’ ability to indefinitely defer realization of gains through borrowing against appreciated assets—the so-called “buy, borrow, die” strategy that has increasingly undermined the income tax’s progressivity.[82] These represent substantial federal interests in maintaining an effective and equitable revenue system.

The countervailing state interests appear less weighty in this context. While states might assert interference with their traditional property tax bases, no state currently imposes a comprehensive wealth tax, and most have abandoned the taxation of intangible property almost entirely.[83] The anti-raid concern animating Schizer and Calabresi’s analysis also seems minimal where the tax base consists primarily of financial assets distributed across national and global markets rather than immobile tangible property that may be located entirely or primarily within only specific states. A wealth tax on securities portfolios and other financial assets simply does not present the same sectional dynamics as would a targeted tax on specified forms of immobile tangible property that may be geographically concentrated.

So then, in light of this analysis, would uniformity or apportionment better serve as the mechanism for protecting state fiscal interests with respect to a broad-based federal wealth tax? We would argue that apportionment’s cumbersome machinery makes little sense for a mobile, national tax base of this sort. Instead, Congress could satisfy federalism concerns through targeted safeguards within a uniform framework: credits for any overlapping state wealth taxes, exemptions for real property and other traditional state and local revenue sources, or other similar protective provisions. We will discuss further (below) how the uniformity requirement can be applied to require appropriate safeguards of this sort.

The key point for now is that FFPR helps illuminate why apportionment is poorly suited for protecting whatever legitimate state fiscal interests might be in conflict with the federal government levying a broad-based wealth tax.

The proportionality balance in this scenario thus favors allowing uniformity with appropriate safeguards.

By contrast, the analysis shifts when considering a federal tax specifically targeting immovable forms of tangible property that may exist wholly within specific states. Imagine, for instance, a federal levy on commercial oil and gas reserves. While the federal government might assert revenue needs or environmental objectives, the potential for fiscal raids on specific states invites scrutiny. Such a tax could functionally transfer wealth from a handful of resource-rich states to the federal treasury for redistribution elsewhere, precisely the fiscal raid that Schizer and Calabresi argue apportionment was designed to prevent.

In this context, apportionment arguably serves its historic purpose. By requiring equal per-capita tax burdens regardless of resource distribution, apportionment makes sectional targeting potentially more difficult politically. The tailoring between means and ends becomes much tighter when the threat is regionally targeted extraction rather than broad-based revenue collection. Without sufficiently important national interests and robust safeguards ensuring proportional benefit to affected states, such a targeted levy could well fail FFPR’s proportionality analysis. The classification as “direct,” requiring apportionment, would be justified not just by formal categories but also by functional protection of federalism values.

Translated into more formalist language, this analysis bolsters the Brooks and Gamage argument (based on constitutional history, text, and precedent) that a broad-based wealth tax should be categorized as an excise on an activity or privilege (for which the uniformity requirement is applicable); whereas, by contrast, a tax directly assessed on real property that is based primarily on the characteristics of that property—as opposed to the nature of the property’s ownership or activities engaged in with respect to the property or by its owners—should be characterized as a direct tax (for which the apportionment requirement is applicable).[84] As we explained in Part I, formalism and functionalism need not be enemies here but instead can work together, with FFPR-based functionalism assisting in clarifying gaps and ambiguities in formalist categories.[85]

This contextual approach acknowledges the limits of proportionality review in resolving all aspects of the classification debate. For those who view the Apportionment and Uniformity Clauses through lenses other than state fiscal protection—whether formalist adherence to fixed meanings, individual liberty concerns,[86] or nonfunctionalist dismissal—FFPR offers less analytical purchase. Yet for the important strand of jurisprudence and scholarship exemplified by Justice Thomas’s dissent and the Schizer-Calabresi analysis, which understands these clauses as serving state fiscal interests, FFPR provides a principled methodology that improves upon current doctrine’s categorical confusion.

2. The Uniformity Test

The Uniformity Clause requires that “all Duties, Imposts and Excises shall be uniform throughout the United States.”[87] Like the classification question discussed above, the uniformity requirement has been understood—at least partially—as protecting state fiscal autonomy from federal encroachment. Yet current doctrine, epitomized by United States v. Ptasynski,[88] has rendered this protection rather weak through an easily manipulated two-part test that scholars have criticized as reducing the Clause to “virtually an empty shell.”[89]

The geographic uniformity principle established in the Head Money Cases[90] and Knowlton v. Moore[91] held that a tax satisfies the Uniformity Clause when it “operates with the same force and effect in every place where the subject of it is found.”[92] This formulation distinguished constitutional geographic uniformity from the unworkable standard of intrinsic uniformity: A tax need not burden all regions equally in effect, only apply the same rule wherever its subject exists.[93] Yet as Nelson Lund observed, this principle left unresolved the critical question of how Congress defines the tax’s “subject,” creating a loophole through which “good draftsmanship” could defeat the Clause’s protective purpose.[94]

Ptasynski purported to address this gap but instead created doctrine that invites circumvention. The Court established that where Congress defines a tax’s subject in nongeographic terms, the Uniformity Clause is presumptively satisfied: what critics call a “per se rule of validity.”[95] Only when Congress explicitly uses geographic language does the Court “examine the classification closely to see if there is actual geographic discrimination.”[96] Even then, the Court upheld Alaska’s exemption from the windfall profit tax based on “neutral factors” like climate and drilling costs, despite the exemption’s explicit geographic boundaries.[97]

This framework fails on multiple levels. Most fundamentally, it enables precisely the evil the Uniformity Clause was designed to prevent: sectional raids disguised through careful drafting.

a. The Failure of Facial Formalism

Consider a hypothetical that exposes the current doctrine’s inadequacy. Congress, seeking to punish states that have challenged federal immigration policy, imposes a 50 percent excise tax on “hydraulic fracturing operations using horizontal drilling techniques at depths exceeding 8,000 feet where average well productivity exceeds 500 barrels per day.” Congressional staffers have carefully researched these parameters to ensure they capture fracking operations in Texas and Oklahoma—states whose congressional delegations opposed recent immigration legislation—while excluding operations in allied states where different geological conditions prevail.

Under Ptasynski’s first prong, this facially neutral tax would receive virtually no scrutiny. The statute nowhere mentions Texas or Oklahoma; it speaks only of drilling techniques and productivity metrics. Yet this represents a clear “fiscal raid”: precisely what the framers sought to prevent when they insisted that federal excises not become tools for building up “[t]he agriculture, commerce, or manufactures of one State . . . on the ruins of those of another.”[98] As Lund argued, this approach reduces the Uniformity Clause to a mere drafting exercise.[99]

b. Applying FFPR to Uniformity Analysis

FFPR transforms this hollow formalism into principled analysis. As articulated in Part I, FFPR evaluates: (1) the asserted federal interest; (2) the countervailing state interest; (3) whether the means are reasonably tailored to the ends, using among the least intrusive of all equally effective means; and (4) whether the federal benefit is proportional to the burden on state autonomy.[100]

Applied to our hypothetical fracking tax, FFPR quickly exposes what Ptasynski’s formalism obscures. At step one, Congress would need to articulate a valid federal interest beyond punishing political opposition. Generic revenue-raising might suffice, but the narrow targeting suggests pretextual justification. At step two, the affected states have powerful interests in avoiding discriminatory federal taxation that could cripple major economic sectors. The tailoring analysis at step three reveals the classification’s true nature: If the federal interest is environmental protection or revenue generation, why do geologically similar operations in other states escape taxation? The parameters appear reverse-engineered for geographic targeting rather than reasonably tailored to valid ends. Finally, the proportionality analysis would likely condemn a tax that devastates particular states’ economies while contributing marginally to federal revenues or environmental goals.

Now consider how FFPR might analyze Ptasynski itself. The federal interest was clear: encouraging oil exploration in extreme conditions to enhance energy independence.[101] The state interest in uniform treatment remains significant—other oil-producing states faced a competitive disadvantage. But the tailoring analysis becomes more complex. Congress confronted unique Arctic conditions—permafrost, extreme cold, lack of infrastructure—that made drilling costs fifteen times higher than elsewhere.[102] Could Congress have used non-geographic proxies? Perhaps exempting wells with documented costs exceeding a threshold, regardless of location. Yet such alternatives posed serious administrative challenges and potential fraud, while geographic boundaries provided clear, enforceable limits for conditions that were genuinely geography-specific.[103] The proportionality balance might reasonably favor the exemption: the burden on uniformity affected less than 20 percent of Alaska’s production, while the federal interest in Arctic energy development was substantial given 1970s energy crises.[104]

Crucially, FFPR reaches this conclusion through transparent reasoning about federal and state interests, not through mechanical application of the geographic/non-geographic distinction. The framework would equally reject a broader Alaskan preference unsupported by unique conditions or a facially neutral classification that merely disguised sectional targeting.

c. A Doctrinal Proposal

Courts applying FFPR to uniformity challenges should ask: When Congress deviates from geographic uniformity—whether through explicit boundaries or facially neutral proxies—can it demonstrate that (1) the classification serves a legitimate federal objective beyond sectional preference; (2) the burden on disfavored states’ fiscal interests has been considered and minimized; (3) there is reasonable tailoring between the means and ends, meaning that among equally effective means, Congress chose an approach that is among those least disruptive to competitive neutrality among states; and (4) the federal gains justify the departure from uniform treatment?

This approach neither categorically condemns geographic classifications nor blindly accepts facially neutral ones. Instead, it recognizes that uniformity, like the other structural principles discussed in this Article, protects state fiscal autonomy while permitting necessary federal flexibility. Some geographic tailoring may be essential; for example, the Arctic presents challenges that no cost metric fully captures. Some facially neutral classifications may be intolerable; reverse-engineered parameters that target disfavored states while maintaining technical neutrality should at the very least be subject to heightened scrutiny.

The uniformity requirement need not remain an empty shell vulnerable to drafting gamesmanship. Through FFPR, it can resume its intended role: protecting states from sectional exploitation while preserving federal flexibility to address genuine regional variations.[105] Structured proportionality review offers a principled middle path between formalistic rigidity and standardless deference.

3. The Apportionment Test

Once a tax is classified as direct, Article I requires apportionment “among the several States . . . according to their respective Numbers.” This requirement was famously applied to strike down a national income tax in Pollock v. Farmers’ Loan & Trust Co. (prior to the Sixteenth Amendment).[106] Although Congress levied a series of apportioned direct taxes during the Civil War and prior, many commentators have since come to believe that the apportionment requirement is so cumbersome that it has essentially become an insurmountable barrier to any federal taxes deemed to be direct and thus subject to apportionment.[107]

There is no jurisprudence on the application of the apportionment requirement beyond Pollock’s striking down a national income tax that was unmistakably designed to be uniform and not apportioned.[108] Though, in an analogous area of jurisprudence, the Court in Adams Express Co. v. Ohio State Auditor—decided just two years after Pollock—upheld flexible state apportionment of multistate business taxes, recognizing that state revenue power would be unduly restricted by a strict apportionment test.[109]

So why have commentators come to assume that the apportionment requirement has become an in-effect near-insurmountable hurdle, especially considering that jurisprudence has made the uniformity requirement an in-effect near-empty shell (as explained above)?

a. Reassessing Historical “Impossibility”

Clarke and Glogower marshal impressive evidence that historical apportioned taxes repeatedly failed to collect their mandated quotas.[110] For instance, the 1798 Direct Tax collected only 77 percent of its target after five years; some states paid nothing due to protracted valuation disputes.[111] Yet we think these historical struggles reflect administrative incapacity, not constitutional defects.

For sure, Clarke and Glogower are correct that if the apportionment test is interpreted as requiring strict and precise apportionment as to the ultimate effects and incidence, then no historical apportioned direct tax could have satisfied this test, and indeed it would be near impossible for any real-world tax to satisfy such a test. Revenue collection is just not that precise in practice. But why should the apportionment requirement be interpreted so impossibly strictly, especially considering that the uniformity requirement has been interpreted to require only at-most facial uniformity in a manner making it essentially toothless? The historical record clearly supports that the founders intended for the national government to be able to levy apportioned taxes in practice, especially during times of war. There is no historical support for thinking that the apportionment test was intended as an in-effect impassable barrier.

Reflecting on this in 1861, Treasury Secretary Salmon P. Chase concluded that the apportionment test should be understood as requiring only facial compliance, that “the constitutional requirement will be satisfied if Congress, in the act levying the tax, shall apportion it among the several States in the required manner.”[112] Collection shortfalls, he argued, cannot retroactively void a facially apportioned levy—just as the Union’s inability to collect uniform taxes in Confederate states did not violate the Uniformity Clause. As we discussed earlier, this facial compliance principle aligns with the Court’s later uniformity jurisprudence, which demands geographic neutrality in statutory design, not equality of economic impact or perfect collection.

We think Chase’s view on this is both plausible and shows greater fidelity to the text and history of the Constitution than does interpreting the Apportionment Clauses as imposing a near-insurmountable hurdle to direct taxes. Yet we think FFPR offers a superior middle ground. We argued above that FFPR provides guidance for calibrating uniformity to achieve constitutional fidelity with a test that is neither essentially toothless nor impossible to comply with. We now argue that FFPR can similarly guide in calibrating and interpreting the Apportionment Clauses.

b. Modern Administrative Viability

Brooks and Gamage identify two developments that resurrect apportionment’s practical viability.[113] First, the federal government now operates vast intergovernmental transfer systems capable of offsetting any regressive interstate effects. If apportionment forces poorer states to impose higher effective rates, Congress can alleviate or even counteract those disparities through spending programs or direct transfers—converting what was once an intractable equity problem into a manageable design challenge.

Second, contemporary administrative tools make the mechanics of apportionment workable, if admittedly somewhat more complex than uniformity. Consider what Clarke and Glogower label as the “sum certain” mechanism: Congress predetermining each state’s dollar contribution rather than setting rates and letting revenues float. Clarke and Glogower argue that this is a critical flaw making apportionment unworkable.[114] Yet many local property tax systems in America currently operate in essentially this same manner: Legislatures determine revenue needs, assessors calculate the base, and administrators derive rates to meet those needs.[115] From this we conclude that the key difference between eighteenth-century supposed failures and modern feasibility lies not in anything inherently constitutional but rather in administrative capacity.

A workable framework for apportioning a tax today could thus include: statutory apportionment of the national levy to state quotas based on census data, mechanical rate-setting where each state’s rate equals its quota divided by its assessed base, and targeted transfers to protect vulnerable populations and preserve essential state services. Techniques like this already operate successfully in local property tax administration.[116]

c. Applying FFPR to Apportionment Analysis

FFPR offers a way to read the apportionment requirement as a real safeguard rather than either as a mere ceremonial recital or as an impenetrable blockade. The inquiry should seek to ascertain whether Congress has designed an administrable regime reasonably calculated to raise a formally, facially apportioned sum while appropriately respecting state fiscal autonomy and federalism values.

A hypothetical federal levy on high‑value commercial real property illustrates the point. A federal interest in revenue (or perhaps, say, infrastructure finance) could easily be legitimate. But the state interests are potentially valid as well: The property tax remains a backbone of subnational finance and falls on immobile, place‑specific assets. Those features raise both the displacement concern emphasized by Justice Thomas and the fiscal raid worry about regionally concentrated bases emphasized by Schizer and Calabresi. With regard to the classification question, routing a national property tax of this sort to the apportionment test therefore at least arguably fits with the Constitutional text, history, and purpose. This then raises the question of applying the apportionment test.

FFPR directs courts to look beyond just abstract categories by examining how Congress actually structures an apportioned tax. The 1798 Direct Tax Act demonstrates a workable template that remains instructive today.[117] Congress established state quotas, then deployed a tripartite mechanism: nationally uniform charges on dwelling houses and enslaved persons, combined with a residual land levy calibrated to close each state’s remaining gap. As Brooks and Gamage observe, this design reveals a crucial principle—“only the combination of the three—the total revenue collected—was proportional to population.”[118] The administrative logic extends beyond this historical example: When direct-tax bases distribute unevenly across states, Congress can satisfy apportionment by pairing uniform base components with state-specific residual rates that achieve the required quotas. Rather than representing a constitutional defect or clever evasion, this hybrid structure embodies the pragmatic flexibility necessary to operationalize apportionment’s requirements while respecting its protective purposes.

The historical record does not justify transforming apportionment into a rigorous outcomes test. Treasury records reveal persistent gaps between ambition and achievement—the five direct-tax statutes collectively raised roughly $28 million against $34 million apportioned—with collections trailing for years.[119] The 1798 levy exemplifies this pattern: a decade after enactment, only $1.7 million of the $2 million target had materialized, with several states chronically delinquent in their quotas.[120] Yet these shortfalls illuminate administrative capacity, not constitutional noncompliance. Eighteenth-century tax administration lacked the standardized assessment protocols, electronic recordkeeping, and enforcement mechanisms that modern systems deploy routinely. What should matter for the constitutional analysis is that Congress legislated apportionment quotas and constructed a collection architecture to pursue them in good faith. FFPR therefore counsels deference to a statute that builds a reasonable apparatus to meet the quotas, while permitting courts to reject designs that would predictably frustrate apportionment or disguise sectional extraction.

FFPR also clarifies the role of potential interstate fiscal-equalization provisions. Because apportionment can impose higher effective rates on poorer states, Congress may employ appropriate fiscal tools—such as equalization transfer grants to state governments—to smooth interstate effects. Brooks and Gamage argue that the modern federal toolkit permits such adjustments while leaving apportionment meaningful.[121] The key point to understand here is that federal spending has never been subject to either the apportionment or uniformity requirements, nor could it comply with either. Moreover, there is no support in either the constitutional text or history for extending either requirement to spending (as both requirements explicitly apply only to federal taxes). Indeed, existing federal spending programs provide grants to state governments using formulas purposefully designed to achieve different targeting for different states and geographies—consider Medicaid, for just one notable example. Thus, as Brooks and Gamage explain in much greater detail in their prior scholarship, the interstate inequities caused by apportionment viewed myopically can be ameliorated through targeted federal spending such as grants to state governments or increased financing to states inequitably affected by apportionment through adjusted formulas for Medicaid or other similar spending programs. Adding to this prior work by Brooks and Gamage, we now argue here that the use of such tools should be evaluated through FFPR and in consideration of the presumption of symmetry: If Congress could accomplish the same interstate redistribution through an independent spending statute that would survive FFPR-informed review under the Spending Clause, then using a fiscal equalization formula to recycle a portion of revenues raised by an apportioned direct tax should likewise be permissible (at least presumptively).

Two examples help illustrate the boundary. First, Congress might enact an apportioned surtax on high‑value commercial property that would rely on standardized valuation protocols and a residual land‑value rate to reconcile each state’s quota. Along with this, Congress might enact a companion spending program of fiscal equalization grants to state governments—perhaps keyed to population and median income and available to all states—to soften interstate regressivity. Under FFPR, that combined package should be ruled consistent with apportionment’s purpose. Absent other facts suggesting otherwise, this package seems like a reasonable attempt to raise national revenues from a direct tax base with appropriate tailoring that respects state fiscal interests and fiscal federalism values and with the companion spending grants designed to achieve the valid federal goal of alleviating interstate regressive effects.

For a brief counterexample, suppose Congress imposed an apportioned tax limited to oil and gas reserves and then earmarked the proceeds for a “transition fund” that completely excluded fossil‑fuel‑producing states. That combination would seemingly amount to an invalid fiscal raid. An FFPR-informed apportionment test should thus examine this with great scrutiny and skepticism.

d. A Doctrinal Proposal

Courts should operationalize the middle ground through a structured design inquiry. Formally satisfying the Apportionment Clauses demands that Congress establish population-based quotas and construct collection machinery reasonably calculated to achieve them. Yet this should permissibly allow for incorporating pragmatic mechanisms such as: mechanical rate-setting where quotas drive rate determination (a residual land rate, for instance, derived by dividing each state’s remaining obligation by its assessed base); dynamic adjustment protocols with reconciliation mechanisms; and de minimis variance bands that acknowledge operational friction without inviting strategic gamesmanship.[122] Where federal levies may threaten traditional state tax bases, courts should potentially reward design features that appropriately seek to preserve subnational fiscal capacity—credits against state and local property taxes, for example—preventing federal collections from needlessly cannibalizing core state revenue instruments.

Accompanying equalization spending devices should presumptively be permissible when they operate through generally applicable formulas that would themselves satisfy constitutional scrutiny if enacted as stand‑alone spending legislation. Courts should ask whether such devices further valid federal interests—maintaining interstate equity, stabilizing national investment, or mitigating temporary rate disparities—or instead seem designed to overly trample on state interests without appropriate tailoring. For instance, where the overall design or legislative history reveals a pretext to accomplish a regional fiscal raid, an FFPR-informed apportionment test should potentially bar even a statute that would facially achieve apportionment quotas.

This approach gives apportionment real teeth without demanding the impossible. In short, FFPR reads apportionment as a workable, state‑protective rule rather than a relic or a trap.

4. Synthesis: Harmonizing the Constitution’s Express Clause-Based Limits on the Federal Taxing Power

FFPR can help reconcile the Apportionment and Uniformity Clauses with modern fiscal realities by providing courts with a structured methodology for both classification and application. Rather than treating these clauses as binary switches or empty shells, FFPR directs attention to their federalism risk profiles. Taxes on immobile, tangible, place-bound bases that may threaten core state revenue sources are relatively better suited to apportionment’s machinery, consistent with the historical association of “direct taxes” with land, real property, and capitation.[123] Conversely, taxes on diffuse, mobile, more abstract, and transaction-determined bases present lower federalism risks and are relatively better-suited for uniformity. This approach harmonizes formal categories with functional purposes in fidelity with the constitutional text and history.

Once classification determines the governing clause, FFPR calibrates each test to be meaningful yet workable. For uniformity, this means geographic neutrality with teeth—screening for state-mapping proxies that disguise sectional targeting through facially neutral parameters. For apportionment, FFPR similarly charts a middle course: requiring population-based quotas with administrable collection mechanisms reasonably calculated to achieve them, while permitting modern tools like equalization spending grants to state governments for addressing interstate regressive effects without defeating the clause’s protective purposes. The 1798 Direct Tax Act is a historical example demonstrating this pragmatic flexibility—pairing uniform levies on dwellings with a variable residual land rate to meet state quotas, showing how hybrid designs can appropriately operationalize apportionment.[124] Through this structured approach, FFPR transforms the Uniformity and Apportionment Clauses from fragmented doctrinal silos into a coherent framework that appropriately respects federalism values.

Conclusion

We have argued that the current fissured state of fiscal federalism doctrines reflects the absence of a unifying analytical framework. By tracing our proposed FFPR framework across the varied contexts examined in this Article, we have sought to demonstrate how a structured methodology can bring principled order to this doctrinal chaos. Our framework does not aim to impose uniformity for its own sake; rather, it demands that courts articulate precisely when and why different contexts may warrant different treatments, replacing incoherent siloing with transparent reasoning about the federal and state interests actually at stake.

The Internet Tax Freedom Act illustrates the problem; what began as temporary protection for a fledgling e-commerce industry has calcified into claims for indefinite exemption by some of the world’s most dominant economic sectors. Current jurisprudence offers no coherent method for reassessing whether yesterday’s justified interventions have become today’s unjustified intrusions. FFPR provides the necessary tools for this reevaluation—not through rigid temporal limits but through dynamic recalibration as economic and technological circumstances evolve. The same analytical structure capable of evaluating 1998’s dial-up protections can assess tomorrow’s quantum computing regulations, asking not just what legal category a technology inhabits but also what federal-state tensions it creates and how their resolution serves overarching constitutional values.

Or consider state or federal legislators considering a new tax that might be novel, at least in twenty-first-century context. Legislators (and judges) need guidance based on principles as to new cases.

Traditional doctrines stumble when confronting new developments because no founder contemplated novelties like social media or digital currencies. FFPR’s structured approach may not eliminate disagreements, but it can at least structure new ideas and channel disputes toward the questions that ultimately matter. By forcing fundamental inquiries into the open, FFPR can transform fiscal federalism from an exercise in doctrinal archaeology into a proper constitutional jurisprudence, equipping the judiciary to manage not just today’s conflicts but also the federal-state frictions our economic and technological future will inevitably generate.

  1. * David Gamage is the Law School Foundation Distinguished Professor of Tax Law & Policy, University of Missouri. ↑

  2. ** Darien Shanske is a Martin Luther King Jr. Professor of Law at UC Davis. The authors would like to thank all of the participants at the excellent symposium at which this Article was first presented and also the participants at the Mizzou Law Faculty Workshop. They would like to extend special thanks to Andrew Appleby, Jake Brooks, Conor Clarke, Brannon Denning, Brian Galle, Ari Glogower, Alexander Gouzoules, Brad Joondeph, Charles Rhodes, and Adam Thimmesch. ↑

  3. . U.S. Term Limits, Inc. v. Thornton, 514 U.S. 779, 838 (1995) (Kennedy, J., concurring) (“Federalism was our Nation’s own discovery. The Framers split the atom of sovereignty.”). ↑

  4. . See generally Alden v. Maine, 527 U.S. 706 (1999); Seminole Tribe of Fla. v. Florida, 517 U.S. 44 (1996). ↑

  5. . Alden, 527 U.S. at 712 (“We hold that the powers delegated to Congress under Article I of the United States Constitution do not include the power to subject nonconsenting States to private suits for damages in state courts.”); see also id. at 750. ↑

  6. . See generally Jerome R. Hellerstein, Walter Hellerstein & Andrew D. Appleby, State Taxation § 4.26–27 (3d ed. with updates through Mar. 2026); James R. Eads, Federal Preemption of Revenue Autonomy, in The Oxford Handbook of State and Local Government Finance 198 (Robert D. Ebel & John E. Petersen eds., 2012) (listing numerous examples of federal preemption of state taxing authority). ↑

  7. . See, e.g., 15 U.S.C. §§ 381–384; Internet Tax Freedom Act, 47 U.S.C. § 151 note; 49 U.S.C. § 40116(b) (prohibiting state taxation of air travel); 49 U.S.C. § 14505 (restricting state taxation of motor carriers); 49 U.S.C. § 11501 (prohibiting discriminatory state taxation of railroads); 49 U.S.C. § 31705(a) (requiring states to conform to International Fuel Tax Agreement); 4 U.S.C. § 117(b) (federal sourcing rules for mobile phones); 29 U.S.C. § 1144(a) (ERISA preemption); 47 U.S.C. § 542(b) (capping cable franchise fees); 4 U.S.C. § 114 (prohibiting state taxation of nonresident retirement income); 7 U.S.C. § 2013(a) (prohibiting state taxation of SNAP purchases). ↑

  8. . See Michael W. McConnell, Federalism: Evaluating the Founders’ Design, 54 U. Chi. L. Rev. 1484 (1987) (book review). ↑

  9. . McCulloch v. Maryland, 17 U.S. (4 Wheat.) 316, 405 (1819). ↑

  10. . See, e.g., Pike v. Bruce Church, Inc., 397 U.S. 137, 142 (1970) (establishing balancing test for nondiscriminatory state regulations affecting interstate commerce); City of Boerne v. Flores, 521 U.S. 507, 520 (1997) (requiring that Section 5 legislation be congruent and proportional to constitutional violations). ↑

  11. . Vicki C. Jackson, Constitutional Law in an Age of Proportionality, 124 Yale L.J. 3094, 3142 (2015). ↑

  12. . See Ronald Dworkin, Taking Rights Seriously 22–28 (1977) (distinguishing between rules and principles). ↑

  13. . See Jamal Greene, Foreword: Rights as Trumps?, 132 Harv. L. Rev. 28 (2018); Stephen Breyer, Active Liberty: Interpreting Our Democratic Constitution (2005). ↑

  14. . One might see this perpetual refining as a weakness, but we think the ability of the test to provide ever more specific—and principled—guidance is a strength. See Frederick Schauer, Proportionality and the Question of Weight, in Proportionality and the Rule of Law: Rights, Justification, Reasoning 173 (Grant Huscroft, Bradley W. Miller & Grégoire Webber eds., 2014). ↑

  15. . See, e.g., Alden v. Maine, 527 U.S. 706, 728 (1999) (“[S]overeign immunity derives not from the Eleventh Amendment but from the structure of the original Constitution itself.”). ↑

  16. . United States v. Lopez, 514 U.S. 549, 558–59 (1995) (“Congress’ commerce authority includes the power to regulate those activities having a substantial relation to interstate commerce . . . .”). ↑

  17. . Moshe Cohen-Eliya & Iddo Porat, American Balancing and German Proportionality: The Historical Origins, 8 Int’l J. Const. L. 263, 271 (2010) (“Article 10(2) of the Allgemeines Landrecht of 1794 authorized the government to exercise police powers in order to ensure public peace; however, at the same time, it also limited those powers to such measures that were essential for achieving that goal.”). ↑

  18. . See Alec Stone Sweet & Jud Mathews, Proportionality Balancing and Global Constitutionalism, 47 Colum. J. Transnat’l L. 72, 89–91 (2008). ↑

  19. . See generally Moshe Cohen-Eliya & Iddo Porat, The Hidden Foreign Law Debate in Heller: The Proportionality Approach in American Constitutional Law, 46 San Diego L. Rev. 367 (2009). ↑

  20. . See, e.g., Sweet & Mathews, supra note 16, at 89; Vicki C. Jackson, Ambivalent Resistance and Comparative Constitutionalism: Opening Up the Conversation on “Proportionality,” Rights and Federalism, 1 U. Pa. J. Const. L. 583, 626 (1999). ↑

  21. . Consolidated Version of the Treaty on European Union, art. 5, Oct. 26, 2012, 2012 O.J. (C 326) 18 [hereinafter TEU] (“Under the principle of proportionality, the content and form of Union action shall not exceed what is necessary to achieve the objectives of the Treaties.”). ↑

  22. . Armin Steinbach, The Federalism Dimension of Proportionality, 28 Eur. L.J. 36 (2022). The TEU also contains an explicit commitment to “subsidiarity,” which requires that “the Union shall act only if and in so far as the objectives of the proposed action cannot be sufficiently achieved by the Member States, either at central level or at regional and local level, but can rather, by reason of the scale or effects of the proposed action, be better achieved at Union level.” TEU, supra note 19, art. 5. As another scholar observed, subsidiarity (at least as applied by a court) is reducible to the proportionality principle: “The principle of subsidiarity will thus ask whether the European legislator has unnecessarily restricted national autonomy. A subsidiarity analysis that will not question the federal proportionality of a European law is bound to remain an empty formalism. Subsidiarity properly understood is federal proportionality.” Robert Schütze, Shorter Article, Subsidiarity After Lisbon: Reinforcing the Safeguards of Federalism?, 68 Cambridge L.J. 525, 533 (2009) (original italics omitted). ↑

  23. . George A. Bermann, Taking Subsidiarity Seriously: Federalism in the European Community and the United States, 94 Colum. L. Rev. 331 (1994). ↑

  24. . See generally Steven G. Calabresi & Lucy D. Bickford, Federalism and Subsidiarity: Perspectives from U.S. Constitutional Law, in Federalism and Subsidiarity 123 (James E. Fleming & Jacob T. Levy eds., 2014). Calabresi and Bickford amass important historical evidence as to the significance of federalism to the founders including a form of subsidiarity, as well as an economic argument for this preference. As to these arguments, we broadly agree, but Calabresi and Bickford explicitly do not apply proportionality review, id. at 178 n.19, and also do not generally offer a unified attempt to analyze revenue powers under this rubric. ↑

  25. . This is how H.L.A. Hart described Oliver Wendell Holmes. See H.L.A. Hart, Positivism and the Separation of Law and Morals, 71 Harv. L. Rev. 593, 593 (1958). ↑

  26. . We derive the test from Sweet & Mathews, supra note 16, at 75–76; Mattias Kumm, Constitutionalising Subsidiarity in Integrated Markets: The Case of Tobacco Regulation in the European Union, 12 Eur. L.J. 503, 519 (2006); Richard Stacey, The Magnetism of Moral Reasoning and the Principle of Proportionality in Comparative Constitutional Adjudication, 67 Am. J. Compar. L. 435, 439–40 (2019). ↑

  27. . Kumm, supra note 24, at 521. ↑

  28. . See, e.g., Antonin Scalia, A Matter of Interpretation: Federal Courts and the Law (Amy Gutmann ed., 1997); Antonin Scalia, Essay, The Rule of Law as a Law of Rules, 56 U. Chi. L. Rev. 1175 (1989). ↑

  29. . U.S. Const. art. II, § 1, cl. 5. ↑

  30. . See, e.g., Antonin Scalia & Bryan A. Garner, Reading Law: The Interpretation of Legal Texts 180 (2012) (“The provisions of a text should be interpreted in a way that renders them compatible, not contradictory.”). ↑

  31. . And it is not clear there could be, as Wittgenstein warns not to be bewitched by the image of machine-like reasoning spitting out the right answer. Ludwig Wittgenstein, Philosophical Investigations 77 ¶ 192 (G.E.M. Anscombe trans., 2d ed. 1958) (“You have no model of this superlative fact, but you are seduced into using a super-expression.”). Even John Manning, who is skeptical of more free-floating federalism norms as a part of our Constitution, accepts that they have a place. John F. Manning, Federalism and the Generality Problem in Constitutional Interpretation, 122 Harv. L. Rev. 2003, 2008 (2009) (“To be sure, not all of the relevant provisions are precisely drawn (consider the Commerce Clause, the Necessary and Proper Clause, or the Guarantee Clause); many leave room for interpretation, a task for which the overall purpose of federalism may, if sufficiently definite, provide guidance.”). Granted, Manning is skeptical of many of the Court’s decisions that we would build on. This is not the space fully to adjudicate this dispute as to how far rules might go, but those decisions he criticizes are still the law and, should they remain so, the anomalies and uncertainties we catalog will remain. ↑

  32. . See Timothy Endicott, Proportionality and Incommensurability, in Proportionality and the Rule of Law, supra note 12, at 311, 325–26. Accordingly, even frontal assaults on balancing, such as Pike balancing, often end up relying on what we would characterize as proportionality reasoning. See, e.g., Andrew Jordan, What on Earth Is a Burden on Interstate Commerce?, 120 Nw. U. L. Rev. 245 (2025). Despite his critique of Pike, Jordan concedes that something like Pike balancing may be appropriate for interstate functionalities, like transportation, and thinks the test should be: “[T]here is a shared interest in efficient transportation of goods, and that states must have some good reason to impede that interest.” Id. at 297. It is very hard to see how this is not an inchoate version of our analysis. (What is a good reason? Why interstate functionalities if not because of their import? Etc.) ↑

  33. . 602 U.S. 572, 625–26 (2024) (Thomas, J., dissenting) (“The Direct Tax Clause was a critical aspect of the balance between state and federal power in the original design of the Constitution.”). ↑

  34. . Nat’l Fed’n of Indep. Bus. v. Sebelius, 567 U.S. 519 (2012). ↑

  35. . U.S. Const. art. I, § 8, cl. 1. Our analysis of the Clause follows that of Samuel R. Bagenstos, The Anti-Leveraging Principle and the Spending Clause After NFIB, 101 Geo. L.J. 861 (2013). ↑

  36. . See generally Bagenstos, supra note 33. ↑

  37. . See, e.g., United States v. Lopez, 514 U.S. 549, 561–68 (1995); United States v. Morrison, 529 U.S. 598, 610–19 (2000). ↑

  38. . David Gamage & Darien Shanske, The Federal Government’s Power to Restrict State Taxation, 81 State Tax Notes 547, 553 (2016). ↑

  39. . Bradley W. Joondeph, Congress’s Authority to Regulate State and Local Taxation, 79 Tax Law. 193 (2026). ↑

  40. . And thus we do not need to agree with the Court’s conclusion to believe that our framework helps create a larger and more coherent structure for its analysis. ↑

  41. . See Gamage & Shanske, supra note 36; Joondeph, supra note 37. ↑

  42. . 47 U.S.C. § 151 note. And we acknowledge this is just an outline of how courts should approach this issue. For a similar analysis of the ITFA, see Michael T. Fatale, Common Sense: Implicit Constitutional Limitations on Congressional Preemptions of State Tax, 2012 Mich. St. L. Rev. 41. ↑

  43. . Brief of Appellees Responding to Amici Curiae Brief of Tax Law Professors at 40–41, Comptroller of Md. v. Comcast of Cal./Md./Pa./Va./W. Va., LLC, 297 A.3d 1211 (Md. 2023) (No. 32). ↑

  44. . Gregory v. Ashcroft, 501 U.S. 452, 464 (1991). ↑

  45. . N.Y. State Conf. of Blue Cross & Blue Shield Plans v. Travelers Ins. Co., 514 U.S. 645, 655 (1995). ↑

  46. . See Ernest A. Young, “The Ordinary Diet of the Law”: The Presumption Against Preemption in the Roberts Court, 2011 Sup. Ct. Rev. 253. ↑

  47. . It would also be inconsistent with the Court’s sensible claim that “commerce” is supposed to have the same definition in both its negative and positive aspects. See, e.g., Camps Newfound/Owatonna, Inc. v. Town of Harrison, 520 U.S. 564, 574 (1997). ↑

  48. . United Haulers Ass’n, Inc. v. Oneida-Herkimer Solid Waste Mgmt. Auth., 550 U.S. 330 (2007) (example of two tests for regulations); Complete Auto Transit, Inc. v. Brady, 430 U.S. 274 (1977) (establishing four-prong test for taxes). ↑

  49. . Nat’l Pork Producers Council v. Ross, 598 U.S. 356 (2023). ↑

  50. . Container Corp. of Am. v. Franchise Tax Bd., 463 U.S. 159 (1983) (adding so-called internal consistency); Commonwealth Edison Co. v. Montana, 453 U.S. 609 (1981) (eviscerating fair relation prong). ↑

  51. . This is an argument made by the plaintiffs objecting to the Maryland tax. See, e.g., Amended Complaint for Injunctive and Declaratory Relief ¶ 84, Chamber of Com. v. Franchot, 595 F. Supp. 3d 423 (D. Md. 2022) (No. 21-cv-410). ↑

  52. . Michael T. Fatale, State Tax Discrimination and Internal Consistency, 29 Fla. Tax Rev. 271 (2025). The internal consistency test asks if out-of-state taxpayers would be burdened if every state were to adopt the same formula. This is a reasonable heuristic for whether or not a formula is reasonable (and if it is not, then it fails Step 3 of FFPR). ↑

  53. . One reading of Comptroller of the Treasury v. Wynne, 575 U.S. 542 (2015), is that the Court is very invested in the internal consistency test above all and not as a heuristic. But see Fatale, supra note 50. A different strong reading of this case indicates that, at the very least, the Court was also looking to simplify and rationalize its DCC jurisprudence. Brannon P. Denning, The Dormant Commerce Clause Wynnes Won Wins One: Five Takes on Wynne and Direct Marketing Association, 100 Minn. L. Rev. Headnotes 103 (2016) (noting that the Court itself is moving in this direction). ↑

  54. . Nat’l Pork Producers, 598 U.S. 356. ↑

  55. . Jesse H. Choper & Tung Yin, State Taxation and the Dormant Commerce Clause: The Object-Measure Approach, 1998 Sup. Ct. Rev. 193. ↑

  56. . Adam B. Thimmesch, The Unified Dormant Commerce Clause, 92 Temp. L. Rev. 331 (2020). ↑

  57. . Maine v. Taylor, 477 U.S. 131 (1986). ↑

  58. . U.S. Const. amend. XI. ↑

  59. . Seminole Tribe of Fla. v. Florida, 517 U.S. 44, 72–73 (1996). ↑

  60. . See Cent. Va. Cmty. Coll. v. Katz, 546 U.S. 356, 377–80 (2006) (holding that in the plan of the Convention the states agreed not to assert sovereign immunity in “Laws on the subject of Bankruptcies”); PennEast Pipeline Co. v. New Jersey, 594 U.S. 482, 499–506 (2021) (concluding states surrendered any immunity from the federal eminent domain power, including when delegated to private condemners); Torres v. Tex. Dep’t of Pub. Safety, 597 U.S. 580, 589–99 (2022) (recognizing that states agreed their sovereignty would yield where Congress exercises its war powers). ↑

  61. . But see, e.g., Suzanna Sherry, Essay, States Are People Too, 75 Notre Dame L. Rev. 1121 (2000). ↑

  62. . Alden v. Maine, 527 U.S. 706, 750 (1999) (“Underlying constitutional form are considerations of great substance. Private suits against nonconsenting States—especially suits for money damages—may threaten the financial integrity of the States.”). ↑

  63. . Id. at 728 (“[S]overeign immunity derives not from the Eleventh Amendment but from the structure of the original Constitution itself.”). We should add here the Court has also shown itself willing to undertake significant doctrinal gymnastics in order to come up with a rough balancing of rights and interests in this area. For example, sovereign immunity has been interpreted broadly to protect states, but the Court has developed the Ex parte Young exception in order to protect citizens from ongoing violations that the Court’s expansive interpretation of sovereign immunity would otherwise seem to allow. See, e.g., id. at 747 (“In particular, the exception to our sovereign immunity doctrine recognized in Ex parte Young, 209 U. S. 123 (1908), is based in part on the premise that sovereign immunity bars relief against States and their officers in both state and federal courts, and that certain suits for declaratory or injunctive relief against state officers must therefore be permitted if the Constitution is to remain the supreme law of the land.”). ↑

  64. . City of Boerne v. Flores, 521 U.S. 507, 520 (1997). ↑

  65. . Bd. of Trs. v. Garrett, 531 U.S. 356, 376 (2001) (Breyer, J., dissenting). ↑

  66. . For a powerful critique see, for example, William W. Buzbee & Robert A. Schapiro, Legislative Record Review, 54 Stan. L. Rev. 87 (2001). ↑

  67. . Garrett, 531 U.S. at 372–74 (noting it is “entirely rational [and thus not a violation of the Equal Protection Clause] . . . to conserve scarce financial resources”). ↑

  68. . Nev. Dep’t of Hum. Res. v. Hibbs, 538 U.S. 721, 738 (2003) (“We also find significant the many other limitations that Congress placed on the scope of this measure.”). ↑

  69. . We also note that one may object to the Court’s handling of the analysis of the rights, and, in fact, we do because we would use a proportionality analysis as to the underlying right. ↑

  70. . Note that, due to space constraints, this Article mostly does not address the special interpretive questions raised by the Sixteenth Amendment. For discussion of the Sixteenth Amendment’s original meaning and its implications for modern tax debates, we direct readers to John R. Brooks & David Gamage, The Original Meaning of the Sixteenth Amendment, 102 Wash. U. L. Rev. 1 (2024). ↑

  71. . For discussions of these issues, see, e.g., David Gamage, John R. Brooks & Edward J. McCaffery, Moore Questions, Some Answers: Fixing the Personal Tax System Despite Constitutional Constraints, 28 Fla. Tax Rev. 381, 403–10 (2025) (surveying mark‑to‑market, wealth‑tax, and other reforms and their constitutional constraints). ↑

  72. . Daniel Hemel, Formalism, Functionalism, and Nonfunctionalism in the Constitutional Law of Tax, 2024 Sup. Ct. Rev. 327. ↑

  73. . Bruce Ackerman, Taxation and the Constitution, 99 Colum. L. Rev. 1, 6–10 (1999); Calvin H. Johnson, Apportionment of Direct Taxes: The Foul-Up in the Core of the Constitution, 7 Wm. & Mary Bill Rts. J. 1 (1998). ↑

  74. . John R. Brooks & David Gamage, Taxation and the Constitution, Reconsidered, 76 Tax L. Rev. 75 (2022). ↑

  75. . Erik M. Jensen, The Taxing Power, the Sixteenth Amendment, and the Meaning of “Incomes,” 33 Ariz. St. L.J. 1057, 1076–77 (2001). ↑

  76. . Moore v. United States, 602 U.S. 572, 644 (2024) (Thomas, J., dissenting). ↑

  77. . David M. Schizer & Steven Gow Calabresi, Wealth Taxes Under the Constitution: An Originalist Analysis, 77 Fla. L. Rev. 1401 (2025). ↑

  78. . 49 U.S.C. § 11501(b). ↑

  79. . Moreover, as we will discuss further below, to the extent that the apportionment requirement is viewed as an in-effect insurmountable barrier, Congress would then be effectively prohibited from levying a tax on such property regardless of whether or not it was uniform. ↑

  80. . We of course acknowledge that there are differences between the taxing power and regulatory powers, and so there may be valid reasons for a lack of complete symmetry. For instance, the Origination Clause (requiring that taxes originate in the House of Representatives, not the Senate) applies only to taxes, and not regulations; but this limitation is justified on political economy grounds related to separation of powers and the allocation of authority within Congress between the House and Senate, and not on the fiscal federalism concern of protecting state fiscal interests. ↑

  81. . Brooks & Gamage, supra note 72, at 150–52 (discussing the Warren and Sanders wealth‑tax proposals and associated constitutional issues). ↑

  82. . See Gamage et al., supra note 69, at 404–09 (discussing “buy, borrow, die” and design options to address realization‑based avoidance). ↑

  83. . And even were states to return to levying such taxes, the overlap here would be no worse than for other existing taxes levied at both the federal and state levels. See David Gamage & Darien Shanske, Tax Cannibalization and Fiscal Federalism in the United States, 111 Nw. U. L. Rev. 295, 304–09 (2017) (explaining cannibalization across federal and state tax bases and ways to address this). As discussed further below, this differs from real and personal property taxes because such property must exist in specific geographic locations, by contrast to intangible property which lacks similar physical locational ties. ↑

  84. . Brooks & Gamage, supra note 72. ↑

  85. . See supra Section I.C. ↑

  86. . We think that analysis too should be based on proportionality review, though not FFPR because of the different interests. ↑

  87. . U.S. Const. art. I, § 8, cl. 1. ↑

  88. . 462 U.S. 74 (1983). ↑

  89. . Nelson Lund, Comment, The Uniformity Clause, 51 U. Chi. L. Rev. 1193, 1193 (1984). ↑

  90. . 112 U.S. 580, 594 (1884). ↑

  91. . 178 U.S. 41, 106 (1900). ↑

  92. . Id. ↑

  93. . See id. at 83–84 (rejecting argument that progressive rates violated uniformity). ↑

  94. . Lund, supra note 87, at 1194, 1217–18. ↑

  95. . Id. at 1222. ↑

  96. . United States v. Ptasynski, 462 U.S. 74, 85 (1983). ↑

  97. . Id. at 78, 85–86 (discussing “neutral factors” and “unique climatic and geographic conditions”). ↑

  98. . 1 Joseph Story, Commentaries on the Constitution of the United States: with a Preliminary Review of the Constitutional History of the Colonies and States Before the Adoption of the Constitution 683 § 957 (Thomas M. Cooley ed., 4th ed. 1873). ↑

  99. . Lund, supra note 87, at 1217–19. ↑

  100. . See supra Section I.B. ↑

  101. . See H.R. Rep. No. 96-817, at 103 (1980) (Conf. Rep.). ↑

  102. . Ptasynski, 462 U.S. at 78–79, 78 n.7. ↑

  103. . Our analysis of Ptasynski in this Section is partly inspired by Hemel’s treatment, although our conclusions differ. See Hemel, supra note 70, at 329, 341 (describing Ptasynski as “the opposite of hypertextualist formalism” because the Court “excused Congress’s facial violation of the Uniformity Clause’s plain text,” and observing that “[s]ince lawmakers almost always will be able to cite some economic rationale for geographic differentiation, Ptasynski effectively renders the Uniformity Clause nugatory”). ↑

  104. . Ptasynski, 462 U.S. at 77 n.5 (noting less than 20 percent of Alaska’s oil production was exempt). ↑

  105. . Our analysis here parallels that of whether states can tax out-of-state firms under the DCC. The parallelism is deliberate and we think a major strength of our approach. ↑

  106. . 157 U.S. 429 (1895), vacated on reargument, 158 U.S. 601 (1895), superseded by constitutional amendment, U.S. Const. amend. XVI, as recognized in Moore v. United States, 602 U.S. 572 (2024). ↑

  107. . Brooks & Gamage, supra note 72, at 98–104. ↑

  108. . Eisner v. Macomber continued this jurisprudential approach with respect to the specific income tax provision being challenged. 252 U.S. 189 (1920). ↑

  109. . 165 U.S. 194 (1897). ↑

  110. . Conor Clarke & Ari Glogower, Apportioned Direct Taxes, 79 Tax L. Rev. (forthcoming 2026) (manuscript at 3–16), https://papers.ssrn.com/sol3/papers.cfm?abstract_id=5314120 [https://
    perma.cc/4J26-TR5E] (surveying the 1798, 1813, 1815/16, and 1861 Direct Tax Acts and applications to land/real estate and enslaved persons). ↑

  111. . Id. ↑

  112. . Salmon P. Chase, Report of the Secretary of the Treasury on the Finances, S. Exec. Doc. No. 37-2, at 10 (1st Sess. 1861). ↑

  113. . Brooks & Gamage, supra note 72. ↑

  114. . Clarke & Glogower, supra note 108 (manuscript at 15, 57–65) (introducing the “Sum Certain” and analyzing why this design feature creates fundamental implementation difficulties). ↑

  115. . David Gamage, Preventing State Budget Crises: Managing the Fiscal Volatility Problem, 98 Calif. L. Rev. 749 (2010). ↑

  116. . Id. ↑

  117. . As an aside, it is worth noting here that historically, apportionment may have originated as a budgeting device: a sum certain fixed ex ante to discipline the work of assessors and collectors. Clarke and Wiedenbeck describe the mechanism as having a “reasonable purpose and function,” akin to a quota that constrains local discretion—“not a foolish one.” Conor Clarke & Peter Wiedenbeck, The Original Function of Tax Apportionment, 188 Tax Notes Fed. 1215, 1222 (2025) (“[T]he original mechanism was not a foolish one.”); id. (explaining apportionment’s budget‑like role to discipline local assessment). ↑

  118. . Brooks & Gamage, supra note 72, at 103. ↑

  119. . Clarke & Glogower, supra note 108 (manuscript at 47–52) (reporting approximately $28 million collected of $34 million apportioned across the five statutes, with long collection tails). ↑

  120. . Id. ↑

  121. . Brooks & Gamage, supra note 72, at 102–03, 120–25. ↑

  122. . Brooks & Gamage, supra note 72, at 138–41. ↑

  123. . Id. at 93–94, 100, 106–08. ↑

  124. . Id. at 102–03. ↑

Consumption Taxes and the Constitution

Posted on by Brian Galle
Galle_Consumption Taxes and the ConstitutionDownload

Abstract

In the aftermath of Moore v. United States, there has been a modest rise in interest in U.S. consumption taxes, not only for revenue raising but as a response to inequality. This Article argues that these consumption tax proposals are not likely to be a satisfactory response to inequality, even if they may have other features to recommend them for more limited purposes. For example, to achieve inter-temporal neutrality, a cash-flow consumption tax requires one of three other conditions: (1) Taxpayers derive no utility from wealth or investment; (2) all utility from wealth or investment is taxed as imputed income as it is “consumed”; or (3) taxpayers receive no deductions for investments that provide consumption value. I argue that violations of condition 1 are large and important to household decision-making, especially among the very wealthy, while condition 3 is not administratively achievable in a world where condition 1 is widely violated. It is also well-known that a cash-flow consumption tax must tax borrowing.

Consumption taxes thus must likely tax both borrowing and imputed income to function, but unfortunately, both these requirements face many of the same constitutional questions that critics raise with respect to wealth and mark-to-market taxes. Taxes on imputed income closely resemble, in both operation and potential administrative difficulties, a tax on wealth. District court opinions following Eisner v. Macomber held that cancellation of indebtedness income was outside the Sixteenth Amendment definition, and there has been similar debate at times about the tax treatment of embezzlers.

In short, it appears that consumption taxes do not offer an easy solution to contemporary inequality and would carry much the same constitutional risk as proposals that directly address the problem.

Introduction

In the first half of 2025, U.S. tax policy lurched unexpectedly in a new direction. At the same time that traditional income, corporate, and estate taxes were slashed by more than $3.5 trillion, the administration imposed large new tariffs that it claimed would potentially generate trillions in replacement revenue.[2] As of this writing the legal fate of many of those tariffs is uncertain, but the larger policy question remains: Should the U.S. continue to move towards “consumption” taxes, such as tariffs, while continuing to whittle away at the tax burden on savings and investment?

Recent legal developments at the Supreme Court arguably offer a tailwind for the consumption-tax endeavor. In its 2024 decision in Moore v. United States, the Court suggested that taxes on investments might be unconstitutional if imposed at a time other than when the investment property is sold.[3] Yet a system that depends on sales is highly vulnerable to gaming and avoidance by wealthy households who can afford the luxury of waiting to cash in on their investment proceeds.[4] The Court’s decision seems to potentially take off the table important alternatives that might address this problem, such as annual taxes on wealth. It might seem, then, that a fairer and more progressive system built using only instruments like tariffs—if one could be constructed—is now more likely to survive judicial scrutiny than an approach incorporating wealth taxes.

Some commenters, for instance, note that a value-added tax (VAT) would function as a tax on existing wealth, and would clearly be an “excise” tax that would not be subject to constitutional limits.[5] Others suggest that difficulties in taxing capital income might be a reason to move towards a cash-flow consumption tax (CFCT) with progressive rates, which resembles an income tax with deductions for savings but an income-inclusion for borrowed funds.[6] A CFCT can be collected either at the individual or firm level.[7] In the past, commentators have also suggested systems in which only wages are taxed, sometimes paired with various forms of entity-level tax on businesses to achieve greater progressivity (sometimes called the “X tax”).[8]

This Article argues that these consumption tax proposals are not likely to be a satisfactory response to inequality, even if they may have other features to recommend them for more limited purposes. First, it argues that the CFCT is the most economically appealing of the various options. While a VAT may have considerable revenue potential, and may even be able to raise some funds efficiently and somewhat progressively when paired with rebates or progressive spending programs, it is ineffective as a tool of redistribution at the top. A VAT is a wealth tax only over many generations. Further, in a world today where very wealthy households get enormous personal satisfaction simply from owning and wielding their wealth, the VAT would miss a large portion of rich families’ consumption and indeed would distort their choices away from purchases and towards wealth accumulation.

While the CFCT can achieve some degree of redistribution for top earners, it also has important limitations, and I argue that any realistic instantiation of a CFCT will probably fail to achieve the tax’s key neutrality goals. That is, the strongest traditional argument for a CFCT is that it supposedly equalizes the cost of consumption across time periods, leaving households indifferent about whether to spend or save in any given period.[9] It’s well-known that this claim holds only if borrowing is taxed as income. CFCT proponents also recognize that a CFCT must satisfy one of three other key requirements: (1) Taxpayers derive no utility from wealth or investment; (2) all utility from wealth or investment is taxed as imputed income as it is “consumed”; or (3) taxpayers receive no deductions for investments that provide consumption value. I argue that violations of condition 1 are large and important to household decision-making, especially among the very wealthy, while condition 3 is not administratively achievable in a world where condition 1 is widely violated. A CFCT thus has to tax both borrowing and imputed income to function.

Unfortunately, both these requirements face many of the same constitutional questions that critics raise with respect to wealth and mark-to-market taxes.[10] Even if condition 2 were administrable, it is unclear whether courts would consider imputed income to be within the original (or other) meaning of the Sixteenth Amendment, the provision at issue in the Moore case. Imputed income from owner-occupied housing was a common feature of world income-tax systems and was the law in the state of Wisconsin when the Sixteenth Amendment was adopted in 1913. Taxes on imputed income do not seem to accord with a rule that property gains can only be taxed at sale, however. Even if imputed income from housing were permitted as a sort of grandfathered exception, spending-period neutrality would also require a tax on many other sources of imputed income, especially the exercise of political power and influence. Such a tax would closely resemble, in both operation and potential administrative difficulties, a tax on wealth.

Borrowing, too, has Moore troubles. District court opinions in the early history of the modern income tax held that new indebtedness was outside the Sixteenth Amendment definition of income, and the Court seemed to initially agree, before reversing course without much explanation. In the 1960s, the Court similarly lurched back and forth about whether embezzlers have taxable income, with some justices again asserting that embezzled funds are not “income” in the constitutional sense, largely for the same reasons that early courts had found debt not to be taxable. Though these questions are thus technically settled law, they offer a path for the current Court to raise questions about whether a borrower can really have taxable “income” as a result of going into debt.

In short, it appears that consumption taxes do not offer an easy solution to contemporary inequality and would carry much the same constitutional risk as proposals that more directly address the problem. This does not mean surrender to the problems of an income-tax system that taxes only at sale. In other work, I argue that “retrospective” taxes that can mimic the economic impact of a wealth tax are likely the most appealing option.[11]

I. Background: Taxing the Savings of the Ultrarich

One of tax policy’s most enduring debates is over whether tax systems should aim to burden investments and other wealth accumulation, or whether instead a tax system should solely draw on what households actually spend. This latter approach is usually called a “consumption tax.” The most familiar example is a simple sales tax, but there are a number of other versions, as we will see.

The basic intuition in favor of consumption taxes over tax systems that would burden savings rests on the claim that we want to minimize the ways in which tax law changes private behavior. A tax on savings, the argument goes, changes households’ decisions about when to spend their money.[12] A system that includes a tax on savings hits households twice: once when they earn money in the first place, and then again when they invest it successfully.[13] As a result, money spent out of invested dollars faces a higher effective tax rate than money that is spent immediately. Over long periods of time, in particular, the effective rate even for a modest tax on investments can be very substantial due to compounding.[14] Since it will be cheaper to spend now than later, these effects are said to encourage present consumption and discourage savings.[15]

As I develop at more length elsewhere, research over the past two decades has undercut what once was a fairly broad consensus behind consumption taxes.[16] The claim that taxing savings is more economically damaging than consumption taxation rests on a number of factual assumptions, some of which do not seem to hold in many cases. Even if the predictions of the consumption-tax models prove true, other factors may weigh more strongly in favor of taxing savings anyway. For instance, the ability to accumulate savings, especially in massive quantities, may be the best marker we have for a household’s ability to pay tax.

Another reason to tax wealth accumulation, I have argued, is because of its power to deliver unmatched social influence.[17] Today, massive wealth grants its owners the ability to shape both markets and the marketplace for ideas. With those tools, they can readily achieve personal or political goals that few others in society can. That fact has several key implications for tax system design. What I want to focus on here is the inference that sufficiently large stores of wealth supply their own “consumption”: the power to get things the owner desires without even spending the funds. Traditional consumption taxes, such as the sales tax, do not reach this form of consumption.[18]

Unfortunately, it is difficult to effectively tax the wealth of the very rich in the U.S. today because of our reliance on the realization principle.[19] Realization is simply the convention under which we only tax increases in wealth at the time of a sale (or “other disposition”).[20] Households rich enough to have the luxury of waiting to sell appreciated assets can thus readily delay tax or even eliminate it.[21] If we tried to reduce inequality by raising tax rates on investment gains, many wealthy households would likely respond simply by realizing less or realizing later.[22] In other work, therefore, I examine ways of taxing wealth without relying on the realization principle.[23]

II. Realization and the Constitution

Recent legal developments might complicate the argument against consumption taxes. In 2024, the Supreme Court decided Moore v. United States, a case that commenters have read as raising serious questions about whether a realization-based tax system is constitutionally required.[24] If realization is required, taxing investment gains looks much more difficult. Perhaps, then, Moore tips the policy scales back towards consumption taxes, by making them not only economically but also legally appealing. To assess this possibility, let’s first review what the Constitution and courts have had to say about taxation in the past, then dig into Moore and its implications.

A. Historical Background

The U.S. Constitution provides that “direct Taxes shall be apportioned among the several States . . . according to their respective Numbers . . . . No Capitation, or other direct, Tax shall be laid, unless in Proportion to the Census . . . .”[25] This rule of “apportionment” means that any tax that is classified as “direct” has to collect revenue pro rata by state population.[26]

As James Madison famously noted, the Constitution’s drafters did not offer a precise definition of what the Constitution meant by the term “direct” tax.[27] An early Supreme Court decision in 1796, which was both argued and decided by men who had drafted the Constitution, held that there were very few taxes that would count as “direct” for constitutional purposes.[28] While not all the justices wrote to explain their views, the Court agreed that a tax on the use, rather than mere ownership, of carriages was not “direct.”[29] Between 1869 and 1894, the Court would hold that line several more times, including in 1881 by rejecting the argument that the Civil War income tax was unconstitutional as an unapportioned direct tax.[30]

But the Court then shocked the country by deciding, in the case Pollock v. Farmers’ Loan & Trust Co., that the 1894 income tax bill indeed was an unconstitutional, unapportioned direct tax.[31] Taxes on the ownership of both land and other forms of property are direct, the Court decided, and since income is “derived from” property, it too must be a direct tax.[32] Widespread anger and disbelief followed.[33]

In response, Congress drafted, and the states then ratified, the Sixteenth Amendment, which went into effect in 1913.[34] The Amendment aimed directly at Pollock’s holding, providing that Congress has the power to collect income taxes “from whatever source derived” without apportionment. That is, following the Sixteenth Amendment, there are two ways for a tax to skip the constitutional apportionment requirement. First, the tax needs no apportionment if it is not a “direct” tax imposed solely because of the ownership of property.[35] Second, even if the tax is direct, it doesn’t have to be apportioned if it’s a tax on “income.”[36]

In the wake of the Amendment, only one tax provision has ever flunked the apportionment test. That provision was an income-tax rule that treated pro rata stock dividends as part of the recipient’s income. The Court ruled in its 1920 decision in Eisner v. Macomber that such stock dividends are not “income” and so are not within the scope of the Sixteenth Amendment.[37] Although the opinion is fairly cryptic, commentators concluded that the core rationale was that, because a pro rata stock dividend doesn’t change the recipient’s economic wealth (it’s just a stock split), the taxpayer “has not realized or received any income in the transaction.”[38] Just what that meant wasn’t clear. The next year, in applying the Macomber precedent, the Court said that it required that the taxpayer get “something of exchangeable value produced by . . . his investment . . . severed from it and drawn by him for his separate use.”[39] Somewhat similarly, an individual had income under these rules if they received “an essentially different thing” in exchange for their existing property.[40]

This is the proposition for which Macomber has long been known: An income tax can only be defined by “realized” income, such as from a sale or cash dividend, that provides the taxpayer with something of “exchangeable value” that is “severed from” his underlying investments.[41] Taken at face value, it would seem to rule out an unapportioned tax solely on annual changes in the value of unsold property.

The Court pretty quickly backed away from Macomber. By the early 1940s, a series of cases had found income in situations, such as cancellation of prior debts or the return of a rental property to its owner, that could not plausibly meet the Macomber definition of realized gains.[42] That led academics, and in 1943 three justices, to declare that Macomber was dead.[43] The Court’s majority ducked the issue by ruling on statutory grounds, but agreed that these later cases had “undermined . . . the original theoretical bases” of Macomber.[44] Mark-to-market provisions imposing tax at times other than realization slowly proliferated in the Internal Revenue Code and consistently were upheld by U.S. courts of appeals.[45] In the 1990s the Court would call the concept of realization a matter of “administrative convenience,” defer to the IRS’s view of what it meant, and imply strongly that Congress could change it if Congress were so inclined[46]—hardly what you’d expect if realization were a core aspect of the constitutional definition of income.

B. The Moore Case

By 2017, essentially everyone but one or two academic gadflies thought that the realization principle was dead, as a constitutional matter. Most readers are probably familiar with what happened next: Congress enacted a tax on U.S. owners of active foreign businesses, with a taxable amount based on the profits of the business that had not yet been subject to U.S. tax.[47] Some individuals who paid the tax challenged it as outside the Sixteenth Amendment definition of “income” because, they said, it represented a tax on unrealized gains under Macomber.

But the Supreme Court majority decided the Moore case not by resurrecting Macomber’s realization rule but instead by claiming Macomber did not apply to the taxpayers at all.[48] In an opinion by Justice Kavanaugh, the Court held that whether or not the Sixteenth Amendment definition of “income” requires realization, there in fact had already been a realization event for the Moores: when their corporation sold products and earned profits.[49] Thus, whether or not the Constitution in effect demands realization, taxing an equity owner would meet that demand, assuming the business entity itself has realized income.

Even so, the Court also signaled that it did not view realization as a dead letter. Moore holds that the government can define an individual’s income to include the untaxed profits of a business entity in which the individual holds an equity stake.[50] That holding allowed the Court to take a pass on determining whether there is any constitutional realization requirement. The Court repeated several times, however, in several different ways, that a realization requirement could be a constitutional obstacle to wealth or mark-to-market taxes, and it was not deciding those questions.[51] Four justices argued that realization was constitutionally required.[52]

C. The Meaning of Moore

Where, then, does Moore leave efforts to tax unrealized wealth? In part the answer depends on what constitutional scholars sometimes call a “level of generality” problem.[53] As with shareholder-level taxation of corporate profit, there is a long history of mark-to-market provisions in the U.S. income tax, dating back to the Civil War.[54] Before 1913, farmers, insurance companies, businesses holding investment assets, and even homeowners in Wisconsin paid income tax based on unrealized gains or losses.[55] In any future challenge, the government could readily point to these provisions as evidence that at the time of the Sixteenth Amendment, realization was hardly a universal component of “income.”

Conceivably, though, Justice Kavanaugh might frame the historical question differently. He might ask, “Is there a long historical tradition of broad-based income taxation on a mark-to-market basis, as opposed to certain small special applications?” If that were the question, the answer would be “no.” On the other hand, over the last fifty years, mark-to-market rules have evolved into an essential set of anti-abuse devices, particularly with respect to overseas assets and financial instruments.[56] If these were weakened, there would likely be a devastating run on U.S. mutual funds. Yet there are ways out of that dilemma for the Court. A rule that was framed not as “all mark-to-market rules have historical pedigree” but instead less generally as “narrowly applied anti-abuse rules have historical pedigree” would let the Court keep in place these economically vital provisions without blessing broad new efforts to tax unsold wealth. This framing would leave the majority justices with the discretion to decide which favored provisions count as permissibly narrow and which disfavored rules are impermissibly broad.

In short, there now is a fair bit of constitutional uncertainty about whether realization is necessary for an “income” tax. Narrow provisions that rely on mark-to-market principles in support of other income-tax rules might be safe, but more ambitious efforts to rearrange the timing of income taxation for large swathes of untaxed gains might not. Defenders of these provisions have yet more solid arguments to offer, such as the possible suggestion in Moore that, since Pollock was wrongly decided, income taxes are excises, not “direct” taxes, and so do not need to be apportioned.[57] But these arguments are as yet untested.

III. Value-Added Taxes

What, then, of consumption tax alternatives? Most countries, with the notable exception of the United States, impose a value-added tax.[58] The VAT resembles the U.S. retail sales tax, but it allows retailers to take a deduction for the costs of their inventory.[59] For example, a retailer who sells $5 million worth of products but paid $4 million to acquire those products would be taxed on $1 million in net sales. There might be an argument that after Moore the U.S. should give more thought to introducing a VAT-type tax, as a classic example of an “indirect” tax that is exempt from the apportionment requirement.

A VAT can be a reasonably effective component of a fair tax system, as thoroughly explored in a careful review by a blue-ribbon UK commission in 2011.[60] It can be efficient to replace some income-tax revenue with a retail consumption tax, because (up to a point) that substitution can swap out highly distortive top income rates for relatively less distortive and lower-rate VAT charges.[61] While that could be true of any tax imposed at the register rather than the payroll, VATs outperform the simpler retail sales tax because they avoid multiple layers of tax on business inputs and incentivize each party in the supply chain to report transactions, facilitating enforcement.[62] This efficiency case is easier to make if the VAT treats all consumption equally, such as by fully taxing services and essentials, though that is uncommon in global VAT systems.[63]

Nonetheless, a VAT likely cannot meaningfully address massive inequality at the top because it does not raise much money from the wealthiest taxpayers.[64] A VAT is a flat tax, so that even with a large exemption amount or rebate it is quite regressive at higher income levels. Although a newly enacted VAT does in theory impose some tax burden on existing stores of wealth, it would take hundreds of years before extremely wealthy households paid any meaningful share of their wealth in VAT.

The ultra-wealthy may also expose an important gap in even the most broad-based VAT system. As I argue in more depth elsewhere, U.S. wealth offers routes to power and personal satisfaction without any express transactions or purchases—even if one counted campaign contributions as taxable transactions.[65] In technical economic lingo, wealth is “in the utility function” for the wealthy, even with zero identifiable consumption as such.[66]

The fact that vast wealth provides consumption value without any direct spending has two key implications, both bad for the operation of a VAT. For one, it means that a VAT will be even more regressive, because it will tax the ways that most households use their money but fail to tax the unique influence that the very wealthiest can wield without spending. And it means that the wealthy will prefer influence over outright expenditures, since influence is not taxed. Thus, not only would a VAT fail to redistribute wealth at the top, but it would also push wealthy households to use their wealth for their own aggrandizement.

My point is therefore not that the VAT has no important tax policy uses but rather that it is not an effective tool for achieving redistribution at the top of the income range, and hence for addressing the core of modern inequality. Indeed, not only does the VAT fail to change the distribution of wealth among the very rich, but it also fails the supposed premise of a consumption tax, which is to leave taxpayers indifferent between spending and saving. The VAT could actually bend some top households towards further accumulation.

IV. The Wage Tax

Wage or “labor income” taxes offer a potential alternative path to a VAT for advocates of consumption taxes. Suppose every dollar a household earns is either spent (consumed) or saved. If so, Henry Simons famously argued, an income tax is just the sum of a tax on consumption plus a tax on savings.[67] With a little algebra, it’s easy to then show that a tax on labor income—all income, less income from savings—is a tax on consumption. We’ll see this equivalence turns on some key assumptions that are not always satisfied. For now, though, think of a wage tax as a way of taxing consumption through households’ paychecks rather than at the register.

A key advantage of collecting a consumption tax through paychecks is that the wage tax is much easier than a VAT to implement with progressive rates. That is the central design element in the “X tax” proposal from David Bradford, later further developed by Robert Carroll and Alan Viard.[68] That is, a wage tax can be made to look just like the familiar income tax but with an exemption for savings and investment. Top earners might pay tax at a 37 percent rate, each household can get an exemption amount or allowances for the cost of supporting children or elderly parents, and so on. These features would make the wage tax potentially rather more progressive than a VAT alone.

At first glance a wage tax also looks to have constitutional advantages over systems that might seek to tax investment returns. After all, if the Constitution limits “income” to mean realized income, there seems little doubt that salary paid to laborers is realized, the “fruit” of any “tree” of business profits (in Macomber’s awkward agricultural metaphor).

A. Defining “Wages”: Economic and Legal Problems

This basic case in favor of the wage tax falls apart because it can be quite challenging to identify when labor income is actually paid, as we now know from more than 100 years of experience.[69] Carried interest is the famous example, but there are many others. In a typical carried interest arrangement, an investment fund manager selects investments for clients, and receives in exchange a right to a share (often 20 percent) of any resulting profits (or profits in excess of some threshold return, such as 8 percent).[70] If all these events transpired in one year, we’d have little difficulty concluding that the profits payments should be taxed as labor income. Current U.S. doctrine instead treats the entire profits interest as an investment asset of the manager, taxable only at capital gains rates and only when the fund eventually realizes gains.[71]

Another version of the same problem is the loophole in the Social Security payroll tax base for self-employed individuals. The Social Security tax is almost a perfect wage tax, imposed on “remuneration for employment.”[72] But self-employed individuals can avoid it by paying out their business earnings as distributions of profits rather than salary.[73] Tax law in theory treats at least a minimal portion of an entrepreneur’s profits as a “reasonable” salary, but commentators all generally agree that the regime does not currently work.[74]

A third prominent set of examples centers around various forms of deferred compensation arrangements, such as stock options, “supplemental executive retirement plans,” and life insurance policies with large embedded investment components.[75] Broadly speaking, these schemes allow workers who do not need immediate cash to convert some of their compensation income into various forms of investment assets, getting the benefits of tax deferral and often a lower tax rate to boot.[76] Individuals who work for themselves always have the option to simply leave wage earnings inside the firm and harvest them through sale of the firm’s equity.[77]

How and when to tax these kinds of earnings is already a fairly agonizing problem under an income tax, where the stakes are relatively low, and a wage tax worsens the problem. With an income tax, the issue is mostly about the appropriate timing and rate to apply. Under a wage tax, though, classifying a payment as investment rather than wages results in full exemption, making each decision more valuable to the taxpayer and costlier for the government. That about guarantees that taxpayers would work even harder to reclassify “wages” as investments, and that both sides would sink more into resolving each dispute.[78]

As other commentators have recognized, this definitional problem suggests that a wage tax likely fails in its basic aspiration to achieve neutrality.[79] Everyone will want to earn (or claim that they have earned) “investment” opportunities, not salary. Presumably a sensible wage tax would treat at least some sales of compensatory equity interests as themselves compensation, but households will see a tax advantage if they can hold off selling “investment” assets longer.[80] And by widening the tax wedge between wages and investment even wider than under the income tax, the wage tax encourages even more wasteful and distortive tax planning.

B. Wage Taxes and the Constitution

The definitional problem also undermines what looked like a solid constitutional argument in favor of a wage tax. Again, it seems straightforward that a cash salary is realized income. But the legal rules for a wage tax regime cannot only tax cash on receipt, because then eventually a larger and larger share of the economy would shift away from cash salary into investments and “investments.” Many potential legal responses to this problem would run quickly into constitutional terra incognita.

To see this, consider the very simple rule courts apply to efforts by the self-employed to evade the Social Security payroll tax. As I mentioned, the IRS has occasionally succeeded in arguing that an individual whose business earns substantial profit, but who reports no wage income, should be deemed instead to have earned a “reasonable” salary.[81] Usually what is reasonable is measured by looking at other similar businesses. But no cash has actually changed hands. Has the entrepreneur realized income, in the constitutional sense, when all of the relevant earnings happen only at the corporate level?

Though there is a constitutional shortcut here in some cases, that shortcut will likely fail for many others. As we saw earlier, the Court faced a quite similar question in Moore and resolved it by holding that the realized income of the business could be attributed to the individual investor.[82] That is all well and mostly good for business owners. Presumably the Social Security “reasonable salary” approach would be constitutional under the same attribution theory with which the Court upheld the MRT, though it might run aground in years in which the underlying business lost money.[83] What, though, about Shohei Ohtani, whose $700 million contract with the Dodgers defers 90 percent of the payments until 2034?[84] What of CEOs who own no part of their company but instead stand to profit from “restricted stock units” that replicate the economics (but not governance rights) of an investment in the company?[85] Could a wage-tax system constitutionally treat any of these promises as wages in a year before they were paid?

To be clear, my argument is not that taxing Shohei or restricted-stock units prior to full payment is certainly unconstitutional but rather that these are precisely the same issues that confront a tax on non-compensatory investment income. Simply exempting investment income, or offering deductions for savings, does nothing to mitigate the constitutional challenge because taxpayers will constantly press the boundaries of the legal definition of “savings” in ways that will demand something other than simplistic response. There will be enormous pressure to in effect subject many forms of compensation to mark-to-market treatment, for the same reason that today there is pressure to subject all other investments to that treatment. While some of these approaches might survive as narrow anti-abuse rules, that path is inherently uncertain, as the borders of what is permissibly narrow seem entirely within the Court’s discretion. The Constitution is not a reason to move towards a wage tax.

In sum, a wage tax has many unappealing economic features and no redeeming constitutional advantages. To be sure, the most sophisticated versions of a wage tax shore up some of its economic weak spots by combining it with other taxes. The X tax, for instance, adds on a cash-flow business tax. But while adding another tax might offer some complementary economic features, the wage tax component remains a wage tax, with all the legal challenges and resulting tax distortions that defining “wages” brings.

V. A Cash-flow Consumption Tax

A third option for taxing consumption is what I will call the cash-flow consumption tax (CFCT).[86] A CFCT starts with the traditional income-tax base, but the taxpayer can take a full deduction for all unconsumed funds, such as purchases of investment assets. The individual is then taxed on all later gross receipts from the sale or use of the investment.[87] This is the sense in which the tax is based on “cash flow”: All dollars out—other than those used for immediate consumption—reduce tax while all dollars in increase it. Cash flow includes borrowed funds, which the debtor must include in their tax base.[88] The debtor then receives a deduction for any subsequent interest and principal payments.

Even though the CFCT appears to eventually tax investment earnings, the allowance for an upfront deduction has the economic effect of making the effective tax rate on some of those earnings zero.[89] Allowing immediate deductions for all investment expenditures is often known as “expensing.”[90] Expensing is a mistake (in an income tax): It rewards taxpayers who buy equipment instead of renting by granting them deductions immediately rather than over time.[91] Under certain assumptions, the value of this excess reward exactly equals the tax burden imposed on average returns to capital.[92] Two tax wrongs then make a right (for consumption-tax advocates): Through expensing, the CFCT imposes no net tax on investment returns.

But the CFCT does not exempt super-normal returns, sometimes called “economic rents,” such as from monopoly patent rights.[93] This differential treatment is usually presented as an attractive feature of the CFCT. Taxes on rents are thought to be highly efficient, perhaps more efficient than taxes on labor, because they have relatively smaller impact on real economic decisions.[94] By definition, the taxpayer cannot earn super-normal returns through other choices, so taxes are less likely to affect the decision to seek rents. If Effie can earn a 3 percent return normally, or 10 percent by investing in Monopoly Co., it would take a very large tax to get her to abandon her Monopoly Co. position.

A. Defining “Consumption”: Economic and Legal Challenges

A CFCT solves several of the legal (and other) problems of a wage tax. For one, a CFCT does not have to distinguish between wages and capital, which as we saw is also one of the key weak points of the modern income tax. Since all unconsumed funds are omitted from the tax base at the end of a year, the CFCT in effect gives every worker an unlimited IRA or tax-favored pension in which their compensation, of whatever form, can be tax-deferred as long as it is unspent. The CFCT therefore also does not need to rely on approximations of wage income that might be subjected to constitutional challenge.

Despite these possible advantages over a wage tax, the CFCT also has several debilitating weak points and a good handful of smaller but troublesome question marks. As with the wage tax, the biggest weaknesses end up being a stew of legal boundary-drawing, economic distortions that follow from the boundary difficulties, and then constitutional constraints on what the legal system can do in response.

The most important of these challenges is a CFCT’s limited ability to distinguish consumption from investment. In our modern economy, owners of durable assets often get consumption value from what they own, as in the classic example of a homeowner who gets to live rent-free in the property.[95] If a CFCT allows deductions for purchases of assets that provide consumption value, it will fail in its basic mission because it will be favoring current purchases over later purchases of consumption services and favoring some kinds of consumption (those that can be delivered through durables) over others.

Cash-flow taxes can tackle this issue in one of two basic ways. One of course is by denying deductions for purchases that will provide consumption value.[96] Alternately, the CFCT could allow a deduction initially but then include the consumption value of the asset in income each year.[97] Neither of these approaches works well.

Let’s back up to first get a clearer picture of why a CFCT has to pick one of these two. Suppose that Effie buys ApplianceCo bonds. A CFCT would give her an immediate deduction in the amount of their purchase price. What if she instead buys an ApplianceCo refrigerator, with an expected useful life of ten years? In a sense, the refrigerator isn’t much different from the bond: Durable goods are a form of savings. What Effie has purchased is ten years’ worth of future food-cooling services.

But the CFCT should not provide a deduction for Effie’s refrigerator purchase, assuming she is keeping it in her kitchen at home rather than using it in, say, a restaurant business. We want to tax her consumption, and so Effie should not be permitted to deduct purchases that provide her with consumption value. She would not get a deduction for the costs of renting an at-home refrigerator, no matter when she paid for it. So, too, she cannot get a deduction for buying the fridge, even though it will last beyond the current taxable year. Giving her an immediate deduction for buying the fridge would be the equivalent, in present-value terms, of giving her a deduction each year for her consumption of personal cooling services.

Another way to look at the transaction is as if the refrigerator were actually a savings account, where the money in the account is withdrawn each year to pay rent. In that case, the CFCT would give her a deduction in the year she puts her money on ice with ApplianceCo. But then each year, as she gradually withdraws those funds to pay ApplianceCo for annual refrigeration services, she would have to include the withdrawal as cash-flow income.

This concept of taxing the rental value of property the taxpayer owns is sometimes known as “imputed income,” and has a long and politically fraught history in the United States.[98] In our imaginary alternative transaction, the tax on Effie’s annual withdrawals is easy to calculate. We would see each year Effie’s bank statement showing a withdrawal of a certain number of dollars and a payment of that amount in satisfaction of a rental agreement that specified an annual rent. In the real world, though, Effie buys a refrigerator, and we don’t necessarily know what the annual rental value might be.

What if we did neither of these but simply allowed Effie to claim deductions for her refrigerator, her home, or indeed the cost of any asset lasting more than a year? Dollars consumed this year would not be deducted; dollars spent this year for consumption next year would be. In that case, we would be offering Effie a powerful incentive to change what and when she consumes—just the opposite of what a consumption tax is supposed to accomplish.

Contrary to the suggestion in Andrews, this is not just a small side-problem with refrigerators or vacation homes.[99] In an important sense, many of the most valuable assets in our economy provide substantial consumption value in later years. Andrews focuses, somewhat dismissively, on rare works of art or collectibles that the owner takes pride and pleasure in displaying.[100] Yet as I argue in more depth elsewhere, U.S. wealth accumulation today opens the door to many avenues of social control—the power to get what you want.[101] For instance, media companies, whether traditional or social, can be instruments for advancing the owner’s ideological goals. If nothing else, great wealth offers its holders the opportunity to take satisfaction from the ability to transmit dynastic wealth and power, a lasting family legacy, to future generations.

Thus, rather than making taxpayers indifferent between spending today and tomorrow, the CFCT arguably overcorrects. By ignoring the imputed income from wealth, the CFCT excessively rewards accumulations that deliver these kinds of intangible benefits to their owners.[102] Recent U.S. experience suggests that massive accumulations of wealth and power by a handful of persons with outlier political views have become a central social problem that needs remedying, not worsening.

Once we see that the scope of the imputed income problem is so vast and pervasive, the simple response of denying deductions for durable assets with consumption value no longer seems plausible. When nearly any asset seemingly can offer great consumption value, if accumulated and deployed strategically, then it becomes unclear conceptually how we would categorize some goods as “consumption” and others as “investment.”

Admittedly, these kinds of “utility from wealth” effects might be hallmarks mostly of great wealth, not the everyday savings working households can hold in their retirement accounts. If so, it may follow that a CFCT would apply different rules to different taxpayers. Households with fortunes large enough to grant power over their surroundings today, or the ability to transmit dynastic control, should face a different set of rules in which their wealth accumulations are not exempt from tax.

It appears, then, that a CFCT would struggle to distinguish investment from consumption at the time of purchase, but this leaves the possibility of imposing annual taxes on imputed income. American scholars regularly describe taxing imputed income as impractical or politically impossible, but it’s not quite clear why.[103] Many other countries taxed imputed income from housing at the dawn of the U.S. income tax, and Wisconsin’s forerunner state income tax did so as well.[104] Taxes on imputed income from housing remain a fairly common global feature today.[105]

A simple and roughly accurate imputed-income system would just be the mirror image of what we do today for depreciation. That is, because the purchase price of a consumption good generally should reflect the discounted value of the flow of future consumption, we might take the purchase price of the asset and spread that price out over the expected life of the asset, with an adjustment for the time value of money.[106] Andrews notes that this simple method may fail for long-lived assets, where interest rates or usage value may change during the life of the asset.[107] Taxes on imputed income also pose similar liquidity issues as a tax on unrealized gain. But those are often fairly easy problems to overcome.[108]

B. CFCT and the Constitution

Unfortunately, an annual tax on imputed income faces constitutional questions under present law similar to those that a wealth tax would face. Indeed, perhaps the strongest argument against the constitutionality of a tax on imputed income is that, in form and operation, the two are relatively interchangeable. Imagine that the Court were to hold that taxes on imputed income were within the scope of the Sixteenth Amendment. It would then be fairly easy for architects of a wealth tax to draft a bill that achieves their goals but labels the resulting tax as imposed on the “imputed income” from a broad class of assets. As we have seen, they could even make a plausible argument that simple financial assets create imputed income in large-enough accumulations. This ready equivalence suggests that courts that are hostile to a wealth tax are unlikely to be more welcoming of taxing imputed income.

Precedent and available historical materials probably leave courts with the room to hold that imputed income is not “income” within the meaning of the Sixteenth Amendment. In Eisner v. Macomber, the Court said that income has to comprise “something of exchangeable value proceeding from property, severed from the capital . . . [and] received or drawn by the recipient (the taxpayer) for his separate use, benefit and disposal.”[109] It is unclear whether courts would say that the intangible consumption benefits arising from mere ownership—the satisfaction of owning a rare painting, say—are “severed” from the underlying property or “received by the recipient . . . for his separate use.”[110] After all, by definition imputed income comes from owning the thing and can’t be separated from that ownership.

The Court would later seemingly disavow Macomber’s reliance on the “severance” metaphor, but it’s unclear whether its revised definition is friendlier to imputed income. In the case of Helvering v. Bruun, the Court decided that a taxpayer had income from the expiration of a lease, where the tenant had improved the rental parcel during the tenancy.[111] It rejected an earlier lower-court opinion by the famed Judge Learned Hand, in which Judge Hand argued that such improvements were not taxable because not “severable” from the underlying property.[112] Stanley Surrey, famously, believed that this implied that realization was dead as a constitutional principle.[113]

Unfortunately, it seems at least four current justices, and maybe six, do not share Surrey’s reading, leaving us to have to guess what they believe is left of Macomber today.[114] The plaintiffs in Moore argued that Bruun also noted that income in that case arose “as a result of a business transaction,” the cancellation of the lease.[115] In Bruun, the Court found income from a “profit realized in the completion of a transaction.”[116] What this tells us about realization is uncertain. We know that a transaction (whatever that is) can sometimes be sufficient to create realized income, but not whether it is necessary. Assuming it were necessary, as the Moore plaintiffs asserted, there would be some doubt about whether simply residing in a house or gazing on a favorite artwork could be described as a “transaction.” “Non-material satisfactions,” the Court has said (albeit when interpreting the Code, not the Constitution), “are not taxable as income.”[117]

There is also probably room for debate about whether the Supreme Court would agree that broadly taxing imputed income is consistent with the original public meaning of the Sixteenth Amendment. Again, the state of Wisconsin and a number of other countries taxed imputed income from a personal residence at the time the Sixteenth Amendment was being ratified by the states. In my view this is evidence that the original public meaning of “income” included unrealized income, and thus that Macomber was wrong to say that “income” is limited to realized gains. Suppose, though, that five justices disagree with my view. What would they make of the historical evidence? Perhaps they would simply conclude that imputed income is realized, which would be a good result for CFCT proponents. The justices might, however, also assert that the original meaning of “income” generally requires realization, and that imputed income is unrealized, but that there is a narrow exception to the realization rule for owner-occupied housing. As a possible justification for the narrow exception, the justices might say that the status of imputed income from housing as realized or unrealized was unsettled in 1913, so that the Sixteenth Amendment does not require any particular treatment of housing wealth. That seems a largely unprincipled claim but one that, as a predictive matter, is hard to rule out as a possible outcome.

Nor is imputed income the only constitutional vulnerability for the CFCT. Recall that the CFCT tax base includes borrowed funds. Borrowers must be taxed because the combination of expensing and tax-free borrowing offers taxpayers a return on leveraged investments that is actually better after tax.[118] That is, without a tax on borrowed funds, the CFCT would distort consumption and investment choices, favoring investment over consumption and encouraging debt over equity or retained earnings. That of course defeats the whole point of using a CFCT.

It’s uncertain, though, whether the Court would see borrowing as a realization event. Traditionally, the U.S. income-tax system has not treated borrowing as income, at least when the borrower and lender have agreed on a binding commitment to repay: “When a taxpayer receives a loan, he incurs an obligation to repay that loan at some future date. Because of this obligation, the loan proceeds do not qualify as income to the taxpayer.”[119]

The rule that borrowing is not income is longstanding, though seemingly based on “the meaning of § [61],” not necessarily the Constitution.[120] Still, challengers to a rule taxing borrowing could cite this language at least as shedding some light on the constitutional meaning of “income.”[121]

Historically, the exclusion for borrowing seems to have grown out of courts’ struggle to reconcile an annual income tax with the reality that the ultimate economic outcome of a transaction might be unresolved by the end of the tax year. In the first decade or so of the individual income tax, courts seemed to suggest that borrowing was not taxed because it was uncertain whether the borrower would get to keep the proceeds or instead would have to repay.[122]

Uncertainty about whether the taxpayer would have to repay was the grounds on which the Supreme Court would initially say, in the Wilcox case, that embezzlers did not have taxable income.[123] In his dissent to Wilcox, Justice Burton pointed out that there was also a line of cases in which taxpayers were taxed immediately, even though they faced some risk of having to make a future repayment.[124] Burton would eventually prevail, as a decade later the Court held in the Rutkin case that the decision to impose tax before a final resolution of the underlying repayment obligation was an administrative choice open to Congress and the IRS to resolve, and thus that extortioners can be taxed despite the likelihood they may be caught and forced to repay.[125] As the dissenters noted, that result effectively overruled Wilcox,[126] and the Court made that overruling official in the subsequent James case.[127]

Three justices—Whittaker, Black, and Douglas—dissented from the James decision. They argued that embezzlers were like debtors and that the Court had always at least implicitly treated debts as outside the constitutional definition of income.[128] In particular, they claimed that cases treating cancelled debts as income only made sense if there was an underlying rule in which the initial debt was not taxable.[129]

The James dissenters are not persuasive. It’s true that we wouldn’t need a rule taxing cancellations of debt if the debts themselves were taxed, but that doesn’t mean that both rules have to be part of the Sixteenth Amendment definition of income. Instead, we can think of the COD cases as answering the question: “Supposing that there were a rule of administrative convenience that ignored initial borrowing, would it be constitutional to trigger tax at the time of a later transaction in which that debt were cancelled?”[130] Further, even if it were true that borrowed funds are not Sixteenth Amendment “income,” taxes on them still would not have to be apportioned. Recall that only “direct” taxes are limited by the Constitution; excises and other “indirect” taxes do not have to be apportioned. A tax on bond issuances or other new debt looks like a classic excise tax: a government upcharge on the sale of a financial instrument, though in the case of the CFCT collected from the buyer.[131]

My point then is not that a CFCT would certainly be unconstitutional but instead that there is at least a meaningful amount of risk that courts might see it that way. While Rutkin and James strongly suggest that borrowing can constitutionally be taxed, there is no case that holds that directly. Skeptical judges could cite the standard language about why debts are not part of statutory income and could lean on the James dissenters for their constitutional rationale. They might distinguish Rutkin by saying that criminals who help themselves to someone else’s money are in a different position than borrowers in a consensual relation to the creditor (though it’s unclear exactly why consent matters from a tax perspective).[132] And they might respond to the excise-tax argument by noting that a true excise tax would not have rates that vary with the purchaser’s income (though in other cases the Court has said that taking income into account does not by itself make a tax an income tax).[133]

Ultimately, although there are certainly some tradeoffs, a CFCT is probably the best of the comprehensive consumption tax proposals. It at least solves the fundamental legal puzzle that wage taxes pose. And yet it still faces deep and uncertain legal challenges of its own. It probably would have to tax both imputed income and borrowing, yet both of those routes have serious constitutional doubts.

Conclusion

There isn’t any practical route to taxing only consumption that would still address the fundamental problem of massive top-end inequality. If anything, we’ve seen that starting from the logic of a cash-flow consumption tax, we quickly end up with a tax system that in fact would impose annual taxes on the holdings of the ultrarich. The Constitution does not offer any reasons to conclude otherwise.

  1. * Professor of Law, UC Berkeley School of Law. Segments of this piece appear in more extensive form in a white paper from the Roosevelt Institute titled “How to Tax the Ultrarich.” Thanks for helpful comments and suggestions from Reuven Avi-Yonah, Conor Clarke, Bill Gale, David Gamage, Greg Leiserson, and attendees of presentations at the Annual Meeting of the National Tax Association and the Washington University Law Review’s annual Symposium. I still think “Law Quarterly” sounds cooler. ↑

  2. . Cong. Budget Off., Estimated Budgetary Effects of Public Law 119-21, to Provide for Reconciliation Pursuant to Title II of H. Con. Res. 14, Relative to CBO’s January 2025 Baseline (2025), https://www.cbo.gov/system/files/2025-07/61570-pl119-21-2025 Recon-CLB.xlsx [https://perma.cc/H8JW-4Y4T]. ↑

  3. . 602 U.S. 572, 598–99 (2024). ↑

  4. . Brian Galle, David Gamage & Darien Shanske, Solving the Valuation Challenge: The ULTRA Method for Taxing Extreme Wealth, 72 Duke L.J. 1257, 1270–72 (2023). ↑

  5. . Reuven S. Avi-Yonah, Are We Trapped by Realization?, 188 Tax Notes Fed. 255, 256 (2025); see David Gamage, John R. Brooks & Edward J. McCaffery, Moore Questions, Some Answers: Fixing the Personal Tax System Despite Constitutional Constraints, 28 Fla. Tax Rev. 381, 424–27 (2025) (noting possibility of “supplementing” income tax with VAT in response to constitutional challenges). ↑

  6. . See Gamage et al., supra note 4, at 421–22 (noting this is the solution preferred by Prof. McCaffery). ↑

  7. . See Alan Auerbach, Michael P. Devereux, Michael Keen & John Vella, Destination-Based Cash Flow Taxation 11–15 (Oxford Univ. Ctr. for Bus. Tax’n, Working Paper 17/01, 2017) (analyzing a cash-flow tax imposed on business entities). ↑

  8. . E.g., David F. Bradford, A Tax System for the Twenty-First Century, in Toward Fundamental Tax Reform 11, 13–16 (Alan J. Auerbach & Kevin A. Hassett eds., 2005). ↑

  9. . For discussion of these points, see infra Part V. ↑

  10. . I discuss the points in this paragraph infra Section V.B. My arguments about the constitutionality of a CFCT are distinct from the claim by Erik Jensen that such a tax would not be a tax on “income.” Erik M. Jensen, The Apportionment of “Direct Taxes”: Are Consumption Taxes Constitutional?, 97 Colum. L. Rev. 2334, 2413 (1997). As best I can tell, the basis of that argument is that the CFCT omits too many elements of what Jensen considers to be income “in any generally accepted sense.” Id. at 2410–12. I have earlier explained how that argument is both tautological and otherwise unpersuasive. Brian Galle, The Taxing Power, the Affordable Care Act, and the Limits of Constitutional Compromise, 120 Yale L.J. Online 407, 417–19 (2011). ↑

  11. . Brian Galle, How to Tax the Ultrarich 11–22 (2026). ↑

  12. . Joseph Bankman & David A. Weisbach, The Superiority of an Ideal Consumption Tax over an Ideal Income Tax, 58 Stan. L. Rev. 1413, 1422–27 (2006). ↑

  13. . Id. at 1422. ↑

  14. . Alan Auerbach, Tax Reform in the Twenty-First Century, in Fundamental Tax Reform: Issues, Choices, and Implications 27, 30–31 (John W. Diamond & George R. Zodrow eds., 2008). ↑

  15. . Id. ↑

  16. . Galle, supra note 10, at 53–57. ↑

  17. . Id. at 31–40. ↑

  18. . Id. at 65. ↑

  19. . Galle et al., supra note 3, at 1268–96. ↑

  20. . I.R.C. § 1001. ↑

  21. . Greg Leiserson, Taxing Wealth, in Tackling the Tax Code: Efficient and Equitable Ways to Raise Revenue 89, 93 (Jay Shambaugh & Ryan Nunn eds., 2020). ↑

  22. . Galle, supra note 10, at 42–43. ↑

  23. . Id. at 111–27. ↑

  24. . 602 U.S. 572, 584 (2024); see sources cited supra note 4. ↑

  25. . U.S. Const. art. I, § 2, cl. 3; U.S. Const. art. I, § 9, cl. 4. ↑

  26. . Calvin H. Johnson, Fixing the Constitutional Absurdity of the Apportionment of Direct Tax, 21 Const. Comment. 295, 296 (2004). ↑

  27. . 2 The Records of the Federal Convention of 1787, at 350 (Max Farrand ed., Yale Univ. Press rev. ed. 1966); see Conor Clarke & Ari Glogower, Apportioned Direct Taxes, 79 Tax L. Rev. (forthcoming 2026) (manuscript at 13–14), https://papers.ssrn.com/sol3/papers.cfm?abstract
    _id=5314120 [https://perma.cc/4J26-TR5E]. ↑

  28. . Hylton v. United States, 3 U.S. (3 Dall.) 171, 175 (1796) (opinion of Chase, J.); id. at 180 (opinion of Paterson, J.); id. at 183 (opinion of Iredell, J.). ↑

  29. . See Bruce Ackerman, Taxation and the Constitution, 99 Colum. L. Rev. 1, 20–24 (1999) (summarizing and analyzing the Hylton opinions). ↑

  30. . Id. at 28; Joseph M. Dodge, What Federal Taxes Are Subject to the Rule of Apportionment Under the Constitution?, 11 U. Pa. J. Const. L. 839, 879–82 (2009). ↑

  31. . Ajay K. Mehrotra, Making the Modern American Fiscal State: Law, Politics, and the Rise of Progressive Taxation, 1877–1929, at 143–84 (Cambridge Univ. Press 2013). ↑

  32. . 158 U.S. 601, 618, 629–35 (1895). ↑

  33. . Sidney Ratner, American Taxation: Its History as a Social Force in Democracy 214 (1942). ↑

  34. . See John R. Brooks & David Gamage, Taxation and the Constitution, Reconsidered, 76 Tax L. Rev. 75, 119–26 (2022) (discussing history and early interpretation of the Sixteenth Amendment). ↑

  35. . Id. at 109–10. ↑

  36. . U.S. Const. amend. XVI. ↑

  37. . 252 U.S. 189, 199–201 (1920). ↑

  38. . Id. at 212. ↑

  39. . United States v. Phellis, 257 U.S. 156, 175 (1921). ↑

  40. . Marr v. United States, 268 U.S. 536, 541 (1925). In the year before Marr, the Court ruled that as a statutory matter, the reincorporation of an entity in the same state does not trigger gains for the shareholders, though it relied on the same realization logic as in Macomber. Weiss v. Stearn, 265 U.S. 242, 254 (1924). Similarly, for a brief period the Court believed that cancellation or reduction in indebtedness was not “income,” though it was not clear whether that holding was based in the Constitution or just an interpretation of the Internal Revenue Code. Bowers v. Kerbaugh-Empire Co., 271 U.S. 170, 175 (1926), overruled by United States v. Kirby Lumber Co., 284 U.S. 1, 3 (1931). Some lower courts did interpret that position as a constitutional holding, though. E.g., Appeal of Meyer Jewelry Co., 3 B.T.A. 1319, 1322–23 (1926). ↑

  41. . Phellis, 257 U.S. at 169; see Sloan G. Speck, The Realization Rule as a Legal Standard, 16 Colum. J. Tax L. 1, 34 (2024). ↑

  42. . Joseph M. Dodge, The Story of Glenshaw Glass: Towards a Modern Concept of Gross Income, in Tax Stories 17, 20, 40 (Paul L. Caron ed., 2d ed. 2009); Alex Zhang, Rethinking Eisner v. Macomber, and the Future of Structural Tax Reform, 92 Geo. Wash. L. Rev. 179, 210–28 (2024). ↑

  43. . Helvering v. Griffiths, 318 U.S. 371, 404 (1943) (Douglas, J., dissenting). ↑

  44. . Id. at 393–94 (majority opinion). ↑

  45. . Moore v. United States, 36 F.4th 930, 935–36 (9th Cir. 2022), aff’d, 602 U.S. 572 (2024). ↑

  46. . Cottage Savings Ass’n v. Comm’r, 499 U.S. 554, 559–62 (1991). ↑

  47. . Moore, 602 U.S. at 579. ↑

  48. . Id. at 588–89. ↑

  49. . Id. ↑

  50. . Id. at 598. ↑

  51. . Id. at 598–99. ↑

  52. . Id. at 608–12 (Barrett, J., concurring); id. at 620 (Thomas, J., dissenting). ↑

  53. . E.g., Reva B. Siegel, The Levels-of-Generality Game: “History and Tradition” in the Roberts Court, 47 Harv. J.L. & Pub. Pol’y 563, 565 (2024). ↑

  54. . Brief of Amici Curiae Professors of Tax Law, Legal History, and Computational Science in Support of Respondent at 6–11, Moore, 602 U.S. 572 (No. 22-800); see Clint Wallace & Bret Wells, The Past and Future of Taxing “Incomes”, 104 N.C. L. Rev. 1, 16–30 (2025). ↑

  55. . Brief of Amici Curiae Professors of Tax Law, Legal History, and Computational Science in Support of Respondent, supra note 53, at 6–11. ↑

  56. . An especially important but little-known rule is I.R.C. § 1256, which imposes mark-to-market treatment for offsetting positions in options and futures contracts. Without this rule, a sufficiently liquid taxpayer could always wipe out their capital gains for the year at low cost by entering into offsetting positions, then selling the losing side on Dec. 31 and the winning side on Jan. 1. ↑

  57. . Ari Glogower, The Constitutional Limits to the Taxing Power, 93 Fordham L. Rev. 781, 796 (2024). ↑

  58. . Liam Ebrill, Michael Keen, Jean-Paul Bodin & Victoria Summers, The Modern VAT 9–12 (2001). ↑

  59. . Id. at 1–2, 15–19. ↑

  60. . Stuart Adam et al., Tax By Design: The Mirrlees Review 148–215 (2011). ↑

  61. . John Brooks, Brian Galle & Brendan Maher, Cross-Subsidies: Government’s Hidden Pocketbook, 106 Geo. L.J. 1229, 1249–55 (2018) (discussing the conditions under which it may be efficient to use consumption taxes with rates that vary across goods); Brian Galle, David Gamage & Yulia Kuchumova, Tax Base Diversification as an Enforcement Tool, 26 Am. L. & Econ. Rev. (forthcoming 2026) (manuscript at 4), https://doi.org/10.2139/ssrn.5093851 [https://perma.cc/NU53-7Z5T] (modeling the claim that differentiated consumption taxes can be efficient). ↑

  62. . Ebrill et al., supra note 57, at 15–18. ↑

  63. . Adam et al., supra note 59, at 216–30. ↑

  64. . Auerbach, supra note 13, at 41. ↑

  65. . Galle, supra note 10, at 34–39. ↑

  66. . See Pascal Michaillat & Emmanuel Saez, Resolving New Keynesian Anomalies with Wealth in the Utility Function, 103 Rev. Econ. & Stats. 197, 198 (2021). ↑

  67. . Henry C. Simons, Personal Income Taxation: The Definition of Income as a Problem of Fiscal Policy 50 (1938). ↑

  68. . Robert Carroll & Alan D. Viard, Progressive Consumption Taxation: The X Tax Revisited 34–35 (2012). Carroll & Viard also refer to their proposal as a “real-based” X tax, to distinguish it from a cash-flow consumption tax, which they call either a real-plus-financial tax or a personal expenditure tax. Id. at 33. Alan Auerbach calls these instruments an R tax and an R+F tax, respectively. Alan J. Auerbach, The Future of Capital Income Taxation, 27 Fiscal Stud. 399, 412 (2006). As the names imply, the “real” tax ignores financial flows such as borrowing and interest, while the R+F tax takes account of these flows as if they were no different from other sources of cash. I call the “real-based” X tax or R tax a “wage tax.” I dub the “R+F tax” a “cash-flow consumption tax.” ↑

  69. . Wage-type taxes also offer a set of unique avoidance and arbitrage opportunities in addition to the basic question of what is a “wage.” Although these have been known and potential government responses discussed for a long time, it is unclear how effective the anti-abuse rules would prove in reality. See, e.g., Parthasarathi Shome & Christian Schutte, Cash-Flow Tax (IMF, Working Paper No. 1993/002, 1993), https://doi.org/10.5089/9781451841688.001 [https://perma.cc/2XUG-STFU]. ↑

  70. . Gregg D. Polsky, A Compendium of Private Equity Tax Games 1 & n.2 (UNC Legal Stud., Research Paper No. 2524593, 2014), https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2524593 [https://perma.cc/DYG8-9XBH]. ↑

  71. . Victor Fleischer, Two and Twenty: Taxing Partnership Profits in Private Equity Funds, 83 N.Y.U. L. Rev. 1, 10–15 (2008). ↑

  72. . I.R.C. § 3121(a). ↑

  73. . Karen C. Burke, Exploiting the Medicare Tax Loophole, 21 Fla. Tax Rev. 570, 585–86 (2018). ↑

  74. . See id.; see also Joshua D. Blank & Ari Glogower, The Tax Information Gap at the Top, 108 Iowa L. Rev. 1597, 1625–26 (2023). ↑

  75. . See David I. Walker, The Practice and Tax Consequences of Nonqualified Deferred Compensation, 75 Wash. & Lee L. Rev. 2065, 2068 (2018) (executive compensation); Gregg D. Polsky & Brant J. Hellwig, Taxing the Promise To Pay, 89 Minn. L. Rev. 1092, 1134–37 (2005) (pension arrangements for non-employees); Susan Lorde Martin, Corporate-Owned Life Insurance: Another Financial Scheme That Takes Advantage of Employees and Shareholders, 58 U. Miami L. Rev. 653, 674–76 (2004). After adoption of a complex series of reforms, many insurance arrangements taken out by employers on behalf of executives are now treated as compensation, at least in part, but can sometimes be converted to dividends when used by small-business owners. Blaise Sonnier, Machacek and McGowan: Split Personality, Split-Dollar Life Insurance, Est. Plan., Apr. 2024, at 41, 41 (describing the regime and its interaction with rules for taxation of dividends); see also Treas. Reg. § 1.61-22(d)(1) (2003) (holding that benefit of receiving life insurance coverage may be treated as either compensation or a distribution to a shareholder). ↑

  76. . Robert J. Jackson, Jr. & Colleen Honigsberg, The Hidden Nature of Executive Retirement Pay, 100 Va. L. Rev. 479, 491–93, 506 (2014). ↑

  77. . William A. Klein, Timing in Personal Taxation, 6 J. Legal Stud. 461, 463–64 (1977) (describing this strategy for owner-built assets generally). Founders can also take advantage of planning strategies usually reserved for investment gains. Victor Fleischer, Taxing Founders’ Stock, 59 UCLA L. Rev. 60, 72–74 (2011). ↑

  78. . The incentive may be reduced in a system in which the wage tax is paired with a business-level tax, assuming that the business-level tax rate is equal to or higher than the individual rate. Carroll & Viard, supra note 67, at 73. Recent experience with the politics of American business “competitiveness” suggests that it is very unlikely we would see a business-level tax at rates approaching those currently paid by top-level earners. ↑

  79. . See Emmanuel Saez & Stefanie Stantcheva, A Simpler Theory of Optimal Capital Taxation, 162 J. Pub. Econ. 120, 126 (2018) (arguing that capital should be taxed if taxpayers can readily recharacterize labor earnings as investment). ↑

  80. . That is, even though wage-tax proponents often say that it ignores sales of financial assets, in practice the wage tax would likely have to treat the sale of assets acquired by work as compensation at least at the time of a realization event, as in the case of carried interest. Cf. Carroll & Viard, supra note 67, at 151 (noting that related-party transactions would require “strict rules”). ↑

  81. . See sources cited supra note 73. Carroll and Viard also propose this strategy for implementing their hybrid wage-tax proposal. Carroll & Viard, supra note 67, at 74. Another option, detailed by Ed Kleinbard, is to tax business owners each year as if they had earned a reasonable return on their investment, and then to adjust total taxes later at sale, along the lines of some Nordic countries. Edward D. Kleinbard, The Right Tax at the Right Time, 21 Fla. Tax Rev. 208, 211–14 (2017). This deemed annual sale would likely face the same questions about whether it is consistent with the realization rule, since it applies even if no dollars actually change hands between the business and the shareholder. ↑

  82. . Moore v. United States, 602 U.S. 572, 588–89 (2024). ↑

  83. . That is, in years when a business shows net losses, there is no business income to pass through to the owner as “salary.” ↑

  84. . Fabian Ardaya, Shohei Ohtani to Defer $68 Million Per Year in Unusual Arrangement with Dodgers: Source, The Athletic (Mar. 25, 2024), https://www.nytimes.com/athletic/5129506/2023/ 12/11/dodgers-shohei-ohtani-contract-deferrals/ [https://perma.cc/NJ94-CF35]. ↑

  85. . See Walker, supra note 74, at 2097–98 (describing use of restricted stock units and other “notional” executive investments in their firm). ↑

  86. . Again, Carroll & Viard call this a personal expenditure or “real plus financial” tax, while Auerbach calls it “R+F.” See sources cited supra note 67. McCaffery & Hines call it a “spending tax.” Edward J. McCaffery & James R. Hines, Jr., The Last Best Hope for Progressivity in Tax, 83 S. Cal. L. Rev. 1031, 1043–44 (2010). ↑

  87. . William D. Andrews, A Consumption-Type or Cash Flow Personal Income Tax, 87 Harv. L. Rev. 1113, 1149 (1974). ↑

  88. . Andrews proposed that for simplicity there would neither be income nor deductions for short-term consumer debt, which today would presumably include credit-card balances. Id. at 1150. ↑

  89. . Daniel I. Halperin & Alvin C. Warren, Jr., Understanding Income Tax Deferral, 67 Tax L. Rev. 317, 317–18 (2014). ↑

  90. . Id. ↑

  91. . See Alvin C. Warren, Jr., Accelerated Capital Recovery, Debt, and Tax Arbitrage, 38 Tax Law. 549, 552–53 (1985). ↑

  92. . Id.; see Halperin & Warren, supra note 88, at 320. ↑

  93. . See Halperin & Warren, supra note 88, at 320 (explaining that expensing exempts only the normal return). ↑

  94. . Auerbach, supra note 67, at 411–12. ↑

  95. . Richard Goode, Imputed Rent of Owner-Occupied Dwellings Under the Income Tax, 15 J. Fin. 504, 504, 507 (1960). ↑

  96. . Andrews, supra note 86, at 1155–56. ↑

  97. . Id. at 1150, 1155. Andrews also suggests a kind of third option in the case of debt-financed consumer durables: ignoring both the loan proceeds and the interest payments. Id. at 1155–56. He argues that taxing the household on funds used to make annual interest payments would then be the equivalent of taxing the imputed income from the durable. Id. ↑

  98. . See Dorothy A. Brown, Shades of the American Dream, 87 Wash. U. L. Rev. 329, 338–39 (2009) (critiquing racial disparities in who benefits from omission of imputed income from housing); Lee Anne Fennell, Homes Rule, 112 Yale L.J. 617, 631–34 (2002) (book review) (critiquing the economic and political impact of excluding imputed income from housing). ↑

  99. . See Andrews, supra note 86, at 1159. ↑

  100. . Id. at 1159–60. ↑

  101. . Galle, supra note 10, at 34–39. ↑

  102. . Andrews argues that a theoretically ideal income tax would also have to identify and tax imputed income from durable assets. Andrews, supra note 86, at 1160. Perhaps. But the entire premise of switching to a CFCT is to eliminate tax distortions of when households choose to consume. If it cannot achieve that, then the undesirable distributive effects and higher rates of a CFCT—relative to our imperfect current income tax—are hard to justify. ↑

  103. . See Treasury Dep’t, Blueprints for Basic Tax Reform 85–86 (1977); Noël B. Cunningham & Deborah H. Schenk, Taxation Without Realization: A “Revolutionary” Approach to Ownership, 47 Tax L. Rev. 725, 800 (1992); see also Ethan Yale & Gregg Polsky, Taxing Residential Solar, 74 Tax L. Rev. 69, 123 (2020) (making this point about certain home improvements but noting that denying deductions for debt-financed improvements produces net result similar to taxing imputed income). ↑

  104. . See Goode, supra note 94, at 504, 522. ↑

  105. . See, e.g., Tax Imputed Rents, Ctr. for Analysis Soc. Exclusion, https://sticerd.lse.ac.uk/
    case/_new/research/Inequalities_and_Poverty/policy-toolkit/housing-tax-imputed-rents.asp [https://per
    ma.cc/C7AE-JCLK] (identifying six European countries that tax imputed rent). ↑

  106. . Andrews, supra note 86, at 1156. ↑

  107. . Id. at 1157. ↑

  108. . Galle et al., supra note 3, at 1297–1313. ↑

  109. . 252 U.S. 189, 207 (1920) (emphasis in original). ↑

  110. . Id. ↑

  111. . 309 U.S. 461, 469 (1940). ↑

  112. . See Hewitt Realty Co. v. Comm’r, 76 F.2d 880, 884 (2d Cir. 1935) (Hand, J., concurring). ↑

  113. . Stanley S. Surrey, The Supreme Court and the Federal Income Tax: Some Implications of the Recent Decisions, 35 Ill. L. Rev. 779, 783, 791 (1941). ↑

  114. . See supra Section II.B. ↑

  115. . Bruun, 309 U.S. at 469. ↑

  116. . Id. (citing, inter alia, Helvering v. Am. Chicle Co., 291 U.S. 426, 430 (1934)). ↑

  117. . Helvering v. Stuart, 317 U.S. 154, 168 (1942). ↑

  118. . Andrews, supra note 86, at 1127, 1138–39, 1154. ↑

  119. . Comm’r v. Tufts, 461 U.S. 300, 307 (1983); see also id. at 319 (O’Connor, J., concurring). ↑

  120. . Comm’r v. Wilcox, 327 U.S. 404, 408 (1946). ↑

  121. . Cf. James v. United States, 366 U.S. 213, 249–53 (1961) (Whittaker, J., concurring in part and dissenting in part) (arguing that the Sixteenth Amendment does not permit taxation of borrowers until the time that they fail to repay). But see David G. Chamberlain, Borrowing as Realization: Taxing Billionaires’ Unlocked Gains, 73 Buff. L. Rev. 281, 360 (2025) (arguing that use of loan proceeds meets the Macomber test because “[t]he funds are available for the borrower’s separate use”); Anthony P. Polito, Borrowing, Return of Capital Conventions, and the Structure of the Income Tax: An Essay in Statutory Interpretation, 17 Va. Tax Rev. 467, 485–86, 490 (1998) (same). For a substantive critique of the offsetting obligations theory, see Joseph M. Dodge, Exploring the Income Tax Treatment of Borrowing and Liabilities, or Why the Accrual Method Should Be Eliminated, 26 Va. Tax Rev. 245, 260–65 (2006). ↑

  122. . E.g., Appeal of Indep. Brewing Co. of Pittsburgh, 4 B.T.A. 870, 874 (1926). ↑

  123. . Wilcox, 327 U.S. at 408. ↑

  124. . Id. at 415 (Burton, J., dissenting). ↑

  125. . Rutkin v. United States, 343 U.S. 130, 137 (1952). ↑

  126. . See id. at 139–40 (Black, J., dissenting). ↑

  127. . James v. United States, 366 U.S. 213, 221 (1961) (plurality opinion). ↑

  128. . Id. at 250–52, 255–57 (Whittaker, J., dissenting). ↑

  129. . Id. at 250–52. ↑

  130. . The Court has answered “yes” to an almost identical question in the context of purchases of real estate financed by nonrecourse debt. Crane v. Comm’r, 331 U.S. 1, 15–16 (1947). ↑

  131. . Edward G. Fox & Zachary D. Liscow, No More Tax-Free Lunch for Billionaires: Closing the Borrowing Loophole, 182 Tax Notes Fed. 647, 654 (2024); see Chamberlain, supra note 120, at 363–64 (citing Nicol v. Ames, 173 U.S. 509 (1899)). ↑

  132. . The Second Circuit took a similar route in its own treatment of embezzlement. Collins v. Comm’r, 3 F.3d 625, 632 (2d Cir. 1993). Alternately, courts might distinguish traditional debts from other contingent liabilities based on the relative likelihood of repayment. See Dodge, supra note 120, at 276–77. ↑

  133. . Ari Glogower, A Constitutional Wealth Tax, 118 Mich. L. Rev. 717, 768–79 (2020). ↑

Tariffs and the Progressive Fiscal Constitution

Posted on by Lawrence J. Liu & Alex Zhang
Liu & Zhang_Tariffs and the Progressive Fiscal ConstitutionDownload

Abstract

For more than a century, progressive taxation has constituted the American fiscal state. A resurgent and expanding tariff regime, however, threatens that commitment to progressive distribution. Given the ongoing popularity of tariffs, this Article examines how they might be designed and administered in a way that mitigates their regressive distributive impact. The Article thus develops and assesses proposals to (1) vary tariff burdens in accordance with the consumption of imported goods, (2) reduce income- or payroll-tax burdens on lower-income households, and (3) earmark tariff revenue for specified spending programs. Although none is perfect, we seek to articulate possibilities and highlight relevant considerations for policymakers seeking to make tariffs better cohere with our progressive fiscal constitution.

Introduction

Progressive taxation has constituted our fiscal state. Since the ratification of the Sixteenth Amendment, Congress has relied on the individual income tax as a main—and for the past eighty years, the most important—source of federal funding and mechanism of distributive justice. Unlike the consumption taxes on which Congress previously depended, such as excises and tariffs, the progressive income tax appealed to reformers of that era and successive governments as a more equitable means of raising revenue.[3] Since the New Deal, income-tax receipts have supported the dramatic expansion of federal power, along with the rise of an administrative state and welfare programs that have redefined American fiscal citizenship. Thus, the principle of ability to pay—and its statutory instantiation in the form of higher marginal rates based on the taxable unit’s income[4]—is an entrenched feature of our polity, seemingly outside the realm of ordinary politics.

For much of that time, the growing revenue significance of the individual income tax was accompanied by the diminishing revenue significance of tariffs. Indeed, U.S. presidents’ use of congressionally delegated authority to negotiate reductions in tariff rates is well-documented.[5] The recent resurgence of tariffs, however, threatens this constitutional-fiscal settlement. A self-congratulatory “tariff man,”[6] President Donald Trump has long touted the benefits of tariffs, including their potential to raise revenue and remedy the country’s deficit in the trade of goods. In his campaign leading up to the 2024 presidential election, Trump expressed support for an “all-tariff” federal revenue system and for the repeal of the income tax.[7] So far, the President has tried to make good on that promise, imposing a raft of tariffs on allies and competitors alike.[8] By April 2025, federal tariff receipts had already reached a monthly high of $16.3 billion,[9] a record that has since continued to be broken.[10] Tariff receipts for the full 2025 calendar year totaled about $287 billion, up 192 percent versus 2024.[11] Should broad-based and retaliatory tariffs stay in place, they could soon rival the corporate income tax in their contribution to the federal fisc.[12]

Nor are tariffs simply a tool of the Trump administration. President Joe Biden kept in place most of the tariffs levied by the first Trump administration while further raising duties on various imports, actions that led one prominent observer to also label Biden a “tariff man.”[13] Like presidential efforts to reduce tariffs, executive-driven moves to restrict imports rest on delegated powers that increasingly sound in economic security.[14]

The continuing use of tariffs is thus all but assured. Indeed, even after the Supreme Court invalidated the bulk of tariffs imposed in 2025 by the President, the administration quickly pivoted to alternative statutory authorities to ensure the continuation of its expanded tariff regime.[15] But tariffs’ political popularity has not translated into the academic discourse. Scholars and commentators have instead criticized the tariff regime for its distortion, distributive effects, ineffectiveness, and questionable use of certain legal authorities.[16] In particular, tariffs are regressive: They are consumption taxes on imported goods and disproportionately burden lower-income households.[17]

We do not dismiss these scholarly critiques. We may even agree with the substance of their analyses. The present project has a much more limited scope: Given the reality of tariffs’ continued use, how might Congress design and administer tariffs in a way that mitigates their regressive distributive impact? We begin answering that question by first considering debates surrounding consumption taxation. Like tariffs, broad-based consumption taxes are regressive and disproportionately burden lower-income households that spend a larger portion of their income and save little. In response, scholars have developed various proposals of progressive consumption taxation.[18] Further, we suggest that the United States can learn from efforts to achieve greater progressivity in the fiscal system by offsetting the regressivity on the revenue side with income-tax adjustments or more robust spending for social welfare or income security.[19]

We argue that these scholarly and comparative data provide normative and practical lessons for the resurgent tariff regime. They hold the promise for making tariffs—as a revenue and trade tool—better cohere with the progressive commitment that has structured our fiscal constitution. Accordingly, Part I starts with a discussion of the principle of progressive distribution that has dominated federal tax lawmaking in the past century. Part II shows how tariffs break with this entrenched tradition, not through ordinary politics and increasingly by executive actions. In Part III, we examine how tariffs can fit into—perhaps even instantiate—this progressive fiscal commitment. In particular, we draw on the scholarly discourse to assess three possibilities: (1) varying tariff burdens in accordance with the consumption of imported goods; (2) designing progressive tariffs using income- or payroll-tax mechanisms; and (3) earmarking tariff receipts to support expanded government services like social-welfare programs. Ultimately, we see several main considerations in this choice: administrative capacity, the nature of our progressive constitutional commitment, the impact of the proposals on the effectiveness of other trade and tax levers, and the political-economy dynamics as our democracy seriously considers the revival of an external-revenue regime.

I. Our Progressive Fiscal Constitution

This Part discusses the development of our progressive fiscal constitution. It paves the path for Part II, which highlights how the newly ascendant tariff regime deviates from that normative commitment. For the first 124 years of its constitutional existence, Congress indeed relied on tariffs to fund the federal government. In 1792, for example, customs totaled 93.8 percent of all federal receipts, with the remainder made up mostly by domestic excises on alcohol.[20] With the exception of a few years of extraordinary public land sales and the Civil War, the dominance of external revenue persisted until World War I.[21]

War efforts, however, put a stop to Congress’s heavy reliance on consumption taxation of imported goods, and income taxes became a key source of federal revenue. Congress had taxed income in the past. During the Civil War, fiscal exigency drove Congress to adopt an “income duty.”[22] The Revenue Act of 1864, for example, taxed income with a progressive schedule: Above an exemption amount of $600, rates rose from 5 percent for income between $600 and $5,000 to 10 percent for income in excess of $10,000.[23] After letting the income tax lapse in 1871, Congress again attempted to tax income in 1894—this time at a flat rate of 2 percent for income above a $4,000 threshold, and as part of a tariff-reduction plan.[24] But in a controversial opinion, Pollock v. Farmers’ Loan & Trust Co., the Supreme Court struck down the 1894 income tax as an unapportioned direct tax, despite having upheld the Civil War income tax just fifteen years before.[25]

All this led to the Sixteenth Amendment. Ratified in 1913, the Amendment allowed Congress to tax income, from whatever source derived, without regard to the constitutional apportionment requirement.[26] Congress quickly exercised this power. The Revenue Act of 1913 levied taxes on income above the exemption amount of $3,000 (for single filers), again at graduated rates, rising from 1 percent to 7 percent.[27] In 1917, income-tax receipts exceeded customs for the first time in the nation’s history.[28]

Since then, the federal income tax has formed the backbone of federal revenue. In 2024, income taxes on individuals constituted just about half of all federal receipts.[29] And federal receipts have grown substantially as a proportion of the nation’s economic output. The needs of defense, income-security programs, and the modern regulatory state mean that federal revenue grew from a mere 3.7 percent of the gross domestic product in 1929 to roughly 17 percent in 2024.[30]

Unlike tariffs or excises, Congress has generally taxed income at progressive, graduated rates. That is, taxpayers’ marginal tax rates—and by corollary, their average tax burdens—have increased in accordance with their income levels.[31] During the infancy of the income tax, the rates were low and marginal tax brackets few. From 1913 to 1915, for example, Congress taxed income at seven marginal rates: 1 percent, 2 percent, 3 percent, 4 percent, 5 percent, 6 percent, and 7 percent.[32] But as fiscal needs swelled—and the calculus of fairness and efficiency became more complex—rates rose and brackets proliferated. The Revenue Act of 1916 divided marginal rates into fourteen brackets and taxed the highest income level, above $2 million, at the then-record of 15 percent.[33] Congress more than quadrupled that top rate to 67 percent the next year, and determined income-tax liability through twenty-one marginal-rate brackets.[34] The 1920s saw retrenchment: Wartime fiscal needs subsided, and the business-friendly Republican administration pushed for a tax cut.[35] Although Treasury Secretary Andrew Mellon (one of the wealthiest men at the time) succeeded in cutting taxes at the top income levels, the structure of graduated rates has persisted ever since.[36] Today, Congress taxes income at seven marginal tax rates, ranging from 10 percent to 37 percent.[37] And in the interim, the income tax turned from a class tax on the rich to a mass tax on a majority of Americans.[38]

In the entire history of the federal income tax—from 1861 to the present—Congress arguably deviated from progressive rates only at three junctures. And of these three occasions, it attempted to tax income at a flat rate twice. Both attempts came in the nineteenth century, only once with success. First, in the final six years of the Civil War-era income tax, Congress imposed a 5 percent and then a 2.5 percent flat tax rate.[39] The use of the flat rate from 1867 to 1872 took place after the war, when fiscal pressure diminished and Congress had not weaned itself off tariffs and consumption taxation more broadly. Indeed, 1866 saw the highest federal income-tax receipt at the time (not to be surpassed until 1915), and it was still only 41 percent of customs.[40] As a distributive matter, the flat tax rate was still progressive: The high exemption amount meant that only the wealthy paid any income tax at all.[41]

Second, the Wilson-Gorman Tariff Act imposed a flat 2 percent rate.[42] But as discussed, this 1894 income tax never generated significant revenue, and the Supreme Court struck it down as an unapportioned direct tax in violation of Article I of the Constitution.[43]

Third, the Tax Reform Act of 1986 reduced rates and condensed the then-operative fourteen brackets, taxing income earned from 1988 to 1990 at two main marginal rates: 15 and 28 percent.[44] But it was short-lived. The Budget Reconciliation Act of 1990 soon added another top rate of 31 percent, making President George H.W. Bush break his campaign promise of “no new taxes” and contributing to his loss in the 1992 presidential election.[45] The Clinton administration continued to add to the top rates, returning the federal tax structure to the graduated, progressive rates that we have today.[46] Further, at least in rhetoric if not in effect, the Tax Reform Act of 1986 was distribution-neutral.[47] That is, the base-broadening provisions of the Act curbed the use of tax shelters at the top and were not supposed to shift substantially the distribution of tax burdens across income levels. The refrain is clear: Congress has rarely taxed income at a flat rate. When it did, the flat tax either failed constitutional scrutiny (i.e., in 1894) or was on its way out (i.e., in 1872).

Progressive rate structure has thus propped up the modern fiscal state. For the 112 years since the ratification of the Sixteenth Amendment, Congress has generally imposed heavier income-tax burdens (as a proportion of their income) on the wealthy than the middle class or the impoverished.[48] This bears out not only as a formal matter of statutory rates but also in practice. Recent studies by the Treasury Department and the Yale Budget Lab have shown that average effective tax burdens rise with income.[49] To be sure, they also show the immense variation of tax burdens at the top—with most households in the top 0.01 income percentile paying anywhere between 16 percent and 37 percent as their effective tax rates.[50] And scholars have recognized that the realization doctrine and stepped-up basis at death enable extraordinary tax avoidance by households whose income derives from capital.[51] Such observations point to the importance of foundational reform like taxing accrued gains.[52] They also reveal the gap between rhetoric—the top 37 percent rate is salient in public discourse—and the reality that the ultra-wealthy pay far less.[53] But they do not defeat the core claim that some progressivity—even if less robust in reality than the schedule of tax rates or political rhetoric would suggest—has structured the federal income tax throughout its lifetime.

In our view, this statutory regime and history—as well as their distributive effects—evidence a constitutional progressive commitment. To be sure, progressivity is not expressly written into the text of the Sixteenth Amendment, or for that matter, any grant or restriction of the federal taxing power in Article I of the Constitution.[54] Indeed, Steven Bank has argued that the political contest surrounding the ratification of the Sixteenth Amendment aimed to replace a regressive tax system with a proportional one.[55] That is, the income tax would reduce regressivity elsewhere in the tax system (e.g., in federal consumption taxation like tariffs) and subject the wealthy to a proportional share in bearing the costs of governance.[56]

However, scholars have long recognized that extra-canonical norms—for example, statutes as opposed to provisions in the canonical 1787 Constitution—structure our governance and are thus “constitutional” in a functional sense. As early as 1934, Karl Llewellyn contended that it was not essential for constitutional “practice or institution [to] be in any way related to the Document.”[57] More recently, Ernest Young has argued that “the American ‘constitution’ consists of a much wider range of legal materials than the document ratified in 1789 and its subsequent amendments.”[58] Instead, constitutional norms—whether they take the form of constitutional texts, statutes, regulations, practices, or institutions—perform two key functions. They constitute the government by establishing governance institutions and their modes of operation.[59] They also confer rights on individuals against state intrusion.[60] Some constitutional norms are entrenched in the canonical Constitution through the cumbersome Article V amendment process.[61] But they need not be: In both theory and practice, constitutional function is separated from entrenchment. Importantly, extra-canonical norms implement (i.e., flesh out in institutional form the canonical Constitution’s “skeleton of a government”), specify (i.e., particularize canonical norms “to aid their application in specific situations”), supplement (i.e., speak where the canonical Constitution is silent), and supersede (i.e., replace obsolete principles with extra-canonical rules).[62]

Viewed through this lens, the 112 years of statutory history and practice have fulfilled core constitutional ends. The graduated rate structure and distribution of income-tax burdens have constituted the modern federal fiscal machinery. They have guided its operation through a progressive principle. Depending on one’s views of values animating the canonical text (that is, the Sixteenth Amendment and Article I’s relevant provisions of the federal taxing power), this progressive commitment results from the distinct extra-canonical functions it has performed: (1) implementation: it fleshes out the Sixteenth Amendment’s vision of distributive justice (if one subscribes to a progressive view of the Sixteenth Amendment like Akhil Amar); (2) specification: it particularizes norms implicit in Article I and the Sixteenth Amendment by making them applicable to a mass-based income tax; (3) supplementation: it fills the normative gap left open by the Sixteenth Amendment, which by its literal terms does not mandate progressivity, proportionality, or regressivity in federal income taxation; or (4) supersession: it supersedes the Sixteenth Amendment’s original vision of proportionality, as argued by Bank.[63]

Importantly, framing progressive income taxation as a quasi-constitutional commitment rather than a stand-alone, even if longstanding, federal policy accentuates its spillover effects on other areas of democratic and distributive calculus.[64] That is, public assumption of the federal income tax’s critical role in forming the foundations of the fiscal state—and thus helping it achieve a baseline level of redistribution—allows (perhaps improperly capacious) room for inequality to creep into nontax areas of law and regulation.[65] That is, the perceived entrenchment of progressive income taxation has structured how the ordinary political process calibrates and contests egalitarianism.[66]

One final note before moving on to tariffs: Could the progressive income tax continue to instantiate a distributive commitment to proportionality, given the rise of payroll taxation? That is, as Bank has argued, the Sixteenth Amendment was originally ratified after a struggle to use the income tax to reduce the regressivity of federal consumption taxation, thus resulting in an overall proportional tax scheme.[67] Tariffs and excises, of course, diminished in the past century.[68] But other forms of regressive taxes emerged. Payroll taxes today account for roughly one-third of federal receipts.[69] They burden solely income derived from labor, and are (for the most part) capped on a wage tax base of $184,500.[70] Earnings above the tax base are subject to much lower rates of taxation than earnings below the tax base.[71] Payroll taxes thus burden lower-income groups much more than high-income households. This is both due to the lower rates on the higher portions of labor income and because capital income—exempt from payroll taxation by definition—is distributed more heavily at top income levels.[72] Combining payroll and income-tax rates means that federal taxation of labor income is relatively flat, contrary to public discourse and rhetoric.[73]

The federal income tax can thus be thought of as a progressive complement to the regressive payroll tax. However, this view is not persuasive for purposes of theorizing our fiscal constitution. To be sure, payroll taxes are regressive as to revenue generation. But they fund the Social Security program, which distributes benefits through a progressive formula. Indeed, this type of earmarking—collecting revenue through regressive, administratively efficient means and distributing earmarked benefits through progressive formulae—is a policy option to make tariffs cohere with our fiscal constitution. We will have more to say about it in Part III.

II. The Return of Tariffs

Ongoing and likely paradigmatic shifts in U.S. trade policy threaten our progressive fiscal commitments. Recent presidential administrations have shown a penchant for tariffs, with the current administration especially touting their revenue-generating potential.[74] Unlike the income tax, tariffs likely have a disproportionate impact on lower-income Americans.[75] Given that regressive character, we argue that the growing popularity of and stated justifications for tariffs stand in opposition not only to the status quo ante in favor of trade liberalization but also to our progressive fiscal constitution.

Throughout the beginning of President Trump’s second term, tariffs have captured headlines in ways not seen since the early twentieth century. On the campaign trail, President Trump proclaimed his desire for “a system of universal baseline tariffs on most imported goods.”[76] Since taking office in January 2025, Trump has announced, paused, and ultimately imposed tariffs on numerous allies and adversaries, including China, Canada, Mexico, and the European Union.[77] The most dramatic announcement of the President’s first year back in office came on April 2, 2025. On “Liberation Day,” the President promised to impose “reciprocal” tariffs that would result in a 10 percent baseline tariff on almost all U.S. imports.[78] Imposition of these actions has been uneven as the President has simultaneously sought to negotiate new trade agreements.[79] Nonetheless, many of these tariffs did go into effect on August 7, 2025, raising the overall average effective tariff rate to 18.6 percent—a level not seen since the early 1930s.[80] President Trump’s reliance on tariffs as a bargaining chip has continued into year two of his second term, as evidenced by his since-withdrawn threat to impose tariffs on European NATO allies over Greenland.[81]

The interest in tariffs from the second Trump administration is neither new nor unexpected. The President during his first term initiated a trade “war” with China, reinvigorated dormant statutes to raise import duties, and threatened withdrawal from the World Trade Organization (WTO).[82] Nor is the rising use of tariffs and defensive trade measures limited to President Trump. President Biden kept much of President Trump’s first-term tariffs in place, further increased duties on Chinese imports, and continued to apply pressure on the WTO.[83]

This growing bipartisan deployment of tariffs contrasts with a near-century of moves towards trade liberalization. For much of that time, U.S. trade policy had centered on the negotiation of trade agreements and the development of international institutions aimed at reducing barriers to trade.[84] As illustrated in Figure 1, although the average tariff rate on dutiable imports had reached nearly 60 percent in the 1930s, that number had fallen to and stabilized around 5 percent by the mid-1970s before climbing again in recent years.

Figure 1: Average Tariffs of the United States, 1894–2025[85]

To facilitate this drop in trade barriers, Congress had delegated much of its Article I powers to regulate foreign commerce and collect duties to the President. Whereas Congress had once set tariffs in the service of raising revenue or defending domestic industries, the aforementioned growing reliance on the progressive income tax was accompanied by statutory grants of authority that allowed the President to negotiate trade agreements and reduce import restrictions with limited congressional review.[86] Although U.S. presidents once largely wielded those powers to reduce tariffs, congressional delegations allow for increasing tariffs as well, powers that recent administrations are deploying in novel ways.[87]

Why are U.S. presidents increasingly exercising their delegated authority to impose defensive trade measures like tariffs? Much attention has focused on the national security dimensions of the actions. Behind any executive-led move to raise tariffs is a domestic trade statute, many of which contain provisions that empower the President to impose trade barriers in the name of national security. As catalogued by Kathleen Claussen, “hard” security exceptions to trade liberalization permit the President to act only if he has identified a threat to national security.[88] Such exceptions include the International Emergency Economic Powers Act (IEEPA)[89]—which requires declaration of a national emergency—Section 232 of the Trade Expansion Act of 1962[90]—which permits restrictions on imports found to threaten U.S. national security—and Section 201 of the Trade Act of 1974[91]—which permits “safeguards” against imports that are imported in such increased quantities that they are a substantial cause of serious injury to a domestic industry. Other statutory provisions contain what Claussen calls “soft” exceptions, permitting presidential action against trading partners perceived to threaten U.S. commerce.[92] Soft exceptions include Section 301 of the Trade Act of 1974[93]—which permits retaliatory actions to combat unreasonable or discriminatory acts, policies, and practices—and Section 338 of the Tariff Act of 1930[94]—which permits tariffs on countries that discriminate against the commerce of the United States.

Many of the actions taken by the Trump and Biden administrations might be fairly understood through an economic security lens.[95] Whereas most import duties prior to 2016 resulted from the mobilization by primarily private actors of non-security-focused exceptions like the antidumping and countervailing duty laws, there has been increasing attention on security exceptions since President Trump’s decision to impose Section 232 tariffs on steel and aluminum imports in 2018.[96] Perhaps most jarring was Trump’s reliance on IEEPA, an authority that had never been used to impose tariffs but which had been the President’s tool of choice throughout year one of his second term.[97] Although the Supreme Court ultimately rejected the President’s use of IEEPA to impose tariffs,[98] the administration almost immediately began efforts to reinstate its tariffs under alternative legal authorities.[99]

President Trump’s rhetoric, calling for tariffs to deal with “unfair” relationships that are “ripping off” the United States, has further underscored the security valence of his actions.[100] Similarly, President Biden focused on the security implications of defensive trade actions, especially vis-à-vis competitors like China. The Biden administration sought to “derisk” from China by cutting it out of global supply chains, limiting inbound or outbound Chinese investment, and restricting trade with China.[101] As explained by then-National Security Advisor Jake Sullivan in late 2024, targeted tariffs were considered necessary to resist China’s “domination of . . . supply chains,” “its willingness to weaponize such dependencies,” and “to prevent a second China shock.”[102] Together, both word and deed break with the previously held belief that trade liberalization would lead to more economic interdependence and, by extension, peace.[103]

Without discounting the validity of the economic security rationale, we train attention on another key but less discussed justification among scholars: raising revenue. The focus of legal academics notwithstanding, President Trump and his administration have consistently emphasized the revenue-raising benefits of tariffs. During his campaign, Trump alluded to the potential of tariffs to once again serve as a primary source of federal revenue.[104] Since retaking office, he has consistently touted tariffs as a means not only to reduce the federal debt but also to justify large cuts to or even replacement of the income tax.[105] As more and more tariffs went into effect, the administration reported positively on the billions, and eventually trillions, of dollars generated by the expanding tariff regime.[106] And, in holding that IEEPA does not authorize the President to impose tariffs, the Court’s reasoning frequently emphasized their tax- and revenue-generating character.[107]

This is not to say the supposed revenue benefits of this tariff regime go unquestioned. Some critics point out that tariff revenue, though not insignificant, nonetheless remains a drop in the ocean necessary to fund the federal government.[108] Still others question the feasibility of administering a customs system that can collect the required duties.[109] One of the loudest criticisms is that broad-based tariffs effectively function as a regressive tax on U.S. consumers. Even accepting that certain industries are unfairly burdened by import competition, critics nonetheless worry that large-scale and wide-ranging duties will result in higher prices that disproportionately impact poorer Americans.[110] Coupled with President Trump’s large tax cuts, some even complain that tariffs will only further accelerate a large transfer of wealth from poorer to richer Americans.[111] Viewed from this perspective, tariffs threaten not only our longstanding reliance upon the income tax but also the notably progressive commitment behind that revenue source.

Without weighing in on the economic, political, or legal wisdom of increasing tariffs, we assume that tariffs will continue to be a prominent policy tool in the years to come. As described, the President still wields significant authority to raise tariffs, litigation is unlikely to curb the full extent of that authority, and “tariff men” from both sides of the political spectrum have been happy to flex that authority. Even the administration’s defeat in Learning Resources has not dulled the President’s tariff enthusiasm.[112] At the same time, we take seriously the concern about the regressive nature of tariffs. In the sections to follow, we discuss how such concerns mirror longstanding debates surrounding other forms of regressive taxation. We draw insights from those discussions to assess whether and how U.S. tariff policy can be made more progressive, in better keeping with our progressive fiscal constitution.

III. Designing Progressive Tariffs

Part III explores three main statutory and administrative mechanisms that effect a progressive tariff regime by: (1) varying tariff burdens in accordance with consumption, either based on (a) actual consumption of imported goods, or (b) consumption of certain types of goods; (2) varying tariff burdens in accordance with metrics of the taxpayer’s economic power like income, including (a) providing an income-tax credit for lower- and middle-income households through tariff receipts or (b) eliminating or reducing income-tax or payroll-tax burdens for lower-income households; and (3) earmarking tariff revenue for social welfare. We do not endorse any of them as perfect instantiations of the federal commitment to progressivity in taxation and fiscal governance. Nor do we speak to the political feasibility of any of these proposals by assuming their persuasiveness to Congress or the administration. Instead, we outline the operation of each and evaluate its relative normative merits.

Tariffs are, by definition, taxes on the consumption of imported foreign goods.[113] They thus exempt the consumption of foreign services. For example, the United States does not impose an import tariff on a U.S. citizen’s vacation trip to—and consumption of services provided abroad in—the United Kingdom. Scholars have long debated—and many have recognized—the desirability of a broad-based consumption tax either in place of or in addition to an income tax.[114] But commentators have traditionally also acknowledged the regressivity of a flat-rate consumption tax: Lower-income households spend a larger portion of their income while higher-income households can afford to save. Consumption taxation thus imposes higher proportionate burdens on the former than the latter because it by nature exempts savings from tax. Indeed, the debate about the choice of a tax base (income versus consumption) from the 1970s to the 2000s began in large part because scholars showed that a consumption tax can be made progressive: for example, by preserving the existing income tax and providing a deduction for savings.[115] The regressivity point is especially important for tariffs because they burden only consumption of imported goods. The United States imports a large volume of services from overseas, with their value reaching $814 billion in 2024.[116] Such foreign services, including tourism (e.g., traveling overseas for vacation), transportation (e.g., provided by international airlines), financial and management consulting, and intellectual property, are disproportionately consumed by higher-income households and are untaxed in a tariff regime.

A. Varying Tariff Burdens in Accordance with Consumption

1. Actual Consumption of Imported Goods

We begin with proposals to vary tariff burdens according to an individual’s actual consumption of imported goods. This approach would borrow most directly from proposals to implement a progressive consumption tax. The variety of progressive consumption tax proposals notwithstanding,[117] we focus here on a system that tracks an individual taxpayer’s consumption and issues a rebate either at point of sale or annually after income-tax filing. When goods enter the United States via ports of entry, relevant duties are assessed and paid by the importer.[118] Although importers had initially seemed to absorb much of the burden brought by President Trump’s new tariff regime, that has since shifted to U.S. consumers, with projections estimating that the burden will only further increase in 2026.[119] Assuming then that at least some of these additional costs are passed on to consumers via higher prices, the intuition behind the individual accounting approach is that consumers who spend a greater amount on imported goods each year ought to bear a greater burden of those costs than those who spend less on imported goods. Moreover, to the extent the tariffs are intended to boost U.S. manufacturing or reduce consumption of foreign-made products, shifting the burden towards higher spenders would seemingly cohere with such policy goals.

One way of implementing an individual scheme is by issuing rebates to consumers at the point of sale, an approach that draws inspiration from Manoj Viswanathan’s description of an individual accounting progressive consumption tax.[120] Similar to Viswanathan, the agency tasked with collecting tariff receipts—currently the Customs and Border Protection (CBP)—would maintain a secure database that tracks the aggregate amount each individual spends on imported goods each year. At the point of sale of an imported good, the retailer would communicate the amount spent to the agency database, which would return a marginal rebate to the retailer based on the aggregate consumption by that consumer up to that point. That rebate amount would then be immediately remitted to the consumer.[121]

For purchases made by electronic payments such as credit or debit cards, which make up most and an increasingly large percentage of purchases,[122] the third party facilitating the transaction would be tasked with transmitting the purchase amount to the agency database. As explained by Viswanathan, imposing this additional reporting requirement on electronic payment systems is a straightforward extension of existing obligations.[123] Cash transactions would rely on consumer self-reporting, which could be accomplished at point-of-sale via an app or QR code.[124] Although such self-reporting would be voluntary, we imagine that many consumers would be interested in participating given the instant savings they might receive.

A less administratively burdensome approach might be to issue rebates via the existing income tax system. Similar to the point-of-sale method, consumer purchases of imported goods would still need to be reported and logged in a secure government database.[125] Rather than calculating the amount to be refunded in real time, however, the purchase would be added to a taxpayer’s annual aggregate consumption amount. At the beginning of the following year, around the time that taxpayers receive other tax documents like W-2s or 1099-INTs, a taxpayer would receive a report listing the purchases and aggregate consumption of imported goods. The appropriate refund amount would then be determined with reference to a graduated scale that varies based on the total amount consumed, and taxpayers would receive their refunds after filing their income taxes.

One of the challenges in implementing either individual accounting approach is administratively determining what counts as purchasing an imported good. For products purchased directly by consumers online, any product that is shipped from outside the United States would qualify the consumer for a potential rebate. For final goods sold in stores or mailed from a U.S.-based warehouse, such as laptops or pieces of furniture, those goods could be logged as imports in a CBP database upon entry. Some imports, however, are input goods that will go into a final product further into the manufacturing process. Steel nails from China, for instance, might be imported and then included in an automobile assembled in the United States. One option might be to require manufacturers who use imported inputs in a product to include the finished product in a CBP database, and future sale of that product would trigger the rebate process described above. Another option is to treat any purchaser of an imported good, even if it is a U.S. manufacturer rather than a consumer, as an entity whose purchases are tracked and can receive a point-of-sale rebate. A third is to implement this system only for consumers purchasing imported final goods and not for those who purchase goods that have imported inputs.

Another primary drawback concerns privacy. Although consumers already provide more information to, say, their credit-card companies than they would the CBP under this scheme,[126] the CBP would be receiving more consumer-related information than it currently has. Moreover, one might be especially concerned about providing information to the CBP because of its organizational home within the Department of Homeland Security—the department also charged with immigration enforcement. Because the IRS already receives sensitive individual-level information, one response is to have the IRS implement an individual accounting system, with support and in coordination with the CBP only as necessary. However, this design would be vulnerable to similar criticisms concerning collaboration between the IRS and Immigration and Customs Enforcement, another DHS agency.[127]

To the extent there are fewer privacy concerns with the IRS and the Department of the Treasury than with DHS, the collection of duties could be moved out of DHS into Treasury. Indeed, prior to 2003, customs administration was part of Treasury, and President Trump’s proposed External Revenue Service would likely be within Treasury.[128] Related to these privacy concerns, certain populations like noncitizens or the unhoused might generally be less willing to self-identify and would thus have difficulty accessing the benefits of an individual accounting system.[129]

2. Type of Imported Good Consumed

Another consumption-based approach is to adjust the tariff rate based on the type of good involved. Expensive, luxury imports can be subject to higher tariff rates while cheaper necessities can be subject to lower rates or even exempt. The intuition behind this scheme is that wealthier individuals are more likely to spend on pricier imports than less wealthy individuals, while the latter are more likely to spend on cheaper goods or necessities.

Helpful to implementation, differentiation by product is already present in U.S. tariff-rate schedules. Tariff rates and classifications are listed out in the Harmonized Tariff Schedule (HTS), which is published and maintained by the International Trade Commission, an independent agency, and enforced by the CBP.[130] Rather than only differing rates based on, say, the customs value of import categories[131] or exempting cheap goods altogether from duties,[132] the tariff rate for a given product could further differ based on whether an import is considered a luxury or a necessity. Luxury items like high-end watches, handbags, or clothing could be tariffed at higher rates than goods such as pharmaceuticals or food products.

This approach, of course, raises the question of what counts as a luxury versus a necessity. Although price might be a good proxy, prices are relatively easy for sellers to manipulate, and the determination of what is a luxury or a necessity is ultimately subjective. Application of the appropriate tariff rate would thus potentially come down to a discretionary decision by the CBP agents who enforce the HTS and make final determinations as to the correct duty rate.[133] Moreover, this approach does not account for abnormal spending patterns. For instance, under this scheme, a consumer who makes $60,000 annually and consumes only a $10,000 Swiss watch might be subject to a higher tariff burden than an individual who makes $500,000 a year but buys no luxury imports and primarily consumes imported clothing, food, and other necessities or lower-end products.

B. Designing Progressive Tariffs from the Income-Tax System

This Section explores how Congress and the executive branch can design and implement features of the income-tax system to make tariffs cohere with our progressive fiscal constitution. As the previous section shows, varying tariff burdens in accordance with actual consumption of imported commodities has the virtue of furthering certain trade policy—for example, by disincentivizing individual consumption of foreign goods and potentially encouraging domestic manufacturing. But accounting and administrability costs reduce the attractiveness of such proposals. Further, the progressive commitment of our fiscal constitution has centered on measures of economic power—for example, income as a proxy for ability to pay.[134] Actual consumption of imported commodities may correlate with economic power, but not always accurately. Idiosyncrasies in preferences may lead, for example, a small subset of middle-income households to consume a high volume of imported commodities and a small subset of higher-income households to consume a low volume of imported commodities. In those cases, varying tariff burden based on consumption of imports may not mitigate the regressive effects of tariffs (i.e., conceptualizing regressivity as a distributive effect with respect to income levels), even if it furthers trade-policy goals.

Income-tax mechanisms are less cumbersome in administration, and we sketch two possibilities. First, Congress and the executive branch can design and distribute annually income-tax credits based on revenue from tariffs. Customs receipts have unsurprisingly reached records under the Trump administration, totaling $28 billion in December 2025 and constituting 7.34 percent of all federal fiscal-year-to-date revenue.[135] The continuation of the existing tariff regime (after accounting for a substantial decline in tariff revenue when importers stop stockpiling inventory in anticipation of rate hikes) means that the federal government can expect roughly $200 billion in customs receipts each year. Half of the proceeds can thus allow Congress and the executive branch to distribute about $1,300 on average in refundable income-tax credits to the bottom half of U.S. households.[136] Senator Josh Hawley has thus proposed using tariff proceeds to fund rebates—in the form of income-tax credits at $600 per person—for individuals earning less than $75,000 (and $150,000 for married couples).[137] The amount of the credit, of course, can vary based on the taxpayer’s income: Larger benefits may go to lower-income taxpayers if the goal is to increase progressivity in the overall tax system, or to another group (likely middle-income taxpayers) that both purchases imported commodities and lacks the economic power of high-income households.

Second, as previously discussed, the Trump administration has suggested abolishing the individual income tax and replacing it with tariffs.[138] Stated without qualification, that proposal is unrealistic. Even under the rosiest estimates, tariff proceeds are unlikely to match the scale of individual-income-tax receipts, the largest source and about half of all federal revenue.[139] On the other hand, scholars like Michael Graetz have previously suggested abolishing the federal income tax for some taxpayers and financing the cost with a federal-level consumption tax. One proposal, for example, calls for the abolition of the income tax for 90 percent of filers and the adoption of a 10 to 15 percent, broad-based value-added tax, thus returning federal income taxation to its function before World War II—a class tax on the wealthy.[140] We suggest that a version of this kind of proposal can increase the progressivity of the tariff regime. Again, assuming roughly $200 billion of additional customs receipts each year, the federal government can abolish the individual income tax for a large segment of taxpayers—probably at least half of income-tax filers.[141] This can be implemented by dramatically raising the standard deduction or simply exempting households earning less than an income threshold (e.g., $55,000) from the income tax. Of course, a large subset of those taxpayers either already pays no income tax or even faces negative income-tax rates because of transfer programs like the earned income tax credit. The federal government can thus combine this second possibility with the first by providing lower-income groups with a refundable tax credit funded by tariff proceeds.

Though easier to implement, the income-tax mechanisms are imperfect. By design, they suffer from the same problems that plague any administration of social welfare with the income-tax system. For example, beneficiaries are required to file tax returns to claim their statutory entitlements and will receive benefits only once a year.[142] The administrative burden is not negligible, and lower-income groups who disproportionately bear the costs of tariffs may need resources throughout the year, not only around April 15, to fund household expenses. And even a straightforward credit regime will increase the complexity of the tax system, leading to errors in filing, delays in processing the returns, and incentives for third-party tax preparers to exploit unsophisticated taxpayers and profit from a refundable-tax-credit regime.[143] Such administrative concerns might counsel the adoption of higher standard deductions rather than the provision of refundable tax credits.

C. Earmarking Tariff Revenue for Tax and Fiscal Expenditures

Perhaps more importantly, any direct link between expenditure programs (e.g., refundable tax credits or higher standard deductions) and revenue collection changes the political-economy dynamics of taxation. This is an important point against stringent earmarking of tariff revenue for expenditure programs, whether they are tax expenditures or direct spending. That is, if Congress seriously considers any of the proposals described thus far in this Article, we recommend framing the legislative fix as a mechanism to reduce the regressivity of the tariff regime and funded by general revenue, at least in the short term. Democratic regimes confront a recurring policy problem when they create concentrated sets of beneficiaries, and they exacerbate the problem when they fund benefits for such groups through taxes that burden a broad swath of the public.[144] The concentrated beneficiaries can efficiently mobilize to defend their fiscal entitlements, whether in court or through the political process. By contrast, the expected gain from nonpayment of the tax (which funds such benefits) is relatively small, and few would incur the costs of mobilization to fight for its repeal. As a result, the earmarked tax survives—perhaps even thrives—despite overall democratic opposition in a costless regime. Indeed, one study shows that “earmarked taxes that have concentrated benefits and diffuse costs are associated with a substantial increase in revenue over time relative to taxes with other cost-benefit configurations.”[145]

This line of reasoning applies to the tariff context. If a smaller, defined group receives tax credits expressly funded by tariff revenue, their political preferences and mobilization will contribute to the preservation of the tariff regime. Without commenting on the economic wisdom behind the continuation of such a regime or drawing firm conclusions about its long-term desirability as a matter of distributive justice,[146] we suggest that this might nonetheless be democratically suboptimal in the short run given significant ongoing debate about tariffs’ desirability, and at least some judicial skepticism as to their validity.[147] For the same reason, we also counsel against earmarking tariff revenue toward specific social-welfare spending. That would similarly amplify the political-economy dynamics: Expenditure programs for specific purposes (e.g., education, healthcare, or industries perceived to have been harmed by retaliatory tariffs like agriculture) tend to feature even more concentrated beneficiaries than tax credits generally available to groups below an income threshold.[148] And the salience of the benefits may trigger cognitive biases to make future repeal of the funding source—and future deprivation of a highly visible benefit—even more difficult.[149]

* * *

This Part of the Article has described and analyzed policy options to reduce the distributive regressivity of the tariff regime. None is perfect. Varying tariff burdens in accordance with actual consumption of imported goods raises administrability concerns, especially as to input imports. Varying tariff burdens in accordance with consumption of different types of goods raises additional problems like defining the boundaries between luxuries and necessities, which ultimately come down to subjective consumer preferences and discretionary decision-making by administrative agencies. Mechanisms through the income-tax system (e.g., providing refundable tax credits for lower- and middle-income households, or reducing/eliminating income-tax or payroll-tax burdens for lower-income households) carry the familiar disadvantages of tax administration. Most prominent are the need for annual filing and annual, rather than more frequent, distribution of benefits. And earmarking revenue for expenditure programs risks cementing a tax regime criticized by both economists and certain theories of distributive justice.

One broader implication of these imperfect solutions might be for policymakers to rethink seriously the desirability of such a wide-ranging and volatile tariff regime. But our external-revenue regime shows no signs of diminishing. Indeed, the Trump administration has already begun to reinstate its tariff regime through independent statutory authorities despite a loss at the Supreme Court.[150] And the astonishing level of our national debt may make the repeal of any significant source of federal revenue difficult in future administrations.[151]

Assuming tariffs’ continuing existence, and acknowledging the imperfections of these proposals, we tentatively conclude that reducing income- or payroll-tax burdens for lower-income groups might present a workable plan in the short to medium term. This would not implicate the costly administrability problems involved in attempting to vary tariff burdens based on actual consumption. It would also mitigate—even if not completely avoid—the political-economy dynamics generated by the creation of concentrated beneficiaries and diffuse payers, thus allowing our democracy time to deliberate on the resurgence of tariffs without making lower-income groups bear disproportionate costs. And by integrating the tax benefits into paycheck withholding, the Treasury Department can deliver at least some benefits to taxpayers throughout the year.

Conclusion

This Article assesses the resurgence of tariffs within the progressive fiscal system of the United States. For more than a century, the federal income tax has featured graduated tax rates, imposing higher tax burdens on high-income groups. This longstanding statutory regime evidences a quasi-constitutional commitment to progressive distribution. Tariffs deviate from this commitment. They are consumption taxes on imported goods and disproportionately burden lower- and moderate-income households that consume larger portions of their economic power. The Article evaluates policy options for diminishing tariffs’ regressive distributive effects, including varying tariff burdens in accordance with consumption, reducing or eliminating select households’ income- or payroll-tax burdens, and earmarking tariff revenue for spending programs. Although none is perfect, this Article’s account helps lawmakers navigate the difficult distributive calculus of using an external-revenue regime to vindicate trade or industrial-policy goals.

  1. * Lawrence J. Liu is Associate Professor at Washington University in St. Louis School of Law. ↑

  2. ** Alex Zhang is Associate Professor of Law at Emory University. Authors contributed equally to the Article. We thank Samuel Bagenstos, Jonathan Gould, Christine Kim, Matt Lawrence, Susan Morse, Adam Rosenzweig, and the audience at the Washington University Law Review’s Symposium on Taxing, Spending, and the Constitution for their insights and feedback, as well as the editors of the Law Review for their diligence. ↑

  3. . See Ajay K. Mehrotra, Envisioning the Modern American Fiscal State: Progressive-Era Economists and the Intellectual Foundations of the U.S. Income Tax, 52 UCLA L. Rev. 1793 (2005). ↑

  4. . Of course, the statutory structure of graduated income tax rates may overstate the actual tax burdens borne by those at the very top of the income distribution (e.g., the top 0.1 percent or 0.01 percent) due to well-documented tax-avoidance techniques. See, e.g., Edward J. McCaffery, The Death of the Income Tax (or, The Rise of America’s Universal Wage Tax), 95 Ind. L.J. 1233 (2020); infra notes 47–51 (discussing the distribution of tax burdens at the top). ↑

  5. . See generally Timothy Meyer & Ganesh Sitaraman, Trade and the Separation of Powers, 107 Calif. L. Rev. 583, 590–625 (2019); Douglas A. Irwin, Clashing Over Commerce: A History of U.S. Trade Policy (2017). ↑

  6. . See Anne O. Krueger, Tariff Man Doubles Down, Project Syndicate (Mar. 24, 2025), https://www.project-syndicate.org/commentary/trump-tariff-agenda-means-trouble-for-american-and-global-economies-by-anne-o-krueger-2025-03 [https://perma.cc/DXE5-ZXX6]. ↑

  7. . See Lindsay Wise, Katy Stech Ferek & Alex Leary, Trump Floats ‘All-Tariff’ Federal Revenue System in Return to Capitol Hill, Wall St. J. (June 13, 2024), https://www.wsj.com/politics/
    elections/trump-to-return-to-capitol-hill-for-first-time-since-jan-6-riot-f8b9b082 [https://perma.cc/2N3
    K-GFUT]; Agenda47: President Trump’s New Trade Plan to Protect American Workers, Donald J. Trump (Feb. 27, 2023), https://www.donaldjtrump.com/agenda47/agenda47-president-trumps-new-trade-plan-to-protect-american-workers [https://perma.cc/UR44-PEMV]. ↑

  8. . See infra Part II. ↑

  9. . Anthony DeBarros, U.S. Collected a Record $16.3 Billion in Customs Duties in April, Wall St. J. (May 12, 2025), https://www.wsj.com/livecoverage/stock-market-today-tariffs-trade-war-05-12-2025/card/u-s-collected-a-record-16-3-billion-in-customs-duties-in-april-xgzJO1QrMJMzGev81FAH [https://perma.cc/TGZ5-9L2Q]. ↑

  10. . Tobias Burns, Customs Duties Hit New Record in August on Tariff Revenues, The Hill (Sept. 11, 2025), https://thehill.com/business/5499132-customs-duties-hit-new-record-in-august-on-tariff-reve
    nues [https://perma.cc/GY98-X3L2]. ↑

  11. . Marina Azzimonti, Jacob Titcomb & John O’Trakoun, How Much Revenue Has Been Raised by Tariffs So Far?, Fed. Rsrv. Bank Rich. (Jan. 13, 2026), https://www.richmondfed.org/research/
    national_economy/macro_minute/2026/how_much_revenue_raised_by_tariffs_so_far [https://perma.
    cc/44SH-K38U]. In late February 2026, a splintered Supreme Court struck down tariffs levied pursuant to the International Emergency Economic Powers Act (IEEPA). Learning Res., Inc. v. Trump, 146 S. Ct. 628 (2026). Following the Supreme Court’s opinion, the Court of International Trade ordered nation-wide tariff refunds. Amended Order, Atmus Filtration, Inc. v. United States (No. 26-01259), 2026 WL 679285 (Ct. Int’l Trade Mar. 5, 2026). But the Trump administration has already employed alternative statutory authorities in seeking to reimpose tariffs like those promulgated under IEEPA. Thus, even if refunds diminish IEEPA-tariff receipts for the 2025 calendar year, future revenue streams from the tariff regime appear durable. See Lawrence J. Liu, No More IEEPA Tariffs? The Legal Bases of an Alternative Regime, 110 Minn. L. Rev. Headnotes 89 (2026) (cataloguing the authorities that could underlie a non-IEEPA tariff regime and highlighting considerations that will affect their future use). ↑

  12. . See Donald J. Marples & Brendan McDermott, Cong. Rsch. Serv., R48313, Overview of the Federal Tax System in 2024, at 2 (2024); supra note 9 and accompanying text (noting record tariff receipts in 2025). ↑

  13. . William Alan Reinsch, The Return of Tariff Man—But Not the One You Were Expecting, CSIS (May 20, 2024), https://www.csis.org/analysis/return-tariff-man-not-one-you-were-expecting [https://
    perma.cc/4F44-Q36N]; see also David E. Bond, Matt Solomon & Ian Saccomanno, United States Finalizes Section 301 Tariff Increases on Imports from China, White & Case (Sept. 17, 2024), https://
    http://www.whitecase.com/insight-alert/united-states-finalizes-section-301-tariff-increases-imports-china [htt
    ps://perma.cc/ZVC8-7XUB]. ↑

  14. . See Kathleen Claussen, Trade’s Security Exceptionalism, 72 Stan. L. Rev. 1097, 1115–25 (2020); Kathleen Claussen & Timothy Meyer, Economic Security and the Separation of Powers, 172 U. Pa. L. Rev. 1955 (2024). ↑

  15. . See Tony Romm & Ana Swanson, The Trade Statutes Trump Will Use to Keep Imposing Tariffs, N.Y. Times (Feb. 20, 2026), https://www.nytimes.com/2026/02/20/us/politics/trump-other-options-tariffs.html [https://perma.cc/4XFN-NCSP] (describing the legal authorities cited by the President in his press conference shortly after the Supreme Court’s decision); Liu, supra note 9. ↑

  16. . E.g., Learning Res., 146 S. Ct. at 637 (holding that IEEPA does not authorize tariffs); Kimberly A. Clausing & Mary E. Lovely, Peterson Inst. for Int’l Econ., Policy Brief No. 24-1, Why Trump’s Tariff Proposals Would Harm Working Americans (2024), https://www.piie
    .com/sites/default/files/2024-05/pb24-1.pdf [https://perma.cc/SLH7-GFG3]; Adam S. Hersh & Josh Bivens, Tariffs—Everything You Need to Know but Were Afraid to Ask, Econ. Pol’y Inst. (Mar. 28, 2025), https://www.epi.org/publication/tariffs-everything-you-need-to-know-but-were-afraid-to-ask/
    [https://perma.cc/V68G-5VBV]; see Reuven S. Avi-Yonah, Doron Narotzki & Tamir Shanan, From Relic to Relevance, the Resurgence of Tariffs, 77 U.C. L.J. 497 (2026); Jennifer Hillman, Trump’s Use of Emergency Powers to Impose Tariffs Is an Abuse of Power, Lawfare (Mar. 24, 2025), https://www
    .lawfaremedia.org/article/trump-s-use-of-emergency-powers-to-impose-tariffs-is-an-abuse-of-power [htt
    ps://perma.cc/2G4T-FF6D]; Ed Gresser, Progressive Pol’y Inst., Trade Policy, Equity, and the Working Poor: United States MFN Tariffs Are Regressive Taxes Which Help Few Workers and Harm Many (2022), https://www.progressivepolicy.org/wp-content/uploads/2022/04/Trade-Poli
    cy-Equity-and-the-Working-Poor-ITC-Report_FINAL.pdf [https://perma.cc/5TE6-6SZG]. ↑

  17. . Importantly for this Article (and for critics of the external-revenue regime on distributive-justice grounds), the argument about the regressivity of tariffs stands even if consumers do not bear the entire economic incidence. That is, the costs of tariffs might be borne by a combination of consumers (who pay higher prices for imported goods), foreign manufacturers (who increase prices for their products, but not as much as the imposed tariffs, thus bearing a portion of the cost to compensate for the decline in demand due to increased price), importers or retailers (who pass some portion of the tariffs’ costs to consumers in the form of increased prices and absorb the rest in the form of reduced profits), or even foreign consumers (whose country devalues its currency in response to tariffs). If domestic consumers bear at least a significant part of the burden—and preliminary data suggest that they do—tariffs will have a regressive distributive effect. See Mary Amiti, Chris Flanagan, Sebastian Heise & David E. Weinstein, Who Is Paying for the 2025 U.S. Tariffs?, Fed. Rsrv. Bank N.Y.: Liberty St. Econ. (Feb. 12, 2026), https://libertystreeteconomics.newyorkfed.org/2026/02/who-is-paying-for-the-2025-u-s-tariffs [https://perma.cc/3T28-7DTJ] (“In sum, U.S. firms and consumers continue to bear the bulk of the economic burden of the high tariffs imposed in 2025.”); Ruth Simon, The Break Is Over. Companies Are Jacking Up Prices Again., Wall St. J. (Feb. 15, 2026), https://www.wsj.com/
    business/price-increases-consumers-businesses-b70e4542 [https://perma.cc/2JXY-LZMA]. Further, importers and retailers may pass the costs of the tariff regime to consumers through not only price increases (which contribute to broader inflationary pressures) but also indirect recovery mechanisms like the terms of seller-financing. See, e.g., Kristine W. Hankins, Morteza Momeni & David Sovich, Consumer Credit and the Incidence of Tariffs: Evidence from the Auto Industry, 116 Am. Econ. Rev. 627, 627 (2026) (showing that “consumers received higher interest rates from captive [automobile] lenders after the tariffs relative to unaffected noncaptive lenders” and noting “a disparate impact on low-income borrowers”). ↑

  18. . See, e.g., William G. Gale, Raising Revenue with a Progressive Value-Added Tax, in Tackling the Tax Code: Efficient and Equitable Ways to Raise Revenue 191 (Emily Moss, Ryan Nunn & Jay Shambaugh eds., 2020); Manoj Viswanathan, Implementing a (Modern) Progressive Consumption Tax, 41 Va. Tax Rev. 241 (2022); Steven A. Bank, The Progressive Consumption Tax Revisited, 101 Mich. L. Rev. 2238 (2003) (book review). But see Michael J. Graetz, Implementing a Progressive Consumption Tax, 92 Harv. L. Rev. 1575 (1979). ↑

  19. . See infra Sections III.B, III.C. ↑

  20. . Bureau of the Census, Historical Statistics of the United States, 1789–1945, at 298 (1949) (showing $3,669,960 of total federal receipts in 1792, of which $3,443,071 came from customs). ↑

  21. . See id. at 297 (showing $50,826,796 of total federal receipts in 1836, of which $24,877,180 derived from the sale of public lands and $23,409,941 from customs, and showing $333,714,605 of total federal receipts in 1865, of which $60,979,329 derived from income and profits taxes and $84,928,261 from customs). ↑

  22. . Revenue Act of 1862, ch. 119, § 90, 12 Stat. 432, 473 (levying a tax “upon the annual gains, profits, or income of every person residing in the United States”); see Alex Zhang, Essay, Fiscal Citizenship and Taxpayer Privacy, 125 Colum. L. Rev. 235, 247–48 (2025) (describing the Civil War income tax); Sheldon D. Pollack, The First National Income Tax, 1861–1872, 67 Tax Law. 311 (2014). ↑

  23. . Revenue Act of 1864, ch. 173, § 116, 13 Stat. 223, 281. ↑

  24. . Wilson-Gorman Tariff Act, ch. 349, § 27, 28 Stat. 509, 553 (1894); F.W. Taussig, The Tariff History of the United States 284–320 (4th ed. 1899) (describing electoral backlash to the high burdens imposed by the protectionist McKinley tariffs, and the complex politics that led to the Wilson-Gorman Act, which reduced but did not radically reform the tariff regime). ↑

  25. . Pollock v. Farmers’ Loan & Tr. Co., 158 U.S. 601 (1895). For criticism of Pollock, see, for example, Bruce Ackerman, Taxation and the Constitution, 99 Colum. L. Rev. 1, 4–5 (1999); Alex Zhang, Rethinking Eisner v. Macomber, and the Future of Structural Tax Reform, 92 Geo. Wash. L. Rev. 179, 192–94 (2024). ↑

  26. . U.S. Const. amend. XVI. ↑

  27. . Revenue Act of 1913, ch. 16, §§ II(A), II(C), 38 Stat. 114, 166, 168 (levying a 1 percent normal tax on income—subject to a $3,000 deduction for all filers and a $1,000 bonus deduction for those with a spouse, and additional taxes ranging from 1 percent to 6 percent for income exceeding $20,000). ↑

  28. . Bureau of the Census, supra note 18, at 296 (showing customs totaling $225,962,393 and receipts from income and profit taxes totaling $359,681,228 in 1917). Income-tax receipts ballooned the next year and outstripped customs almost thirteen to one, as the War Revenue Act of 1917, ch. 63, §§ 1–2, 40 Stat. 300, 300–01, dramatically raised income-tax rates. ↑

  29. . Press Release, Janet L. Yellen, Sec’y of Treas., and Shalanda D. Young, Dir. of Off. of Mgmt. and Budget, Joint Statement on Budget Results for Fiscal Year 2024 (Oct. 18, 2024), https://home.
    treasury.gov/news/press-releases/jy2657 [https://perma.cc/7CRX-JMVK] (showing $4.919 trillion of total federal receipts, of which $2.426 trillion derived from individual income taxes). ↑

  30. . Federal Receipts and Net Outlays as Percent of Gross Domestic Product, Fed. Rsrv. Bank St. Louis (2025), https://fred.stlouisfed.org/graph/?g=ockN [https://perma.cc/E97K-KNGM]. ↑

  31. . Jason S. Oh, Are Progressive Tax Rates Progressive Policy?, 92 N.Y.U. L. Rev. 1909, 1910 (2017) (describing marginal rate progressivity, under which “[a]s taxpayers earn more income, the tax rate they face on each additional dollar increases,” as “a near universal feature of statutory income tax rates”). ↑

  32. . Revenue Act of 1913 §§ II(A), II(C), 38 Stat. at 166, 168. The Civil War income tax featured even fewer brackets. See, e.g., Revenue Act of 1862, ch. 119, § 90, 12 Stat. 432, 473 (taxing income at two marginal rates: 3 percent and 5 percent). ↑

  33. . Revenue Act of 1916, ch. 463, § 1(a)–(b), 39 Stat. 756, 756–57 (levying a 2 percent normal tax on net income and a 13 percent additional tax on net income in excess of $2 million). ↑

  34. . War Revenue Act of 1917, ch. 63, §§ 1–2, 40 Stat. 300, 300–01 (levying, in addition to the normal tax and additional tax levied by the Revenue Act of 1916 § 1(a)–(b), a 2 percent like normal tax on net income and a 50 percent like additional tax on income in excess of $1 million). ↑

  35. . See Ajay K. Mehrotra, Making the Modern American Fiscal State: Law, Politics, and the Rise of Progressive Taxation, 1877-1929, at 33, 349–408 (2013) (describing the “paradoxical process of retrenchment” in which “Mellon and like-minded Republicans swiftly dismantled the steeply progressive rate structure of the wartime tax regime”). ↑

  36. . E.g., Revenue Act of 1926, ch. 27, §§ 210–211, 44 Stat. 9, 21–22 (reducing individual income tax burdens but preserving the graduated rate structure). ↑

  37. . I.R.C. § 1. ↑

  38. . Carolyn C. Jones, Class Tax to Mass Tax: The Role of Propaganda in the Expansion of the Income Tax During World War II, 37 Buff. L. Rev. 685 (1988); Who Will Pay No Federal Individual Income Tax in 2025?, Tax Pol’y Ctr. (June 4, 2025), https://taxpolicycenter.org/fiscal-facts/who-will-pay-no-federal-individual-income-tax-2025 [https://perma.cc/4H5M-85T4] (estimating that 60 percent of American households will pay federal income taxes in 2025). ↑

  39. . Revenue Act of 1867, ch. 169, § 13, 14 Stat. 471, 478 (levying “a tax of five per centum on [net income] so derived over one thousand dollars”); Revenue Act of 1870, ch. 255, § 6, 16 Stat. 256, 257 (levying, for 1870 and 1871, “and no longer, a tax of two and one half per centum upon the gains, profits, and income of every person residing in the United States, and of every citizen of the United States residing abroad”). ↑

  40. . See Bureau of the Census, supra note 18, at 297 (showing receipts from income and profit taxes totaling $72,982,159 and customs totaling $179,046,652 in 1866); id. at 296 (showing receipts from income and profit taxes totaling $80,201,759 in 1915). ↑

  41. . The Civil War income tax provided an exemption amount of $600. See Revenue Act of 1864, ch. 173, § 116, 13 Stat. 223, 281. At that time, laborers made roughly $0.92 to $1.50 per day. Bureau of Lab. Stat., U.S. Dep’t of Lab., History of Wages in the United States from Colonial Times to 1928, at 254 tbl.G-1 (1934), https://fraser.stlouisfed.org/title/history-wages-united-states-colonial-times-1928-4126 [https://perma.cc/LJ6U-LSNE] (showing a low average compensation of $0.92 per day for laborers in Rhode Island in 1864, and a high average compensation of $1.50 per day for laborers in Ohio). ↑

  42. . Wilson-Gorman Tariff Act, ch. 349, § 27, 28 Stat. 509, 553 (1894). ↑

  43. . Pollock v. Farmers’ Loan & Tr. Co., 158 U.S. 601 (1895); supra notes 22–23 and accompanying text. ↑

  44. . Tax Reform Act of 1986, Pub. L. No. 99-514, § 101, 100 Stat. 2085, 2096 (taxing income at 15 percent and 28 percent). ↑

  45. . Omnibus Budget Reconciliation Act of 1990, Pub. L. No. 101-508, § 11101, 104 Stat. 1388, 1388–403; Michael J. Graetz, Tax Reform Unraveling, 21 J. Econ. Persps. 69, 71 (2007) (describing the “Omnibus Budget Reconciliation Act of 1990 [as] a bipartisan deficit-reduction measure that broke George H.W. Bush’s famous ‘no new taxes pledge,’ probably costing him reelection”). ↑

  46. . E.g., Omnibus Budget Reconciliation Act of 1993, Pub. L. No. 103-66, § 13202, 107 Stat. 312, 461 (adding surtax marginal rates of 36 percent and 39.6 percent on “high-income taxpayers”). ↑

  47. . Louis Kaplow, A Distribution-Neutral Perspective on Tax Expenditure Limitations, 31 Tax Pol’y & Econ. 161, 172 (2017) (“An example of particular note is the Tax Reform Act of 1986, which (speaking roughly) broadened the base by reducing tax expenditures and simultaneously lowered rates, and in a manner that linked the two together, specifically, to achieve distribution neutrality (as well as revenue neutrality).”). ↑

  48. . See supra notes 29–35 and accompanying text. ↑

  49. . Akcan Balkir, Emmanuel Saez, Danny Yagan & Gabriel Zucman, Estimating Tax Burdens by Wealth Groups 10 tbl.1 (Feb. 28, 2025) (IRS Statistics of Income working paper), https://www.irs.gov
    /pub/irs-soi/24rpestimatingtaxburdens.pdf [https://perma.cc/T4MH-MZ69]; Yale Univ. Budget Lab, Who Is Paying Their Fair Share of Taxes?: A New Analysis and Interactive Tool (Nov. 15, 2024), https://budgetlab.yale.edu/sites/default/files/2024-09/The%20Budget%20Lab%20Horizontal%2
    0Equity%20Report%202024.pdf [https://perma.cc/4GMY-BDT8%5D. ↑

  50. . Yale Univ. Budget Lab, supra note 47, at 2. ↑

  51. . E.g., Brian Galle, David Gamage & Darien Shanske, Solving the Valuation Challenge: The ULTRA Method for Taxing Extreme Wealth, 72 Duke L.J. 1257, 1259–61 (2023); Alex Zhang, The Forgotten Income-Attribution Power, 135 Yale L.J. 923 (2026). ↑

  52. . E.g., Lily Batchelder & David Kamin, Policy Options for Taxing the Rich, in Maintaining the Strength of American Capitalism 200 (Melissa S. Kearney & Amy Ganz eds., 2019). ↑

  53. . Yale Univ. Budget Lab, supra note 47, at 2. ↑

  54. . U.S. Const. art. I, § 8, cl. 1; id. amend. XVI. ↑

  55. . Steven A. Bank, Origins of a Flat Tax, 73 Denv. U. L. Rev. 329, 333 (1996) (“The history of income taxation in this country before and immediately after the ratification of the Sixteenth Amendment, however, reveals a struggle of more than fifty years to replace a regressive tax system with a proportional, not progressive, one.”); cf. Akhil Reed Amar, Comment, Our Forgotten Constitution: A Bicentennial Comment, 97 Yale L.J. 281, 291 (1987) (“The popular legislative history of [the Sixteenth Amendment’s] ratification reveals not merely an endorsement of an income tax simpliciter, but popular approval of a predictably progressive—that is, a redistributive—income tax.”). ↑

  56. . Bank, supra note 53, passim. ↑

  57. . K. N. Llewellyn, The Constitution as an Institution, 34 Colum. L. Rev. 1, 30 (1934). ↑

  58. . Ernest A. Young, The Constitution Outside the Constitution, 117 Yale L.J. 408, 410 (2007). ↑

  59. . Id. at 412–13. ↑

  60. . Id. at 416. ↑

  61. . Id. at 412. ↑

  62. . Id. at 443–48. ↑

  63. . See id.; Bank, supra note 53, passim; Amar, supra note 53, at 291. ↑

  64. . We thank Samuel Bagenstos for flagging this distinction. ↑

  65. . A version of this point has played out in an influential strand of the law and economics literature. See, e.g., Louis Kaplow & Steven Shavell, Why the Legal System Is Less Efficient than the Income Tax in Redistributing Income, 23 J. Legal Stud. 667 (1994); Zachary Liscow, Redistribution for Realists, 107 Iowa L. Rev. 495 (2022). ↑

  66. . Indeed, the discrepancy between the statutory scheme (which suggests that high-income groups are generally subject to a tax rate of 37 percent on their marginal income) and the actual distribution of burdens (which vary widely from the perceived 37 percent marginal rate) already contributes to cognitive biases that reduce mobilization for egalitarian tax reform despite rising economic inequality. E.g., Alex Zhang, Tax Procedure and Distributive Discourse: The Case of Classical Athens, 73 Am. J. Compar. L. 747 (2025). The regressive distributive effects of tariffs add to these biases that distort democratic fiscal governance. This is especially the case because the burdens of income taxes tend to be much more salient than those of consumption taxes like tariffs, and because President Trump has made repeated claims that foreign countries rather than Americans bear the costs of tariffs—claims whose accuracy scholars have contested. See infra note 117 (describing scholars’ conclusion that domestic importers and consumers have borne most of the costs of tariffs). ↑

  67. . Bank, supra note 53, at 333 (arguing that the slightly progressive rate structure was originally designed “to equalize the overall regressive effects of the tariffs and internal excise taxes which provided the federal government with the bulk of its revenues”). ↑

  68. . Bureau of the Census, supra note 18, at 295–96. ↑

  69. . What Are the Sources of Revenue for the Federal Government?, Tax Pol’y Ctr. (Jan. 2024), https://taxpolicycenter.org/briefing-book/what-are-sources-revenue-federal-government [https://perma
    .cc/TGZ4-TFQ9]. ↑

  70. . Topic No. 751, Social Security and Medicare Withholding Rates, Internal Revenue Serv. (Jan. 20, 2026), https://www.irs.gov/taxtopics/tc75 [https://perma.cc/3Y4P-YTGA]. Exceptions include Medicare and Additional Medicare Taxes. Id. ↑

  71. . See id. ↑

  72. . Who Has Capital Gains?, Tax Pol’y Ctr. (Nov. 26, 2024), https://taxpolicycenter.org/
    fiscal-facts/who-has-capital-gains [https://perma.cc/UE4F-2UTZ] (“Those earning at least $1 million realized 69 percent of all long-term capital gains in 2021, with those earning at least $10 million realizing 42 percent of the total.”). ↑

  73. . McCaffery, supra note 2, at 1292 fig.14. ↑

  74. . See infra notes 102–104 and accompanying text. ↑

  75. . See supra note 15 and accompanying text. ↑

  76. . Agenda47, supra note 5. ↑

  77. . For a helpful summary of the President’s tariff actions since taking office again in January 2025, see Talya Minsberg, A Timeline of Trump’s On-Again, Off-Again Tariffs, N.Y. Times (Oct. 14, 2025), https://www.nytimes.com/2025/03/13/business/economy/trump-tariff-timeline.html [https://per
    ma.cc/73TY-FZF7]. ↑

  78. . See Danielle Kurtzleben, Trump Unveils Sweeping 10% Tariff and ‘Reciprocal’ Tariffs on Dozens of Nations, NPR (Apr. 2, 2025), https://www.npr.org/2025/04/02/nx-s1-5345802/trump-tariffs-liberation-day [https://perma.cc/2G8U-RYFR]. ↑

  79. . See Minsberg, supra note 75. ↑

  80. . State of U.S. Tariffs: August 7, 2025, Yale Univ. Budget Lab (Aug. 7, 2025), https://
    budgetlab.yale.edu/research/state-us-tariffs-august-7-2025 [https://perma.cc/WJT7-DTCS]. ↑

  81. . Kevin Breuninger, Trump Says He Reached Greenland Deal ‘Framework’ with NATO, Backs Off European Tariffs, CNBC (Jan. 21, 2026), https://www.cnbc.com/2026/01/21/trump-tariffs-nato-greenland-davos.html [https://perma.cc/ZC2U-WW3Z]. ↑

  82. . See Ana Swanson, Trump’s Trade War with China Is Officially Underway, N.Y. Times (July 5, 2018), https://www.nytimes.com/2018/07/05/business/china-us-trade-war-trump-tariffs.html [https://
    perma.cc/8JB4-P5VV]; Christine Wang, Trump Threatens to Withdraw from World Trade Organization, CNBC (Aug. 30, 2018), https://www.cnbc.com/2018/08/30/trump-threatens-to-withdraw-from-world-trade-organization.html [https://perma.cc/7X4E-F7DB]; Glenn Thrush, Trump’s Use of National Security to Impose Tariffs Faces Court Test, N.Y. Times (Dec. 19, 2018), https://www.nytimes.com/
    2018/12/19/us/politics/trump-national-security-tariffs.html [https://perma.cc/ZD8C-MYV8]. ↑

  83. . See, e.g., Bryce Baschuk, Biden Picks Up Where Trump Left Off in Hard-Line Stances at WTO, Bloomberg News (Feb. 22, 2021), https://www.bloomberg.com/news/articles/2021-02-22/bi
    den-picks-up-where-trump-left-off-in-hard-line-stances-at-wto [https://perma.cc/DU5X-UQFX]; Ryan Mulholland & Mike Williams, The Biden Administration’s Targeted, Strategic Tariffs Are Effective Industrial Policy at Work, Ctr. for Am. Progress (May 29, 2024), https://www.americanprogress.org
    /article/the-biden-administrations-targeted-strategic-tariffs-are-effective-industrial-policy-at-work [http
    s://perma.cc/5WEZ-T38X]; U.S. President Biden Raises Tariffs on Russian Imports, Curtis (June 28, 2022), https://www.curtis.com/our-firm/news/u-s-president-biden-raises-tariffs-on-russian-imports [htt
    ps://perma.cc/U23U-X5SF]. ↑

  84. . See Cory Adkins & David Singh Grewal, Two Views of International Trade in the Constitutional Order, 94 Tex. L. Rev. 1495 (2016); Meyer & Sitaraman, supra note 3, at 612–25; Claussen, supra note 12, at 1109–15. ↑

  85. . These numbers come from the Office of Analysis and Research Services within the International Trade Commission. See U.S. Int’l Trade Comm’n, U.S. Imports for Consumption, Duties Collected, and Ratio of Duties to Value, 1891-2025 (2026), https://www.usitc.gov/
    documents/dataweb/ave_table.pdf [https://perma.cc/G86B-QQ7R]. ↑

  86. . See Meyer & Sitaraman, supra note 3, at 590–625. ↑

  87. . See Claussen, supra note 12; Claussen & Meyer, supra note 12. ↑

  88. . Claussen, supra note 12, at 1115–22. ↑

  89. . 50 U.S.C. §§ 1701–07. Although the Supreme Court has held that IEEPA does not authorize the imposition of tariffs, it did not “attempt to set forth the metes and bounds of the President’s authority to ‘regulate . . . importation’” via non-tariff measures. Learning Res., Inc. v. Trump, 146 S. Ct. 628, 643 (2026). ↑

  90. . 19 U.S.C. § 1862. ↑

  91. . Id. § 2251. ↑

  92. . Claussen, supra note 12, at 1122–25. The exercise of many, though not all, of these statutory authorities involves varying amounts of administrative process. See Lawrence J. Liu, Opening the Tariff Toolkit: The Demand for U.S. Administrative Trade Remedies, 101 N.Y.U. L. Rev. 520 (2026); Kathleen
    Claussen, Trade Administration, 107 Va. L. Rev. 845 (2021). ↑

  93. . 19 U.S.C. § 2411. ↑

  94. . Id. § 1338. ↑

  95. . See Claussen, supra note 12; Claussen & Meyer, supra note 12. For more general discussions of the impact of national security rhetoric on global economic affairs in the United States, but also elsewhere, see J. Benton Heath, The New National Security Challenge to the Economic Order, 129 Yale L.J. 1020 (2020); Harlan Grant Cohen, The International Order, International Law, and the Definition of Security, 47 Mich. J. Int’l L. 1, 28–36 (2026). ↑

  96. . See Liu, supra note 90; Claussen, supra note 12, at 1117. Notably, although many of these moves were initiated by presidential action, still many others were triggered following petitions by private actors. And, the popularity of the antidumping and countervailing duty laws, for instance, continues. See Liu, supra note 90. ↑

  97. . Brad W. Setser, How Court Rulings Could Affect Trump’s Aggressive Trade Policies, Council on Foreign Rels. (Aug. 31, 2025), https://www.cfr.org/expert-brief/how-court-rulings-could-affect-trumps-aggressive-trade-policies [https://perma.cc/67D8-5H37] (describing how IEEPA underlies “the bulk of the tariffs” that the President has imposed in 2025); Hillman, supra note 14. ↑

  98. . Learning Res., Inc. v. Trump, 146 S. Ct. 628, 637 (2026). It is worth noting that the Court’s decision invalidated the use of IEEPA to impose tariffs, but not necessarily a future use of IEEPA to impose other non-tariff trade restrictions explicitly stated in the statute. ↑

  99. . See Liu, supra note 9. ↑

  100. . See Fact Sheet: President Donald J. Trump Declares National Emergency to Increase Our Competitive Edge, Protect Our Sovereignty, and Strengthen Our National and Economic Security, White House (Apr. 2, 2025), https://www.whitehouse.gov/fact-sheets/2025/04/fact-sheet-president-donald-j-trump-declares-national-emergency-to-increase-our-competitive-edge-protect-our-sovereignty-and-strengthen-our-national-and-economic-security [https://perma.cc/8PR7-98VU]; David Goldman, Tariffs, Explained: What Trump Wants from All These Trade Deals, CNN (July 7, 2025), https://www.cnn
    .com/2025/07/07/economy/tariffs-trump-deals-explained [https://perma.cc/3KPC-5R23]. ↑

  101. . See Mark Jia, American Law in the New Global Conflict, 99 N.Y.U. L. Rev. 636, 652–53 (2024); Peter S. Goodman, The Rise and Fall of the World’s Most Successful Joint Venture, N.Y. Times (Nov. 14, 2023), https://www.nytimes.com/2023/11/14/business/us-china-economy-trade.html [https://
    perma.cc/4UC4-44CS]; Greg Ip, A China-U.S. Decoupling? You Ain’t Seen Nothing Yet, Wall St. J. (Feb. 7, 2024), https://www.wsj.com/economy/trade/a-china-u-s-decoupling-you-aint-seen-nothing-yet-12c0828e [https://perma.cc/AXR9-3YUX]; Damien Cave, How ‘Decoupling’ From China Became ‘De-risking’, N.Y. Times (May 22, 2023), https://www.nytimes.com/2023/05/20/world/decoupling-china-de-risking.html [https://perma.cc/FPB6-35B8]. ↑

  102. . Jake Sullivan, Nat’l Sec. Advisor, Remarks at the Brookings Institution (Oct. 23, 2024), https://www.presidency.ucsb.edu/documents/remarks-national-security-advisor-jake-sullivan-the-broo
    kings-institution [https://perma.cc/98B8-6WGJ]. ↑

  103. . See Sannoy Das, Giving Peace a Chance? Decolonization, Development, and the Foundations of the GATT, 49 Yale J. Int’l L. 53 (2024); Patrick J. McDonald, Peace Through Trade or Free Trade?, 48 J. Conflict Resol. 547 (2004). ↑

  104. . Agenda47, supra note 5. ↑

  105. . See Danielle Kurtzleben, Trump’s Tariff Revenue Has Skyrocketed. But How Big Is It, Really?, NPR (Aug. 11, 2025), https://www.npr.org/2025/08/11/g-s1-81934/trump-tariffs-record-reve
    nue [https://perma.cc/35LB-SADY]; Kate Dore, Trump Said ‘There Is a Chance’ Tariff Revenue Could Replace the Income Tax. Economists Are Skeptical, CNBC (Apr. 22, 2025), https://www.cnbc.com
    /2025/04/22/trump-tariffs-replace-income-tax.html [https://perma.cc/NJN7-8MX2]; Scott Lincicome, Opinion, Republicans Can’t Pay for Their Tax Cuts with Fantasy Revenue Sources, Wash. Post (May 26, 2025), https://www.washingtonpost.com/opinions/2025/05/26/trump-tariffs-revenue-big-beautiful-bill [https://perma.cc/AAA7-VS63]. ↑

  106. . Alicia Wallace, New Tariffs Are Generating Billions of Dollars in Revenue, but Bessent Says That Will Go Toward Paying National Debt, CNN (Aug. 19, 2025), https://www.cnn.com/2025/08/19/
    economy/us-tariff-rebate-checks-bessent [https://perma.cc/F8M9-VLX7]; Andrew Duehren, Trump’s Tariffs Are Making Money. That May Make Them Hard to Quit., N.Y. Times (Aug. 3, 2025), https://www.
    nytimes.com/2025/08/03/business/trump-tariffs-how-much-money-debt.html [https://perma.cc/8S7N-KHL8]; Tami Luhby, Trump Is Crowing About His Tariffs Reducing the Debt by $4 Trillion. But There Are Some Caveats, CNN (Aug. 26, 2025), https://www.cnn.com/2025/08/26/politics/us-national-debt-trump-tariffs [https://perma.cc/69C8-PXLG]. ↑

  107. . Learning Res., Inc. v. Trump, 146 S. Ct. 628, 638, 643–44 (2026). ↑

  108. . See, e.g., Kurtzleben, supra note 103; Dore, supra note 103; Ari Hawkins, How Trump’s $150 Billion Tariff Brag Could Backfire, Politico (Aug. 6, 2025), https://www.politico.com/news/2025/08/
    06/how-trumps-150-billion-brag-could-backfire-00494882 [https://perma.cc/56QU-BDZC]. ↑

  109. . See Ari Hawkins, Trump Tariff Agency Plan Stalls amid White House Turf Battle, Politico (Aug. 16, 2025), https://www.politico.com/news/2025/08/16/trump-tariffs-lutnick-bessent-imports-eco
    nomy-00512234 [https://perma.cc/DD4C-Q5ZW]. ↑

  110. . See Clausing & Lovely, supra note 14; Gresser, supra note 14; Eduardo Porter & Guilbert Gates, How Trump’s Protectionism Could Backfire, N.Y. Times (Mar. 20, 2018), https://
    http://www.nytimes.com/interactive/2018/03/20/business/how-trumps-protectionism-backfires.html [https://p
    erma.cc/A6AD-W45Y]. ↑

  111. . See Vishaal Sanjay, Trump’s ‘One Big, Beautiful Bill’ Is ‘The Largest Redistribution from Poor to Rich in American History,’ Says Economist Justin Wolfers amid Tax Cuts, Spending Slashes and Tariffs, Yahoo! Finance (June 13, 2025), https://finance.yahoo.com/news/trumps-one-big-beautiful-bill-003121937.html [https://perma.cc/M3R9-J3K8]. ↑

  112. . See Ana Swanson, Trump’s Trade Gamble Will Continue, Despite Supreme Court Rebuke, N.Y. Times (Feb. 21, 2026), https://www.nytimes.com/2026/02/21/business/economy/trump-tariffs-tra
    de-war.html [https://perma.cc/YLR6-US6J]. ↑

  113. . U.S. Int’l Trade Comm’n, Harmonized Tariff Schedule of the United States Revision 22, at General N.1 (2025), https://hts.usitc.gov/reststop/file?release=2025HTSRev22&file
    name=finalCopy [https://perma.cc/E9AD-79HC] (providing the general tariff treatment of “goods . . . imported into the customs territory of the United States”). ↑

  114. . The modern scholarly debate began in earnest with William D. Andrews, A Consumption-Type or Cash Flow Personal Income Tax, 87 Harv. L. Rev. 1113 (1974). Andrews’s proposal of a consumption tax generated voluminous echoes (e.g., on the grounds of efficiency, administrative ease compared to an income tax, as well as the potential to incentivize savings and therefore productivity) and criticism (e.g., on the grounds that empirical evidence of a consumption tax’s effect on savings is mixed and that the administrative virtues of a consumption tax depend on unlikely congressional restraint in handing out tax exemptions) in the academy. E.g., Alvin C. Warren, Fairness and a Consumption-Type or Cash Flow Personal Income Tax, 88 Harv. L. Rev. 931 (1975) (criticizing on distributive-justice grounds the decision to tax labor and exempt capital income—a key feature of any consumption tax); Joseph Bankman & David A. Weisbach, The Superiority of an Ideal Consumption Tax over an Ideal Income Tax, 58 Stan. L. Rev. 1413 (2006) (favoring consumption taxation because it produces efficiency gains and can be made progressive like the income tax); Daniel Shaviro, Beyond the Pro-Consumption Tax Consensus, 60 Stan. L. Rev. 745 (2007) (arguing that the assumptions made to justify consumption taxation do not hold). For an overview about how scholarly and policy commentary has evolved on the relative merits of consumption versus income taxation, see, for example, Reuven S. Avi-Yonah, The Rise and Fall of the Consumption Tax, 146 Tax Notes 247 (2015). ↑

  115. . E.g., Andrews, supra note 112. But see Graetz, supra note 16 (analyzing the administrative difficulties in implementing progressive consumption taxation). As Avi-Yonah details, the movement to adopt a federal consumption tax lost steam during the late 2000s and mid-2010s because of rising economic inequality, which has shifted the debate to egalitarian reforms like taxing the wealthy. Avi-Yonah, supra note 112. Much of the ultrawealthy’s economic power takes the form of capital appreciation, which a consumption-tax regime does not burden. ↑

  116. . Press Release, Bureau Econ. Analysis, U.S. International Trade in Goods and Services, December and Annual 2024 (Feb. 5, 2025), https://www.bea.gov/news/2025/us-international-trade-goo
    ds-and-services-december-and-annual-2024 [https://perma.cc/289H-Y6S2]. ↑

  117. . For a discussion of the various approaches, see Viswanathan, supra note 16, at 245–54. Two other common proposals to implement progressive consumption taxation are (1) deducting savings to indirectly measure and then tax consumption or (2) taxing wages. Neither is well-suited to the tariff context because tariffs are only levied on a subset of a consumer’s purchases, i.e., the consumption of imported goods. ↑

  118. . Christopher A. Casey, Cong. Rsch. Serv., IF11030, U.S. Tariff Policy: Overview (2025). ↑

  119. . See supra note 15 and accompanying text; Heidi E. Crebo-Rediker, Benn Steil, Erin D. Dumbacher, David M. Hart & Linda Robinson, Visualizing 2026: Five Foreign Policy Trends to Watch, Council on Foreign Rels. (Dec. 17, 2025), https://www.cfr.org/articles/visualizing-2026-five-foreign
    -policy-trends-watch [https://perma.cc/2HAF-TSRA]; Julian Hinz, Aaron Lohmann, Hendrik Mahlkow & Anna Vorwig, Kiel Inst. for World Econ., Kiel Pol’y Brief No. 201, America’s Own Goal: Who Pays the Tariffs? 7 (2026), https://www.kielinstitut.de/fileadmin/Dateiverwaltung/
    IfW-Publications/fis-import/92fb3f30-07b8-4dcf-b2bc-fbefb831f1a1-KPB201_EN.pdf [https://perma.
    cc/958N-644W] (noting that American importers and consumers have borne 96 percent of the tariff costs). As one illustration of this shift, the Trump administration decided to exempt agricultural imports like coffee, cocoa, and bananas from higher tariff rates after distributors raised prices on those and other products. See Luke Fountain, Trump Cuts Tariffs on Goods like Coffee, Bananas and Beef in Bid to Slash Consumer Prices, CNBC (Nov. 15, 2025), https://www.cnbc.com/2025/11/14/trump-cuts-tariffs-goods-prices.html [https://perma.cc/3SMU-ANGK]. ↑

  120. . See Viswanathan, supra note 16. ↑

  121. . See id. at 257. ↑

  122. . Berhan Bayeh, Isaiah Nardone, Shaun O’Brien & Hailey Phelps, Fed. Rsrv. Fin. Servs., 2025 Findings from the Diary of Consumer Payment Choice 5 (2025), https://www.frbse
    rvices.org/binaries/content/assets/crsocms/news/research/2025-diary-of-consumer-payment-choice.pdf [https://perma.cc/BEZ8-RVYC]. ↑

  123. . Viswanathan, supra note 16, at 257. ↑

  124. . Id. at 258. ↑

  125. . If maintenance of a government database proves too cumbersome, the companies facilitating payments could be relied upon to collect and share this information instead. This would, however, preclude the recording of any cash transactions. ↑

  126. . See Viswanathan, supra note 16, at 260. ↑

  127. . See William Turton, Christopher Bing & Avi Asher-Schapiro, The IRS Is Building a Vast System to Share Millions of Taxpayers’ Data with ICE, ProPublica (July 15, 2025), https://www.pro
    publica.org/article/trump-irs-share-tax-records-ice-dhs-deportations [https://perma.cc/Z4XM-J4YC]. ↑

  128. . See Robert Goulder, Trump and the External Revenue Service: What Just Happened?, Tax Notes (Jan. 27, 2025), https://www.taxnotes.com/featured-analysis/trump-and-external-revenue-ser
    vice-what-just-happened/2025/01/24/7qj45 [https://perma.cc/BH95-3G74]; Ana Swanson, Trump’s Proposed Tariff Agency Raises Questions, and Confusion, for Experts, N.Y. Times (Jan. 21, 2025), https://www.nytimes.com/2025/01/21/us/politics/trump-tariffs-external-revenue-service.html [https://
    perma.cc/3AVV-CAJ4]; Hawkins, supra note 107. ↑

  129. . See Viswanathan, supra note 16, at 262–63. ↑

  130. . See Harmonized Tariff Schedule – General Information, U.S. Customs & Border Prot. (Feb. 13, 2026), https://www.help.cbp.gov/s/article/Article-1015 [https://perma.cc/EN7H-53WG]. ↑

  131. . See Drew Desilver, U.S. Tariffs Vary a Lot, but the Highest Duties Tend to Be on Imported Clothing, Pew Rsch. Ctr. (Mar. 28, 2018), https://www.pewresearch.org/short-reads/2018/03/28/u-s-tariffs-vary-a-lot-but-the-highest-duties-tend-to-be-on-imported-clothing [https://perma.cc/6DFM-2Z5
    X]. ↑

  132. . This de minimis exemption, which had exempted goods valued at $800 or less from import duties, was stopped by President Trump in August 2025. See Bill Chappell, This Rule Made Many Online Purchases Dirt Cheap for U.S. Consumers. Now It’s Ending, NPR (Aug. 28, 2025), https://www.
    npr.org/2025/08/28/nx-s1-5519361/de-minimis-rule-tariffs-consumers-imports-trump [https://perma.
    cc/H34V-JC3Y]. ↑

  133. . Determining Duty Rates, U.S. Customs & Border Prot. (Nov. 25, 2024), https://www.cbp
    .gov/trade/programs-administration/determining-duty-rates [https://perma.cc/KKC3-RFV2]. ↑

  134. . See supra Part I. ↑

  135. . Bureau Fiscal Serv., U.S. Dep’t of Treasury, Monthly Treasury Statement: Receipts and Outlays of the United States Government for Fiscal Year 2026 Through December 31, 2025, and Other Periods 4 fig. 1 (2026), https://fiscaldata.treasury.gov/static-data/
    published-reports/mts/MonthlyTreasuryStatement_202512.pdf [https://perma.cc/Y9HK-XPZS]. ↑

  136. . See Erica York, Summary of the Latest Federal Income Tax Data, 2025 Update, Tax Found. (Nov. 18, 2024), https://taxfoundation.org/data/all/federal/latest-federal-income-tax-data-2025 [https://
    perma.cc/7DYG-JCWX]. ↑

  137. . American Worker Rebate Act of 2025, S. 2475, 119th Cong. (2025). ↑

  138. . David Goldman & Matt Egan, Trump Says He’ll Eliminate Income Taxes. There’s a Problem with That, CNN (Apr. 28, 2025), https://www.cnn.com/2025/04/28/business/taxes-trump-tariffs [https://
    perma.cc/439H-ELYS]. ↑

  139. . How Much Revenue Has the U.S. Government Collected This Year?, U.S. Dep’t of Treasury, https://fiscaldata.treasury.gov/americas-finance-guide/government-revenue/ [https://perma
    .cc/QJ8L-FL78]. ↑

  140. . Michael J. Graetz, Essay, 100 Million Unnecessary Returns: A Fresh Start for the U.S. Tax System, 112 Yale L.J. 261 (2002). ↑

  141. . See York, supra note 134. ↑

  142. . See Anne L. Alstott, The Earned Income Tax Credit and the Limitations of Tax-Based Welfare Reform, 108 Harv. L. Rev. 533 (1995). ↑

  143. . Scholars have documented these features in the context of the Earned Income Tax Credit. See id.; Danshera Cords, Paid Tax Preparers, Used Car Dealers, Refund Anticipation Loans, and the Earned Income Tax Credit: The Need to Regulate Tax Return Preparers and Provide More Free Alternatives, 59 Case W. Rsrv. L. Rev. 351 (2009); Hadi Elzayn et al., Measuring and Mitigating Racial Disparities in Tax Audits, 140 Q.J. Econ. 113 (2025). ↑

  144. . Susannah Camic Tahk, Public Choice Theory and Earmarked Taxes, 68 Tax L. Rev. 755 (2015). ↑

  145. . Id. at 756. ↑

  146. . Indeed, even among ourselves, we are ambivalent about who should benefit from a tariff regime. We both appreciate the argument that a policy outcome is undesirable if a majority of the population would prefer otherwise. And most of this Article has focused on using tariff revenue to the general benefit of low- or moderate-income groups. At least one of us is sympathetic, however, to the argument that specific groups that have long borne the costs and consequences of imports—say, workers in manufacturing industries—might deserve concentrated benefits even if that comes at the expense of a larger population—say, consumers. And those groups that have historically borne the costs of offshoring and a more globalized economy do not precisely coincide with the lower end of the income distribution. In any event, what is desired as a matter of distributive justice or majority preference is at least contested and depends on our democracy’s views on the relative importance of current-time distributive justice and a more historically anchored view of corrective justice. Such considerations further counsel against stringent earmarking for expenditures. ↑

  147. . See Jocelyn Kiley, Gabriel Borelli, Joseph Copeland & Shanay Gracia, Trump’s Tariffs and ‘One Big Beautiful Bill’ Face More Opposition Than Support as His Job Rating Slips, Pew Rsch. Ctr. (Aug. 14, 2025), https://www.pewresearch.org/politics/2025/08/14/trumps-tariffs-and-one-big-beautiful
    -bill-face-more-opposition-than-support-as-his-job-rating-slips [https://perma.cc/6ENG-XT4P] (showing that 61 percent of Americans either strongly disapprove or somewhat disapprove, and only 38 percent strongly approve or somewhat approve, of “the Trump administration substantially increasing tariffs on goods imported from most countries that trade with the U.S.”); Learning Res., Inc. v. Trump, 146 S. Ct. 628 (2026) (invalidating Trump’s IEEPA tariffs). ↑

  148. . See Press Release, U.S. Dep’t Agric., Trump Administration Announces $12 Billion Farmer Bridge Payments for American Farmers Impacted by Unfair Market Disruptions (Dec. 8, 2025), https://
    http://www.usda.gov/about-usda/news/press-releases/2025/12/08/trump-administration-announces-12-billion
    -farmer-bridge-payments-american-farmers-impacted-unfair [https://perma.cc/AKH4-3W8X]. ↑

  149. . See generally Deborah H. Schenk, Exploiting the Salience Bias in Designing Taxes, 28 Yale J. on Regul. 253 (2011); Alex Zhang, Pandemics, Paid Sick Leaves, and Tax Institutions, 52 Loy. U. Chi. L.J. 383 (2021). ↑

  150. . See Romm & Swanson, supra note 13; Liu, supra note 9. ↑

  151. . See Bureau Fiscal Serv., U.S. Dep’t of Treasury, supra note 133, at 4 fig. 2 (showing a $602 billion federal deficit through December 2025 for fiscal year 2026). ↑

The Origination Clause and the President’s Tariffs

Posted on by Susan C. Morse, Shu-Yi Oei & Diane M. Ring
Morse, Oei & Ring_The Origination Clause and the President’s TariffsDownload

Abstract

The President’s dramatic use of tariffs has unleashed a host of constitutional and statutory interpretation challenges that promise to make new law. In the leading case, Learning Resources, Inc. v. Trump, the Supreme Court struck down presidential tariffs. This represents the beginning, not the end, of modern legal developments on the question of the President’s authority to impose tariffs.

In this Article, we examine the role played by the Origination Clause, together with the Taxing Power Clause, in analyzing presidential tariff powers. We argue that while the Origination Clause does not provide a strong constitutional limit on the President’s power to impose certain tariffs, the Clause holds significance for statutory interpretation, because only a revenue-raising statute can empower the President to impose revenue-raising tariffs. This contribution fits well with the approach of the Learning Resources Court, whose decision relied on statutory interpretation.

Origination Clause case law helps courts identify revenue-raising statutes based on the goal of the legislation and the use of the funds raised. In addition, the legislative process anticipated by the Origination Clause and the Taxing Power Clause demonstrates the Founders’ intent that Congress should identify and treat revenue-raising statutes as such. The fewer indicia that Congress considered a statute to be revenue raising when enacting it, the weaker the case for interpreting it as a revenue-raising statute.

The key issue in Learning Resources was how to interpret the President’s authority under the International Emergency Economic Powers Act (IEEPA) to “regulate” “importation” in an “emergency.” IEEPA (1) does not mention tariffs or taxes and would not be considered a revenue-raising statute under Origination Clause case law and (2) contains no congressional process indicators of being a revenue-raising statute. Accordingly, our statutory interpretation analysis supports the Court’s conclusion that IEEPA did not authorize the President’s 2025 tariffs. It can also support courts’ future analyses of presidential tariff authority under other statutes.

Introduction

The President’s dramatic use of tariffs has unleashed a host of defenses and challenges. The leading case so far is Learning Resources, Inc. v. Trump.[4] This decision is the first in which the Supreme Court has held tariffs imposed by the President unlawful. Statutory interpretation provided the core of the Court’s reasoning, as it decided that the statute did not delegate to the President the tariff powers that he asserted.[5] The Court did not reach the constitutional challenge—that, even if Congress had broadly delegated tariff powers to the President, that grant lacked an intelligible principle and thus violated the nondelegation doctrine.

The taxing provisions of the Constitution—specifically the Taxing Power Clause[6] and the Origination Clause[7]—are at the heart of current tariff debates. These provisions give Congress the power to lay and collect taxes and require that bills for raising revenue must originate in the House. Their existence renders the tariff power an Article I power that Congress may delegate to the President.[8] Accordingly, the tariffs imposed by the President must be consistent with the delegating statute.[9]

What role does the Origination Clause play in analysis of presidential tariff powers? Existing scholarship and litigation documents provide little coverage of this question. We examine it here. We argue, contrary to some suggestions in the literature, that the Origination Clause likely will not provide a strong constitutional limit on the President’s power to impose tariffs.

We also argue that the Clause does hold significance for the statutory interpretation task that was embraced by the Learning Resources Court and that other courts will continue to face as they consider presidential tariff powers in the future. First, the Clause, and case law interpreting it, disfavors permissive readings of statutes as authorizing broad revenue-raising powers. Second, the Clause’s existence emphasizes that congressional bills to raise revenue use specific procedures, which were missing from the statutes the President relied upon to impose new tariffs in Learning Resources. These untapped arguments may prove helpful in future rounds of litigation regarding presidential tariff powers.

We proceed as follows: In Part I, we describe recent developments in tariff law and policy. In Part II, we explore the historical context of the Origination Clause, its periodic invocation by the House, and its examination by the courts over the years. Our analysis reveals that while the Origination Clause has shaped congressional norms, it has rarely played a dispositive role in judicial review.

In Part III, we argue that the Origination Clause typically will not provide a strong constitutional constraint on the President’s tariff powers. The most obvious Origination Clause challenge—an assertion that a tariff-authorizing statute did not originate in the House—was not available for the tariffs challenged in Learning Resources because the underlying statute did originate in the House.[10] Some commentators also identify a different constitutional concern—nondelegation—and suggest that the Origination Clause, in conjunction with the Taxing Power Clause, reduces the ability of Congress to delegate taxing powers.[11] But we also disagree with this notion of a special nondelegation doctrine for tax. Our view is consistent with the Supreme Court’s recent FCC v. Consumers’ Research decision.[12] We also see only limited opportunity for the Origination Clause to function as an effective constitutional constraint through either House enforcement or public action.

In Part IV, we argue that the Origination Clause should, however, affect the statutory interpretation question of whether a law has delegated tariff powers to the President. First, Origination Clause case law contains precedent that helps courts identify revenue-raising statutes based on the goal of the legislation and the use of the funds raised. This analysis should apply in interpreting whether a statute in fact delegates power to the President to raise revenues via tariffs.

Second, the process anticipated by the Origination Clause, together with the Taxing Power Clause, demonstrates the Founders’ intent that Congress should identify and treat revenue-raising statutes as such, and that whether or not Congress did so should be considered in interpreting a statute. Along those lines, Congress has in fact traditionally employed various procedures in considering and enacting revenue legislation. The fewer indicia that Congress considered a statute to be, and treated it as, revenue raising when enacting it, the weaker the case for interpreting it as a revenue-raising statute. This overall statutory interpretation approach holds relevance for analyzing the President’s authority to impose tariffs.

Our proposed focus on statutory interpretation aligns with the approach taken in the Supreme Court’s Learning Resources decision. In Learning Resources, the Supreme Court considered not only the Learning Resources district court decision[13] but also the Federal Circuit’s decision in V.O.S. Selections, Inc. v. Trump.[14] V.O.S. Selections, which arose in the Court of International Trade as the law requires,[15] was the leading case.

The Learning Resources Court affirmed the Federal Circuit’s decision, using similar statutory interpretation reasoning. The Court read the statute and interpreted the President’s authority under the International Emergency Economic Powers Act (IEEPA) to “regulate” “importation” in an “emergency.”[16] The Supreme Court’s decision emphasized that IEEPA’s text does not mention tariffs or taxes and held that the authority to regulate did not include the authority to tax.[17] The opinion explained that IEEPA’s authority to “compel” and “prohibit” is not a greater power that must encompass “tax”; rather, taxes are different, because unlike quotas or embargoes, taxes “raise revenue for the Treasury.”[18] The Court also distinguished case law relating to tariffs imposed by presidents under the authority of other statutes,[19] including a unanimous 1976 Court decision upholding a presidential tariff on oil imports[20] and a 1975 federal appellate court decision upholding a temporary across-the-board 10 percent tariff imposed by the President to encourage other countries to adopt floating exchange rates.[21]

Some commentators emphasize a different aspect of the Learning Resources case—the major questions doctrine (MQD)—which is said to require clearer statements of legislative intent on matters of greater economic or political significance. But as the case reveals, the Justices are split on the application of the MQD in tariff cases, such that it is unclear whether and under what circumstances the MQD will be dispositive in future cases in this area. The MQD sets up an Article I versus Article II conflict in tariff cases, which the Court did not resolve. Some Justices appear to think that the MQD must apply if the President imposes sweeping tariffs.[22] Some Justices think exactly the opposite, that the MQD does not apply to tariff cases, because of the Constitution’s allocation of foreign affairs power to the executive.[23] Another view is that the MQD is part and parcel of textualism.[24] This last middle-of-the-road view, which may well prove the most successful path forward for the Court in finding consensus around the MQD’s application, brings the spotlight back to statutory interpretation.

The Learning Resources Court did not enlist the Origination Clause in support of its decision, but it could have. And this analytical avenue might prove helpful in future cases. Case law interpreting the Origination Clause could be valuable if a court were facing a closer case in interpreting IEEPA or another statute because it helps distinguish between revenue-raising and non-revenue-raising statutes. IEEPA, for example, would not be considered a revenue-raising statute under Origination Clause case law in the first place, and thus could not have been found to violate the Origination Clause even if it had originated in the Senate rather than the House (because the Origination Clause would simply be inapplicable). This line of Origination Clause-based statutory interpretation analysis supports the Supreme Court’s conclusion that IEEPA is not a revenue-raising statute (and thus is incapable of delegating revenue-raising powers), regardless of where the statute originated. As we anticipate more cases about tariffs and presidential power in the future, we can expect statutory interpretation to play an important role in their resolution. Our Origination Clause analysis in this Article contributes to this ongoing project.

I. Presidential Tariffs

A. Executive Orders

Upon taking office in January 2025, President Trump quickly began announcing tariffs on a wide range of goods imported from a wide range of countries. In January and February, he announced planned tariffs on goods from Mexico, Canada, and China in response to concerns about illegal immigration and drug trafficking.[25] On April 2, 2025, he issued an executive order imposing a global, across-the-board tariff of 10 percent, as well as higher country-by-country “reciprocal” tariffs calculated as a percentage equal to half of a specific country’s goods trade deficit divided by that country’s imports from the United States.[26] The country list was comprehensive, including over fifty-five countries plus the European Union, with rates reaching as high as 50 percent.[27] The country-specific tariffs were quickly postponed but were ultimately implemented in August 2025 for most jurisdictions with some revisions.[28]

Concurrently, President Trump also identified plans for new goods-specific tariffs covering, for example, steel, aluminum, automobiles, auto parts, copper, timber, critical minerals, pharmaceuticals, semiconductors, trucks, aircraft and engines, drones, and polysilicon.[29] There has been a vast and constantly changing array of imposed, imposed-and-paused-pending-negotiations, or contemplated tariffs during the Trump presidency. These have generated extensive and ongoing retaliation and countermeasures, negotiations, and announced deals with various countries, as well as litigation by plaintiffs adversely affected by the tariffs.[30]

The tariffs are broad and sweeping and have even been described by the President and the U.S. Secretary of the Treasury as a partial substitute for the income tax.[31] They appear to be intended as a permanent part of the revenue-raising public fiscal system. In 2026, on the day of the Learning Resources decision, an executive order announced a new global, across-the-board tariff of 10 percent, which took effect four days later and was to be in place for 150 days.[32] Meanwhile, the government is preparing to put in place yet more tariffs under other statutory authority after the 150-day window.[33]

B. Authorizing Statutes

Various congressional statutes delegate the ability to set tariff policy to the President.[34] As trade scholars have observed, these statutes can be sorted into two types.[35] One type empowers the President to reduce tariffs, for instance through trade liberalization agreements brokered through international institutions like the General Agreement on Tariffs and Trade and the World Trade Organization.[36] The other type allows the President to increase tariffs by invoking exceptions. For instance, Section 122 allows the imposition of an across-the-board tariff of up to 15 percent for up to 150 days to address “fundamental international payments problems.”[37] Section 232 contains a national security exception,[38] and Section 301 allows the President to respond to other countries’ unfair trade practices.[39] The President also has emergency powers under statutes such as IEEPA.[40]

The President asserts that various statutes, including Section 122, Section 232, Section 301, and IEEPA, authorize him to impose tariffs.[41] He initially made extensive use of IEEPA, which imposes the fewest requirements on the executive branch.[42]

C. Litigation to Date

Unsurprisingly, the President’s attempts to impose tariffs have generated litigation. Because the President relied initially on IEEPA to authorize the 10 percent across-the-board tariff and the “reciprocal” country-specific tariffs, the leading case, V.O.S. Selections, Inc. v. Trump, addressed IEEPA.[43] In V.O.S. Selections, the Federal Circuit affirmed the Court of International Trade’s decision that IEEPA did not authorize the President to impose the April 2 tariffs.[44] The Supreme Court granted certiorari, consolidated the case with Learning Resources, Inc. v. Trump, and heard oral arguments on the consolidated cases on November 5, 2025.[45]

On February 20, 2026, the Supreme Court issued its opinion in Learning Resources. The Learning Resources Court affirmed the Federal Circuit’s V.O.S. Selections decision, using statutory interpretation reasoning. But the Court was split on the application of the major questions doctrine. This contrasted with the approach of the Federal Circuit, which first held under ordinary statutory interpretation principles that IEEPA did not authorize the President’s tariffs, and then also held that interpreting IEEPA to allow the President to impose sweeping tariffs would violate the MQD. The Federal Circuit reasoned that the broad interpretation of the emergency power was unprecedented, that “tariffs are a core Congressional power,” and that the April 2 tariffs were expected to generate more than $2 trillion over ten years.[46] The Federal Circuit in V.O.S. Selections rejected the counterargument that the MQD did not apply because tariff policy involved Article II matters of foreign affairs and national security.[47]

II. The Origination Clause in Historical Context

A. The Origin of the Origination Clause

The Constitution gives Congress the power to tax, stating that “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.”[48] The Origination Clause, Article I, Section 7, Clause 1, provides a further process-related specification for the taxing power, stating that “All Bills for raising Revenue shall originate in the House of Representatives; but the Senate may propose or concur with Amendments as on other Bills.”[49] From the beginning, the Clause’s reference to “Bills for raising revenue” has been understood to apply to tariffs, imposts, and excises.[50] For the first 150 years after the adoption of the Constitution, tariffs made up the vast majority of federal revenue,[51] and they continue to operate within the context of the larger tax system.[52]

The Clause was enacted as part of the 1787 Great Compromise between small and large states establishing the bicameral legislature: The dissatisfaction of larger, more populous states, who were less well represented in the Senate, was appeased by locating the power to tax in the House, where those large states were better represented.[53] The Framers gave careful attention to the Clause.[54] The House’s agenda-setting power for revenue bills was said to offset not only the disproportionate power of smaller states in the Senate but also other Senate powers, including those relating to approval of executive appointments and treaties.[55] Early tariffs were heavily negotiated in Congress and enacted as extremely detailed statutes.[56] Recent commentators continue to describe the Origination Clause as the Framers’ attempt to locate the power to tax in the legislative body most accountable to the people—the House.[57] As one Supreme Court Justice wrote in dissent in 2025, “As the Framers saw it, ‘the Chamber that is more accountable to the people should have the primary role in raising revenue.’”[58]

B. House Enforcement

The procedural details of how the Origination Clause is enforced by the House have been discussed elsewhere in the literature and in various reports, so we will only describe the key points here.[59]

The initial line of Origination Clause enforcement rests with the House and is undertaken through a process called “blue slipping,” in which the House may defend its authority to originate legislation by making a “blue slip resolution” to return an offending bill to the Senate. Such a resolution may be offered by the Ways and Means Committee chairperson or by other members. Thus, the House is usually the actor that initiates formal enforcement of the Origination Clause power. Short of such formal enforcement, the House also has the ability to act less formally, for example by ignoring a Senate bill, by having problematic provisions removed in conference, or by reporting its own bill.[60] If the House were to decline to enforce its origination prerogative, the Senate could play a role by declining to consider a noncompliant piece of legislation or by ruling that a measure violates Senate rules or procedures and is “out of order.”[61]

The Congressional Research Service reports twenty-five instances between 1991 and 2024 in which the House has “blue-slipped” the Senate by making a resolution to return a bill for Origination Clause violations.[62] These instances include not only measures amending the Internal Revenue Code but also measures imposing economic sanctions, imposing or changing import restrictions on certain goods and countries, or imposing user fees or changing other revenue laws.[63] In addition, there are other steps the House can take to render a piece of legislation Origination Clause-compliant that may be less visible. For example, there were no blue slips in six congressional sessions between 1991 and 2024.[64] But we do not know whether less formal methods achieved Origination Clause compliance. For instance, the House might refuse to consider Senate-reported revenue legislation, strike revenue-related language, or originate its own bill to address the violation.

C. Judicial Interpretations

Origination Clause cases are justiciable, so that courts, as well as the House, may enforce the Clause.[65] In contrast to the House blue-slipping procedure, Origination Clause cases arise in court ex post, after legislation has been enacted. Getting an Origination Clause matter heard by a court is not automatic, but rather arises after a plaintiff suffers injury as a result of the statute, acquires standing, and decides to sue. The Supreme Court has never found an Origination Clause violation.[66]

Under existing case law, there are two different pressure points in determining whether a statute survives an Origination Clause challenge. First, the statute may be unconstitutional under the Clause if it was not originated by the House. Here, courts have applied the “enrolled bill” approach, which traces to the Court’s 1892 decision in Marshall Field & Co. v. Clark; under this approach, legislation will be found compliant with the Origination Clause as long as the bill was appropriately “enrolled” in the congressional records.[67] In Field v. Clark, the plaintiff alleged that a provision had been left out of the 1890 tariff act presented to Congress,[68] but House and Senate leaders attested that the bill was complete through their typical journal entry system.[69] The Court upheld the law and explained that it would not second-guess legislative records indicating that Origination Clause requirements were met.[70] Instead, internal House and Senate records provide dispositive evidence of a bill’s origin.[71]

Second, courts examine the use of the funds raised by a statute to determine whether the statute is a revenue-raising statute subject to the Origination Clause’s requirements at all. If it is not revenue raising, then the statute will not be subject to the Origination Clause’s requirements. Although this approach is sometimes called “purposive,” it does not necessarily examine legislative history or other sources outside the statute’s text. Rather, it is concerned with the purpose or goal for which the funds are collected, as stated in the statute. For instance, the Court used the so-called “purposive” approach in United States v. Munoz-Flores, which involved a special statutory assessment added to a criminal penalty to fund a crime victims’ fund.[72] The Court reasoned that the case did not involve a bill “for raising revenue” because the law funded a specific and narrow goal rather than having the purpose of contributing to the Treasury’s general fund.[73] Justice Antonin Scalia, however, wrote a concurrence advancing the enrolled-bill theory instead as the ground for decision.[74]

In 2015, in Sissel v. United States Department of Health & Human Services, judges on the D.C. Circuit split over whether to apply the “purposive” analysis or the enrolled bill approach to decide that the Affordable Care Act (“ACA”) would survive an Origination Clause challenge.[75] The ACA was a sweeping revision of health care law that included tax provisions that were estimated to raise about $473 billion over ten years.[76] The ACA technically originated in the House as the Service Members’ Home Ownership Act, but the Senate then used a shell bill tactic and passed a “gut and replace” amendment that inserted an entirely new bill.[77] The D.C. Circuit used the “purposive” analysis to uphold the ACA, reasoning that the ACA’s tax provisions funded the regulatory health care objectives of the statute and thus were not “for” raising revenue, even though the ACA tax provisions produced substantial revenue that went into the general fund.[78]

In dissenting from a denial of rehearing en banc, then-Judge Brett Kavanaugh would have adopted the enrolled-bill approach instead.[79] That is, he would have said that the Constitution permits the Senate to amend House bills and that such amendment power lacks any germaneness requirement, so that a bill complies with the Clause as long as the House originates it, even if the Senate does a gut-and-replace amendment.[80] Kavanaugh emphasized the established congressional norm of such sweeping amendments that replace an entire bill’s text.[81] Thus, under Kavanaugh’s approach, there would be no need to reach the purposive analysis.

As discussed further below,[82] the Supreme Court’s decision in FCC v. Consumers’ Research may suggest that the current Court would prefer to avoid an inquiry into whether a bill was “for” raising revenue. In Consumers’ Research, the Court expressed skepticism about the judicial task of distinguishing between statutes that raise revenue and those that do not. Nevertheless, both the enrolled-bill analysis and the “purposive” analysis are available precedent under the Origination Clause. Moreover, the “purposive” analysis is a necessary part of Origination Clause jurisprudence. Consider a statute that originated as a bill in the Senate and plainly had nothing to do with revenue because, for instance, the statute forbade revenue raising or any adjustment to revenue law or policy. If that statute later faced an Origination Clause challenge, a court would need the “purposive” analysis to explain why the statute was not a revenue statute, therefore was not required to originate in the House, and therefore did not violate the Origination Clause.

III. The Origination Clause’s Ineffectiveness as a Constitutional Constraint

We now examine the potential of the Origination Clause acting as a constitutional constraint on broad presidential tariffs and conclude that it is a weak constraint both as a matter of constitutional doctrine and as a matter of pragmatic enforcement. First, current jurisprudence has been unfavorable to finding Origination Clause violations. Second, there is no guarantee that the House will effectively enforce and safeguard its origination powers. Third, public enforcement is also likely to be ineffective.

A. The Argument for the Origination Clause as a Constitutional Constraint

The notion that the Origination Clause could serve as an explicit constitutional limit is not new. Various commentators and litigants have argued that the Origination Clause can and should be relevant in enforcement of the constitutional boundaries of taxing powers.[83] One form of challenge arises where plaintiffs allege that legislation raises revenue but did not originate in the House.[84] This kind of challenge is not available for statutes like IEEPA that originated in the House.[85]

The Origination Clause might also affect analysis under the constitutional nondelegation doctrine, which imposes an “intelligible principle” requirement for statutory delegations of authority. The “intelligible principle” requirement arose from a tariff powers case.[86] However, no tariff power has been invalidated under nondelegation analysis, and indeed nondelegation has been invoked successfully in only two Supreme Court cases.[87]

A nondelegation analysis takes as its starting point that the President’s tariff power must be derived from Article I and from a congressional delegation, rather than from Article II.[88] The Origination Clause helps buttress the argument for viewing Article I as the analytical starting point. Further, some scholars support a more stringent nondelegation doctrine for tax, based on the explicit language of the Origination Clause and the Taxing Power Clause. They argue that the Constitution’s emphatic and repeated placement of the taxing power in the hands of Congress, together with Founding-era historical evidence of the importance placed on the Article I nature of the power, should require a stricter standard for delegating the taxing power to the executive.[89]

Some current Justices also argue for a stricter nondelegation doctrine for tax.[90] This argument for a special nondelegation doctrine for tax would be most relevant in a case where a statute clearly states a delegation of broad taxing powers to the President. In such a case, it would be clear that Congress had tried to delegate sweeping taxing powers, and the dispositive question would be whether the Constitution permitted Congress to delegate such powers.

B. FCC v. Consumers’ Research and Why the Argument Fails

In 2025, the Supreme Court rejected these scholarly conceptions of a special nondelegation doctrine for tax in Federal Communications Commission v. Consumers’ Research.[91] In Consumers’ Research, the Court considered a statute that authorized the FCC to require carrier contributions to fund universal access to telephone and internet service. The Court decided that Congress could constitutionally transfer to the FCC the authority to set the terms of contribution.[92] It concluded that the statute’s authorization to the FCC to raise “sufficient” funds to support access for rural, low-income, school, and hospital users satisfied the intelligible principle test.[93]

The Consumers’ Research Court observed that the intelligible principle test, which arose in the 1928 tariff case J.W. Hampton, Jr., & Co. v. United States,[94] did not suggest that there should be any special nondelegation rule for revenue-raising or tax cases. Likewise, wrote the Court, no special revenue-raising nondelegation rule was applied in Skinner v. Mid-America Pipeline Co., a 1989 decision involving pipeline safety user fees.[95] In Skinner, Justice Sandra Day O’Connor, writing for a unanimous Court, stated that neither the Taxing Power Clause nor the Origination Clause places a special tax constraint on Congress’s power to delegate.[96]

In Consumers’ Research, the Court upheld the statute that authorized the FCC to impose fees for the universal service fund. Justice Elena Kagan wrote for the Court that any special nondelegation approach for tax was contrary to precedent. The Court also wrote that an exceptional nondelegation doctrine for tax would be unworkable, due to the difficulty of distinguishing taxes from fees.[97] Although the majority opinion in Consumers’ Research did not cite either the Origination Clause or the Taxing Power Clause, it referenced “Congress’ taxing power.”[98] The Court’s rejection of a special nondelegation rule for tax indicates that it did not perceive either constitutional clause as a powerful constraint on delegation.

The Consumers’ Research dissent, authored by Justice Neil Gorsuch and joined by Justices Samuel Alito and Clarence Thomas, would have considered nondelegation questions in context, including by referring to the Origination Clause and the Taxing Power Clause.[99] If the Consumers’ Research Court had taken the dissent’s view that the Constitution constrains Congress more tightly with respect to the delegation of taxing power, the prospect of challenging presidential tariff power under a nondelegation theory would be more promising. But as it stands, the Consumers’ Research decision confirms the weak nature of the Origination Clause as a judicially enforced constitutional constraint on what Congress may delegate to the President.

C. The Limits of House Enforcement

The above analysis concludes that the Origination Clause does not provide a strong constitutional limit on what Congress may delegate to the President. Furthermore, in terms of congressional strategy and political process, the likelihood of the House itself successfully asserting its origination power so as to strongly bind assertions of presidential tariff powers is also low. As discussed in Part II, enforcement by the House against Senate encroachment can be formally accomplished via a blue slip resolution, ex ante, before Congress passes legislation.[100] But reliance on the House to police its exclusive grant from the Origination Clause is likely to fail in many circumstances.

In situations where both the House and the Senate are in favor of granting the President extensive tariff powers ex ante and are working in cooperation to enact legislation that does so, little burden would be imposed by the Origination Clause as a constraint on legislation. Congress would simply have to ensure that the revenue legislation commences in the House, which is easily done using strategies such as re-originating a Senate bill in the House or replacing the contents of a House shell bill in the Senate. If that is done, then there would be little room for judicial intervention on constitutional grounds, except by way of a nondelegation challenge, which, as detailed above, would not receive special consideration just because it involves tax. Likewise, even if the House is not actively in favor of granting tariff powers but rather passively declines to object, as long as the House has checked the box by starting the legislative process, Congress has still satisfied the Clause.

Indeed, some commentators examining the legislative dance over who drafts and originates bills have offered a tempered assessment of the relevance of which legislative body moves first. For example, in the context of Affordable Care Act litigation, one observer characterized the congressional strategy over Origination Clause compliance as merely pro forma and carrying limited political leverage. Under this view, even if the Senate thought it was writing a bill that did not raise revenue within the meaning of the “purposive” analysis adopted in Sissel, the Senate would choose to stay on the safe side, as “[t]he prudent course would still be to adhere to the costless formality of amending a House-originated revenue bill.”[101] This logic demonstrates that if the House and Senate support delegation to the President, the Origination Clause does not do much work.

In later-in-time situations where a broad unilateral reading of a pre-existing statute provides the basis for the President’s claim of expansive tariff or other taxing powers, ex post House enforcement will also be constrained. If the legislation claimed to be authorizing the powers did not originate in the House, this would now be a matter for the courts, not the House directly, since the moment available for the blue-slipping procedure would have come and gone. Even if some members of the House or Senate objected to the presidential taxing power grab, the possibility of direct standing to object in court is unclear and uncertain.[102] The more likely remedy would be enactment of a second round of legislation clarifying or explicitly limiting the President’s tariff authority. However, there are well-understood legislative process reasons why getting such legislation through Congress would be difficult.

The situation where legislation was either sloppy or imprecise, or was not perceived by Congress as revenue raising at the time of enactment, raises essentially the same later-in-time issues for House enforcement of the Origination Clause. If the President imposes tariffs based on ambiguous legislation or legislation that Congress had not perceived as revenue raising in nature, direct enforcement of the Origination Clause and the Taxing Power Clause would again fall to the courts. While an objecting House and Senate could safeguard their constitutionally derived powers over taxation by enacting new clarifying legislation that explicitly rejects the President’s claim of delegated tariff authority, the congressional action should not be presumed. There may be a host of political impediments to new legislation actually being passed in a timely fashion.

In short, even though the House theoretically holds the initial constitutional authority to originate taxing legislation, the House is unlikely to systematically safeguard that power. In reality, once the President has claimed broad tariff powers, safeguarding the congressional taxing power and in particular the House origination power will largely fall to the courts.

D. The Limits of Public “Enforcement”

What about the ability of “the public” to put pressure on the House to take its constitutional role of origination more seriously? As Section II.A discussed, the existence and placement of the Origination Clause is a statement about the structure of government and the expectation that the House—the chamber closest to the people—will think seriously about legislation that effectively constitutes taxation and not merely act as a rubber stamp.[103] Some commenters have noted that if the House fails to fully embrace its constitutional role in drafting revenue-raising legislation, then the Origination Clause will continue to be undermined and diminished. For example, in reflecting on the constitutional balance of powers in the government, the Heritage Foundation argued that “Members of the House of Representatives should be more zealous in protecting this exclusive prerogative.”[104] Testifying before a House committee, against the backdrop of the ACA debates, the executive director of the Pacific Legal Foundation (which litigates for limited government) contended: “Like the guarantee of free speech, the Origination Clause guarantees a deeply-ingrained, individual right (which may rise to the level of a fundamental right that is essential to Anglo-American ordered liberty) and not just a political prerogative of House members to enforce or not as they choose.”[105] In the Learning Resources case, thirty-seven briefs were filed on behalf of plaintiffs objecting to the tariffs and only six on behalf of the government.[106]

However, these sorts of rallying cries of constitutional obligation have not seemed to make a notable impact on how tax legislation is made in Congress. Part of the reason is that in order to have standing to challenge the legislation, the plaintiff must have suffered actual injury and cannot just submit abstract complaints.[107] Another reason is that, under the “enrolled bill” approach to evaluating Origination Clause violations, the Supreme Court will generally only look at whether the originating bill was a House bill and will not interrogate the source of the underlying provision further.[108] Thus, there is no apparent incentive for the House to do any additional safeguarding work in response to (or in anticipation of) public outcry beyond ensuring that it originates the initial bill as a matter of form.

In short, the constitutional effect of the Origination Clause remains a soft one because the Clause is not understood to demand anything more from the House than starting the legislation. Actual, meaningful evaluation and assessment of legislation in the House need not occur or appear to occur in order to satisfy the Constitution. Members of the House can be exhorted to take this power more seriously, but the Constitution only requires mechanical compliance. The Origination Clause may function as a way for commentators to frame and focus their dissatisfaction, but preferences would ultimately need to be expressed at the ballot box to have real effect.

IV. The Origination Clause as a Statutory Interpretation Tool

In this Part IV, we argue that despite its weakness as a constitutional constraint, the Origination Clause retains power as a tool of statutory interpretation.

A. Leveraging the Meaning of Revenue Raising in Origination Clause Case Law

Even though the Origination Clause offers no constitutional constraint on presidential tariff powers, it supports arguments grounded in statutory interpretation for limiting presidential tariff action. Central to this analysis is recognition that while some tariffs are “revenue raising,” and thus subject to the Origination Clause, other tariffs might not be revenue raising. Where a President seeks to impose a tariff that is “revenue raising,” the authorizing statute must meet two requirements: First, it must authorize the President to impose tariffs (as required by the Taxing Power limits of the Constitution), and second, the statute itself must be a “revenue-raising” statute that is subject to the Origination Clause’s requirements (in order to conceivably delegate revenue-raising power to the President).

If a court simply wished to hold that a statute does not permit the president to impose tariffs at all, then it would just have to find that the statute did not authorize tariffs as required by the Taxing Power (i.e., the first requirement above), and no further inquiry would be needed. But if a court wanted to draw distinctions in future cases between different kinds of tariffs—finding, for example, that narrower tariffs are authorized by a statute but more expansive ones are not—then the second inquiry (regarding whether the underlying statute is a “revenue-raising” statute capable of delegating broad rather than narrow tariff powers)—would become important. It is here that the Origination Clause case law can aid in the statutory interpretation task.

Take, for example, the case of a statute that authorizes the President to impose narrow, trade-specific tariffs to address a specified problem. The President cannot rely on said statute to justify imposition of broad and general revenue-raising tariffs, because only a revenue-raising statute can authorize such broad tariffs. The President cannot take a non-revenue-raising statute passed by Congress and read into it a grant of broad revenue-raising power. Any statute that grants revenue-raising powers to the President must be: (1) a revenue-raising statute, (2) that was initiated in the House—both elements are required. Our statutory interpretation argument is that presidential revenue raising through the imposition of a tariff is valid only if based on a revenue-raising statute, and that Origination Clause case law provides the interpretive tools needed to determine whether a statute is a revenue-raising statute. That case law reveals, for example, that a statute that collects a fee for a special purpose is not a revenue-raising statute, while a statute that collects money for an unspecified purpose and for the general Treasury fund is a revenue-raising statute.

This type of analysis was used in both the Supreme Court’s Munoz-Flores decision[109] and in the D.C. Circuit’s Sissel decision[110] in determining whether a statute was revenue raising. Our view is that the definition of a revenue-raising statute as developed in those cases can help guide the interpretation of statutes that are used by the President to assert revenue-raising powers and that a President can only have revenue-raising power if the statute is a revenue-raising statute that has delegated such power.[111] In Munoz-Flores, for example, the Court concluded that a special assessment imposed to support a crime victim fund did not raise revenue.[112] The objective of the statute and use of funds are the focus of the Munoz-Flores inquiry, consistent with precedent holding that taxes specifically raised to pay for railroad construction[113] or establish a national currency[114] did not raise revenue within the meaning of the Origination Clause. The Court wrote that “a statute that creates a particular governmental program and that raises revenue to support that program, as opposed to a statute that raises revenue to support government generally, is not a ‘Bil[l] for raising Revenue’ within the meaning of the Origination Clause.”[115] In the case of the crime victim fund statute in Munoz-Flores, “‘There was no purpose by the act or by any of its provisions to raise revenue to be applied in meeting the expenses or obligations of the Government.’”[116]

Similarly, in Sissel, the D.C. Circuit concluded that the Affordable Care Act was not a revenue-raising statute.[117] Looking at prior efforts to determine the reach of the Origination Clause, the court observed that “in three separate cases spanning more than a century, [the Supreme Court] held that the variable controlling whether a statutory provision falls within the ambit of the Origination Clause is whether raising revenue for the general Treasury is that provision’s primary purpose.”[118] A statute that lacks a revenue-raising purpose is neither a revenue-raising statute subject to Origination Clause constraints nor one from which the President can extract revenue-raising powers.

These statutory interpretation insights regarding the determination of whether a statute is “revenue raising” for purposes of applying the Origination Clause can be applied to analyze tariffs such as those at issue in Learning Resources. There, the President claimed revenue-raising authority, meaning the authority to collect money for unspecified purposes for the general fund of the federal government.[119] The Learning Resources tariffs, including the 10 percent across-the-board tariff imposed via the April 2025 Executive Order, were clearly envisioned as revenue raising within the meaning of Origination Clause case law. The administration advertised its tariffs as capable of collecting hundreds of billions of dollars annually,[120] which is consistent with independent estimates.[121] These amounts were set to go into the federal government’s general fund with no specified spending purpose,[122] and tariff revenues were used in congressional negotiations to justify other tax cuts.[123] In addition, the April 2025 10 percent across-the-board tariff generally was not reduced in negotiation.[124] Rather, the 10 percent across-the-board tariff was treated as a permanent part of the taxing system of the federal government.

The President reinforced this understanding of the April 2025 tariffs as revenue raising by imposing a comparable replacement tariff on the same day the Supreme Court struck down the April 2025 tariffs.[125] In this second round, he used a different statute, Section 122, which allows a tariff of up to 150 days and up to 15 percent to address a balance-of-payments issue.[126] Meanwhile, the administration is also pursuing additional tariffs under Sections 232 and 301, presumably with the intent of replacing the 150-day tariff by the time of its expiration.[127]

Applying the Origination Clause case law analysis to the Learning Resources tariffs reveals that IEEPA is not a revenue-raising statute. If IEEPA had happened to originate in the Senate rather than the House, it would not have been found to be subject to, or to violate, the Origination Clause, because IEEPA does not contemplate raising revenue at all. Its listed powers do not include the power to impose tariffs or taxes.

The Origination Clause revenue-raising analysis can help differentiate between statutes authorizing narrow tariff powers and those authorizing broad, revenue-raising powers. For instance, the Court could have concluded (though it did not explicitly do so) that even if IEEPA did authorize the President to impose temporary tariffs[128] in some circumstances, like those in the Yoshida case,[129] IEEPA did not authorize broad and sweeping peacetime tariffs with the objective of raising revenue for the Treasury’s general fund.

In other words, even if the Supreme Court had concluded that IEEPA authorized some tariffs, the right reading—and the one supported by our Origination Clause statutory analysis—would be that IEEPA authorizes only tariffs to specifically address an emergency, rather than general purpose, revenue-raising tariffs. A special-purpose tariff authorized under IEEPA would be akin to taxes authorized for the specific purposes of supporting a national currency, railroad construction, or a crime victims’ fund. None of these provisions raise revenue within the meaning of the Origination Clause.

The Origination Clause can reveal a mismatch between a non-revenue-raising statute (like IEEPA) and the extremely revenue-raising purpose of the President’s tariff actions. The Origination Clause offers courts a way to link their statutory interpretation analysis to a disconnect between a narrow congressional statutory authorization and a sweeping power asserted by the President to impose a measure like the across-the-board April 2025 10 percent baseline tariff, which was undertaken with a core, publicly stated purpose of raising revenue for the general Treasury fund and which has been presented as a permanent part of the federal government’s general revenue scheme.[130]

B. Congressional Process Indicators of a Statute’s Revenue-Raising Meaning

The argument that IEEPA is not a revenue-raising statute is also supported by the fact that such statutes generally emerge from a specific congressional tax legislative process. Though this observation is not strictly an Origination Clause point, it reflects the same heightened attention that the Constitution bestows on the taxing power. The congressional tax legislative process not only requires Congress to originate revenue bills through the House but also follows specific practices, norms, and steps. If Congress had used the typical congressional tax legislative process for enacting revenue bills to enact a statute like IEEPA, there would be a stronger argument that the statute is one that authorizes the President to raise revenue for the Treasury’s general fund.

IEEPA, for example, did not follow any of these tax legislative process norms or requirements but rather arose from a bespoke congressional study of presidential emergency powers. The effort began with a 1976 study by a subcommittee of the Senate Committee on International Relations, which considered how to restrict the broad emergency powers claimed by successive presidents from Franklin Roosevelt to Richard Nixon.[131] IEEPA was part of a group of reforms that emerged as a result of that study.[132] IEEPA did not go through the process followed by revenue bills. Instead, after IEEPA was introduced in the House in June 1977, it was taken up by the House Committee on International Relations and, upon passage of the revised bill in the House in July 1977, was referred to the Senate Committee on Banking, Housing, and Urban Affairs, with the Senate passing a revised bill in October 1977.[133]

In contrast, at the time IEEPA was enacted, the process for considering revenue bills featured participation by the House Ways and Means Committee, the Senate Finance Committee, the Joint Committee on Taxation (JCT), and the Secretary of the Treasury.[134] The administration frequently initiated the consideration of tax proposals by bringing them to the attention of the Ways and Means Committee, and both public hearings and nonpublic executive sessions involving Ways and Means, the JCT, and the Treasury were typically used to deliberate on proposals.[135] Even before the modern era in which passing tax legislation via budget reconciliation became common practice,[136] revenue estimates prepared by JCT staff and Treasury estimators—which generally showed how the provisions of the statute would affect the Treasury’s general fund—were considered and discussed as part of the legislative process.[137] After House consideration, the passed bill would go to the Senate, where the Senate Finance Committee would hold additional hearings and make additional amendments. After Senate passage, the House and the Senate used a conference process, which also involved Treasury staff, to arrive at a final version of the bill to pass and present to the President.

The moment of IEEPA’s passage in 1977 was a transitional moment in congressional procedure for tax legislation, since it occurred after the passage of the Congressional Budget Act of 1974[138]—which contains the modern process of budget reconciliation—but before Congress had adopted the new reconciliation procedures into its working norms.[139] A key element of the transitional moment was the use of revenue estimation, which had become part of the contemporaneous process in practice and which was formalized and required in the Congressional Budget Act. IEEPA followed neither the contemporaneous procedure nor the modern procedure.[140] Instead, no budget estimates were produced. The only relevant legislative history reference is a statement from the Congressional Budget Office stating that the legislation would have no revenue effects.[141]

That IEEPA did not go through either the contemporaneous tax legislative process or the modern budget reconciliation process strongly suggests that Congress in no way viewed it as revenue legislation.[142] We do not claim that specific tax committees and estimates must be involved in enacting a piece of legislation for it to authorize taxes or tariffs. But we do suggest that where—as is the case with statutes like IEEPA—a court’s task is to determine the meaning of a statute in the absence of any statutory text indicating that the statute is a revenue statute, the fact that the statute also has none of the congressional-process hallmarks of revenue legislation supports the statutory interpretation result that the statute does not and may not raise revenue. If the statute had mentioned taxes or tariffs, set a maximum rate, or even set a tax base, the case would be stronger for interpreting the statute as revenue raising based on its text.[143] But this was not the case with IEEPA.

When a court considers presidential tariff authorization under other trade statutes, it can similarly consider whether such statutes bear tax legislative process hallmarks. This may involve mixed evidence. For instance, some trade statutes have some tax legislative process indicators but not all.[144] Nevertheless, consideration of tax legislative procedure, while not determinative, can help inform whether a statute authorizes revenue raising.

C. The Major Questions Doctrine and the Origination Clause

In the context of presidential tariff powers, this Article has briefly discussed the constitutional nondelegation doctrine, which would suggest that Congress cannot delegate the power to impose tariffs. But as discussed above in Part III, this doctrine has almost never prompted a court to hold a statute unconstitutional, and the Court has recently rejected an exceptionalist argument for tax delegation grounded in the Taxing Power Clause or the Origination Clause.[145] In addition, a more stringent nondelegation doctrine for tax could cause significant practical problems by questioning existing administrative practices at Treasury and the IRS, including the use of the broadly worded Section 7805 of the Internal Revenue Code to support a large body of regulations and administrative guidance.

This Article has also emphasized the contribution that the Origination Clause can make to the statutory interpretation project of determining whether certain trade statutes authorize the President’s broad, sweeping tariffs. This more modest option of statutory interpretation underlies our argument in Sections IV.A and IV.B that (1) the Origination Clause could have helped courts decide that IEEPA’s authorization to “regulate” “importation” in an “emergency” does not delegate revenue-raising power to impose broad tariffs to the President and that (2) the Clause might help future courts analyze whether tariff authorization under other trade statutes delegates revenue-raising power. In the statutory interpretation argument, as explained above, the contribution of the Origination Clause is to help a court identify whether a trade statute is a revenue-raising statute, and thus whether that statute could delegate broad, revenue-raising power to the President.

There is a third pathway of analysis in these cases, which is the major questions doctrine. When a court finds that a claimed grant of authority is “extraordinary,” the court can apply the MQD to require a clear statement, not “merely plausible textual basis,” that “Congress in fact meant to confer the power the agency has asserted.”[146] For instance, in the tax context, the Supreme Court has held that “billions of dollars in spending” represented by Affordable Care Act tax credits made the interpretation of the tax credit provision a major question.[147]

The MQD has been described as a sub-constitutional[148] “power canon”[149] that allows courts to limit executive branch power without accepting the higher stakes of the constitutional nondelegation doctrine. When courts apply the MQD, they offer a variety of reasons why a claimed grant of authority might be “extraordinary,” often citing the importance of an action in the economy.[150] But their reasons go further than that and have involved, for instance, concerns about federalism and criminal penalties.[151]

There are similarities between the MQD and the Origination Clause argument in tariff cases. Both distinguish between narrower tariff actions and broader tariff actions. The broader and more permanent the tariff action, the more likely that it is an extraordinary, or major, policy for purposes of MQD analysis. Likewise, the broader and more permanent the tariff action, the more likely that it raises revenue for the Treasury’s general fund for purposes of Origination Clause analysis. Chief Justice John Roberts highlighted this similarity in his Learning Resources opinion when he relied on tariff revenue estimates to justify his discussion of the MQD[152] (though the MQD did not appear in the portion of his opinion that constituted the Court’s opinion).[153] Justice Gorsuch put the MQD at the center of his Learning Resources concurrence,[154] and Justice Amy Coney Barrett called it part of textualist statutory interpretation.[155] But despite the support of these three Justices, Justice Kagan, Justice Sonia Sotomayor, and Justice Ketanji Brown Jackson disagreed with the application of the MQD and argued instead that the Court only needed to apply ordinary statutory interpretation to reach the result.[156] Thus, a majority of the Court did not support applying the MQD in Learning Resources.

Further, as the principal dissent highlighted, another and perhaps more important MQD question also divided the Court. The dissent emphasized that two constitutional elements—Article I, regarding legislative power, and Article II, regarding executive power—point in opposite directions in terms of whether or not the MQD is applicable. Justices Kavanaugh, Alito, and Thomas took the Article II side, and Justice Kavanaugh wrote that the Constitution does not require a clear statement from Congress to authorize the President to exercise foreign affairs and national security powers, including with respect to economic policy.[157]

Our Origination Clause contribution can help courts navigate these potential conflicts. By strengthening the ordinary statutory interpretation analysis of whether a trade statute authorizes the President to impose a sweeping tariff, the Origination Clause may help courts to sidestep the problematic Article I/Article II conflict presented by the MQD.[158] While the Supreme Court could take the Article I side and hold that the MQD requires a clear statement of congressional intent in tax and tariff situations, this approach holds risks. It could jeopardize, for instance, both the discretionary authority of Treasury and the IRS in offering taxpayers needed regulations and guidance[159] and the ability of a President to negotiate free trade agreements, as has been done for decades.[160] Alternatively, the Supreme Court could take the Article II side and hold that the MQD does not apply because of the foreign affairs context of tariffs. But this path also holds risks. It would increase the President’s power to impose taxes and make other domestic economic policy decisions under the guise of a foreign affairs or foreign affairs-adjacent power, which conflicts with the Constitution’s careful placement of the taxing power in the hands of Congress, and in particular in the originating hands of the House.

To avoid not only a nondelegation analysis but also an MQD analysis, courts deciding the scope of the President’s authority in tariff cases should make the most of ordinary statutory interpretation. They should avoid holding that special clear statement rules apply where taxing or tariff powers are concerned. Learning Resources supports using statutory interpretation to determine whether a trade law statute authorizes broad, revenue-raising tariffs. The Origination Clause can strengthen and enrich this statutory analysis task.

Conclusion

Presidentially imposed tariffs are an unprecedented use of executive power in U.S. tax law. They appear to contradict the Origination Clause and the Taxing Power Clause, which place taxing power in the hands of Congress rather than the President. Yet the Supreme Court has held that these tax clauses in the U.S. Constitution do not require a special nondelegation doctrine for tax. In addition, these clauses do not necessarily require courts to apply a clear statement rule under the major questions doctrine.

Nevertheless, the Origination Clause analysis endorses the result reached by the Court in Learning Resources: that IEEPA did not authorize the presidential tariffs imposed under it in 2025. The Origination Clause supports the Court’s holding, based on statutory interpretation, that the President lacked the authority he claimed. Origination Clause case law reveals that IEEPA is not a revenue-raising statute and thus does not authorize the President to impose tariffs that raise revenue. After Learning Resources, as this law continues to develop, the Origination Clause can also help future courts decide whether other trade statutes authorize the President to raise revenue by imposing tariffs.

  1. * Mark G. and Judy G. Yudof Chair in Law, University of Texas at Austin School of Law. ↑

  2. ** David T. Zhang Professor of Law, Duke University School of Law. ↑

  3. *** Marianne D. Short and Ray Skowyra Professor of Law, Boston College Law School. We are grateful to the Washington University Law Review’s Symposium on Taxing, Spending, and the Constitution and to the Law Review’s editors for exceptional support and editing on this Article. Thanks also to participants at presentations sponsored by the American Association of Law Schools, the Austin Tax Study Group, Boston University School of Law, Duke University School of Law, Georgetown University School of Law, the National Tax Association, the University of Missouri School of Law, and the University of Texas School of Law. Thank you to Shane Hargrove and Van Tran for excellent research assistance. ↑

  4. . See Learning Res., Inc. v. Trump, 146 S. Ct. 628 (2026). That case consolidated two cases. See V.O.S. Selections, Inc. v. Trump, 149 F.4th 1312 (Fed. Cir.), aff’g 772 F. Supp. 3d 1350 (Ct. Int’l Trade), cert. granted, 146 S. Ct. 73 (mem.) (2025); Learning Res., Inc. v. Trump, 784 F. Supp. 3d 209 (D.D.C.), cert. granted before judgment, 146 S. Ct. 73 (mem.) (2025). ↑

  5. . See Learning Res., 146 S. Ct. at 646 (“IEEPA does not authorize the President to impose tariffs.”). ↑

  6. . U.S. Const. art. I, § 8, cl. 1. ↑

  7. . U.S. Const. art. I, § 7. ↑

  8. . See Rebecca M. Kysar, On the Constitutionality of Tax Treaties, 38 Yale J. Int’l L. 1, 8–9 (2013) (describing the adoption of the Origination Clause); Rebecca M. Kysar, Is Trump’s Tariff Plan Constitutional?, N.Y. Times (Jan. 3, 2017), https://www.nytimes.com/2017/01/03/opinion/is-trumps-tariff-plan-constitutional.html [https://perma.cc/CRD2-ZCUK] (arguing that executive orders imposing tariffs lack support from any independent Article II power and violate the Origination Clause if they do not go through Congress). ↑

  9. . See, e.g., J.W. Hampton, Jr., & Co. v. United States, 276 U.S. 394, 409 (1928) (upholding tariff statute that contained an “intelligible principle” allowing the President to change rates in response to production costs); see also Field v. Clark, 143 U.S. 649, 681–95 (1892) (reviewing previous delegations of embargo and other trade power authorities and upholding tariff statute that prescribed specific results following presidential factfinding regarding the reasonableness of other countries’ trade policies). ↑

  10. . See H.R. 7738, 95th Cong. (1977). ↑

  11. . See, e.g., Jonathan Rosenberg, Comment, The Origination Clause, the Tax Equity and Fiscal Responsibility Act of 1982, and the Role of the Judiciary, 78 Nw. U. L. Rev. 419, 420 (1983) (contending in the context of litigation over the TEFRA Act that “the origination clause is a proscription on congressional power that must be enforced by the judiciary”); Jake Settle, Comment, Origination and Original Meaning: Reviving the Origination Clause to Restrain the Administrative State, 31 Geo. Mason L. Rev. 697, 716–19 (2024) (arguing that the Origination Clause limits congressional power to delegate revenue-raising authority). ↑

  12. . FCC v. Consumers’ Rsch., 606 U.S. 656, 672–76 (2025) (rejecting any special nondelegation treatment for tax). ↑

  13. . See Learning Res., Inc. v. Trump, 784 F. Supp. 3d 209 (D.D.C. 2025), vacated, 146 S. Ct. 628 (2026). ↑

  14. . See V.O.S. Selections, Inc. v. Trump, 149 F.4th 1312 (Fed. Cir. 2025), aff’d sub nom. Learning Res., Inc. v. Trump, 146 S. Ct. 628 (2026). ↑

  15. . See Learning Res., 146 S. Ct. at 637 n.1 (holding that the United States District Court for the District of Columbia lacked jurisdiction to hear the case below (citing 28 U.S.C. § 1581(i))). ↑

  16. . See 50 U.S.C. §§ 1701–1702. ↑

  17. . See Learning Res., 146 S. Ct. at 642–43 (focusing on the list of authorized actions in IEEPA). ↑

  18. . See id. at 644 (rejecting comparisons to other cases including Fed. Energy Admin. v. Algonquin SNG, Inc., 426 U.S. 548 (1976) and United States v. Yoshida Int’l, Inc., 526 F.2d 560 (C.C.P.A. 1975)). ↑

  19. . Id. at 644–46. ↑

  20. . See Algonquin, 426 U.S. at 550 (upholding oil tariff imposed as a national security exception under Section 232). ↑

  21. . See Yoshida, 526 F.2d at 573–77 (upholding four-month across-the-board tariff imposed under an emergency statute that preceded IEEPA). ↑

  22. . See Learning Res., 146 S. Ct. at 646 (Gorsuch, J., concurring) (calling the asserted tariff power “an extraordinary power” that requires application of the MQD); see also Jon Endean, Tariffs as Taxes: A Framework for Understanding Delegation of the Taxing Power, 63 San Diego L. Rev. (forthcoming 2026) (manuscript at 21–28), https://ssrn.com/abstract=5421134 [https://perma.cc/5CM5-85WE] (proposing a “clear statement” structural canon for the delegation of tax and tariff powers). ↑

  23. . See Learning Res., 146 S. Ct. at 691 (Kavanaugh, J., dissenting) (“[I]n foreign affairs cases, courts read the statute as written and do not employ the major questions doctrine as a thumb on the scale against the President.”); see also Timothy Meyer & Ganesh Sitaraman, The National Security Consequences of the Major Questions Doctrine, 122 Mich. L. Rev. 55, 90 (2023) (explaining that the MQD would risk paralysis of essential economic policy projects that advance national security given the impracticality of Congressional response); see also Kristen E. Eichensehr & Oona A. Hathaway, Major Questions About International Agreements, 172 U. Pa. L. Rev. 1845, 1873–78 (2024) (arguing that application of the MQD to international agreements would upend foreign relations and national security policy). ↑

  24. . See Learning Res., 146 S. Ct. at 672 (Barrett, J., concurring) (writing that the MQD is “best understood as an ordinary application of textualism” and emphasizing “context”); see also id. at 675 (Kagan, J., concurring in part and concurring in the judgment) (preferring “usual text-in-context interpretation” but declining to use the “major questions doctrine” label to help describe that interpretive method). ↑

  25. . See Designating Cartels and Other Organizations as Foreign Terrorist Organizations and Specially Designated Global Terrorists, Exec. Order No. 14,157, 90 Fed. Reg. 8439, 8439 (Jan. 20, 2025) (announcing tariffs on imports from Mexico); Imposing Duties to Address the Flow of Illicit Drugs Across Our Northern Border, Exec. Order No. 14,193, 90 Fed. Reg. 9113, 9114 (Feb. 1, 2025) (announcing tariffs on imports from Canada); Imposing Duties to Address the Synthetic Opioid Supply Chain in the People’s Republic of China, Exec. Order No. 14,195, 90 Fed. Reg. 9121, 9122 (Feb. 1, 2025) (announcing tariffs on imports from China). See generally Ana Swanson, Trump Promises Tariffs on Canada and Mexico, and Paves Way for Further Trade Action, N.Y. Times (Jan. 20, 2025), https://www.nytimes.com/2025/01/20/us/politics/trump-tariffs-executive-order.html [https://perma.cc/
    4M9J-D6DG]; Fact Sheet: President Donald J. Trump Imposes Tariffs on Imports from Canada, Mexico and China, White House (Feb. 1, 2025), https://www.whitehouse.gov/fact-sheets/2025/02/fact-sheet-president-donald-j-trump-imposes-tariffs-on-imports-from-canada-mexico-and-china/ [https://perma.
    cc/47PA-JE68]. ↑

  26. . See Regulating Imports with a Reciprocal Tariff to Rectify Trade Practices That Contribute to Large and Persistent Annual United States Goods Trade Deficits, Exec. Order No. 14,257, 90 Fed. Reg. 15041 (Apr. 2, 2025). ↑

  27. . See id. Annex I (imposing a reciprocal tariff of 50 percent on Lesotho). ↑

  28. . 50 U.S.C. §§ 1701–1710. See Further Modifying the Reciprocal Tariff Rates, Exec. Order No. 14,326, 90 Fed. Reg. 37963 (July 31, 2025); see also Keigh E. Hammond & William F. Burkhart, Cong. Rsch. Serv., R48549, Presidential 2025 Tariff Actions: Timeline and Status, 6–20 tbls. 2, 3, 4 & 5 (2026), https://www.congress.gov/crs-product/R48549 [https://
    perma.cc/8B8Z-ZYTQ]. ↑

  29. . See Hammond & Burkhart, supra note 25. ↑

  30. . See, e.g., Trade Compliance Resource Hub, ReedSmith, http://www.tradecomplianceresourcehub
    .com [https://perma.cc/NZ6U-WZFS] (providing up-to-date tariff tracker); see also Hammond & Burkhart, supra note 25, at tbl.6. ↑

  31. . See Richard Rubin, Trump Floats Improbable Income-Tax Cut Tied to Tariffs, Wall St. J. (Apr. 28, 2025) (reporting President’s statement linking tariff increases to income tax cuts), https://www.wsj.com/politics/policy/tariffs-income-taxes-revenue-8b647e6b [https://perma.cc/D9UY-CES2]; Interview by Tucker Carlson with Scott Bessent, Sec., U.S. Dep’t of the Treasury, in Washington, D.C. (Apr. 7, 2025) (quoting Secretary of Treasury Bessent as explaining that although the legislative budgeting process would not give “credit for [presidential] tariffs in any bill,” tariffs could nevertheless pay for legislative tax breaks such as “no tax on tips”), https://home.treasury.gov/news/
    press-releases/sb0073 [https://perma.cc/A8AC-A98G]. ↑

  32. . Proclamation No. 11012, 91 Fed. Reg. 9339 (Feb. 20, 2026). ↑

  33. . See Gavin Bade, Trump Targets Industrial Subsidies and Forced Labor in Tariff Probes, Wall St. J. (Mar. 11, 2026), https://www.wsj.com/politics/policy/trump-tariff-probe-trade-act-8e3ff
    874 [https://perma.cc/KUG3-43A8] (reporting unfair trade practice investigations targeting about sixty nations under Section 301 and consideration of tariffs under Section 232). ↑

  34. . The first such statute was the McKinley Tariff, Act of Oct. 1, 1890, ch. 1244, § 3, 26 Stat. 567, 612. See Oona Hathaway, Presidential Power over International Law: Restoring the Balance, 119 Yale L.J. 140, 173–74 (2009) (noting that this agreement was the first to delegate important international law executive agreement power to the President); Douglas A. Irwin, Clashing Over Commerce: A History of US Trade Policy 303–05 (2017) (noting executive authority innovation of 1890 Act). ↑

  35. . See Kathleen Claussen & Timothy Meyer, Economic Security and the Separation of Powers, 172 U. Pa. L. Rev. 1955, 1963–64 (2024) (contrasting statutes that allowed the President to increase tariffs for national security reasons with statutes, starting with the Reciprocal Trade Agreements Act of 1934, that anticipated “liberalizing trade agreements” including in cooperation with the General Agreement on Tariffs and Trade and the World Trade Organization). ↑

  36. . See Ashley Deeks & Andrew Hayashi, Tax Law as Foreign Policy, 170 U. Pa. L. Rev. 275, 290–94, 321–22, 334–37 (2022) (arguing that tariffs and other taxes are and should be instruments of economic foreign policy, that their advantages include greater flexibility compared to other tools such as export controls, and that a possible institutional competence disadvantage is the requirement that Congress enact tax laws). ↑

  37. . See Trade Act of 1974, Pub. L. No. 93-618, § 122, 88 Stat. 1978, 1987–89 (1975), codified at 19 U.S.C. § 2132. This statute originated in the House. See H.R. 10710, 93d Cong. (1973). ↑

  38. . See Trade Expansion Act of 1962, Pub. L. No. 87-794, § 232(c), 76 Stat. 872, 877, codified at 19 U.S.C. § 1862. This statute originated in the House. See H.R. 11970, 87th Cong. (1962). ↑

  39. . See Trade Act of 1974 §§ 301–302, codified at 19 U.S.C. §§ 2411–2412; see also 19 U.S.C. §§ 2413–2420. This statute originated in the House. See H.R. 10710, 93d Cong. (1973). ↑

  40. . See 50 U.S.C. §§ 1701–1710. ↑

  41. . See generally Hammond & Burkhart, supra note 25. ↑

  42. . See Christopher T. Zirpoli, Cong. Rsch. Serv., R48435, Congressional and Presidential Authority to Impose Import Tariffs 26 tbl.1 (2026), https://www.congress.gov/crs-product/R48435 [https://perma.cc/AJ3A-M9VJ] (showing that IEEPA required much less presidential factfinding and process compared to other tariff statutes). ↑

  43. . See V.O.S. Selections, Inc. v. Trump, 772 F. Supp. 3d 1350 (Ct. Int’l Trade) (consolidating litigation brought by several small businesses and twelve states and striking down worldwide and retaliatory tariffs announced on April 2, 2025 and modified thereafter under the claimed authority of IEEPA), aff’d, 149 F.4th 1312 (Fed. Cir. 2025), aff’d sub nom. Learning Res., Inc. v. Trump, 146 S. Ct. 628 (2026). ↑

  44. . V.O.S. Selections, 149 F.4th 1312. ↑

  45. . See Learning Res., 146 S. Ct. 73 (mem.) (2025). Note that the Supreme Court lists Learning Resources first after consolidating the cases. Id. ↑

  46. . See V.O.S. Selections, 149 F.4th at 1335–36. ↑

  47. . See id. at 1336–37. But see Am. Inst. Int’l Steel, Inc. v. United States, 806 F. App’x 982, 990 (Fed. Cir. 2020) (considering whether the Supreme Court might depart from J.W. Hampton’s Article I delegation framework for tariffs in favor of an Article II foreign affairs or national security analysis); Claussen & Meyer, supra note 32, at 1970–78 (describing and criticizing arguments for Article-II-based trade and tariff power). ↑

  48. . U.S. Const. art. I, § 8, cl. 1. ↑

  49. . U.S. Const. art. I, § 7, cl. 1. ↑

  50. . See 3 Joseph Story, Commentaries on the Constitution of the United States §§ 873–880 (1833) (tracing history of Origination Clause to House of Commons’ responsibility for “money bills”); Michael W. Evans, A Source of Frequent and Obstinate Altercations: The History and Application of the Origination Clause, 105 Tax Notes 1215, 1216 (2004) (same). ↑

  51. . See, e.g., W. Elliot Brownlee, Federal Taxation in America: A History 47–48 (3d ed. 2016) (observing the major role that tariffs played in funding federal domestic as well as military spending in the early years of the country); Tariffs as a Major Revenue Source: Implications for Distribution and Growth, fig.1a, White House (July 12, 2024), https://web.archive.org/web/20240712
    160048/https://www.whitehouse.gov/cea/written-materials/2024/07/12/tariffs-as-a-major-revenue-sour
    ce-implications-for-distribution-and-growth/ [https://perma.cc/3JCP-NJ75] (showing tariff revenue as a share of total federal receipts from 1798–2023); Kysar, On the Constitutionality of Tax Treaties, supra note 5, at 47 (noting that “tariffs receded in importance once the Constitution permitted an income tax in 1913”). ↑

  52. . See Domenico Imparato, Reuven S. Avi-Yonah & Doron Narotzki, No Trade Wars Without Taxation—Who’s to Blame, and What Comes Next?, 29 Fla. Tax Rev. (forthcoming 2026), https://
    ssrn.com/abstract=5414555 [https://perma.cc/JAW7-Y8TT]. ↑

  53. . See, e.g., Nicholas Bagley & Thomas A. Smith, Common Interpretation: Article I, Section 7, Nat’l Const. Ctr., https://constitutioncenter.org/the-constitution/articles/article-i/clauses/766 [https://
    perma.cc/NKX4-WUUP]. ↑

  54. . See Rosenberg, supra note 8, at 422–26 (describing debates over the Origination Clause at the Constitutional Convention). ↑

  55. . See Kysar, On the Constitutionality of Tax Treaties, supra note 5, at 8–9 (describing the adoption of the Origination Clause). ↑

  56. . See Conor Clarke & Ari Glogower, Tariffs and the Taxing Power: Historical Lessons for Major Questions and Nondelegation, 103 Wash. U. L. Rev. 1867, 1886–90 & nn.98–113 (2026) (explaining the statutory style of more specific delegation for external taxes like tariffs and less specific delegation for internal taxes such as income taxes, in earlier revenue statutes). ↑

  57. . See, e.g., The Original Meaning of the Origination Clause: Hearing Before the Subcomm. on the Const. and Civ. Just. of the H. Comm. on the Judiciary, 113th Cong. 1–2 (2014) [hereinafter Origination Clause Hearing] (statement of Trent Franks, Chairman, Subcomm. on the Const. and Civ. Just.), https://www.congress.gov/113/meeting/house/102165/documents/HHRG-113-JU10-Transcript-20140429.pdf [https://perma.cc/Q62C-JGUK] (noting that the House is more accountable because of elections every two years as opposed to every six years in the Senate). Note that the Senate was not elected until the passage of the 17th Amendment in 1913. See U.S. Const. amend. XVII. ↑

  58. . FCC v. Consumers’ Rsch., 606 U.S. 656, 721–25 (2025) (Gorsuch, J., dissenting) (citing and quoting United States v. Munoz-Flores, 495 U.S. 385, 395 (1990)). ↑

  59. . See, e.g., Evans, supra note 47; James V. Saturno, Cong. Rsch. Serv., R46556, Blue-Slipping: Enforcing the Origination Clause in the House of Representatives (2024), https://www.congress.gov/crs-product/R46556 [https://perma.cc/45WT-X4K4] [hereinafter Saturno, Blue-Slipping]; James V. Saturno, Cong. Rsch. Serv., R46558, The Origination Clause of the U.S. Constitution: Interpretation and Enforcement (2024), https://www.congress.gov/crs-product/R46558 [https://perma.cc/88NC-RZE2] [hereinafter Saturno, Origination Clause Interpretation and Enforcement]; Rebecca M. Kysar, The ‘Shell Bill’ Game: Avoidance and the Origination Clause, 91 Wash. U. L. Rev. 659, 671–72, 689 (2014) (explaining blue-slipping). ↑

  60. . Saturno, Blue-Slipping, supra note 56, at 1–2. ↑

  61. . Saturno, Origination Clause Interpretation and Enforcement, supra note 56, at 6. ↑

  62. . Saturno, Blue-Slipping, supra note 56, at 3 tbl.1. ↑

  63. . See Saturno, Origination Clause Interpretation and Enforcement, supra note 56, at 6. It is hard to interpret the impact of these twenty-five instances because of the hidden nature of the political economy involved in the House decision of whether to blue slip. For one thing, we would need to determine the relevant denominators—that is, how many revenue-related provisions each Congress considered in total and how many of those revenue-related laws might have justifiably been blue slipped (even if they were not). Moreover, the outcome of a blue-slipping resolution depends not only on the response of the Senate but also on whether or not a blue-slipped revenue measure eventually becomes law when inserted into later legislation compliant with the Origination Clause. ↑

  64. . See Saturno, Blue-Slipping, supra note 56, at 3 tbl.1 (showing no blue slipping in the 108th, 109th, 110th, 113th, 115th, or 116th sessions). ↑

  65. . See United States v. Munoz-Flores, 495 U.S. 385, 390 (1990) (holding that an Origination Clause challenge was justiciable). ↑

  66. . See Sissel v. U.S. Dep’t of Health & Hum. Servs., 799 F.3d 1035, 1036 (D.C. Cir. 2015) (Rogers, Pillard, and Wilkins, JJ., concurring in the denial of reh’g en banc). See, e.g., Erik M. Jensen, The Origination Clause and the Validity of Taxing Statutes, J. Tax’n Invs., Winter 2019, at 61, 74 (explaining that the Supreme Court’s Origination Clause case law generally allows it to avoid “interfering with legislative prerogatives”). ↑

  67. . Field v. Clark, 143 U.S. 649 (1892). ↑

  68. . Id. at 669 (alleging that presented bill omitted a section). ↑

  69. . See id. at 672 (describing customary signature procedure). ↑

  70. . See id. ↑

  71. . Field v. Clark is best understood as a rule of evidence. See Tara Leigh Grove, The Lost History of the Political Question Doctrine, 90 N.Y.U. L. Rev. 1908, 1934 n.141 (2015). Declining to interfere with congressional procedure could also be categorized as a political question that federal courts consider themselves ineligible to decide. See Aziz Z. Huq, Standing for the Structural Constitution, 99 Va. L. Rev. 1435, 1453–54 (2013) (giving examples of Origination Clause cases and writing that there may not be a right to challenge all structural constitutional violations). But this would be inconsistent with the justiciability of Origination Clause cases. See United States v. Munoz-Flores, 495 U.S. 385, 394 (1990) (rejecting application of political question doctrine and holding that intra-branch allocation of power between houses of Congress was justiciable) (citing Baker v. Carr, 369 U.S. 186, 217 (1962)). ↑

  72. . See Munoz-Flores, 495 U.S. at 387 (noting special assessment of $25 provided for by 18 U.S.C. § 3013). ↑

  73. . See id. at 397–400 (noting specific purpose of crime victims’ fund despite possibility of some contribution to general revenue and relying on the word “for” in purposive analysis). ↑

  74. . See id. at 408–09 (Scalia, J., concurring) (preferring to rest conclusion on enrolled bill rule because the bill was labeled a House Joint Resolution). ↑

  75. . See Sissel v. U.S. Dep’t of Health & Hum. Servs., 799 F.3d 1035, 1036 (D.C. Cir. 2015) (Rogers, Pillard, and Wilkins, JJ., concurring in the denial of reh’g en banc). ↑

  76. . See id. at 1049 (Kavanaugh, J., dissenting from denial of rehearing en banc) (explaining that ACA tax provisions would raise about $473 billion over ten years to offset the cost of the ACA’s program). ↑

  77. . See id. at 1062. ↑

  78. . See id. at 1044–49 (Rogers, Pillard, and Wilkins, JJ., concurring in the denial of reh’g en banc) (emphasizing the word “for” and applying purposive test). Scholars have objected that the court should have considered whether the Senate’s amendment was germane, see Robert G. Natelson, The Founders’ Origination Clause and Implications for the Affordable Care Act, 38 Harv. J.L. & Pub. Pol’y 629, 708–09 (2015), and should have guarded against the indirect evasion of the Origination Clause made possible by the gut-and-replace approach, see Tessa L. Dysart, The Origination Clause, the Affordable Care Act, and Indirect Constitutional Violations, 24 Cornell J.L. & Pub. Pol’y 451, 490–91 (2015). ↑

  79. . See Sissel, 799 F.3d at 1062 (Kavanaugh, J., dissenting from denial of rehearing en banc) (arguing that a gut-and-replace Senate amendment complies with the Origination Clause). ↑

  80. . See Kysar, supra note 56, at 689–90 (advocating the same analysis later articulated by Kavanaugh in dissenting from the denial of rehearing en banc). ↑

  81. . See Sissel, 799 F.3d at 1063 (Kavanaugh, J., dissenting from denial of rehearing en banc). ↑

  82. . See infra Section III.B. ↑

  83. . See, e.g., Kysar, Is Trump’s Tariff Plan Constitutional?, supra note 5 (contending that imposition of tariffs in first Trump presidency through executive order would violate the Origination Clause); Brief for Tax Law Professors as Amici Curiae in Support of Petitioners in No. 24-1287 and Respondents in No. 25-250 at 10–11, Learning Res., Inc. v. Trump, 146 S. Ct. 628 (2026) (arguing that the Constitution’s text and structure reserve the tariff power to Congress as the representative branch of government), https://openscholarship.wustl.edu/law_scholarship/908 [https://perma.cc/HRJ8-DH5T]; sources cited supra note 8; Origination Clause Hearing, supra note 54, at 1–2 (statement of Trent Franks, Chairman, Subcomm. on the Const. and Civ. Just.) (testimony on the origins, historical importance to the allocation of government powers and ongoing relevance of the Origination Clause, as considered in the context of debates regarding the constitutionality of the Affordable Care Act); Ronald J. Krotoszynski, Jr., Reconsidering the Nondelegation Doctrine: Universal Service, the Power to Tax, and the Ratification Doctrine, 80 Ind. L.J. 239, 243–44 (2005) (referencing the Origination Clause and contending that “the importance that the Framers placed on the power to raise and spend money should inform nondelegation jurisprudence”); Dysart, supra note 75, at 491 (arguing that a Senate’s move to gut and replace a House bill with revenue-raising provisions can constitute an indirect violation of the Origination Clause). ↑

  84. . See Sissel v. U.S. Dep’t of Health & Hum. Servs., 760 F.3d 1 (D.C. Cir. 2014), reh’g en banc denied, 799 F.3d 1035 (D.C. Cir. 2015). See also Brief of Association of American Physicians & Surgeons as Amicus Curiae in Support of the State of Texas et al. at 23, California v. Texas, 593 U.S. 659 (2020) (Nos. 19-840 & 19-1019), https://www.supremecourt.gov/DocketPDF/19/19-840/146830
    /20200702112150767_19-840%2019-1019%20AssociationOfAmericanPhysiciansSurgeons.pdf [https:
    //perma.cc/TKV3-8G2W] (arguing that the ACA did not originate in the House for purposes of the Origination Clause, and that the Origination Clause governs the statute). ↑

  85. . See infra text accompanying notes 128–130 (giving IEEPA’s legislative history). ↑

  86. . J.W. Hampton, Jr., & Co. v. United States, 276 U.S. 394, 409 (1928). ↑

  87. . See Panama Refining Co. v. Ryan, 293 U.S. 388 (1935); A.L.A. Schechter Poultry Corp. v. United States, 295 U.S. 495 (1935). ↑

  88. . See generally Kysar, Is Trump’s Tariff Plan Constitutional?, supra note 5 (contending that imposition of tariffs in first Trump presidency through executive order would violate the Origination Clause); see also Kysar, supra note 56, at 671–98 (exploring the scope of the Origination Clause constraint on Congress); Kathleen Claussen & Timothy Meyer, The Foreign Commerce Power, 114 Calif. L. Rev. 407 (2026) (analyzing the presidential trade authority under the Constitution). ↑

  89. . See, e.g., Rosenberg, supra note 8, at 420 (arguing that the Origination Clause should limit congressional power to delegate); Settle, supra note 8, at 716–19; Krotoszynski, supra note 80, at 243–44 (referencing the Origination Clause and contending that “the importance that the Framers placed on the power to raise and spend money should inform nondelegation jurisprudence”). See also Endean, supra note 19, at 11 (linking Founders’ focus on adequate legislative process to their conception of taxation as the seizure of private property). ↑

  90. . See, e.g., FCC v. Consumers’ Rsch., 606 U.S. 656, 721–25 (2025) (Gorsuch, J., dissenting) (in taking the intelligible principle test seriously as a constraint on congressional delegations of taxing powers, noting that “[t]axation ranks among the government’s greatest powers. Indeed, it is arguably the federal government’s ‘most important . . . authorit[y]’ . . . . Reflecting as much, the Constitution provides that all legislation ‘for raising Revenue’ must ‘originate in the House of Representatives.’ . . . As the framers saw it, ‘the Chamber that is more accountable to the people should have the primary role in raising revenue.’” (citations omitted)). ↑

  91. . Id. (majority opinion). ↑

  92. . See id. at 672–76 (applying “usual nondelegation standard”). A second sub-delegation analysis concluded that the FCC validly delegated authority to set the contribution terms to a third party. See id. at 690–93. ↑

  93. . See id. at 679–83. ↑

  94. . See J.W. Hampton, Jr., & Co. v. United States, 276 U.S. 394, 409 (1928). ↑

  95. . See Skinner v. Mid-America Pipeline Co., 490 U.S. 212, 220–21 (1989). ↑

  96. . See id. (noting the “discretionary authority” delegated in I.R.C. § 7805). ↑

  97. . See Consumers’ Rsch., 606 U.S. at 677 (writing that distinguishing taxes from fees would be “a morass”). ↑

  98. . Id. ↑

  99. . Id. at 721–25 (Gorsuch, J., dissenting) (citing both U.S. Const. art. I, § 7, cl. 1 and U.S. Const. art. I, § 8, cl. 1). ↑

  100. . See supra Section II.B (explaining blue slipping). ↑

  101. . Nicholas Bagley, The D.C. Circuit Splits over the ACA and the Origination Clause, Yale J. on Reg.: Notice & Comment (Aug. 11, 2015), https://www.yalejreg.com/nc/the-d-c-circuit-splits-over-the-aca-and-the-origination-clause-by-nicholas-bagley/ [https://perma.cc/PDS9-YSMK]. ↑

  102. . The D.C. Circuit has held that a House committee has standing to challenge a President on grounds that he exceeded the authority of a statute. See U.S. House of Representatives v. Mnuchin, 969 F.3d 353, 354 (D.C. Cir. 2020) (finding standing to challenge an allegedly unauthorized appropriation), vacated as moot by Yellen v. U.S. House of Representatives, 142 S. Ct. 332 (2021) (mem.). However, the strength of this precedent, and its application to the Origination Clause, is unclear. For an examination of the standing of Congress to sue, see Vicki C. Jackson, Congressional Standing to Sue: The Role of Courts and Congress in U.S. Constitutional Democracy, 93 Ind. L.J. 845 (2018). ↑

  103. . See supra notes 50–55 and accompanying text (explaining reasons for placing revenue bill origination in the House). ↑

  104. . Erik M. Jensen, Hands Off My Purse! Why Money Bills Originate in the House, Heritage Found. (Jan. 27, 2011), https://www.heritage.org/the-constitution/report/hands-my-purse-why-money-bills-originate-the-house [https://perma.cc/36K9-WA3P]. Flipping the interpretation of House inaction, Elizabeth Wydra of the Constitutional Accountability Center suggested that the fact that “no member [of the House] raised a blue-slip objection to the ACA” while not “dispositive of the constitutional question . . . does further support the argument that the ACA satisfies the requirements of the Origination Clause.” Origination Clause Hearing, supra note 54, at 36–47 (testimony of Elizabeth B. Wydra, Chief Couns., Const. Accountability Ctr.). ↑

  105. . Origination Clause Hearing, supra note 54, at 57 (testimony of Todd F. Gaziano, Senior Fellow in Const. L., Pac. Legal Found.). ↑

  106. . See Learning Resources, Inc. v. Trump (Tariffs), SCOTUSblog, https://www.scotusblog
    .com/cases/case-files/learning-resources-inc-v-trump/ [https://perma.cc/H5XK-WHU9]. ↑

  107. . See, e.g., TransUnion LLC v. Ramirez, 594 U.S. 413, 422–24 (2021) (explaining that standing requires a concrete injury, causation, and redressability). ↑

  108. . See supra notes 64–68 and accompanying text (discussing the enrolled bill doctrine). ↑

  109. . See supra text accompanying notes 69–71 (discussing United States v. Munoz-Flores, 495 U.S. 385 (1990)). ↑

  110. . See supra text accompanying notes 72–75 (discussing Sissel v. U.S. Dep’t of Health & Hum. Servs., 799 F.3d 1035 (D.C. Cir. 2015)). ↑

  111. . See Saturno, Origination Clause Interpretation and Enforcement, supra note 56, at 9 (reviewing case law). ↑

  112. . See Munoz-Flores, 495 U.S. at 397–400. ↑

  113. . See Millard v. Roberts, 202 U.S. 429, 435–37 (1906) (concluding that taxes in case did not raise revenue). ↑

  114. . See Twin City Bank v. Nebeker, 167 U.S. 196, 202–03 (1897) (holding that a tax payable by banks to support the costs of establishing a national currency did not raise revenue within the meaning of the Origination Clause). ↑

  115. . See Munoz-Flores, 495 U.S. at 398. ↑

  116. . Id. (quoting Nebeker, 167 U.S. at 203). ↑

  117. . Sissel v. U.S. Dep’t Health & Hum. Servs., 799 F.3d 1035, 1044–49 (D.C. Cir. 2015) (Rogers, Pillard, and Wilkins, JJ., concurring in the denial of reh’g en banc). ↑

  118. . See id. at 1036 (citing Munoz-Flores, Nebeker, and Millard). ↑

  119. . The other instance of a tariff imposed under an emergency statute, which is the 10 percent baseline tariff imposed for four months in 1974 by President Nixon to incentivize other nations to drop their currency pegs, does not necessarily qualify as “revenue raising.” It was imposed for a narrower purpose compared to the tariffs imposed in April 2025. See United States v. Yoshida Int’l, Inc., 526 F.2d 560, 573–77 (C.C.P.A. 1975). ↑

  120. . Interview by Tucker Carlson with Scott Bessent, supra note 28 (quoting Bessent as estimating tariff revenue of “$300 billion to $600 billion a year”). ↑

  121. . State of U.S. Tariffs: September 26, 2025, Budget Lab (Sept. 26, 2025), https://budgetlab.
    yale.edu/research/state-us-tariffs-september-26-2025 [https://perma.cc/X2YU-US73] (estimating the revenue effect of all tariffs at about $2.5 trillion over ten years on a static basis and $2 trillion over ten years on a dynamic basis). The IEEPA tariffs contributed the largest portion of this amount. See Erica York & Alex Durante, Tracking the Impact of the Trump Tariffs & Trade War, Tax Found. (Mar. 13, 2026), https://taxfoundation.org/research/all/federal/trump-tariffs-trade-war/ [https://perma.cc/UN8X-SZBQ] (estimating IEEPA tariffs’ revenue contribution at $1.7 trillion over ten years). ↑

  122. . See Riley Beggin, Here’s Where the Money from Trump’s Tariffs Will Go, Wash. Post (Aug. 7, 2025), https://www.washingtonpost.com/business/2025/08/07/trump-tariffs-revenue/ [https://
    perma.cc/W3PU-DN84] (noting that the tariff “money goes into the general fund, which can be used however Congress designates”). ↑

  123. . See Rubin, supra note 28 (reporting President’s statement linking tariff increases to income tax cuts); Interview by Tucker Carlson with Scott Bessent, supra note 28 (quoting Bessent as explaining that although the legislative budgeting process would not give “credit for [presidential] tariffs in any bill,” tariffs could nevertheless pay for legislative tax breaks such as “no tax on tips”). ↑

  124. . The U.S. treaty with Canada and Mexico provides a pre-existing exemption to the 10 percent across-the-board tariff, and there have been isolated examples of negotiated reductions for a few product categories with a few trading partners. See Michael Lowell et al., Trump 2.0 Tariff Tracker, ReedSmith: Trade Compliance Res. Hub (Mar. 13, 2026), https://www.tradecomplianceresourcehub.com/2026
    /03/13/trump-2-0-tariff-tracker/ [https://perma.cc/9GUG-C4V8] (noting USMCA exemptions but few others). The references in the tracker to 0 percent rates for Japan and the European Union are limited exemptions and not broad exemptions to the 10 percent rate. See Implementing the United States-Japan Agreement, Exec. Order No. 14,345, 90 Fed. Reg. 43535 §§ 4–5 (Sept. 4, 2025) (reducing rate to zero for aerospace products and giving Treasury Secretary authority to reduce rate to zero for certain generic pharmaceuticals and ingredients); Modifying the Scope of Reciprocal Tariffs and Establishing Procedures for Implementing Trade and Security Agreements, Exec. Order No. 14,346, 90 Fed. Reg. 43737 (Sept. 5, 2025) (anticipating the possibility of a zero rate under agreements with EU countries for “products that cannot be grown, mined, or naturally produced in the United States or grown, mined, or naturally produced in sufficient quantities in the United States to satisfy domestic demand; certain agricultural products; aircraft and aircraft parts; and non-patented articles for use in pharmaceutical applications”). ↑

  125. . Proclamation No. 11012, 91 Fed. Reg. 9339 (Feb. 20, 2026). ↑

  126. . See Trade Act of 1974, Pub. L. No. 93-618, § 122, 88 Stat. 1978, 1987–89 (1975), codified at 19 U.S.C. § 2132. This statute originated in the House. See H.R. 10710, 93d Cong. (1973). ↑

  127. . See Bade, supra note 30 (reporting unfair trade practice investigations targeting about sixty nations under Section 301 and consideration of tariffs under Section 232). ↑

  128. . The Learning Resources Court is not quite clear about whether IEEPA might ever authorize any tariffs. Its decision includes both narrower statements of its holding, for instance, that IEEPA does not “grant the President an expansive peacetime tariff power,” Learning Res., Inc. v. Trump, 146 S. Ct. 628, 645 (2026), and the broader statement that “IEEPA does not authorize the President to impose tariffs,” id. at 646. ↑

  129. . See United States v. Yoshida Int’l, Inc., 526 F.2d 560, 573–77 (C.C.P.A. 1975) (analyzing 10 percent baseline tariff imposed for several months to encourage other countries to drop their currency pegs). ↑

  130. . See supra text accompanying notes 116–24 (discussing revenue-raising nature of Trump tariffs such as the 10 percent across-the-board baseline tariff). ↑

  131. . Subcomm. on Int’l Trade and Com. of the H. Comm. on Int’l Rels., 94th Cong., Trading with the Enemy: Legislative and Executive Documents Concerning Regulation of International Transactions in a Time of Declared Emergency (Comm. Print 1976). ↑

  132. . Christopher A. Casey, Jennifer K. Elsea & Liana W. Rosen, Cong. Rsch. Serv., R45618, The International Emergency Economic Powers Act: Origins, Evolution, and Use 10 (2025). ↑

  133. . H.R. 7738 – International Emergency Economic Powers Act, Congress.gov, https://
    http://www.congress.gov/bill/95th-congress/house-bill/7738/all-actions [https://perma.cc/J8YR-M26G]. In November and December, the House and Senate agreed on certain amendments to produce a conformed bill, which was then enrolled and signed by the President. Id. ↑

  134. . Ronald A. Pearlman, The Tax Legislative Process: 1972–1992, 57 Tax Notes 939 (1992); Bernard M. (Bob) Shapiro, The Last 50 Years: The Evolving Role of the Joint Committee Staff in the Tax Legislative Process 2–6 (Feb. 2016) (unpublished draft), https://capitolhistory.org/wp-content/
    uploads/2016/02/USCHS-History-Role-Joint-Committee-Taxation-Shapiro.pdf [https://perma.cc/T84F-3WNW]. ↑

  135. . See Michael J. Graetz, Reflections on the Tax Legislative Process: Prelude to Reform, 58 Va. L. Rev. 1389, 1395–97 (1972) (describing the process for enacting tax legislation); see also Stanley S. Surrey & Paul R. McDaniel, The Tax Expenditure Concept: Current Developments and Emerging Issues, 20 B.C. L. Rev. 225, 300–19 (1979) (detailing the legislative process for the Tax Reform Act of 1976, the Tax Reduction and Simplification Act of 1977, the Energy Tax Act of 1978 and the Revenue Act of 1978). ↑

  136. . Megan S. Lynch, Cong. Rsch. Serv., R40480, Budget Reconciliation Measures Enacted into Law Since 1980, at 1 (2025) (summarizing “the 24 budget reconciliation measures enacted into law since 1980, when reconciliation procedures were first used by both chambers”); Rebecca M. Kysar, The New Tax Legislative and Regulatory Process, 73 Nat’l Tax J. 1135 (2020); Victor Fleischer, The State of America’s Tax Institutions, 81 Law & Contemp. Probs., no. 2, 2018, at 7 (analyzing the legislative process leading up to the December 2017 tax legislation, TCJA); Michael Doran, Legislative Entrenchment and Federal Fiscal Policy, 81 Law & Contemp. Probs., no. 2, 2018, at 27 (examining in the context of a legislative entrenchment argument, detailing the federal budget process established in 1974, and the multiplicity of committees engaged in the tax legislative process); Rebecca M. Kysar, Tax Law and the Eroding Budget Process, 81 Law & Contemp. Probs., no. 2, 2018, at 61, 63–70 (2018) (reviewing the history of reconciliation and the influence of the Byrd rule in tax policy making); Ellen P. Aprill & Daniel J. Hemel, The Tax Legislative Process: A Byrd’s Eye View, 81 Law & Contemp. Probs., no. 2, 2018, at 99 (2018) (exploring the powerful and often problematic impact of the Byrd rule in tax legislation); Lawrence Zelenak, Leaving it up to Treasury: Congressional Abdication on Major Policy Issues in the Early Years of the Income Tax, 81 Law & Contemp. Probs., no. 2, 2018, at 137, 137–38 (2018) (reflecting on the congressional shift to drafting more detailed tax legislation rather than leaving it to Treasury and IRS as was the practice prior to World War II); George K. Yin, Crafting Structural Tax Legislation in a Highly Polarized Congress, 81 Law & Contemp. Probs., no. 2, 2018, at 241, 255–61 (2018) (comparing the changing roles of committees and committees chairs in the tax legislative process and its impact in the context of a polarized congress). ↑

  137. . See Shapiro, supra note 131, at 5 (noting that both JCT staff and Treasury Department revenue estimators prepared estimates); Jerry Tempalski, Revenue Effects of Major Tax Bills (U.S. Dep’t of the Treasury, Off. of Tax Analysis, Working Paper No. 81, 2006), https://home.treasury.gov/
    system/files/131/WP-81.pdf [https://perma.cc/WYE4-BHP2] (using revenue estimates of tax bills since 1940 to measure relative bill size over time); Jerry Tempalski, U.S. Dep’t of the Treasury, Revenue Effects of Major Tax Bills: Updated Tables for All 2012 Bills (2013), https://home.treasury.gov/system/files/131/WP81-Table2013.pdf [https://perma.cc/54HJ-FHTL]. ↑

  138. . Congressional Budget Act of 1974, Pub. L. No. 93-344, 88 Stat. 297 (codified at 2 U.S.C. §§ 601–688). ↑

  139. . See Surrey & McDaniel, supra note 132, at 300–19 (detailing the legislative process for the Tax Reform Act of 1976, the Tax Reduction and Simplification Act of 1977, the Energy Tax Act of 1978 and the Revenue Act of 1978). ↑

  140. . See Tori Gorman, Cong. Rsch. Serv., R48444, The Reconciliation Process: Frequently Asked Questions 5–6 (2026), https://www.congress.gov/crs_external_products/R/PDF/
    R48444/R48444.5.pdf [https://perma.cc/SA3M-EY5B] (explaining revenue estimation, including modern application of the “Byrd rule” to ensure that reconciliation bills only relate to spending and revenue). ↑

  141. . See S. Rep. No. 95-466, at 6–7 (1977) (stating that the Congressional Budget Office estimated no budgetary impact from the passage of IEEPA to supersede part of the Trading with the Enemy Act of 1917). ↑

  142. . See Learning Res., Inc. v. Trump, 146 S. Ct. 628, 677–79 (2026) (Jackson, J., concurring) (considering IEEPA’s legislative history). ↑

  143. . See supra Section IV.A (observing that under the Origination Clause case law, a statute that collects a special fee for a special purpose is not a revenue-raising statute, while a statute that collects money for an unspecified purpose and for the general Treasury fund is a revenue-raising statute). ↑

  144. . For instance, consideration of the Trade Act of 1974 involved the Senate Finance Committee and the House Ways and Means Committee, but not the Joint Committee on Taxation or any revenue estimates. See Staffs of S. Comm. on Fin. & H. Comm. on Ways & Means, 93d Cong., Trade Act of 1974: Summary of the Provisions of H.R. 10710 (Comm. Print 1974). See also Irwin, supra note 31, at 549–55 (describing the Trade Act of 1974 and noting the involvement of the House Ways and Means Committee). ↑

  145. . See supra Section III.B (discussing FCC v. Consumers’ Rsch., 606 U.S. 656 (2025)). ↑

  146. . West Virginia v. EPA, 597 U.S. 697, 722–23 (2022). ↑

  147. . King v. Burwell, 576 U.S. 473, 485–86 (2015) (finding that, given the scale of spending at issue, the legal question was one of “deep ‘economic and political significance’ that is central to this statutory scheme; had Congress wished to assign that question to an agency, it surely would have done so expressly”). ↑

  148. . See, e.g., Mila Sohoni, The Supreme Court, 2021 Term – Comment, The Major Questions Quartet, 136 Harv. L. Rev. 262, 313 (2022) (linking the MQD’s clear statement rule to a judgment about separation of powers). ↑

  149. . See Lisa Heinzerling, The Power Canons, 58 Wm. & Mary L. Rev. 1933, 1954–56 (2017) (noting refusal to apply Chevron in King). ↑

  150. . See, e.g., West Virginia, 597 U.S. at 724 (referring to action that would “substantially restructure the American energy market”); King, 576 U.S. at 485–86 (referring to “billions of dollars in spending” due to ACA tax credits); FDA v. Brown & Williamson Tobacco Corp., 529 U.S. 120, 159–60 (2000) (referring to efforts to regulate and perhaps prohibit the large tobacco industry). ↑

  151. . See Ala. Ass’n of Realtors v. Dep’t of Health & Hum. Servs., 594 U.S. 758, 764 (2021) (referring to the state law nature of landlord-tenant law and to potential criminal penalties as well as to the millions of tenants and tens of billions of dollars of rental assistance implicated by eviction moratorium). ↑

  152. . See Learning Res., Inc. v. Trump, 146 S. Ct. 628, 641 (2026) (noting “projections that the tariffs will reduce the national deficit by $4 trillion”). See also V.O.S. Selections, Inc. v. Trump, 149 F.4th 1312, 1335–36 (Fed. Cir. 2025) (applying MQD because taxing power is a “core Congressional power and because of the sizable revenue anticipated from tariffs”), aff’d sub nom. Learning Res., 146 S. Ct. 628. ↑

  153. . See Learning Res., 146 S. Ct. at 646 (writing that the President asserted “extraordinary power” and “must identify clear congressional authorization”). ↑

  154. . See id. at 646 (Gorsuch, J., concurring) (calling the asserted tariff power “an extraordinary power”). ↑

  155. . See id. at 672 (Barrett, J., concurring) (treating the MQD as part of textualism). ↑

  156. . See id. at 675 (Kagan, J., concurring in part and concurring in the judgment) (“The use of a clear-statement rule here is unnecessary because ordinary principles of statutory interpretation lead to the same result.”). ↑

  157. . See id. at 715 (Kavanaugh, J., dissenting) (arguing that the MQD does not apply “in the foreign policy and national security fields”). ↑

  158. . Ordinary statutory interpretation may have separation-of-powers implications, but they are not as far-reaching as those presented by nondelegation. See, e.g., John F. Manning, Textualism as a Nondelegation Doctrine, 97 Colum. L. Rev. 673, 696–97 (1997) (arguing that textualism represents a constitutional claim about an Article I requirement that Congress communicate its intentions through statutory text). ↑

  159. . See I.R.C. § 7805 (granting the Secretary of the Treasury the authority to prescribe and enforce rules necessary to implement the income tax). ↑

  160. . See Meyer & Sitaraman, supra note 20, at 90 (expressing concern that the MQD could interfere with economic policy implemented by the executive branch); Eichensehr & Hathaway, supra note 20, at 1873–78 (expressing concern that MQD would interfere with national security interests). ↑

Tariffs and the Taxing Power:Historical Lessons for Major Questions and Nondelegation

Posted on by Conor Clarke & Ari Glogower
Clarke & Glogower_Tariffs and the Taxing PowerDownload

Abstract

American law is grappling with basic questions about the President’s power to impose tariffs—questions concerning whether Congress can delegate this authority, and the degree to which it has. But the ongoing tariff controversy emerges against a backdrop of conflicting and shifting historical practice. Early Congresses drafted tariff statutes in painstaking detail, while some of the broadest delegations in the early Republic involved internal taxes. In the modern era, by contrast, Congress has delegated more expansive tariff powers to the President, while retaining closer control over internal taxes. How should we understand this seemingly conflicting history of practice, and its relevance for the debates over tax delegation today?

We begin by recounting the history of tariffs around the Founding, emphasizing the ways in which tariffs are historically and constitutionally distinct from other taxes. We then make three observations for the current debate over how nondelegation principles apply to tariffs. First, we provide an account of why the early history of tariff law diverges (or appears to diverge) from early tax delegations—namely, differences in tax design and administrative technology. It was easier for Congress to provide statutory specifications for taxes on discrete items (like import duties) than for tax bases that were novel and harder to measure (like the 1798 wealth tax). Second, we use the example of ad valorem duties to illustrate the delegation principles in early practice. Early Congresses delegated what they had to—but did not authorize the Executive Branch to decide the objects or levels of taxation. Third, we note that Congress maintained a firm grip over early tariffs even when these laws had express foreign policy implications and were explicitly discussed in foreign policy terms. These points offer a consistent understanding of the early taxing power—and suggest why broad presidential tariffs conflict with constitutional structure and practice.

Introduction

Congress’s authority to impose tariffs was arguably once the Constitution’s most uncontroversial feature. Now, it is at once controversial and confusing. One of the most explosive legal issues of the second Trump Administration—generating ongoing controversy and litigation[3]—concerns President Trump’s expansive use of tariffs to pursue a variety of domestic and international policy goals. On April 2, 2025—named “liberation day” by the President—a new executive order declared a national emergency over persistent U.S. trade deficits and directed the imposition of a ten-percent baseline ad valorem tariff on nearly all imports, with higher “reciprocal” tariffs on specific countries starting days later.[4] In the months since, President Trump repeatedly paused, resumed, expanded, contracted, and otherwise modified these and other tariffs.[5]

These actions have attracted legal challenges largely focused on questions of statutory interpretation. Many of the initial tariff actions of the second Trump Administration relied on the authority of the International Emergency Economic Powers Act (IEEPA), which empowers the President, after the declaration of a national emergency, to “regulate . . . importation . . . of . . . any property in which any foreign country . . . has any interest.”[6] The primary challenges recently heard by the Supreme Court contested whether this IEEPA language really grants the President the broad tariff power he has claimed.[7]

But the controversy over the recent Trump tariffs also sounds in broader legal themes—including both the nondelegation and major questions doctrines. The Federal Circuit held in V.O.S. Selections, Inc. v. Trump that IEEPA did not authorize the challenged tariffs, reasoning that Congress has not delegated the broad authority to impose tariffs unless it did so “explicitly,”[8] and that Trump’s “unheralded” and “transformative” tariffs also run “afoul of the major questions doctrine.”[9] The claimants asked the Court to decide not only whether IEEPA authorized the challenged tariffs—but also whether such authorization would be an unconstitutional delegation of legislative authority to the President,[10] or would violate the major questions doctrine.[11] Both major questions and nondelegation—doctrines that are connected—were repeatedly raised at oral argument. In ruling on the Trump tariffs, therefore, the Supreme Court must grapple both with statutory questions and with background constitutional principles that inform statutory interpretation—questions that are broader than the proper construction of IEEPA and the scope of its famously ambiguous language.[12]

These questions about the tariff power also intersect with wider contemporary legal trends. We live in an age of increased scrutiny of broad delegations of the Article I legislative powers and related skepticism of Article II attempts to answer major questions.[13] And the power to impose tariffs is right there in Article I: “Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises.”[14]

Although the nondelegation and major questions doctrines are formally distinct, they operate as overlapping principles guiding the interpretation of statutes delegating Article I powers to the Executive, such as IEEPA’s delegation of economic powers. Interpreting IEEPA to authorize only appropriately cabined discretion over tariffs avoids both delegation concerns and major questions concerns.[15] More generally, judges and commentators have noted the hydraulic relationship between the two doctrines, on account of their overlapping inquiries.[16] And the doctrines have been theorized in similar ways: Courts should not interpret ambiguous statutes to give agencies vast powers that raise constitutional risks.[17] For these reasons, this Article evaluates the question of how to properly interpret the scope of the tariff power delegated in IEEPA as having comparable implications for how both the nondelegation and major questions doctrines apply to tariffs and the taxing power.

Beyond these contemporary doctrinal trends, we also live in an age in which the Supreme Court increasingly turns to the history of practice between the branches as evidence of the law’s settled meaning. Presidential tariffs are of recent vintage (largely confined to the twentieth century), and the scale and scope of the second Trump Administration’s tariffs represent a new high-water mark for the Article II tariff.

Yet the history of lawmaking through the taxing power appears to pose contradictions when it comes to delegation and the related major questions doctrine. On the one hand, early American tariff legislation—a type of what is often called “external” taxation—was usually highly detailed.[18] Some influential commentators have therefore pointed to these early laws, in combination with other evidence, to support an original understanding of a constitutional nondelegation requirement.[19] On the other hand, other influential commentators note that some of the broadest and earliest legislative delegations concerned “internal” taxation—perhaps most famously the Direct Tax of 1798, which required an extensive administrative apparatus that delegated significant discretion to the Executive Branch.[20]

Indeed, today’s division of authority over tariffs and internal taxes appears to be the reverse of what existed in the first decades of congressional practice. Broad legislative delegations of tariff authority—while unknown in the first decades of legislative activity—are not exactly new. Congress has delegated some tariff authority to the President since 1890, and has done so more capaciously since 1934.[21] Indeed, two foundational Supreme Court cases upholding congressional delegations against constitutional challenge concerned tariff delegations.[22] Moreover, tariffs are regarded as an important tool of foreign policy, raising the possibility that—even if the present statutory delegations are ambiguous—the President may lean on more than statutes for support, on the theory that he acts in Justice Jackson’s famous “zone of twilight in which [the President] and Congress may have concurrent authority, or in which its distribution is uncertain.”[23] In the ongoing Supreme Court litigation over IEEPA, the government defends its broad reading on similar grounds, arguing that Congress has not delegated its Article I authorities, but merely supplemented foreign-affairs authorities that flow directly from Article II.[24]

By contrast, it is the internal taxes of today where Congress seems more concerned with “filling up the details,” and retains authority over key features of tax design. For example, while the President and Treasury possess broad administrative authority to implement the Internal Revenue Code, the President may not set income tax rates.[25] For some critics of the modern administrative state, it is obvious that a proper understanding of the Constitution commands this result.[26] Still, delegations of the taxing power are regularly upheld. Last term, for example, the Court rejected a nondelegation challenge to the Federal Communications Commission’s authority to determine fees that telecommunications carriers must pay—a kind of administrative tax—into a fund that subsidizes telecommunications access in underserved areas. The Court rejected the notion that delegations of the taxing power must clear a higher bar: “the delegation inquiry [is] just the same, and just the usual one.”[27]

The twisting law and history of delegation, tariffs, and taxes may thus appear confusing and equivocal. Perhaps for this reason—among others—advocates on both sides of the current debate over the Trump tariffs have drawn differing conclusions from the historical record.

Against this confusing backdrop, what, if anything, can the history teach us about the President’s authority to impose tariffs, and Congress’s ability to delegate that authority? As we have argued elsewhere, the history of congressional and executive practice can provide new perspectives on contemporary questions about the nature and limits of the taxing power.[28]

We turn to history to provide lessons for the debate over nondelegation and major questions as they apply to tariffs as well as the taxing power more generally. While our primary purpose here is not to comment on the litigation over the President’s tariffs, we derive lessons that have relevance for the Court, and that suggest the broad reading of IEEPA advanced by the Trump Administration is out of step with both our constitutional structure and the early tradition of congressional control. Our lessons also have relevance for the ongoing academic debates over delegation, taxes, and tariffs.

In Part I, we provide an overview of the relevant early tariff history and an account of congressional practice regarding external taxes around the Founding. While much of this history has been explored elsewhere, we draw it together partly to emphasize an important and underappreciated theme: The legal history of external taxes is in many respects different from the history of the federal government’s other fiscal powers. In the early republic, tariffs were, without question, the single most important federal revenue source. Indeed, a strong case can be made that the power to impose duties on foreign goods was the most important federal constitutional power. Among other things, the debate over the impost in the 1780s was arguably the primary motivation for the Constitutional Convention of 1787 and the centerpiece of plans for resolving the lingering Revolutionary War debts.

The text of the Constitution also treats internal and external taxation in subtly distinct ways. While both are included under the Constitution’s Taxing Clause,[29] other clauses specifically deprive the states of authority over imports and emphasize that Congress retains oversight over related state lawmaking.[30] We reexamine the Constitution’s relevant textual and structural commitments—an exploration that highlights the reasons to be additionally skeptical of tariff delegations compared to internal tax delegations—and sketch how the tariff authority was wielded after ratification.

In Part II, we offer three interpretive observations about this history that are relevant to the current legal and academic debates over nondelegation and major questions. First, we provide an account of why the early history of tariffs appears to diverge from early internal tax delegations. Here, we focus on the differences in tax design and administrative technology: It was easier for Congress to be specific about tariffs on discrete goods in the nineteenth century than for internal tax bases that were novel and harder to measure. Congress delegated what it had to—which, in the case of tariffs, was not much. Furthermore, these early delegations did not authorize the Executive Branch to decide the object or levels of taxation and thereby limited the Executive’s discretion.

We then examine the case of the early ad valorem duties as an example of how the nature of the delegations depended on choices in tax design. This example illustrates what early Congresses had to delegate and why—namely, processes and judgments (such as valuation procedures) that could not be spelled out in advance by statute. At the same time, it underscores that these delegations were narrowly functional and did not authorize the Executive to make the underlying policy choices about whom to tax or at what rate.

Finally, we engage directly with the argument that because tariffs implicate foreign policy they flow in part from the President’s Article II prerogatives. Early practice does not support this view. Early Congresses maintained a relatively firm grip over tariff design even though early tariffs had foreign policy implications and were explicitly discussed in foreign policy terms. Those tariffs were often designed (by Congress) both to raise revenue and to regulate foreign commerce.

Taken together, these points offer a consistent understanding of the tax and tariff power in the early Republic and explain why broad presidential powers to impose tariffs—as claimed by the Trump Administration in its interpretation of IEEPA—conflict with early historical practice.

I. Tariff History: An Overview

To the modern ear, Congress’s power to impose tariffs—and similar levies on imports, contained within the constitutional terms “duties” and “imposts”—can seem lost in the overall taxing power. But the power to tax imports was perhaps the single most important federal power for the new Republic. This was true before the Founding: The debate over a federal “impost”—and the failure to implement one under the Articles of Confederation—was one of the major controversies that bedeviled the Articles of Confederation and a proximate cause of the Constitutional Convention of 1787.

Because tariffs have a distinct history and raised distinct governance concerns, the text and structure of the Constitution treat them differently than other aspects of the taxing power. Most significantly, the Constitution deprives the states of concurrent authority over imports and provides Congress with oversight over related state lawmaking.[31]

Tariffs continued to have a unique role within the taxing power after ratification: They were by far the federal government’s most important source of revenue from the Founding and until the rise of the modern income tax,[32] and it was uncontroversial in the early decades of the Republic that the American financial system would have this structure.[33]

Because tariffs were central to the taxing power during this period—and because, as explained below, early tariffs and taxes raised distinct design challenges[34]—Congress maintained significant control over their design and implementation. In his history of U.S. trade policy (which is, necessarily and substantially, also the history of U.S. tariff policy), Douglas Irwin observes that “Congress is at the center of the story because it is the principal venue in which trade policy is determined.”[35] This was never more so than in the decades following the Constitution’s ratification.

A. The Impost Debate

The Articles of Confederation vested the pre-federal Congress with broad authority over foreign affairs and certain aspects of interstate commerce, but not an independent authority to levy taxes or tariffs. Instead, the Articles expressly preserved state fiscal authority. Article IX made explicit that “no treaty of commerce shall be made whereby the legislative power of the respective States shall be restrained from imposing such imposts and duties on foreigners, as their own people are subjected to,”[36] preserving state control over customs duties. Article VIII, meanwhile, required that “all other expenses that shall be incurred for the common defence or general welfare . . . shall be defrayed out of a common treasury, which shall be supplied by the several States,” with each state’s taxes “laid and levied by the authority and direction of the legislatures of the several States.”[37] In practice, this structure meant that Congress could only request funds from the states and lacked any reliable stream of revenue—which created difficulty in funding federal activities or paying off the Revolutionary War debt.[38] Deprived of a tariff authority, Congress was forced to seek the states’ permission to enact uniform imposts—an arrangement that proved unworkable.

Congressional proponents of a national taxing power sought on two primary occasions to authorize a federal impost under the Articles of Confederation. Congress[39] made its first major attempt in 1781, when it recommended that the states adopt a five percent ad valorem impost on imports. In its resolution of February 3, Congress declared the measure “indespensably [sic] necessary to the support of public credit and the prosecution of the War,” and asked the states to “vest Congress with full power to collect and to appropriate the same to the discharge of the principal and interest of all debts already contracted or which may be contracted on the faith of the United States during the present war.”[40] But the impost required unanimous approval of the states, and the refusal of Rhode Island—which feared that granting Congress independent taxing power would erode state sovereignty and burden its trade-dependent economy—proved fatal.[41] Congress tried again in 1783, recommending to the states that it was “indispensably necessary to the restoration of public credit, and to the punctual and honorable discharge of the public debts, to invest the United States . . . with a power to levy . . . duties upon goods imported into the said states.”[42] This time, New York vetoed the proposal—based on similar concerns that granting Congress unchecked taxing authority would endanger state sovereignty and shift fiscal control away from the state—thereby jeopardizing New York’s ability to collect revenue from its port.[43] New York also rejected impost proposals in 1784 and 1785, and in 1786 it insisted that any New York import duties be collected by state officers—a move likewise aimed at maintaining state control.[44]

The inability of the states to adopt a national impost was a defining political issue of the 1780s. As Robin Einhorn has noted, when champions of a robust federal Constitution “attacked the ‘imbecility’ of the Articles of Confederation,” the failure of the impost—and the ability of one holdout state to frustrate the urgent fiscal policy intentions of the rest—was a key part of what they had in mind.[45] This failure posed a basic threat to the national project, as duties on imports were understood to be the most important potential source of federal revenue.[46]

The contest over the impost also reflected the importance of imports—and their control—to individual state economies. And states worried that giving up such control to a federal authority might be damaging to their fiscal capacity. One month after Rhode Island’s rejection of the 1781 impost, for instance, Virginia also withdrew its consent for the proposed federal impost with a statement, declaring that to permit “any power, other than the general assembly of this commonwealth, to levy duties or taxes upon the citizens of this state within the same, is injurious to its sovereignty, may prove destructive of the rights and liberty of the people, and . . . contravene[s] the spirit of the confederation.”[47]

The impost controversy—and the inability of the states to coordinate on revenue and commercial matters—helped set the stage for the Constitutional Convention of 1787. In September of 1786, delegates from five states met in Annapolis, Maryland, at what became known as the Annapolis Convention.[48] Their mandate was to address the problems of interstate commerce under the Articles of Confederation, which left Congress too weak to regulate trade effectively. Because attendance was sparse, the delegates concluded that they could not take decisive action. Instead, in a report drafted largely by Alexander Hamilton, they recommended convening a broader assembly to address not only commercial disputes but the fundamental weaknesses of the Articles themselves.[49] That call led directly to the Philadelphia Convention of 1787, where the U.S. Constitution was drafted.[50]

B. Constitutional Text and Structure

The impost debates of the early- and mid-1780s made it increasingly clear that the federal government needed the authority to raise revenue from imports. Thus, while the impost was important—and reflected deeply felt economic and regional interests of the states—the idea of giving Congress the authority to tax imports was perhaps the least controversial fiscal power to emerge from the Convention.[51] After a decade of controversy, the delegates understood that its time had come. The Committee of Detail’s draft of the Taxing Clause was voted forward with no recorded controversy.[52]

The bigger question for the delegates was whether external sources of revenue would be sufficient—not whether they were necessary or desirable in the first place. Even Anti-Federalist opponents of the Constitution conceded the necessity of such external taxes, though they sought to reserve internal taxes for the states. Hamilton, in Federalist No. 30, acknowledged the force of that distinction but rejected it as “inconsistent with every idea of vigor or efficiency.”[53] Limiting the federal government to commercial imposts, he argued, would “leave the General Government in a kind of tutelage to the State governments” and could never suffice for “the present and future exigencies of the Union.”[54] The burden of existing public debt and the costs of essential federal establishments, he concluded, required a broader tax base than import duties alone. Still, the near-universal acceptance of imposts as a federal revenue source underscores the unusual strength of agreement on their desirability. This consensus—and the agreement to extend the federal taxing power to internal revenue sources as well—are reflected in the ratified text of Article I, Section 8: “Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises,” subject to a uniformity requirement.[55]

But several other aspects of the text and structure are worth drawing out, because they emphasize the general principle that Congress would be in charge of revenue-raising, and also emphasize state concerns over the relationship between the new federal taxing power and their own economies. Revenue bills are required to originate in the House of Representatives, emphasizing that the power of the purse should be tied to a popularly accountable and geographically diverse body.[56] Congress is likewise forbidden from taxing exports and preferring the ports of one State over those of another,[57] underscoring the anxiety that the new federal powers might be used to privilege one state’s economy at the expense of another.

Finally, the federal power to levy foreign duties and imposts emerged stronger than the rest of the taxing power, for it was the one component of that power that was expressly denied to the states. Article I, Section 10, Clause 2 provides that “[n]o State shall, without the Consent of the Congress, lay any Imposts or Duties on Imports or Exports, except what may be absolutely necessary for executing it’s [sic] inspection Laws,” and further requires that any revenue from such imposts flow to the federal treasury and be “subject to the Revision and Controul of the Congress.”[58] Clause 3 provides further that “[n]o State shall, without the Consent of Congress, lay any Duty of Tonnage.”[59] These additional provisions underscore both that tariffs were the most important federal taxing power and that they would be subject to congressional (and not more generically federal) oversight.

This constitutional structure emphasizes an important constitutional difference between internal and external taxation. In his famous Federalist No. 32, Hamilton seized on these provisions to underscore the concurrent nature of all the internal taxing powers—and thereby reassure the states. Because the Constitution both grants Congress authority over imposts and simultaneously denies that power to the states, Hamilton reasoned, the implication is that states otherwise retain “an independent and uncontrollable authority to raise their own revenues for the supply of their own wants.”[60] With the sole exception of duties on imports and exports, Hamilton concluded, the states “retain that authority in the most absolute and unqualified sense,” and any federal effort to restrict them further would be “a violent assumption of power, unwarranted by any article or clause of its Constitution.”[61] The exclusion of states from the impost power thus reflected a rare instance of consensus: it was the one constitutional taxing measure that both Federalists and Anti-Federalists agreed belonged squarely in federal and—as the text repeatedly emphasizes—congressional hands.[62]

This distinction between internal and external taxes also raises an important structural question: Would the states have given up their concurrent power to impose tariffs if they thought Congress could freely delegate that power to the President? After all, tariffs were regarded as the most important revenue tool—and also, potentially, the most destructive to state economic interests. By the time of the Constitutional Convention, a general consensus recognized that the federal government needed this revenue authority—but the authorities of the Executive Branch were comparatively more controversial. Indeed, while the impost authority was arguably the least controversial federal power discussed at the convention, the new presidential power was perhaps the single most controversial structural feature of the Constitution.[63]

As we argued in our amicus brief,[64] we think the answer is likely that the states would not have given up their tariff authority if they thought policy decisions in this area were not going to be mediated through a representative congress. In addition to the textual commitments described above, we see ample evidence that the Founders would have expected the economic interests implicated by imports to be mediated through Congress. In Federalist No. 10, for example, Madison offered taxing and imports as core examples of policy issues that would provoke a strong factional response. “Shall domestic manufactures be encouraged, and in what degree,” Madison asked rhetorically, “by restrictions on foreign manufactures?”[65] There is, he continued, “no legislative act in which greater opportunity and temptation are given to a predominant party to trample on the rules of justice” than the proper “apportionment of taxes.”[66] For this reason, he continued, it was beneficial to have a Republic filter those interests “through the medium of a chosen body of citizens.” Madison was hardly alone in thinking that divisive questions over imports would be settled by a representative and deliberative legislature—not by a single Executive.[67]

C. Early Federal Tariff Legislation

Consistent with the expectations described above, Congress’s new constitutional authority to tax imports was indeed the most important source of public revenue in the early Republic.[68] Given the extensive debates of the 1780s, Congress’s initial reliance on tariffs for revenue was largely uncontroversial, and was seen as inevitable.[69] Congress faced the immediate challenge of securing a stable revenue against the backdrop of the lingering war debt. As Madison explained in 1789 to his colleagues in the House of Representatives, “there are but two objects to which in this dilemma we can have recourse”: “direct taxation” and “excises.”[70] But Madison added that “direct taxation is not contemplated by any gentleman on this floor, nor are our constituents prepared for such a system of revenue,” and noted that domestic excises on particular goods were politically toxic, as they “would give particular disgust in some states.”[71] For Madison, that left only one viable path—the more politically acceptable and anticipated duties on imports. “[I]t is better to try what will be produced by a plan which is favoured by the public sentiment,” he concluded, which “will give a support to our laws equal to the greatest energy of a strong execution.”[72]

Madison introduced the first bill to impose duties on imports on April 8, 1789, just two days after a quorum had been achieved in Congress.[73] He urged Congress to act immediately—and adopt the five percent general impost that had been the primary focus of proposal and debate in the 1780s—and then work out a more specific schedule later, so as not to miss spring imports.[74] After some debate, Congress adopted the first federal tariff on July 4, 1789, levying duties on a wide range of imported goods.[75] This initial law imposing customs duties was the second enactment by Congress, preceded only by the law governing the time and manner of oaths of office.[76]

Related fiscal legislation occupied a large share of Congress’s early work. Jennifer Mascott observes that “[s]ix of the 26 statutes enacted in that first session of the First Congress involved customs operations, and 37 of the 96 days of recorded legislative business in the session involved debate on customs laws.”[77] Indeed, the First Congress devoted the majority of its legislative output to revenue measures, and the bills governing customs and tonnage duties were among the few statutes enacted by the summer of 1789.[78]

Congress subsequently revised the tariff schedule repeatedly in the succeeding sessions.[79] But the basic design structure of the tariffs did not change much in the decades that followed: tonnage duties based on total shipping imports, listed specific duties on discrete goods and commodities, and ad valorem duties for items that varied significantly in value or that could not be easily reduced to discrete units.[80]

D. The Executive Branch Tariffs

When and how did the tariff authority shift to the Executive Branch? While the early legislation did reserve significant discretion to the Executive in implementing certain aspects of import duties,[81] the transition to broader presidential discretion over tariffs was much later: it unfolded gradually across the late-nineteenth and early-twentieth centuries. For most of the nineteenth century, Congress retained tight control over tariff schedules, drafting detailed lists of dutiable items and using tariff laws both to raise revenue and to pursue domestic economic objectives such as protection for infant industries and redistribution of wealth. But, by the late 1800s, many members of Congress grew concerned that legislative bargaining produced tariffs distorted by logrolling and special-interest capture.[82] The rise of industrial monopolies further weakened some traditional justifications for tariffs—the protection of fragile and nascent domestic industries—while the introduction of the income tax in the early twentieth century reduced the federal government’s dependence on customs revenues.[83] These developments created space for a shift away from Congress’s detailed enumeration of tariff rates and toward broader delegations of trade authority to the Executive.

The first significant delegation of tariff authority to the President appeared in the McKinley Tariff of 1890, which authorized the President to suspend exemptions if foreign nations imposed unfair tariffs on U.S. goods.[84] The Supreme Court upheld the provision in Marshall Field & Co. v. Clark, reasoning that the statute gave the President permissible discretion over the execution of the law rather than an unconstitutional power to legislate anew.[85] The 1890 tariff—along with later measures like the Fordney-McCumber Tariff of 1922, which included a flexible tariff mechanism[86]—signaled Congress’s willingness to cede a greater degree of the technical and discretionary authority over tariff rates to the Executive Branch.[87] Again, the motives here were functional, and based on political-economy concerns: Delegating allowed members to insulate tariff-setting from interest group pressures and to portray rate adjustments as the product of technocratic rather than political judgment.[88] These steps in the late-nineteenth and early-twentieth centuries laid the groundwork for a more dramatic reallocation of statutory tariff authorities beginning in the 1930s.

An important shift came with the Reciprocal Trade Agreements Act of 1934, which authorized the President to negotiate bilateral trade agreements and reduce tariffs without further congressional action.[89] The 1934 Act reflected both increasing disillusionment with Congress’s own tariff-making—especially the infamous Smoot-Hawley Tariff of 1930, which escalated protectionism at a time when global trade was already strained by the Great Depression[90]—and an emerging view that trade policy was appropriately part of the foreign affairs domain, as shared by the President and Congress.[91] The Supreme Court reinforced an expansive vision of presidential authority in foreign relations, while the Cold War brought a newfound urgency to the geopolitical consequences of trade negotiations.[92] Congress declined to reassert itself even as the President’s authority expanded into multilateral trade institutions and increasingly broad agreements.[93] By the mid-twentieth century, this foreign affairs paradigm left the President with dominant control over trade policy and marked the culmination of the long transition away from detailed congressional tariff control.

These trends set the stage for the current debate over the Trump tariffs. The tariff powers the Trump Administration has claimed under IEEPA trace back to delegations by Congress in the cases of wartime and national emergencies. In 1917, Congress enacted the Trading with the Enemy Act (TWEA)[94] soon after the country’s entry into World War I. Section 5(b) of the TWEA granted the President additional powers “during the time of war” including to “investigate, regulate, or prohibit, any transactions in foreign exchange.”[95] Congress subsequently expanded the TWEA in the 1930s to also apply “during any other period of national emergency declared by the President.”[96] In 1976, Congress limited the scope of national emergencies that could be declared pursuant to the TWEA,[97] and then introduced a more limited scope of emergency powers under IEEPA the following year,[98] including the authority to “regulate” the “importation” of goods “if the President declares a national emergency with respect to” “any unusual and extraordinary threat.”[99]

II. Lessons for the Age of Executive Tariffs

Here, we focus on themes that can be drawn from the history and can contribute to—and add complexity to—the current debate over executive tariffs. First, we provide an account of why the early history of tariffs appears to diverge from early internal tax delegations. We focus on the differences in administrative technology and the design of the tax base. It was easier for Congress to be specific about tariffs on discrete goods in the late-eighteenth and early-nineteenth centuries than it was about tax bases that were novel and harder to measure—such as the federal internal wealth taxes imposed in 1798 and in the early nineteenth century.

When it came to raising revenue, early Congresses delegated what they had to. In the case of tariffs, this was not much. We demonstrate, however, how even early Congresses did delegate processes and determinations that could not be specified in advance by statute, such as valuation procedures for ad valorem duties. In these cases, however, these delegations were cabined by the nature of the tax base.

Finally, we argue that Congress maintained this firm grip over tariffs even though early tariffs had foreign policy implications and were explicitly discussed in foreign policy terms. The Founding generation understood that tariffs could raise revenue and regulate foreign commerce.

Taken together, these points explain some of the seeming contradictions and inconsistencies in the early practice of tax and tariff delegations. Our account also explains why the expansive reading of IEEPA to sanction the level of tariff discretion the Trump Administration now claims would be inconsistent with this historical practice and the structural safeguards with which this practice conformed.

A. The Divergence of Tax and Tariff Delegations

As noted above, the historical record may at first appear to offer conflicting evidence on the scope of congressional delegations of the taxing power. On the one hand, Congress enacted detailed customs laws from the Founding well into the twentieth century. Jennifer Mascott emphasizes that the early tariff and tonnage acts were drafted with “highly detailed” specificity that left little discretion to officers in the field.[100] As explained below, it is a mistake to think those early custom laws were completely devoid of delegated discretion—or could be.[101] But these laws are nevertheless read as suggesting a practice of limited congressional tariff delegations.[102]

On the other hand, in other cases early Congresses enacted tax laws accompanied by vast new statutory administrative systems to implement the taxes—such as the Direct Tax of 1798—and correspondingly broad grants of discretion to these new executive officers when structuring and administering the taxes.[103] Why the difference?

We believe this inconsistency is best explained by the fundamentally different design features of tariffs and internal taxes, and the different balance of statutory prescriptions and administrative discretion that is needed to impose different revenue instruments. Consider the basic determinations that are necessary to calculate a tax liability: the specification of a taxable base (such as “income” in the federal income tax), the measurement of the taxable base (for example, how much “income” does the taxpayer have), and then the application of a rate schedule to this base.[104] Each of these variables must be determined by either Congress through statutory design or by the Executive Branch through regulation and administration.

The different forms of taxes Congress imposed placed different amounts of pressure on these variables. For example, in the case of specific duties—which imposed a tax per item on specified imported goods—specification of the taxable base and the calculation of the amount of tax due was relatively simple. For this reason, the early customs statutes appeared to leave little discretion to the Executive Branch: All the statute had to do was provide a list of all the taxable import goods and their applicable custom rates.[105] In other words, these statutes seemed detailed and complex, but only with respect to determinations which Congress did not need to delegate to the Executive Branch. Indeed, this was seen as one of the great virtues of import duties: They were easy to collect precisely because they required little discretion.[106]

The internal taxes, in contrast, often required much greater delegation of administrative discretion, simply due to the design of these instruments, and the nature of the factors that could not be specified in the statute. In this case, Congress could not designate by statute the attributable amount of the taxable base for each taxpayer, but could merely provide general principles for how the Executive Branch could make these determinations through regulation and administration. For example, in the case of the 1798 Direct Tax, Congress established a vast administrative apparatus with broad discretion to determine taxpayers’ property values and to assess and collect the tax.[107]

This broad delegation was necessary because of the nature of the taxes Congress sought to impose. To apportion a direct tax among the states by population as the Constitution required,[108] Congress had to first specify a total amount to be raised from the tax, as well as the quota to be raised from each state.[109] That is, in this case the typical method of calculating tax liabilities was reversed, and instead started with the amount of tax to be raised and had to work backwards to determine the taxable base and applicable rates, which could not all be anticipated ex ante in the statutes. In this case, Congress had no choice but to leave crucial input variables in the tax calculation unspecified, and to delegate broad administrative discretion to the Executive Branch to make these determinations.

This same problem arose with the early income taxes, attempted by Congress in 1861 and 1894,[110] and with the modern income tax imposed in 1913 after the ratification of the Sixteenth Amendment.[111] All of these laws sought to tax a base defined as a comprehensive measure of a taxpayer’s total income, as an indicator of an even more abstract taxable base of a taxpayer’s economic capacity.[112] For this reason, these laws provided for certain components of the income tax base (such as income from professions, dividends, interest, etc.) as well as catch-all language to include an undefined residual of income from whatever source.[113] These statutes all necessarily delegated significant authority to the Executive Branch to define and measure the components of the income tax base.[114] Congress could not specify ex ante all the variables and measurement determinations for calculating the taxes due on a broad and abstract measure such as income, as it could in the case of the tariff schedules.

This basic difference between forms of taxation helps to reconcile Mascott and Parrillo’s different accounts of delegation in the early Republic: They are evaluating different types of taxes which do not require the same types of delegation.[115] This distinction also helps to explain the profoundly different roles of delegation with respect to the tariffs and the internal taxes, and particularly as the latter evolved to tax broader measures of economic capacity. As a result, it is entirely understandable why Congress might be understood to restrict delegations to the Executive Branch in setting and designing tariffs, even as Congress has given the Executive broader discretion to fill in the gaps that are inevitable with an income tax.

Put simply, the scope of the delegated discretion depended on the type of tax being designed. In this respect, we think both Parrillo and Mascott have important insights to offer: Congress has delegated substantial authority over taxation since the Founding era, but only when necessary to fill specific gaps in the calculation of tax liabilities, and only when the discretion is limited based on the nature of the tax instrument.

This distinction also has implications for how we might understand the role of the major questions doctrine in these two contexts. Taxes can have profound economic consequences both for individual taxpayers and the country. Even in the context of internal taxes, however, Congress never gave the Executive Branch the kind of discretion that could fundamentally reshape these taxes and their economic effects—but instead empowered the Executive Branch to fill in the details of the broad contours prescribed. If, however, Congress were to delegate broad discretionary authority to the Executive Branch to independently determine both the categories of items subject to tariffs as well as the rates, then this discretion could create a new kind of major questions problem that never arose with the previous practice of imposing either internal taxes or congressional tariffs.

B. The Gaps in Early Tariff Legislation

For the reasons described above, it would be a mistake to think that early laws governing the duties on imports could always (and did) fill in every jot and tittle. This Section evaluates the design of the ad valorem duties—that is, duties raised according to value, rather than according to a unit measurement of the imported good, such as quantity or weight. The case of the ad valorem duties illustrates how delegations of the taxing power depended on the design of the tax instrument, even in the early tariff legislation.

The ad valorem customs duties necessarily required greater executive discretion to determine the applicable values. In this case, the goods did not have to simply be listed in the statute but also valued by someone. Furthermore, Congress could not always specify ex ante in the statute what the values would be for each imported good, beyond prescribing certain conventions or methods that would be used in making these valuations. It is not surprising that Congress did delegate greater discretion to the Executive Branch to determine the value of goods and therefore the applicable taxes.

Early U.S. laws followed this structure. Consider, for example, the very first U.S. law imposing duties on imports.[116] This 1789 law imposed some duties based on quantity (“molasses, per gallon, two and a half cents”[117]) and some duties based on weight (“coffee, per pound, two and a half cents”[118]). But it also contained a large number of items to be charged according to a schedule of ad valorem rates: for example, “all looking-glasses, window and other glass (except black quart bottles) . . . [t]en per centum ad valorem.”[119] Indeed, ad valorem duties were the default mechanism in this early law: For all goods not specifically described, Congress imposed a rate of “five per centum on the value thereof at the time and place of importation.”[120]

These ad valorem duties were important revenue instruments. In a 1795 report, Treasury Secretary Alexander Hamilton reported that, under the laws of the time, “not much short of one-third of the whole amount of the duties is derived from articles rated ad valorem.”[121] In later years, ad valorem duties continued to produce a large percentage of federal revenue.[122]

These laws also left substantial discretion to those charged with administering and collecting the tax. Early statutes typically required valuation at the actual cost of the goods (i.e., the cost to the merchant importing the goods to the United States), but in many cases no reliable documentation of that cost was available. In those circumstances, customs officials were empowered to convene adjudicatory proceedings to establish a value, and both collectors and appraisers exercised broad authority to challenge importers’ invoices, order physical inspections, and adjust declared values.[123] In this way, the design of the early ad valorem tariffs more closely resembled that of the first federal wealth tax, with a substantial delegation of administrative discretion to the Executive Branch necessitated by the design of the tax.[124]

This discretion, combined with reliance on invoices, made ad valorem duties vulnerable to fraud and produced inequalities—leading to both concern and resignation at the inevitability of administrative discretion. One Treasury report noted that “[i]t is, undoubtedly, a just and great objection to this method of ascertaining ad valorem duties that it produces very considerable inequalities in the operation of those duties upon different importers,” and that “no scheme of human policy has yet been devised for the collection of ad valorem duties which does not, in some degree, involve the difficulty of unequal valuations.”[125] Elsewhere, Secretary Hamilton noted that, in other nations, efforts to guard against evasion and inequality—which “infallibly happen” under an ad valorem system—“led to contract more and more the number of articles rated ad valorem, and of course to extend the number of those rated specifically . . . .”[126]

This example in the early history shows the dual nature of early tariff delegations. On the one hand, it would be a mistake to see early lawmaking in this area as free of delegation or discretion. No realistic legal framework on an important and substantively rich issue could be completely free of discretion—and tariffs were not. On the other hand, the nature of the delegations tells us something about how Congress understood and transferred its authority. Early tariff statutes delegated only what could not practicably be specified ex ante—questions of administration, valuation, and execution—while reserving to Congress the core policy judgments about the objects of taxation and the levels at which they would be imposed.

C. Tariffs and Foreign Policy

Tariffs are also distinct within the taxing power—and distinctly challenging—because they also serve as instruments of foreign policy, and therefore occupy a shared domain of constitutional authority. As Bayless Manning famously put it, trade regulation is an “intermestic” affair—something simultaneously domestic and international in character.[127] This dual character is reflected in the standard account of American trade history, which typically describes tariffs as directed toward the goals of raising revenue, protecting domestic industries, and expanding foreign trade.[128] Yet the standard account also identifies a tilt over time: Tariffs started out as a revenue tool, but have more recently transformed into a foreign policy tool.[129] As mentioned above, this matters because of the President’s constitutional prerogatives over foreign affairs. Proponents of a broad executive tariff power claim that, because tariffs have become a tool of foreign policy, they now implicate the President’s core Article II authorities.[130]

We offer something of a corrective to this standard account. Tariffs were always understood—before the Founding and immediately after—as tools with foreign policy implications. The claim that presidential control over tariff policy rests solely on the idea that tariffs “became” matters of foreign policy in the twentieth century therefore oversimplifies the issue. The constitutional balance of authority at the Founding necessarily incorporated an understanding that tariff policy was deeply enmeshed with foreign relations.

American public policy debates have always viewed tariffs as something more than a revenue tool—even as, in early America, tariffs were also the most important revenue tool. The crucial debates over tariffs in the 1780s, for instance, were also debates about foreign policy. In 1783, the British imposed stiff duties on America for a mix of foreign policy reasons, including strengthening British maritime control, protecting domestic British manufacturing, and retaliating against the United States.[131] This measure had a crippling effect on the American economy; James Madison complained in a 1785 letter that British retaliatory duties had “robbed us of our trade with the West Indies” and left national trade in a “deplorable Condition.”[132]

In 1784, Congress initiated an effort to open American trade and sent John Adams to negotiate with the British.[133] His reports underscored the limits of American diplomacy without credible economic leverage via tariffs—thereby highlighting how tariff policy and foreign policy were already linked.[134] In a notable letter to John Jay, Adams wrote that “nothing but Retaliation, reciprocal Prohibitions, and Imposts and putting ourselves in a Posture of defense will have any Effect.”[135]

Debates in the Federalist Papers and associated literature likewise demonstrate an early understanding that tariffs would serve foreign policy goals. In Federalist No. 10—the most famous of them all—Madison poses “restrictions on foreign manufactures” as his go-to example of the kind of important policy question that different factional interests would want to answer differently.[136] Even Alexander Hamilton—one of the more ardent proponents of free trade principles among the Founders—acknowledges the foreign policy uses of tariffs at several points in the Federalist Papers and elsewhere. In a 1782 essay, Hamilton noted that giving Congress power over foreign trade was as “necessary for the purposes of commerce”—that is, the promotion of American trade interests—“as of revenue.”[137] In Federalist No. 11, he gives one of the clearest early statements that tariffs (and commercial regulations more broadly) were not simply instruments of domestic finance but also tools of foreign policy, noting that “[b]y prohibitory regulations, extending, at the same time, throughout the States, we may oblige foreign countries to bid against each other, for the privileges of our markets.”[138] Similarly in Federalist No. 35, Hamilton describes the many ways in which tariffs shape behavior in a fashion that is relevant for foreign policy—among them, the fact that “they tend to render other classes of the community tributary, in an improper degree, to the manufacturing classes, to whom they give a premature monopoly of the markets” and that they can “force industry out of its more natural channels into others.”[139]

The varied policy uses of tariffs were also apparent in the early laws and debates over U.S. law after ratification. In this context, Hamilton wanted to avoid conflict with Britain and ensure a steady revenue, while Jefferson, Madison, and others saw trade policy as something that could be wielded against the British.[140] The debates made clear that disagreements over the level of duties were always connected to broader questions about how the country should position itself in the international order.[141] The first tariff turned out to be only “moderately protectionist” in this regard, but the debates over it emphasized many of these same foreign policy themes and leave no doubt that the foreign policy implications of tariffs were on the minds of the Founding generation.[142] The Tonnage Act—the 1789 law that imposed duties based on the carrying capacity of ships entering U.S. ports—had foreign policy front and center. Madison called for discriminating against nations that did not adopt favorable terms with the United States,[143] arguing that he was “well satisfied that there are good and substantial reasons” for “discriminating between nations in commercial alliance with the United States, and those with whom no treaties exist.”[144] Madison argued further that “[i]f America were to leave her ports perfectly free, and make no discrimination between vessels owned by her citizens and those owned by foreigners, while other nations make this discrimination, it is obvious that such policy would go to exclude American shipping altogether from foreign ports, and she would be materially affected in one of her most important interests.”[145] While Congress did not adopt the full scope of Madison’s proposal, it accepted some discrimination expressly designed to advance foreign policy, such as considerably lower duties on American-owned and built vessels than others.[146]

The foreign-policy uses of tariffs were also explicitly apparent in other early laws, many of which discriminated against specific foreign imports or in favor of U.S.-owned ships.[147] And tariffs enacted in the following decades—such as the Tariff of 1824, which substantially raised duties and laid the groundwork for the nullification crisis—similarly lacked a strong revenue purpose and were instead motivated by other policy goals.[148]

Taken together, the evidence shows that tariffs were never a purely domestic revenue instrument; they were viewed as a central part of the nation’s foreign policy toolkit from (and indeed well before) the Founding. Recognizing this history complicates the standard account and suggests that constitutional debates over tariff authority must grapple with their original role as levers of international strategy as well as sources of federal revenue.

Conclusion

This Article’s account of the tax and tariff power in the early Republic explains the seeming contradictions in the historical record and the roles of Congress and the Executive Branch. The history demonstrates that Congress has never exercised absolute control, nor has the President ever enjoyed unbounded discretion. Instead, the nature of tax and tariff delegations depended on the details of tax design and administrative technology, as well as on politics, economics, and institutional capacity. That history underscores a hard lesson for today’s debates: Claims of clear and formalistic constitutional boundaries are themselves ahistorical, and the modern controversies over tariff delegations reprise struggles that have been contested since the Founding. This account also shows how the broad tariff powers claimed by the Trump Administration in its interpretation of IEEPA exceed the bounds of these zones of contestation and negotiation.

  1. * Associate Professor of Law, Washington University in St. Louis: conor.clarke@wustl.edu. ↑

  2. ** Professor of Law, Northwestern University Pritzker School of Law: ari.glogower@
    law.northwestern.edu. We are grateful to Dhammika Dharmapala, Jon Endean, Daniel Hemel, Susan Morse, Zachary Price, Kristen Underhill, and Eleanor Wilking, and for discussions at the Washington University Law Review Symposium, the Cornell Law School faculty workshop, and the National Tax Association annual meeting. For excellent research assistance, we thank Jennifer Arinze, Magaly Lopez Berrios, Michael Gatan, Halle Gordon, and Geremia Lizier-Zmudzinski. ↑

  3. . We developed this Article in the fall of 2025 alongside a Supreme Court amicus brief (also joined by Daniel Hemel and Jon Endean) in Learning Resources, Inc. v. Trump (No. 24-1287). See Brief for Tax Law Professors as Amici Curiae in Support of Petitioners, Learning Res., Inc. v. Trump & Trump v. V.O.S. Selections, Inc., 146 S. Ct. 628 (2026) (Nos. 24-1287 & 25-250), 2025 WL 3036526. Many of the arguments in that brief overlap with arguments we develop here. Relatively late in our editing process for this Article, the Supreme Court issued its February 20, 2026 opinion in the consolidated tariff case. See Learning Res., Inc. v. Trump, 146 S. Ct. 628 (2026). We have not attempted to substantively revise this paper in light of the Court’s opinion; we leave that project to future work. The wider debates over tariff delegations do not look likely to disappear anytime soon. ↑

  4. . Exec. Order No. 14257, 90 Fed. Reg. 15041 (Apr. 2, 2025). ↑

  5. . See, e.g., Exec. Order No. 14266, 90 Fed. Reg. 15625 (Apr. 9, 2025) (modifying the reciprocal tariff rates “to reflect trading partner retaliation and alignment”); Exec. Order No. 14289, 90 Fed. Reg. 18907 (Apr. 29, 2025) (setting forth procedures for determining which tariffs apply to goods subject to multiple overlapping tariff orders); Exec. Order No. 14298, 90 Fed. Reg. 21831 (May 12, 2025) (modifying reciprocal tariff rates on China); Exec. Order No. 14316, 90 Fed. Reg. 30823 (July 7, 2025) (extending the modification of reciprocal tariff rates). ↑

  6. . 50 U.S.C. § 1702(a)(1)(B). ↑

  7. . See V.O.S. Selections, Inc. v. Trump, 149 F.4th 1312 (Fed. Cir.), cert. granted, 146 S. Ct. 73 (2025), aff’d sub nom. Learning Res., Inc. v. Trump, 146 S. Ct. 628 (2026); Oregon v. Trump, 149 F.4th 1312 (Fed. Cir.), cert. granted, 146 S. Ct. 73 (2025), aff’d sub nom. Learning Res., Inc. v. Trump, 146 S. Ct. 628 (2026); Webber v. U.S. Dep’t of Homeland Sec., 785 F. Supp. 3d 824 (D. Mont. 2025); Princess Awesome, LLC v. U.S. Customs & Border Prot., No. 25-00078 (Ct. Int’l Trade 2026). ↑

  8. . V.O.S. Selections, 149 F.4th at 1332. ↑

  9. . Id. at 1334–37; see also id. at 1336 (“The Executive’s use of tariffs qualifies as a decision of vast economic and political significance, so the Government must ‘point to clear congressional authorization’ for its interpretation of IEEPA.”). ↑

  10. . Petition for a Writ of Certiorari at I, Trump v. V.O.S. Selections, Inc., 146 S. Ct. 628 (2026) (No. 25-250). ↑

  11. . Id. at 6. ↑

  12. . It is perhaps hard to imagine an economic authority that is broader and vaguer than the power to “regulate . . . any property.” 50 U.S.C. § 1702(a)(1)(B). ↑

  13. . For a discussion of the interplay between the nondelegation and major questions doctrines, see Cass R. Sunstein, There Are Two “Major Questions” Doctrines, 73 Admin. L. Rev. 475, 478 (2021). ↑

  14. . U.S. Const. art. I, § 8, cl. 1. ↑

  15. . Moreover, important strands of nondelegation doctrine have long emphasized that the “majorness” of a policy decision—apart from and in addition to the degree of discretion that the policymaker exercises—should matter for the constitutional nondelegation inquiry. See, e.g., Whitman v. Am. Trucking Ass’ns, 531 U.S. 457, 487 (2001) (Thomas, J., concurring) (“I believe that there are cases in which the principle is intelligible and yet the significance of the delegated decision is simply too great for the decision to be called anything other than ‘legislative.’”); see also The Benzene Case, 448 U.S. 607, 675 (1980) (Rehnquist, J., concurring) (noting that he would hold the provision at issue to “violate the doctrine against uncanalized delegations of legislative power,” in part “in light of the importance of the interests at stake”). ↑

  16. . In FCC v. Consumers’ Research, for example, Justice Kavanaugh noted that “many of the broader structural concerns about expansive delegations have been substantially mitigated by this Court’s recent case law in related areas,” highlighting (along with the end of Chevron deference) “the Court’s application of the major questions canon of statutory interpretation.” 606 U.S. 656, 705 (2025) (Kavanaugh, J., concurring); see also Kristin E. Hickman, Richard J. Pierce, Jr. & Christopher J. Walker, Summer 2025 Update: Federal Administrative Law: Cases and Materials 7 (4th ed. 2022 & Supp. 2025) (noting that “the more likely explanation” for the lack of interest in expanding the nondelegation doctrine “is that the Court has made other reforms to administrative law that address the majority’s concerns about excessive congressional delegation,” including “the rise of the new major questions doctrine”). ↑

  17. . See West Virginia v. Env’t Prot. Agency, 597 U.S. 697, 740–42 (2022) (Gorsuch, J., concurring) (“Much as constitutional rules about retroactive legislation and sovereign immunity have their corollary clear-statement rules, Article I’s Vesting Clause has its own: the major questions doctrine. . . . The Court has applied the major questions doctrine for the same reason it has applied other similar clear-statement rules—to ensure that the government does ‘not inadvertently cross constitutional lines.’”); see also The Benzene Case, 448 U.S. at 646 (plurality opinion) (“A construction of the statute that avoids this kind of open-ended grant should certainly be favored.”). ↑

  18. . See infra Section I.C; see also Louis L. Jaffe, Judicial Control of Administrative Action 36 (1965) (“Congress for many years wrote every detail of the tariff laws.”). ↑

  19. . See Jennifer Mascott, Early Customs Laws and Delegation, 87 Geo. Wash. L. Rev. 1388, 1395 (2019) (arguing that “statements and actions from this era further suggest an understanding that not only was Congress the preferable body to take action, but that regulation by legislation was constitutionally required”). ↑

  20. . See Nicholas R. Parrillo, A Critical Assessment of the Originalist Case Against Administrative Regulatory Power: New Evidence from the Federal Tax on Private Real Estate in the 1790s, 130 Yale L.J. 1288 (2021) (providing detailed evidence of broad congressional delegation to the Executive Branch to administer and implement the Direct Tax of 1798). ↑

  21. . See McKinley Tariff Act of 1890, ch. 1244, § 3, 26 Stat. 567, 612 (authorizing the President to suspend the free entry of certain goods from countries imposing “duties or other exactions” deemed to be “reciprocally unequal and unreasonable” and to impose tariffs on these goods); Reciprocal Trade Agreements Act of 1934, ch. 474, 48 Stat. 943 (authorizing the President to enter into reciprocal trade agreements that reduce statutory tariff rates by up to fifty percent). For discussion of these acts and their significance in expanding congressional delegation of the tariff power, see also Timothy Meyer & Ganesh Sitaraman, Trade and the Separation of Powers, 107 Calif. L. Rev. 583 (2019); Francis B. Sayre, The Constitutionality of the Trade Agreements Act, 39 Colum. L. Rev. 751 (1939). ↑

  22. . Marshall Field & Co. v. Clark, 143 U.S. 649 (1892) (upholding the delegation of rate-setting authority to the President in Section 3 of the McKinley Tariff Act of 1890); J.W. Hampton, Jr., & Co. v. United States, 276 U.S. 394 (1928) (establishing the “intelligible principle” standard for congressional delegations in upholding the President’s authority to increase or decrease duty rates under the Tariff Act of 1922). ↑

  23. . Youngstown Sheet & Tube Co. v. Sawyer, 343 U.S. 579, 637 (1952) (Jackson, J., concurring). ↑

  24. . See Opening Brief for the Respondents at 12, Learning Res., Inc. v. Trump & Trump v. V.O.S. Selections, Inc., 146 S. Ct. 628 (2026) (Nos. 24-1287 & 25-250) (“For over a century, Congress has supplemented the President’s constitutional power over foreign affairs and national security by delegating to him the authority to manage foreign trade in response to international conditions, including by imposing tariffs.”). ↑

  25. . Compare Daniel J. Hemel, The President’s Power to Tax, 102 Cornell L. Rev. 633 (2017), with James R. Hines Jr. & Kyle D. Logue, Delegating Tax, 114 Mich. L. Rev. 235 (2015). ↑

  26. . Philip Hamburger, for instance, has written that the traditional and proper understanding of nondelegation principles suggests that Treasury officials “could authorize the distribution of government largess, and could make regulations that instructed treasury officers, but he could not promulgate regulations altering tax rates.” Philip Hamburger, Is Administrative Law Unlawful? 4 (2014). ↑

  27. . FCC v. Consumers’ Rsch., 606 U.S. 656, 677 (2025). ↑

  28. . See Conor Clarke & Ari Glogower, Apportioned Direct Taxes, 79 Tax L. Rev. (forthcoming 2026). ↑

  29. . U.S. Const. art. I, § 8, cl. 1 (“The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises.”). Notably, these terms overlap, and cover a variety of internal and external instruments. See generally Conor Clarke & Ari Glogower, Duties, Imposts, and Excises (Feb. 27, 2026) (unpublished manuscript) (on file with author). The constitutional terms “imposts” and “duties” overlap with (and are broader than) tariffs, with “duties” being perhaps the broadest term in the Clause. As a matter of historical usage, “the impost” referred to a uniform import duty on foreign goods. 2 The Records of the Federal Convention of 1787, at 305 (Max Farrand ed., 1911) (Aug. 16, 1787) (“[D]uties are applicable to many objects to which the word imposts does not relate.”) (statement of James Wilson); Brown v. Maryland, 25 U.S. (12 Wheat.) 419, 437–38 (1827) (Marshall, C.J.) (“An impost, or duty on imports, is a custom or a tax levied on articles brought into a country.”). The term “tariffs” generally refers to a varied schedule of duties on imports. Noah Webster, An American Dictionary of the English Language, s.v. “tarif” (New York, S. Converse 1828) (defining the verb as “[t]o make a list of duties on goods”). For purposes of this Article, we use the term “tariffs” broadly to encompass what might also be termed customs, imposts, or imports duties. ↑

  30. . See infra notes 56–57 and accompanying text. ↑

  31. . See U.S. Const. art. I, § 10, cl. 2 (“No State shall, without the Consent of the Congress, lay any Imposts or Duties on Imports or Exports,” and any consented-to imposts remain “subject to the Revision and Controul of the Congress.”); id. cl. 3 (barring states from laying “any Duty of Tonnage”). ↑

  32. . Max M. Edling, A Hercules in the Cradle: War, Money, and the American State, 1783–1867, at 242 (2014) (describing the importance of tariffs for early federal revenue); see also Clarke & Glogower, supra note 26 (describing more on the magnitude of tariffs relative to other sources of early revenue). During this era, Congress generally relied more heavily on internal taxes for revenue only during wartime declines in foreign trade. ↑

  33. . See Edling, supra note 30, at 243 (“[T]here were no serious proposals for radical transformation of the American fiscal system away from customs duties toward income and property taxes or even internal duties.”). ↑

  34. . See infra Section II.A. ↑

  35. . Douglas A. Irwin, Clashing over Commerce: A History of US Trade Policy 2 (2017). ↑

  36. . Articles of Confederation of 1781, art. IX, para. 1. ↑

  37. . Id. art. VIII. ↑

  38. . See Irwin, supra note 33, at 54 (“Since Congress was not permitted to impose import duties, the national government could not raise revenue to fund its operations, finance the national debt, or pay for national defense.”). ↑

  39. . For simplicity, we use this blanket term to refer to all national legislative institutions, though the specific institution changes over time (from the First and Second Continental Congresses, to the Congress of the Confederation, to the post-1789 United States Congress). ↑

  40. . 19 Journals of the Continental Congress: 1774–1789, at 113 n.1 (Gaillard Hunt ed., 1912). ↑

  41. . For more detail on the 1781 impost debate and its failure, see Robin L. Einhorn, American Taxation, American Slavery 132 (2006) (summarizing debates over the impost of 1781); E. James Ferguson, The Power of the Purse: A History of American Public Finance, 1776–1790, at 152–53 (1961) (describing key features of the failure of the impost of 1781). ↑

  42. . 24 Journals of the Continental Congress: 1774–1789, at 257 (Gaillard Hunt ed., 1922). ↑

  43. . See Roger H. Brown, Redeeming the Republic: Federalists, Taxation, and the Origins of the Constitution 28–29 (1993). ↑

  44. . See Alexander Hamilton, Inhabitants of the City of New York to the Legislature of New York State (Jan.–Mar., 1786), reprinted in 3 The Papers of Alexander Hamilton 647, 647–52 (Harold C. Syrett ed., 1962) (describing history). ↑

  45. . See Einhorn, supra note 39, at 119. ↑

  46. . The Federalist No. 12, at 93 (Alexander Hamilton) (Clinton Rossiter ed., 1961) (identifying the impost as the most practicable federal revenue source); Brutus VII (Jan. 3, 1788), reprinted in 2 The Complete Anti-Federalist 400 (Herbert J. Storing ed., 1981). ↑

  47. . 11 The Statutes at Large: Being a Collection of All the Laws of Virginia 171 (William Waller Hening ed., Richmond, Va., George Cochran 1823). ↑

  48. . The convention was formally called the Meeting of Commissioners to Remedy Defects of the Federal Government. For a summary of the Annapolis Convention and its connection to the Philadelphia Convention of 1787, see Brown, supra note 41, at 28–31. ↑

  49. . See Address of the Annapolis Convention, [Sept. 14, 1786], Nat’l Archives, https://
    founders.archives.gov/documents/Hamilton/01-03-02-0556 [https://perma.cc/7JGA-P4W3]. ↑

  50. . Brown, supra note 41, at 28. ↑

  51. . See Dall W. Forsythe, Taxation and Political Change in the Young Nation, 1781–1833, at 62 (1977) (“In striking contrast to the dispute over internal taxes, early tariff policy aroused no heated debate within the political elite, and no difficulties arose with collections. The issue of a national tariff had been widely discussed since 1781, and most Americans agreed that lack of such revenue authority was a crucial defect in the Articles of Confederation.”); see also Einhorn, supra note 39, at 149 (“The U.S. Constitution was many things, but one of them was a device to ensure that the national government could levy the impost. . . . [T]he impost was not controversial.”); Brown, supra note 41, at 31 (noting the universal consensus and lack of controversy around the desirability of the impost). ↑

  52. . See 2 The Records of the Federal Convention of 1787, at 143, 393–94, 456 (Max Farrand ed., 1911); cf. id. at 307–09 (Aug. 16, 1787). ↑

  53. . The Federalist No. 30, at 186 (Alexander Hamilton) (Clinton Rossiter ed., 1961). ↑

  54. . Id. ↑

  55. . U.S. Const. art. I, § 8, cl. 1. ↑

  56. . Id. § 7, cl. 1. James Madison described the Origination Clause as “the most complete and effectual weapon with which any constitution can arm the immediate representatives of the people.” The Federalist No. 58, at 359 (James Madison) (Clinton Rossiter ed., 1961). ↑

  57. . U.S. Const. art. I, § 9, cls. 5–6. ↑

  58. . U.S. Const. art. I, § 10, cl. 2. ↑

  59. . U.S. Const. art. I, § 10, cl. 3. ↑

  60. . The Federalist No. 32, at 194 (Alexander Hamilton) (Clinton Rossiter ed., 1961). ↑

  61. . Id. ↑

  62. . See Brown, supra note 41, at 176 (describing Anti-Federalist plan whereby Congress would have “the sole and exclusive power of regulating trade, of imposing port duties” within the Confederation framework); see also id. at 203 (describing more detail on the Anti-Federalist desire for an expanded tariff power). ↑

  63. . The Founders’ concerns with an overly broad executive power were numerous. See, e.g., Luther Martin, Genuine Information (Dec. 28, 1787), reprinted in 2 The Complete Anti-Federalist 67 (Herbert J. Storing ed., 1981) (describing the nomination powers and the criticism that “the President as here constituted, was a KING, in every thing but the name”); George Mason, Draft Speech of June 4, 1787, reprinted in 1 The Records of the Federal Convention of 1787, at 113 (Max Farrand ed., 1911) (“If strong and extensive Powers are vested in the Executive, and that Executive consists only of one Person; the Government will of course degenerate (for I will call it degeneracy) into a Monarchy.”). ↑

  64. . Brief for Tax Law Professors as Amici Curiae in Support of Petitioners at 12, Learning Res., Inc. v. Trump & Trump v. V.O.S. Selections, Inc., 146 S. Ct. 628 (2026) (Nos. 24-1287 & 25-250). ↑

  65. . The Federalist No. 10, at 80 (James Madison) (Clinton Rossiter ed., 1961). ↑

  66. . Id. ↑

  67. . During the Pennsylvania ratification debates, for example, James Wilson assured delegates that the new states should have confidence that Congress would not impose oppressive tariffs because all such laws would need to go through both the House and Senate. See, e.g., 2 Debates in the Several State Conventions on the Adoption of the Federal Constitution 453, 467 (Jonathan Elliot ed., 1901) (Dec. 4, 1787); see also Letter from Thomas Jefferson to James Madison (Dec. 20, 1787), reprinted in 12 The Papers of Thomas Jefferson 438–44 (Julian P. Boyd ed., 1955) (noting that House members might “be very illy qualified to legislate for the Union [and] for foreign nations,” but continuing that “this evil does not weigh against the good of preserving inviolate the fundamental principle that the people are not to be taxed but by representatives chosen immediately by themselves”). ↑

  68. . See Einhorn, supra note 39, at 117 (“Before the Civil War, federal taxation was almost completely synonymous with the tariff.”). ↑

  69. . See Forsythe, supra note 49, at 68 (noting that the first American tariff “was not a public issue at all”). As Douglas Irwin notes, early objections from South Carolina in the Senate during this period—presaging the controversies over the tariff power and the nullification crisis to come—appear to have backfired and increased support for an initial tariff plan in the Senate. See Irwin, supra note 33, at 76. ↑

  70. . Import Duties, [May 9] 1789, Nat’l Archives, https://founders.archives.gov/documents/
    Madison/01-12-02-0090 [https://perma.cc/3ULH-PBXE] (original in The Congressional Register, I, 261–64; also reported fully in N.Y. Daily Advertiser, 12 May 1789). ↑

  71. . Id. ↑

  72. . Id. ↑

  73. . Irwin, supra note 33, at 73. ↑

  74. . Id. ↑

  75. . Act of July 4, 1789, ch. 2, 1 Stat. 24. ↑

  76. . Mascott, supra note 17, at 1393; see also Act of June 1, 1789, ch. 1, 1 Stat. 23 (regulating “the Time and Manner of administering certain Oaths”). ↑

  77. . Mascott, supra note 17, at 1393. ↑

  78. . Id. at 1399. ↑

  79. . Forsythe, supra note 49, at 67 (observing that “[t]he tariff schedule was revised by Congress twelve times between 1789 and the War of 1812”). ↑

  80. . See, e.g., Act of May 2, 1792, ch. 27, 1 Stat. 259; Act of June 7, 1794, ch. 54, 1 Stat. 390. ↑

  81. . See infra Section II.B. ↑

  82. . Meyer & Sitaraman, supra note 19, at 599. ↑

  83. . Id. at 596–97. ↑

  84. . Act of Oct. 1, 1890, ch. 1244, 26 Stat. 567; see Meyer & Sitaraman, supra note 19, at 599. ↑

  85. . Marshall Field & Co. v. Clark, 143 U.S. 649 (1892). ↑

  86. . Tariff Act of 1922 (Fordney-McCumber Tariff), ch. 356, 42 Stat. 858. ↑

  87. . Meyer & Sitaraman, supra note 19, at 595–96. ↑

  88. . Id. at 598–99. ↑

  89. . Reciprocal Trade Agreements Act of 1934, ch. 474, 48 Stat. 943. ↑

  90. . Tariff Act of 1930, ch. 497, 46 Stat. 590 (codified as amended in scattered sections of 19 U.S.C.). ↑

  91. . For a classic early cite, see United States v. Curtiss-Wright Exp. Corp., 299 U.S. 304, 319–20 (1936) (describing the President’s constitutional authority over foreign affairs and the distribution of authority between the President and Congress). For a more recent one, see Zivotofsky ex rel. Zivotofsky v. Kerry, 576 U.S. 1, 21 (2015) (“The President does have a unique role in communicating with foreign governments . . . . But whether the realm is foreign or domestic, it is still the Legislative Branch, not the Executive Branch, that makes the law.”). ↑

  92. . Meyer & Sitaraman, supra note 19, at 598–99. ↑

  93. . Id. at 606. ↑

  94. . Trading with the Enemy Act of 1917, ch. 106, §§ 1–19, 40 Stat. 411, 411–26. ↑

  95. . Id. § 5(b)(1). ↑

  96. . Emergency Banking Relief Act, ch. 1, § 2, 48 Stat. 1, 1 (1933). ↑

  97. . National Emergencies Act, Pub. L. No. 94-412, 90 Stat. 1255 (1976). ↑

  98. . International Emergency Economic Powers Act, Pub. L. No. 95-223, tit. II, 91 Stat. 1625, 1626 (1977). ↑

  99. . 50 U.S.C. §§ 1701(a), 1702(a)(1)(B). ↑

  100. . Mascott, supra note 17, at 1394–1403. Mascott offers additional evidence suggesting limited early delegations of the tariff power. Congress enacted many of these basic measures even before creating the Treasury Department—in Mascott’s view, reflecting a judgment that revenue laws were too important to be left initially to Article II officials. Id. at 1394–95. Furthermore, after Hamilton became Secretary of the Treasury, Congress treated his reports on customs matters as proposals for legislative action, and Hamilton himself sought statutory clarification when ambiguities arose. Id. at 1395–96, 1400. Finally, Mascott notes that the relevant legislative debates show members tailoring customs provisions to protect the distinct economic interests of their constituents—a process that, she argues, could occur through representative lawmaking rather than centralized administrative action. Id. at 1402–03, 1406–07. ↑

  101. . See infra Section II.B. ↑

  102. . See generally Mascott, supra note 17. ↑

  103. . See Parrillo, supra note 18; see also infra note 105 and accompanying text. ↑

  104. . See, e.g., I.R.C. § 1(a)–(d) (the method for calculating income tax liabilities by applying a rate schedule to a base of “taxable income”). Additional variables not addressed here, such as credits against tax, may also factor into the calculation of tax liabilities. ↑

  105. . See, e.g., Act of July 4, 1789, ch. 2, 1 Stat. 24 (an act “for laying a Duty on Goods, Wares, and Merchandises imported into the United States”) (the detailed list of specific duties and applicable rates in the first tariff legislation, the Tariff of 1789). ↑

  106. . Einhorn, supra note 39, at 117–18 (noting that the “federal government relied on the tariff” in part because “it was easier to collect than other taxes”); see also id. at 133 (noting that the impost “could be levied and collected with a minimum of administrative capacity”); Forsythe, supra note 49, at 66 (“The customs service was also an impressive model of administrative efficiency.”). ↑

  107. . See Act of July 9, 1798, ch. 70, 1 Stat. 580 (an act “to provide for the valuation of Lands and Dwelling-Houses, and the enumeration of Slaves within the United States”) (establishing the administrative apparatus that would be necessary to administer the Direct Tax of 1798). ↑

  108. . U.S. Const. art. I, § 2, cl. 3; id. art. I, § 9, cl. 4. For discussion of the apportionment requirement, see Clarke & Glogower, supra note 26. ↑

  109. . See, e.g., Act of July 14, 1798, ch. 75, 1 Stat. 597 (an act “to lay and collect a direct tax within the United States.”) (the statutory design of the Direct Tax of 1798, which provided for a total direct tax to be raised of $2 million as well as each state’s quota). If Congress did not begin by specifying a “sum certain” of the amount of tax to be raised in the statute, it could not ensure that the direct tax would be constitutionally apportioned among the states by population. See id. ↑

  110. . See Act of Aug. 5, 1861, ch. 45, §§ 49–52, 12 Stat. 292, 309–11 (an act “to provide increased Revenue from Imports, to pay Interest on the Public Debt, and for other Purposes”) (laying the 1861 Income Tax); Act of Aug. 27, 1894, ch. 349, §§ 27–31, 28 Stat. 509, 553–56 (an act “[t]o reduce taxation, to provide revenue for the Government, and for other purposes”) (laying the 1894 Income Tax). The 1861 Income Tax was subsequently upheld by the Supreme Court in Springer v. United States, 102 U.S. 586 (1881), while the 1894 Income Tax was infamously struck down by the Court in Pollock v. Farmers’ Loan & Trust Co., 157 U.S. 429, vacated on reh’g, 158 U.S. 601 (1895). ↑

  111. . U.S. Const. amend. XVI (providing that Congress “shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States”); Act of Oct. 3, 1913, ch. 16, 38 Stat. 114 (an act “[t]o reduce tariff duties and to provide revenue for the Government, and for other purposes”) (laying the 1913 Income Tax). ↑

  112. . See Ajay K. Mehrotra, Making the Modern American Fiscal State: Law, Politics, and the Rise of Progressive Taxation, 1877–1929 (2013). ↑

  113. . For example, the Income Tax of 1861 provided for a tax on “the annual income of every person residing in the United States, whether such income is derived from any kind of property, or from any profession, trade, employment, or vocation carried on in the United States or elsewhere, or from any other source whatever . . . .” Act of Aug. 5, 1861, ch. 45, § 49, 12 Stat. 292, 309. ↑

  114. . See, e.g., id. § 50 (providing for executive-branch officers to administer the Income Tax of 1861). ↑

  115. . That is, these two differing views illustrate how not all delegations of taxing authority are comparable, and not all types of statutory detail are comparable. Rather, the nature of and extent of the delegations depends on the characteristics of the underlying taxes. ↑

  116. . Act of July 4, 1789, ch. 2, § 1, 1 Stat. 24. (an act “for laying a Duty on Goods, Wares, and Merchandises imported into the United States”). ↑

  117. . Id. at 25. ↑

  118. . Id. ↑

  119. . Id. at 26. ↑

  120. . Id. ↑

  121. . Alexander Hamilton, Improvement of the Revenue (Feb. 2, 1795), reprinted in 1 American State Papers, Class III: Finance 348, 348 (Walter Lowrie & Matthew St. Clair Clarke eds., Washington, D.C., Gales & Seaton 1832). ↑

  122. . See, e.g., Albert Gallatin, State of the Finances (Dec. 8, 1809), reprinted in 2 American State Papers, Class III: Finance 373, 375 (Walter Lowrie & Matthew St. Clair Clarke eds., Washington, D.C., Gales & Seaton 1832). ↑

  123. . See, e.g., Act of July 31, 1789, ch. 5, § 16, 1 Stat. 29, 41 (delegating discretion to officers in appraising and valuing goods that were missing their “invoice of their cost” or that were damaged in transit); see also Act of Mar. 3, 1817, ch. 51, 3 Stat. 369 (an act “supplementary to ‘An act to regulate the duties on imports and tonnage’”) (providing that ad valorem duties would be established based on the net cost of the article at the place whence imported plus a standardized addition of twenty percent on all merchandise imported from places beyond the Cape of Good Hope, and of ten percent on articles imported from all other places). ↑

  124. . See supra notes 106–07 and accompanying text. ↑

  125. . Nathan Sanford, Remission of Duties (Jan. 4, 1819), reprinted in 3 American State Papers, Class III: Finance 836, 837 (Walter Lowrie & Matthew St. Clair Clarke eds., 1834). ↑

  126. . Hamilton, supra note 119, at 348. ↑

  127. . Bayless Manning, The Congress, the Executive and Intermestic Affairs: Three Proposals, 55 Foreign Affs. 306, 309 (1977). ↑

  128. . Irwin, supra note 33, at 2 (“US trade policy has been directed toward achieving three principal objectives: raising revenue for the government by levying duties on imports, restricting imports to protect domestic producers from foreign competition, and concluding reciprocity agreements to reduce trade barriers and expand exports.”). ↑

  129. . Meyer & Sitaraman, supra note 19, at 592–93 (“Over the course of the nineteenth century, trade law and policy were virtually coextensive with the tariff. The justification for tariffs shifted over time, but the central purposes of tariffs were all tied to domestic economics: revenue, internal improvements, protection of industry, encouragement of infant industry, and safeguarding labor.”). ↑

  130. . See, e.g., Petition for a Writ of Certiorari at 6, Trump v. V.O.S. Selections, Inc., 146 S. Ct. 628 (2026) (No. 25-250) (arguing that “Congress has long supplemented the President’s Article II foreign-affairs powers by delegating capacious authority to impose tariffs that, in the President’s judgment, will advance national security, foster economic prosperity, or facilitate negotiations with foreign counterparts.”). ↑

  131. . See Irwin, supra note 33, at 49. ↑

  132. . Letter from James Madison to Richard Henry Lee (July 7, 1785), reprinted in 8 The Papers of James Madison: 10 March 1784–28 March 1786, at 314, 314–16 (Robert A. Rutland & William M.E. Rachal eds., 1973). ↑

  133. . Irwin, supra note 33, at 51. ↑

  134. . Id. at 52–53 (“Recognizing the futility of his mission, Adams fired dispatch after dispatch to Congress explaining that the threat of retaliation was the only way to persuade Britain to reach a commercial agreement.”). ↑

  135. . Letter from John Adams to John Jay (Aug. 30, 1785), reprinted in 17 The Adams Papers: April–November 1785, at 374, 374–78 (Gregg L. Lint et al. eds., 2014). ↑

  136. . The Federalist No. 10, at 80 (James Madison) (Clinton Rossiter ed., 1961). ↑

  137. . Alexander Hamilton, The Continentalist No. V (Apr. 18, 1782), reprinted in 3 The Papers of Alexander Hamilton 75, 75–82 (Harold C. Syrett ed., 1962). ↑

  138. . The Federalist No. 11, at 88 (Alexander Hamilton) (Clinton Rossiter ed., 1961). ↑

  139. . The Federalist No. 35, at 212 (Alexander Hamilton) (Clinton Rossiter ed., 1961). ↑

  140. . Douglas A. Irwin, Revenue or Reciprocity? Founding Feuds over Early U.S. Trade Policy, in Founding Choices: American Economic Policy in the 1790s, at 89, 89–90 (Douglas A. Irwin & Richard Sylla eds., 2011) (Nat’l Bureau of Econ. Rsch., Working Paper No. 11738, 2010). ↑

  141. . Id. ↑

  142. . See, e.g., Einhorn, supra note 39, at 149–54 (summarizing debates). ↑

  143. . Edling, supra note 30, at 71. ↑

  144. . James Madison, Tonnage Duties (Apr. 21, 1789), reprinted in 12 The Papers of James Madison: 2 March 1789–20 January 1790, at 127 (Charles F. Hobson & Robert A. Rutland eds., 1979). ↑

  145. . Madison’s statement is reprinted in Cong. Globe, 28th Cong., 1st Sess. 643 (1844). ↑

  146. . Act of July 20, 1789, ch. 3, 1 Stat. 27 (an act “imposing Duties on Tonnage”); see Edling, supra note 30, at 72; Forsythe, supra note 49, at 64–65. ↑

  147. . See, e.g., Act of July 1, 1812, ch. 112, 2 Stat. 768 (an act “for imposing additional duties upon all goods, wares, and merchandise imported from any foreign port or place, and for other purposes”) (increasing duty rates amid the war and imposing even higher rates on imports from foreign vessels); see also Mascott, supra note 17, at 1401–02 (summarizing these foreign policy details). ↑

  148. . Forsythe, supra note 49, at 76–77 (noting that “[s]ince the Treasury had shown a surplus for the two previous years, no pretense was made that the increases were required to raise revenues,” and that protection of domestic industry was “the only possible justification for the tariff increase”). ↑

Public Functions and Private Resources

Posted on by Zachary S. Price
Price_Public Functions and Private ResourcesDownload

Abstract

At the federal level, the boundary between public and private functions is under pressure. On top of longstanding trends toward privatizing government functions and running agencies like businesses, the second Trump administration has sought to enlist private resources more broadly for performing public functions. This Article for the Washington University Law Review’s symposium on “Taxing, Spending, and the Constitution” outlines constitutional principles for assessing such actions. Building on prior work, it explains that presidents may seek outside assistance in exercising “resource-independent” powers, meaning powers like the veto and pardon authorities that do not depend on congressionally authorized resources in the first place. By contrast, they may not disregard legal limits on funding or use of outside resources for “resource-dependent” powers like use of military force, law enforcement, and administration of benefits.

The Article defends this limit on presidential power as a matter of the Constitution’s text and structure. It also discusses relevant historical examples, including disputes over foreign aid and informant rewards in the Washington administration, nineteenth-century controversies over law enforcement funding, the Iran-Contra scandal from the Reagan administration, recent funding restrictions on marijuana enforcement, and the general pattern of applicable opinions by courts, the Comptroller General, and the Justice Department. The Article applies this framework to defend three principles with contemporary relevance: (1) With respect to resource-dependent functions, presidents lack authority to disregard resource levels determined by law as either ceilings or floors; (2) when funds or other resources for resource-dependent functions come under presidential control, they thereby fall subject to legal limits on such resources; and (3) regulatory settlements should receive close scrutiny when they result in free services to the government or otherwise expand the government’s capacity beyond what Congress authorized.

Introduction

At the federal level, the boundary between public and private functions is under pressure. For some time, scholars have noted a trend toward privatizing government functions through reliance on contractors and other outside parties rather than government personnel; more recently, some have noted a tendency within the government itself to operate more like a business.[2] Now, as a feature of its broader push for “appropriations presidentialism,” meaning stronger executive control over spending,[3] the second Trump administration has sought to enlist private resources more broadly for performing public functions. By threatening civil rights investigations, revocation of security clearances, and cancellation of clients’ government-related business, the administration induced major law firms to fund pro bono efforts for favored causes; several firms even provided free services to the Commerce Department.[4] By threatening federal funding, it induced universities to enter settlements including large payouts and other affirmative measures.[5] By threatening tariffs, it induced Japan to pledge $550 billion in presidentially directed investments in the United States.[6] By threatening regime change in Venezuela, it established U.S. custody over that country’s oil revenues.[7] During a recent government shutdown, it apparently accepted a private donation for military salaries,[8] and as part of a White House renovation, President Donald Trump has sought private contributions for a new ballroom.[9]

These actions raise a set of important and insufficiently explored constitutional questions: Can presidents freely enlist private resources for performing public functions? If they do, can they thereby evade statutory limits and conditions on public funds and property? And by threatening regulatory action, can executive officials extract whatever spending or other commitments they like from regulated parties? Building on prior work,[10] this symposium Article argues that, for the most important executive functions, the answer to all these questions is “no,” though getting to that result requires differentiating between two types of executive power.

As I have argued elsewhere, some of the President’s constitutional powers are “resource-independent.”[11] At least in principle, presidents can perform these functions on their own; examples include exercising the veto, pardoning crimes, recommending legislation, recognizing foreign states, and appointing and removing officers.[12] Because these powers do not depend on congressionally afforded resources in the first place, presidents hold a constitutional prerogative to disregard funding limitations and conditions that seek to control how they exercise them. As two justices once put it, Congress cannot thwart the President’s pardon power by denying funds for pens and paper.[13] For the same reason, presidents also hold constitutional authority to seek outside support and assistance for these functions. If presidents wish to accept voluntary help in vetting pardons, developing legislative recommendations, or selecting nominees for federal offices, Congress lacks the authority to stop them.[14]

This prerogative, however, extends only to powers that the President in principle can exercise personally. In contrast, the big-ticket items in the executive toolkit—administering and enforcing laws, dispensing government benefits (including foreign aid), and employing military force—are resource-dependent: They exist only insofar as Congress provides resources for them.[15] Congress may therefore limit the available resources for these functions or impose conditions on their use, as indeed it regularly does. As a necessary corollary, moreover, Congress may also deny access to outside assets if it chooses. For example, Congress may limit enforcement of certain laws to public officials and then limit the budget available for that activity; as Justice Brett Kavanaugh put it in his dissent from a recent decision overturning some of President Trump’s tariffs, Congress could “limit the President’s tariffs” or other such laws “by not approving annual appropriations necessary for the Executive Branch to continue to implement” them.[16] By the same token, Congress may allow gifts to augment agency budgets for some purposes but not others. Because legal limitations on spending are constitutionally valid for resource-dependent functions, presidents and other executive officials cannot circumvent them by enlisting outside resources instead. Once such resources come under the executive branch’s control, they likewise fall subject to the legal requirements and conditions that govern executive resources.

By virtue of these constitutional principles, presidents cannot constitutionally circumvent statutory limits on dispensing foreign aid or domestic welfare by having private parties donate to presidentially controlled accounts, nor may they circumvent legal limits on attacking particular countries or enforcing certain laws by enlisting private soldiers or prosecutors instead. To be sure, private parties may sometimes play such roles. Though current law generally requires public enforcement of federal criminal statutes, private criminal prosecution was widespread at the Founding (and to some extent since),[17] and private causes of action remain a central mechanism for enforcing many laws.[18] The Constitution even contemplates the use of privateers—essentially, licensed pirates—in military conflicts.[19] Yet such options are available only insofar as Congress allows them. Because these functions are resource-dependent, Congress may dial up or down the resources available for enforcing certain laws, affording certain benefits, or undertaking certain military strikes, and it can also control how such powers are exercised by imposing funding conditions, limitations, and mandates.[20] In these areas, the executive branch cannot defy legal limits on its own capacity by unilaterally enlisting outside help instead.

While this congressional authority over resource-dependent executive powers has always been important, it is particularly central to checks and balances following twentieth-century developments in federal administration and national security policy.[21] As I have also discussed elsewhere, Congress used to constrain the executive branch in many cases by determining in advance the scope of legal authorizations but then selectively ratifying and indemnifying any unlawful executive actions after the fact.[22] Today, by contrast, presidents often hold substantial power of initiative due to broad statutory delegations and expansive understandings of executive military and foreign affairs authorities.[23] In this context, Congress’s control over resources—its authority to limit or deny new appropriations for presidential initiatives—is often its central means of shaping government policy.[24] It should not be surprising, therefore, that presidents are seeking not only greater control over public expenditures but also greater freedom to expand their capacity with private resources.[25] Indeed, the latter problem could grow worse if austerity due to ballooning government debt and constrained finances shrinks the official resources available for executive functions.

In prior work, I have outlined the constitutional distinction between resource-independent and resource-dependent executive powers.[26] I also employed this framework to critique presidents’ increasingly adventurous assertions of constitutional authority to defy limits and conditions in appropriations statutes and other laws governing public resources.[27] This symposium Article explores the framework’s implications for executive use of outside resources. Reflecting on the second Trump administration’s innovations, it advances three main arguments.

First, when the functions at issue are resource-dependent, presidents lack authority to disregard resource levels determined by law. Accordingly, presidents lack any unilateral constitutional authority to dismantle government capacities and agencies, cancel foreign aid and other spending, or transfer resources between agencies. Such actions are lawful only insofar as they comport with applicable appropriations laws and other statutes, and by the same token private contributions may expand government resources for such functions only insofar as applicable laws allow.[28]

Second, when funds or other resources for resource-dependent functions come under presidential control, they thereby fall subject to legal limits on such resources, whether or not Congress originally provided the money or assets. Presidents may not circumvent legal restrictions on foreign or domestic government aid by employing outside gifts, captured foreign assets, or contributions to presidentially controlled accounts. Once the President controls such funds or assets, they become government resources subject to legislative direction, not private resources beyond Congress’s purview.[29]

Finally, recognizing the resource-dependence of key executive functions may help sharpen critiques of what Steven Solomon and David Zaring have called “transactional administration.”[30] As one aspect of this emerging practice, the executive branch sometimes threatens penalties or other adverse consequences, perhaps even in legally questionable ways, with the goal of inducing settlements that achieve regulatory goals while circumventing normal administrative procedures.[31] As Solomon and Zaring observe, regulating through deals in this and other ways may circumvent required procedures and limit public input and oversight.[32] As a further problem, however, this technique also may effectively expand the government’s capacity beyond what Congress authorized—especially if the resulting deals secure free services for the government or other large contributions to the executive branch. Transactional administration is thus a challenge not only to administrative regularity but also to Congress’s authority over government resources and executive policy.[33]

To develop this analysis, Part I of this Article explains the distinction between resource-dependent and resource-independent powers and advances a structural argument for applying it to the use of outside resources for government functions. Part II then discusses illustrative episodes from across American history. Although only some of these examples involved the use or attempted use of outside resources, they document a general pattern of respecting Congress’s authority over resource-dependent powers across a wide range of situations—from diplomatic and law enforcement efforts during George Washington’s presidency, to law enforcement controversies in the nineteenth century, to the Iran-Contra scandal of the 1980s, to post-1990s debates over federal marijuana enforcement and more routine controversies over administrative policies from the past half century. Part III then turns to recent controversies, employing the framework developed in Parts I and II to analyze uses of private resources for public functions. In doing so, Part III advances the three key claims just described: that resource levels are binding for resource-dependent executive functions; that resources under presidential control are subject for that reason to applicable legal restraints; and that transactional administration threatens Congress’s power of the purse. The Article ends with a conclusion summarizing its argument and highlighting the importance of maintaining the executive branch’s dependence on congressionally controlled resources for key functions.

I. Resource-Dependence and Executive Power

A. The Constitutional Text

The U.S. Constitution assigns Congress the power of the purse, meaning the power to control government spending. It does so most specifically through the Appropriations Clause, which dictates that “[n]o Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law.”[34] Yet other provisions reinforce the same principle.

For instance, among its enumerated powers, Congress holds authority to regulate the “Property of the United States,” to “raise and support Armies” and “provide and maintain a Navy,” and to “make Rules for the Government and Regulation of the land and naval Forces.”[35] In addition, by requiring presidents to “take Care that the Laws be faithfully executed,”[36] Article II obligates them to effectuate spending mandates as well as limitations.[37] And by framing this command indirectly—requiring presidents to ensure faithful execution and not to execute the laws themselves—the Constitution recognizes that presidents will discharge this responsibility through other offices established and funded by Congress.[38] The same goes for the military: By making the President commander-in-chief but giving Congress responsibility for raising armies and providing a navy, the Constitution renders presidential military power dependent on Congress’s provision of military resources for presidents to command.[39] The Constitution even makes plain that use of private resources in military conflicts requires congressional authorization: Congress, not the President, has authority to “grant Letters of Marque and Reprisal,” meaning essentially licenses for private vessels to attack and capture enemy ships as “privateers” during a conflict.[40]

As a matter of the Constitution’s plain text, then, Congress has authority over the federal government’s funds and property. Yet the President has constitutional powers too—powers that presidents have sometimes claimed give them authority to employ either public or private resources without regard to Congress’s enactments.

B. Internal Resources

Although Congress’s power over resources gives it leverage over the executive branch, presidents for that reason have long sought to loosen Congress’s reins. Presidents have thus claimed broad power to disregard limits and conditions on government funding based on putative constitutional prerogatives. President Trump, for example, implied in a 2017 signing statement that he was not bound by a ban on employing funds to prosecute certain marijuana offenses,[41] President Barack Obama indicated in a 2011 signing statement that he had constitutional concerns about a provision denying funding for any White House “Assistant to the President for Energy and Climate Change” (a position colloquially known as the “climate czar”),[42] and presidents from both parties have ignored funding restrictions on “conduct of diplomacy.”[43] In a prior article, I defended such objections with respect to laws that limit, control, or manipulate the exercise of resource-independent executive authorities.[44] At the same time, I argued that Congress holds near plenary authority to control resource-dependent powers through funding limits and conditions.[45]

This distinction matters because fitting Congress’s power of the purse together with executive constitutional prerogatives presents an interpretive puzzle—one that the framers seem not to have anticipated.[46] To be sure, the framers recognized the structural importance of legislative authority over resources. Expressing an intuitive model of interbranch relations based on English history, James Madison wrote in the Federalist No. 58 that “[t]he purse” was “that powerful instrument by which we behold, in the history of the British Constitution, an infant and humble representation of the people gradually enlarging the sphere of its activity and importance, and finally reducing, as far as it seems to have wished, all the overgrown prerogatives of the other branches of the government.”[47] Yet this model of Congress’s power of the purse—viewing it as an all-purpose instrument for degrading executive prerogatives—does not make sense in the U.S. context.

As Madison well understood, the British system lacked any written constitution and thus developed constitutional constraints through Parliament’s extraction of cumulative concessions from the Crown. The U.S. system, however, is different: Powers assigned to the President or judiciary are not “overgrown prerogatives” for Congress to “reduc[e]” as it chooses; they are instead fixed features of the governmental order, designed in part to keep Congress itself in check.[48] As one Representative put it in a 1796 House debate, “supplies and grievances have been for centuries [in England] a measure of compromise and the mode by which the Commons have accumulated powers and checks against a throne.”[49] By contrast, in the United States, “we see in the powers of this House, not the spoils of contest, not the trophies of repeated victory over the other branches of the Government, but a specific quantum of trust placed in our hands, to be exercised for the people agreeably to the Constitution.”[50]

A plenary authority to defeat presidential powers by denying funds for them could thus undermine the separation of powers that the Constitution aims to fix in place. Consider, for example, legislation forbidding any use of funds to veto bills, pardon criminals, recommend legislation, demand opinions from department heads, receive foreign ambassadors, appoint or remove officers, or issue lawful military commands. Would such legislation bind the President? What if Congress conditioned funding for the government as a whole, or for central presidential priorities, on the President not exercising these powers? As a matter of constitutional structure, such measures should not be effective. Extending Congress’s power of the purse so broadly would eliminate key features of the separation of powers system, collapsing presidential power into an all-encompassing legislative authority over resources. To avoid that outcome, presidents must hold authority to disregard some funding limits and conditions (as they have in fact repeatedly done).[51]

This theory, however, only works for some presidential powers—namely, those that do not depend on congressional appropriations to begin with (apart from the President’s constitutionally guaranteed salary). The powers listed in the last paragraph are resource-independent: Presidents in principle can exercise them on their own, without any staff or executive branch apparatus at all.[52] By contrast, other powers of far greater consequence—the power to enforce federal laws, deploy military force, or dispense benefits and foreign aid—are resource-dependent: They cannot meaningfully be exercised without substantial capacities and resources.[53] The President might ride out in his personal vehicle, handcuffs or shotgun in hand, aiming to take on lawbreakers and military enemies, but he would not get very far in either case.[54] For these functions, the President needs resources over which Congress, by virtue of the provisions discussed earlier, holds authority. As a result, Congress can effectively control the exercise of these powers: It can impose limits, conditions, and mandates on the resources it makes available. Even more clearly, Congress can control the availability and allocation of public benefits, including foreign aid. Such resources are unambiguously treasury funds that can only be “drawn” according to “appropriations by law,” and by the same token, statutory commands regarding their provision are laws whose faithful execution the President must ensure.[55]

In my earlier work, I elaborated on these points, explaining in greater detail what sorts of funding restrictions and conditions are binding on the executive branch. In doing so, I rebutted competing accounts that either exaggerated or minimized Congress’s power. On the one hand, a classic 1988 article by Kate Stith recognized the centrality of congressional control over government funds but missed the importance of resource-dependence.[56] Thus, despite recognizing that defeating presidential authorities like the pardon power would be unconstitutional, Stith advanced only the unsatisfactory remedy that Congress holds a duty to provide funds for such tasks.[57] At the other extreme, Gregory Sidak has argued that presidents hold a constitutional prerogative to employ at least some “minimally necessary” amount for all executive functions, including law enforcement and warfare, without regard to legislative limits and conditions.[58] Some have gone even further and suggested that presidents hold authority to spend more or less as they choose on at least some executive functions such as law enforcement.[59] These arguments, however, overlook the President’s legal and practical dependence on congressionally authorized resources for key functions—a dependence whose binding force presidents across American history have recognized, as we shall see.[60] In contrast to these competing proposals, my article offered an account that comports with sound structural inferences from the Constitution as well as the broad contours of historical practice.

Recent events, however, have added a further wrinkle to this debate: What if presidents seek to circumvent funding limits and conditions not through constitutional objections but instead by enlisting outside resources?

C. Outside Resources

1. The Constitutional Framework

As my article suggested but did not explore in depth, limits on such use of outside resources should in fact follow as a necessary corollary of Congress’s authority over resource-dependent executive powers.[61]

To be sure, one could understand the “treasury” in the Appropriations Clause more narrowly: The clause might refer only to the literal bank account holding federal tax receipts and deposits. Given Congress’s access through taxation to far greater sums than any private party could muster, that understanding would even carry some bite: It would limit executive officials to private resources for functions that Congress did not support.

Understanding the Appropriations Clause this way would nevertheless make little sense. For one thing, if the Appropriations Clause were just an accounting requirement—a limit applicable only to funds in some particular bank account—then presidents could easily evade it by keeping funds elsewhere. Furthermore, conceptually, any money or assets under government control form part of the nation’s treasure and should therefore fall within the Appropriations Clause’s scope, whether or not they are deposited in the literal “treasury.”[62] Indeed, any narrower view would undermine the clause’s structural purpose of conditioning certain executive functions on continued legislative support.[63] Accordingly, to quote Saikrishna Prakash, the Appropriations Clause “would be toothless if one could stash money outside the Treasury and evade the obligation that Congress must appropriate prior to expending funds.”[64] That clause, not to mention related legislative authorities over government property, military assets, and other government resources, must extend equally to government activities and expenditures supported with outside receipts and donations.

That said, applying this principle once again requires distinguishing between executive powers that do and do not depend on congressionally controlled resources in the first place. Congress need not provide public support for the President’s resource-independent functions. It could, if it chose, eliminate the President’s staff, abolish the Pardon Attorney, and sell the White House china (or even the White House itself).[65] But denying funding in these ways would distort the constitutional structure if it meant that the President could not recommend legislation, pardon offenders, or receive foreign ambassadors. Thus, insofar as these functions do not ultimately depend on congressionally afforded resources for their exercise—presidents could perform them on their own—Congress cannot prevent the President from getting outside help instead.

In fact, those providing such help might sometimes hold a constitutional right to do so. At least with respect to matters such as pardons and legislative recommendations, offering advice and guidance to the President might amount to petitioning the government for a redress of grievances in a manner protected by the First Amendment.[66] At any rate, again, presidents in practice have disregarded some limits and conditions on funding for resource-independent functions, and they have also sometimes accepted outside advice and assistance.[67] They have even employed, with some regularity, unofficial diplomatic envoys.[68] Though this practice may be questionable given the Constitution’s express requirement of Senate confirmation for ambassadors,[69] it is most plausibly lawful if diplomatic communication can be understood as resource-independent.[70]

On the other hand, the resource-dependence of other executive powers—those the President cannot exercise personally—means that Congress can place limits on those resources and, as a necessary backstop, preclude reliance on outside funds and assets as a workaround. Accordingly, in exercising resource-dependent powers like law enforcement and warfare, presidents can go outside the available public resources only to the extent that applicable statutes allow. That does not mean that private resources are necessarily unavailable. Again, enforcement of certain federal laws through private suits is entirely routine,[71] and the Constitution’s oblique reference to privateers implies that private parties may sometimes perform even military functions.[72] Such resources, however, are available only insofar as applicable statutes allow their use.

As a constitutional matter, then, the provisions discussed earlier give Congress, not the President alone, the power to authorize, limit, or prohibit, as it chooses, the use of private resources for resource-dependent executive functions. As a necessary corollary, when private resources fall under presidential control, they become part of the government’s resources, and in consequence they fall subject to legal limits on resources for public functions. The President cannot evade legal prohibitions on the use of force by raising a private army, nor can he enforce a law or regulation despite a denial of appropriations by deputizing private prosecutors instead.

2. Governing Statutes and Cases

This understanding is not only conceptually sound but also reflected in government practice, as evidenced by key statutes and settled legal understandings. Most concretely, since 1849, the Miscellaneous Receipts Act has provided explicitly that, absent some statutory exception, “an official or agent of the Government receiving money for the Government from any source shall deposit the money in the Treasury as soon as practicable without deduction for any charge or claim.”[73] Although the Constitution should require as much anyhow, a federal statute thus makes clear that any funds received by the government belong to the “treasury” and are accordingly subject to legal limits on expenditure of treasury funds. In opinions by courts, the Attorney General, and the Comptroller General (a congressional officer who polices spending compliance), all three branches have recognized that this law reflects and reinforces Congress’s constitutional authority to regulate use of public funds.[74]

By virtue of this same statute and the constitutional understanding it reflects, any gifts received by federal officials likewise become part of the “treasury,” meaning the government’s overall resources, and thus again fall subject to legal limits on use of government funds and property. According to the Supreme Court, accepting gifts in general is permissible; the federal government holds inherent authority to receive donations.[75] But such donations belong to the United States as a whole, not any particular officer or agency.[76] Accordingly, specific agencies may receive gifts only if they have statutory authority to do so, and employing those gifts likewise requires legal authorization.[77] If an agency receives contributions and employs them itself without legal authority, it has violated the miscellaneous receipts statute by failing to deposit the funds in the treasury.[78] In the spending law argot, it has impermissibly “augmented” its appropriations by spending more than Congress provided.[79] At the same time, to the extent they have expended donated funds without authorization, responsible officials have also violated the Anti-Deficiency Act (ADA), a penal statute that forbids spending or even “obligating” (that is, committing to spend) funds without a supporting appropriation.[80]

When it comes to labor and services rather than funds or property, similar principles apply, albeit with some confusing wrinkles. To begin with, a statute forbids government personnel from accepting any outside compensation for performance of their government duties.[81] An obvious anticorruption measure, this law prevents private parties from directly funding government services.[82] In addition, since 1884, the Anti-Deficiency Act has barred the government from accepting “voluntary services.”[83] According to a counterintuitive interpretation of this language accepted by both the executive branch and the Comptroller General, this prohibition applies only to voluntary services undertaken with an expectation of future compensation, not truly gratuitous services.[84] In other words, based on the law’s legislative history, both political branches have read the term “voluntary services” to apply only when the services in question may establish a legal or moral obligation on the government’s part to provide future remuneration.[85] Although this reading limits the voluntary services prohibition’s scope, the provision, when it does apply, extends the ADA’s restrictions beyond just spending or obligating funds to accepting voluntary work as well.

One important consequence of this reading is that the ADA generally bars government personnel from working voluntarily during a funding lapse: “Non-essential” agency personnel (i.e., those who do not fall within exceptions to the voluntary services prohibition) must stay home when time-limited agency appropriations expire without new funding.[86] Hence the phenomenon of government “shutdowns”: Congress often appropriates funds only for one year (or some other period), but then when the fiscal year expires, agencies without current appropriations must halt non-excepted functions until Congress restores funding.[87]

At the same time, under this interpretation, if applicable statutes allow employment or consulting services without any fixed remuneration, then the voluntary services prohibition does not apply, and the government may accept voluntary labor so long as those offering it disclaim any expectation of compensation.[88] To that extent, as Stith noted in her article, the government has understood the ADA to establish an implicit gift authority with respect to services.[89] In addition, applicable statutes allow some, but not all, government personnel to waive compensation and perform government functions for free,[90] and Senate-confirmed officers incur a right to compensation by virtue of holding office, without regard to whether annual appropriations lapse.[91] Even for these personnel, however, as for those providing gratuitous services, the incidental expenses associated with their jobs—expenditures for pens, paper, computers, phones, and the like—still require appropriations from Congress and thus fall within legal limits on government spending and property.[92]

In all these ways, applicable statutes reflect and reinforce a constitutional understanding that Congress not only controls public resources but also holds authority to determine the availability of private resources for public functions. Of course, these laws might not determine the Constitution’s meaning in practice if the executive branch routinely ignored them, and presidents, again, have sometimes gone outside public resources in performing resource-independent functions.[93] Applying the same logic, presidents have also sometimes disregarded manipulative conditions and constraints on use of public resources for those functions.[94] With respect to resource-dependent functions, however, no such consistent practice has developed. On the contrary, as we shall now see, presidents have generally respected Congress’s constitutional authority over resources even during periods when the statutory structure just described was less developed and executive officials exercised greater flexibility in anticipating congressional funding choices.

II. Historical Illustrations

Beyond inferences from applicable statutes and the formal constitutional text and structure, the broad contours of historical practice confirm the principles just outlined. The fit, to be sure, is imperfect: There have inevitably been violations, and debatable practices have developed in some areas (particularly conduct of diplomacy). Nevertheless, the outcomes of past appropriations battles have by and large conformed to the understandings outlined in Part I.

Having previously made a systematic case for this view,[95] I will limit myself here to some illustrative examples, including a few that involved attempted use of outside resources to evade legal limits on government funds. In addition, although the same principles apply to the use of military force (as explained in my earlier article),[96] I limit myself here to examples involving aid or law enforcement, the functions most relevant to current controversies. Even with those caveats, and though hardly an exhaustive survey, the examples discussed here show a pattern of compliance in significant episodes from across American history. Indeed, they show a pattern straddling eras with markedly different assumptions about the degree of discretion involved in enforcing laws and the degree of authority that executive officials could presume in anticipating congressional spending. This brief historical survey thus suggests a substantial correlation between government practice and the separation of powers framework just described.

A. Two Framing-Era Disputes

Two examples from George Washington’s presidency, one involving law enforcement and the other foreign aid, suggest framing-era acceptance of congressional control over resources for these functions.

1. Law Enforcement Rewards and Foreign Ransoms

The law enforcement example involves efforts to prevent counterfeiting. In a March 1790 communication to the House of Representatives, Treasury Secretary Alexander Hamilton urged Congress to provide funds for “necessary” expenses that “fall under no stated head of expenditure.”[97] As an example, Hamilton pointed to the need for rewards to help apprehend counterfeiters. “The apprehension and punishment of these persons,” Hamilton wrote, “is, evidently, a matter of serious public concern,” yet the absence of any appropriated funds for rewards presented a major difficulty for enforcement. “[T]he necessity of being able to offer rewards for that purpose, is apparent,” Hamilton explained, “but the want of a provision for it is an impediment.”[98]

In urging Congress to appropriate funds for rewards (as indeed it eventually did),[99] Hamilton presumed that only Congress could provide resources for law enforcement functions, even those whose “necessity” he considered “apparent.” Hamilton elsewhere advocated flexible construction of appropriations laws because, as he put it, “[t]he business of administration requires accommodation to so great a variety of circumstances, that a rigid construction would in countless instances arrest the wheels of Government.”[100] But simply expending funds for a reward, or even diverting them from other accounts, was a bridge too far.

Washington’s negotiations with the so-called Barbary Powers in North Africa demonstrate the same point, this time with respect to foreign aid. In a report to the House and Senate a few months later (in December 1790 for the House and January 1791 for the Senate), Secretary of State Thomas Jefferson provided background information about these Barbary states’ practice of capturing vessels in the Mediterranean and holding their crews hostage (or enslaving them) so as to extract either ship-specific ransoms or broader peace settlements.[101] Outlining the United States’s main options, Jefferson walked through the benefits and costs of paying ransoms, attempting “to obtain peace by purchasing it,” or “repel[ling] force by force.”[102] “Upon the whole,” he concluded, “it rests with Congress to decide between war, tribute, and ransom, as the means of re-establishing our Mediterranean commerce.”[103] Whatever the choice, moreover, Congress would need to provide the necessary funds. “If war,” Jefferson wrote, Congress “will consider how far our own resources shall be called forth, and how far they will enable the Executive to engage, in the forms of the constitution, the co-operation of other Powers.”[104] Likewise, “[i]f tribute or ransom, it will rest with them to limit and provide the amount; and with the Executive, observing the same constitutional forms, to make arrangements for employing it to the best advantage.”[105]

Much as Hamilton recognized that only Congress could provide funds for whistleblower rewards, Jefferson here presumed that only Congress could provide funds for a military buildup or payments to foreign sovereigns, notwithstanding the President’s authority to command the military and conduct foreign relations. In practice, furthermore, the Washington administration followed through on this theory. As one scholar recounts, “The instructions the administration unilaterally chose to give the commissioners [representing the United States] were carefully framed in accordance with the stipulated monetary limitations.”[106] Then, when a diplomatic representative, conducting negotiations from afar in an era without rapid communication, agreed to a settlement with Algiers in 1795 that required further funds, the administration sought Senate ratification of the agreement and asked Congress to appropriate additional money.[107]

Thus, in two areas of core executive authority—enforcement of federal law and the conduct of foreign relations—the very first presidential administration recognized Congress’s authority to determine whether and to what extent resources were available to accomplish presidential objectives.

2. Reconciling these Examples with Anticipatory Spending

These examples are all the more telling because in other instances nineteenth-century presidents and executive officials did spend money without an appropriation in ways that superficially contradicted the principle of resource-dependence. In particular, in a practice that came to be called the “coercive deficiency,” executive officials often exhausted their appropriations prematurely and spent or obligated funds on their own initiative while counting on Congress to make up the shortfall after the fact.[108] In other words, officials created a “deficiency” in their accounts and requested new funding to plug the gap, yet Congress felt “coerced” in considering the new request because denying the funds could mean halting agency operations until new appropriations materialized or, in some cases, jilting constituents expecting payment.[109]

The very same documents discussed earlier provide examples of this phenomenon. In his report requesting appropriations for anti-counterfeiting rewards, Hamilton noted that, because certain “commissioners of loans” had more work to do after funding for their salaries expired, the Treasury Department continued their employment without pay, “subject to the discretion of the Legislature, in respect to compensation.”[110] Similarly, in the document advocating flexible construction of appropriations laws, Hamilton explained that the Treasury regularly provided advances for goods and services and even salaries, sometimes before the applicable appropriations took effect, provided it “appeared safe and expedient to do so.”[111] The administration’s dealings with the Barbary Powers arguably reflected the same pattern too. As noted, although the administration instructed its diplomats to adhere to Congress’s directions, the administration’s negotiator on the spot ended up agreeing to a payoff that required additional appropriations.[112] On a much grander scale, President Washington did the same thing in suppressing the “Whiskey Rebellion” (a violent tax revolt in Western Pennsylvania in 1794): He employed funds unlawfully from regular military accounts so as to raise a militia to suppress the rebellion while Congress was out of session.[113]

At least during certain periods, this sort of anticipatory spending became a routine feature of nineteenth-century governance.[114] Nevertheless, those like Sidak who invoke such examples to support a constitutional prerogative to spend without appropriations are mistaken.[115] To begin with, although spending down existing funds and incurring obligations in anticipation of future appropriations always violated the spirit of the Appropriations Clause, its legality was somewhat ambiguous before 1870: Earlier statutes were not as squarely restrictive as the Anti-Deficiency Act of that year, and even then the statute remained relatively toothless until 1905 when Congress added penalties for violations.[116]

As a constitutional matter, furthermore, nineteenth-century officials who overspent or incurred deficiencies respected Congress’s ultimate authority over resources insofar as they recognized that only Congress could actually resolve the shortfall.[117] Indeed, in some cases, officials risked personal liability, or at least the loss of out-of-pocket expenditures, if Congress failed to ratify their actions with a subsequent appropriation.[118] George Washington himself modeled this posture for later officials. Following the Whiskey Rebellion, Washington reported his actions to Congress and sought legislative blessing. “[O]n you, gentlemen,” Washington implored, “and the people by whom you are deputed, I rely for support.”[119] Likewise, in a less dramatic example, Washington reported to Congress in 1792 that, in connection with efforts to release seamen impressed into the British Navy, the State Department had made expenditures “for which no provision has been made in law.”[120] Confessing this illegality, Washington implored Congress to “do thereon what you shall find to be right.”[121]

As Josh Chafetz has observed, in these and other related examples, Washington and other officials did not “claim[] to be acting legally.”[122] Instead, they “acknowledge[d]” their actions’ illegality and “sought post hoc congressional authorization.”[123] To that extent, these actions respected, and indeed reinforced, Congress’s ultimate authority to control resource-dependent executive powers.

B. Some Nineteenth-Century Controversies

These patterns continued in later nineteenth-century examples. Whereas today executive officials presume broad discretion in enforcing federal laws, presidents in this period understood the Take Care Clause (correctly) to impose some obligation to effectuate Congress’s enactments.[124] In keeping with this view, and in part because constraints on obligating funds without an appropriation were not yet firmly in place, presidents during this period sometimes suggested that they could enforce laws without regard to limits on funding and enforcement capacity.[125] Yet no clear practice of doing so seems to have developed, and some authoritative sources such as Attorney General opinions rejected it.[126]

After discussing the legal framework reflected in Attorney General opinions, this section briefly describes three debates from different presidential administrations—those of James Monroe, Millard Fillmore, and Rutherford Hayes. It uses these examples to illustrate how resource-dependence operated in practice under nineteenth-century administrative arrangements.

1. The Legal Framework

As we saw, nineteenth-century officials regularly created “coercive deficiencies”: They would spend down their accounts prematurely and obligate funds that exceeded their appropriations, counting on Congress to provide the necessary sums after the fact.[127] In this context, officials charged with enforcing the law might take steps they considered necessary to fulfill their duties, even if doing so meant creating such a deficiency. Indeed, presidents might have thought that their duty to ensure faithful execution of the law required their subordinates to do no less.

Even in this context, however, Attorneys General recognized, at least obliquely, that enforcement activities were ultimately resource-dependent: Congress could constitutionally limit them if it wished. Thus, for example, Attorney General Felix Grundy observed in an 1839 opinion that the Appropriations Clause is “an explicit inhibition upon the President and all others to draw from the treasury any portion of public money, until Congress shall have directed it to be done.”[128] In his view, the Clause “clearly indicates that Congress shall also declare the uses to which the money to be drawn from the treasury is to be applied,” so “[w]henever [the President] applies it without the directions of Congress expressed in some legislative act, or against such directions, he assumes upon himself a power not conferred by the constitution.”[129]

Four years later, a different Attorney General similarly suggested that Congress could disable government functions by denying funds for them. According to this opinion, the President could, by virtue of his responsibility for faithful execution of the law, appoint agents to undertake certain investigations.[130] Nevertheless, under applicable laws, he could not pay them without an appropriation specifically providing the necessary funds.[131] “Congress,” Attorney General John Nelson wrote, “may . . . indirectly limit the exercise of this power [to appoint investigators] by refusing appropriations to sustain it, and thus paralyze a function which it is not competent to destroy.”[132] In effect, without the necessary appropriations, the law left “unimpaired” the President’s power of appointment while at the same time “discountenanc[ing] its ordinary execution.”[133] According to Nelson, “even in [cases] of the most pressing urgency, in which the executive departments might feel that the best interests of the country called for the exercise of the appointing power, a resort to Congress for the means of compensating the appointees would be indispensable.”[134]

A third opinion from 1860—albeit one sometimes blamed (inaccurately) for limiting President James Buchanan’s authority to resist southern states’ secession[135]—addressed related points about the relationship between means and ends in performing executive functions. “Where the law directs a thing to be done without saying how, that implies the power to use such means as may be necessary and proper to accomplish the end of the legislature,” Attorney General Jeremiah Black wrote. “But where the mode of performing a duty is pointed out by statute, that is the exclusive mode, and no other can be followed.”[136] By the same token, Black went on, “[i]f . . . an act of Congress declares that a certain thing shall be done by a particular officer, it cannot be done by a different officer. The agency which the law furnishes for its own execution must be used to the exclusion of all others.”[137] In this reasoning, the Attorney General recognized Congress’s authority to structure the executive branch by prescribing different offices’ authorities and capacities.[138] Though focused on questions of legal authority rather than resources, this analysis necessarily implies that resource limitations on particular offices may likewise impede full enforcement of particular laws.

Finally, an opinion from 1877, in a very different political context, directly addressed the question of extending public functions with private resources. With partisan control of the federal government divided between the Democrat-controlled House of Representatives and the new Republican President Rutherford Hayes, Congress adjourned in March of that year without appropriating funds for the army beyond June.[139] As discussed further below, congressional Democrats later clashed repeatedly with Hayes over resources for federal law enforcement; in effect, Democrats aimed to render federal civil rights laws and voting protections a “dead letter”[140] in former Confederate states where white supremacists were seeking to displace racially egalitarian Reconstruction-era governments.[141] At the start of his term, given the impending funding lapse in 1877, the President asked whether funds “furnished by individual contribution” could provide “means for the payment and support of the Army.”[142]

Attorney General Charles Devens essentially answered “no.” Private parties, he reasoned, could not circumvent the lapse in appropriations by contributing to the treasury, because then any withdrawals would constitute a use of treasury funds without any supporting appropriation.[143] Curiously, Devens seemed not to recognize that the miscellaneous receipts statute, if not the Constitution itself, would dictate the same result even if funds were not deposited in the literal treasury.[144] Nevertheless, Devens got to the correct answer. Direct payments to the army, he reasoned, even if made with no assurance from “the Executive authority that they shall be repaid,” “would seem to bear too much the aspect of a contract.”[145] Hence, the contributions “would certainly place the Government, receiving such funds and disbursing them for the necessary purposes of its administration, under the strongest moral obligation to use every proper and reasonable effort that the donors or lenders should be reimbursed.”[146] Accordingly, “[t]he transaction would be subject to criticism as an attempt to do indirectly that which Congress should have provided for by positive appropriation.”[147]

In all these examples, nineteenth-century Attorney General opinions recognized that Congress could restrict the government’s enforcement capacities through appropriations limits. The law at the time did not necessarily require government operations to cease during a funding lapse, as in contemporary shutdowns; that result arises from the 1884 “voluntary services” prohibition and other later changes to the law of official compensation.[148] Furthermore, as we saw, executive officials often created “coercive deficiencies” by exhausting or exceeding their appropriations and asking Congress for more money.[149] Nevertheless, authoritative opinions recognized that Congress ultimately had authority to dial enforcement activities up or down due to those functions’ resource-dependence.

2. Resource Constraints on Enforcing a Slave Trade Ban, the Fugitive Slave Act, and Reconstruction-Era Voting Protections

Three controversies from markedly different points in the nineteenth century show these same constitutional principles operating reasonably well in practice as well as theory.

a. James Monroe’s Claimed Power to Transfer Naval Funds

First, in 1819, Congress enacted new restrictions on the slave trade and piracy and charged the navy with enforcing them.[150] Although Congress did not specifically appropriate funds to strengthen naval enforcement capacity, President Monroe and the Navy Secretary directed the repair and outfitting of ships to serve this purpose. To do so, they ran down existing funds, creating a substantial deficiency for the remainder of the year, and also transferred funds from existing balances left over from appropriations in prior years.[151] As a defender in Congress later put it, the President “assumed a responsibility” for implementing the new laws even though those laws’ “framers [had] supplied no means, made no appropriation, to enable the President to fit, arm, and man the vessels intended for that service.”[152] Lacking any “means in his power, except those under the general appropriation bill [for the navy],” to enforce these statutes, the President nonetheless “obeyed the laws, no doubt under a well-founded confidence that Congress would appropriate the money necessary to carry into effect their own acts.”[153] From that point of view, the Monroe administration’s actions reflected a strong sense that the Take Care Clause obligates presidents to ensure enforcement of federal laws, even if doing so requires repurposing funds or taking other steps to ensure adequate enforcement capacity. As the Navy Secretary put it, “the duty [to enforce the new laws] being made imperious, every exertion was promptly used to execute the duty imposed upon the Executive.”[154]

When reported to Congress, however, the administration’s fiscal maneuvers prompted considerable debate and controversy. Back in 1795, Congress had enacted a provision requiring the return to the treasury of unexpended balances after two years.[155] In 1809, another statute granted the President authority to transfer funds during a congressional recess between different “branch[es] of expenditure” within a department’s appropriations.[156] The executive branch, it turned out, had long followed a peculiar interpretation of these statutes that largely stripped them of force for the navy: It understood balances to fall outside the 1795 statute so long as they had been shifted from the general treasury to naval accounts—even if the U.S. Treasurer continued to hold the sums in question as the Navy Department’s “agent.”[157] With funds preserved in naval accounts in this way, presidents could then meet immediate needs, as they perceived them, by shifting sums from past appropriations, even if those appropriations were more than two years old and even if they allocated the money in question to different purposes.[158]

In response to this revelation, Congress enacted new restrictions on transfers and use of surplus funds.[159] In floor debates, moreover, legislators decried the executive branch’s effective circumvention of statutory limits on funding, as well as the broader practice of incurring coercive deficiencies.[160] Congress thus rejected any unilateral presidential authority to expand government law enforcement capacity, yet the administration seems not to have claimed such a power in the first place. On the contrary, as we saw, it employed a preexisting internal understanding of fiscal statutes to carry out its enforcement duties as completely as possible with available resources. To that extent, both branches in this episode seem to have accepted, as a constitutional matter, the ultimate resource-dependence of law enforcement. They wrangled instead over the degree of spending flexibility that the executive branch should enjoy by law in carrying out that function.

b. Millard Fillmore’s Claimed Power to Use Military Force for Law Enforcement

The second example followed a similar, if somewhat more ambiguous, pattern. In the so-called Compromise of 1850, Congress enacted “an agonized set of trade-offs that temporized with the issue of slavery in the territories and included the notorious Fugitive Slave Act.”[161] Having supported this compromise, President Millard Fillmore set about “overenforc[ing] the act’s draconian provisions for returning runaway slaves,”[162] and in doing so he suggested that he held authority not only to deploy militia and military forces to aid federal law enforcement but also to disregard statutory limits on the use of such resources. Fillmore’s assertions of this theory, however, were curiously hedged, and he seems ultimately to have relied principally on statutory rather than constitutional authorities, at least as he understood them.

In a key example from 1851, following the jailbreak of a man held in Boston as a fugitive from enslavement, Fillmore issued a proclamation “requiring and commanding all officers, civil and military, and all other persons, civil or military, who shall be found within the vicinity of this outrage, to be aiding and assisting by all means in their power in quelling this and other such combinations and assisting the marshal and his deputies in recapturing” the escapee.[163] Though the legal basis for this proclamation was unclear (as was the scope of its hedged language regarding “all means in [federal officers’] power”), Fillmore evidently advanced a constitutional theory of presidential law enforcement power in earlier cabinet deliberations.

As he recounted in an October 1850 letter to Secretary of State Daniel Webster, the cabinet agreed at that point that, “when necessary,” the President should “use the Military force in aid of the civil officer to execute the fugitive slave law.”[164] “We were somewhat embarrassed,” Fillmore noted, by legislation dating from 1807 and afterward that “would seem to imply that this [the use of military force for law enforcement] was a power to be conferred by Congress.”[165] Yet Fillmore evidently rejected that view. “[A]fter a careful examination of the subject,” he reported, “I came to the conclusion that it [ordering military aid to civil law enforcement] was an inherent Executive power enforced by the Constitution, when it made the President commander-in-chief of the Army and Navy, and required him to take care that the laws be faithfully executed.”[166]

“In this”—apparently a reference to Fillmore’s constitutional theory—Fillmore reported that “the whole Cabinet were not agreed.”[167] Yet even the dissenters apparently accepted that when the commissioners charged with administering the act summoned a posse comitatus to help enforce it—something the statute expressly empowered them or their appointees to do[168]—then the posse could include members of the military.[169] Thus, in a sort of “mixture” of conflicting views, as one historian has observed, the cabinet resolved “to give authority to U.S. marshals and their deputies to call for troops when a district judge or justice of the Supreme Court ‘should certify that in his opinion it was necessary.’”[170] In keeping with this conclusion, in an incident preceding the Boston conflict, Fillmore gave “direction . . . to the commanding officer of the Marines in Philadelphia” to assist the federal marshal there,[171] though these orders apparently applied only when the marshal “was unable to sustain the laws by the civil authority.”[172]

Several months later, following the Boston proclamation, Fillmore floated his constitutional theory again.[173] Responding to a Senate query about whether any legal changes were required to help overcome resistance to the Fugitive Slave Act, Fillmore asked Congress to clarify that the applicable laws did not require issuing an advance proclamation before employing either the militia or military to aid in executing the law.[174] In the course of his analysis, he again appeared to suggest that requiring such a proclamation could be unconstitutional, at least as applied to the regular military. As he put it, “The power of the President under the Constitution, as Commander of the Army and Navy, is general, and his duty to see the laws faithfully executed is general and positive; and the [statute in question] ought not to be construed as evincing any disposition in Congress to limit or restrain this constitutional authority.”[175] Fillmore thus hinted that the President holds a “general and positive” obligation to enforce federal laws, one that could justify disregarding at least some restraints on use of federal resources for that purpose.

As in his cabinet discussions, however, Fillmore advanced these bold claims only to qualify them. With respect to the militia, Fillmore implied that the statute was best read in any event as not requiring a proclamation with respect to law enforcement efforts; he noted only that it “created some doubt” about the question and should therefore be “modified” to avoid the practical and constitutional problems he identified.[176] Likewise, with respect to statutes governing the military, Fillmore argued only that they “ought not” be read to impose limitations, an oblique formulation implying ultimate congressional authority.[177] Here, too, he ultimately argued only that Congress should provide “greater certainty,” not that the law necessarily required amendment.[178] And later in his analysis, Fillmore fell back on the same alternative theory from his cabinet meetings: He argued that “all citizens, whether enrolled in the militia or not, may be summoned as members of the posse comitatus, either by the marshal or a commissioner according to law, and that it is their duty to obey such summons.”[179]

As concerns use of outside resources, moreover, Fillmore appeared to acknowledge that any constitutional authority he held with respect to the military extended only to forces that Congress in fact provided. “[P]robably,” he wrote in advancing his theory of affirmative enforcement power, “no legislation of Congress could add to or diminish the power thus given [by the Take Care and Commander-in-Chief Clauses] but by increasing or diminishing or abolishing altogether the Army and Navy”—language recognizing obliquely that Congress could in fact disable his power by eliminating the military altogether.[180]

In sum, although Fillmore advanced a constitutional theory of “positive” presidential law enforcement power, he did not extend his theory beyond congressionally provided resources and, even as to those resources, he qualified his constitutional assertions with alternative statutory arguments, however strained. It is worth noting, too, that the Fugitive Slave Act, though repugnant in substance, expressly contemplated outside help for enforcement: It not only empowered enforcement officials to form posses but also directed that “all good citizens are hereby commanded to aid and assist in the prompt and efficient execution of this law, whenever their services may be required, as aforesaid [that is, in posses], for that purpose.”[181] Furthermore, Congress did nothing to suggest support for Fillmore’s claimed prerogative to disregard resource constraints on law enforcement. On the contrary, the Senate committee charged with considering Fillmore’s proposals reported back that “further legislation is not essential to enable the President to discharge, . . . with fidelity, his high constitutional duty to see that the laws are faithfully executed.”[182] The committee did endorse the administration’s view that the marshals could summon a posse including militia or regular military personnel, but in doing so it “simply did not comment on Fillmore’s claim to inherent power under the Constitution to call on the Army and Navy to enforce federal laws without” regard to existing legal restrictions.[183] At the same time, one committee member issued a minority report rejecting Fillmore’s constitutional theory.[184]

On the whole, then, although this repellent episode carries ambiguities, it fails to support any unilateral presidential authority to summon outside resources for federal law enforcement, and even with respect to public resources it does more to confirm than undermine Congress’s power to control their extent and availability for that purpose.[185]

c. Rutherford Hayes’s Veto Battle over Voting Rights Enforcement

A third example, this one from Hayes’s troubled presidency, shows once more that Congress could limit enforcement resources by law even in an era when Presidents understood themselves to hold an affirmative duty of faithful execution.[186]

A Republican former Governor of Ohio, Hayes seems to have taken office following the disputed election of 1876 only because he gave assurances that vigorous enforcement of Reconstruction would end.[187] Nevertheless, Hayes hoped to maintain federal civil rights protections and sought in particular to enable fair elections.[188] Democrats, however, had other plans: Under their control, the House passed appropriations bills in early 1879 with riders repealing measures allowing use of the army and federal marshals to protect polling places.[189] When Congress then adjourned without enacting appropriations, Hayes called it back into session.[190] At that point, Democrats controlled both houses, so Congress as a whole passed an army appropriations bill forbidding use of the army or marshals at the polls, but Hayes vetoed it.[191] In his message to Congress, Hayes complained that altering substantive policy through appropriations bills, though a “common practice” employed by “[a]ll parties when in power,” gave undue leverage to the House of Representatives (which originated such legislation) and unduly impaired the President’s constitutional “share of the legislative power.”[192]

Congressional Democrats nevertheless kept trying, and Hayes kept rejecting bills with similar provisions.[193] In vetoing an appropriation for judiciary expenses that forbade any use of the funds to implement certain election laws, Hayes echoed Fillmore’s Article II theory, complaining that approving the bill would have meant “participat[ing] in the curtailment of his means of seeing that the law is faithfully executed, while the obligation of the law and of his constitutional duty remained unimpaired.”[194] The bill’s “effect,” in other words, would be “to deprive the executive department of the means to execute laws which are not repealed, which have not been declared invalid, and which it is therefore the duty of the executive and of every other department of Government to obey and to enforce.”[195]

Thus, Hayes, like Fillmore, hinted at the possibility that the executive duty of faithful execution might transcend the resources Congress made available for its exercise. To the extent Hayes meant to advance that view, however, he backed down from it in practice. After Hayes signed other appropriations bills but Congress still denied funding for certain marshal’s fees,[196] Hayes complained that “the means at the disposal of the executive department for executing the laws through the regular ministerial officers will after to-day be left inadequate.”[197] Likewise, Hayes later reported to Congress that, due to the lapse in funding for federal marshals, “the proper execution of the process of the United States failed [in some cases] by reason of the absence of the requisite appropriation.”[198] Hayes did indicate that the marshals had “continued the performance of their duties without compensation from the Government, taking upon themselves the necessary incidental outlays, as well as rendering their own services.”[199] At the time, the Anti-Deficiency Act did not yet prohibit acceptance of such “voluntary services,”[200] and the Attorney General evidently advised the marshals that “they would necessarily have to rely for their compensation upon the prospect of future legislation by Congress.”[201] Despite the bluster in his veto statements, however, Hayes apparently did not presume any power in practice to deploy public or private resources beyond existing appropriations so as to ensure faithful execution of substantive statutes.[202]

More generally, resource constraints bedeviled Reconstruction throughout its history. Although Congress created the Justice Department during this period to enforce new federal civil rights laws, the Department, in one historian’s assessment, “did not possess sufficient personnel or budgetary resources to prosecute the law effectively,”[203] and Congress’s choice to steadily shrink the army following the Civil War removed the only enforcement apparatus that had previously been effective.[204] The failure of political will and state capacity in this period once again confirms, this time in tragic fashion, that Congress may hamstring federal law enforcement with resource limitations if it so chooses.

d. Summary

In three separate nineteenth-century examples, presidents asserted an independent obligation to enforce federal laws, yet in each case they also accepted, at least implicitly, that Congress could undermine that obligation through resource constraints. In moral terms, Monroe’s enforcement of the slave trade ban was enlightened, Fillmore’s commitment to returning fugitives from enslavement was benighted, and Hayes’s effort to maintain Reconstruction policies was tragically insufficient. Then, as now, neither Congress nor the executive branch held a monopoly on virtue and sound policy across the universe of disputes. In part for that reason, however, the pattern of outcomes provides a meaningful indication of operative constitutional understandings. In effect, all three examples highlight how, just as contemporaneous Attorney General opinions suggested, Congress held ultimate authority to control enforcement functions through appropriations limitations, even in an era when presidents presumed that the Take Care Clause required enforcement of federal laws and over-spending in anticipation of future appropriations was routine.

C. Two Modern Disputes and Some Routine Examples

The pattern of behavior evident in some of these historical examples—spending or obligating funds in excess of appropriations and then asking Congress afterward to make up the shortfall—substantially disappeared in the twentieth century.[205] In consequence, nineteenth-century examples like those just discussed should ultimately carry limited relevance as indications of contemporary constitutional meaning: Far from reflecting some enduring executive prerogative to spend without regard to statutory limitations, they reflect a bygone legal and institutional context that Congress eventually reformed.[206] By rendering Congress’s control over resources more potent, this shift has brought into clearer relief the boundary between valid and invalid constitutional objections to spending constraints. Two high-profile examples—once again, one involving foreign affairs and the other law enforcement—show this strengthened congressional power at work, as do some more humdrum examples arising out of the government’s routine operations.

1. Iran-Contra

A first example involves the notorious Iran-Contra scandal of the 1980s. During Ronald Reagan’s presidency, 190 years after President Washington tangled with the Barbary states, Americans were once again being held hostage in the Mediterranean, this time in Lebanon by the Iran-backed militant group Hezbollah.[207] Seeking to secure these hostages’ release, officials on Ronald Reagan’s National Security Council concocted a scheme to curry favor with Hezbollah’s patron through secret illegal arms sales to Iran.[208] These officials diverted the resulting proceeds to the Contras, an anti-communist rebel group in Nicaragua; at the same time, in a parallel scandal that began somewhat earlier, they also solicited contributions to the same cause from private parties and foreign governments.[209] Because a recurrent appropriations provision called the Boland Amendment forbade use of government funds to support the Contras, the officials in question generally channeled these funds through an ostensibly private organization called “the Enterprise” that they in fact controlled.[210] As explained later in a joint House-Senate committee’s investigative report, these officials believed they could circumvent the Boland Amendment—and with it Congress’s power of the purse—by relying on such “contributions” rather than “appropriated funds.”[211]

In part, then, the Iran-Contra fiasco involved an effort to employ outside resources (i.e., funds from arms sales, private parties, and foreign governments) to accomplish a public objective (support for the Contras) that Congress had prohibited by law (through the Boland Amendment). The Reagan administration’s actions thus threatened to establish a precedent for executive defiance of statutory limitations on even resource-dependent functions.

The escapade’s significance, however, ended up being the opposite. In its majority report, the joint House-Senate committee condemned the administration’s actions and repudiated its legal theory.[212] Responsible officials faced criminal prosecution, though in the end convictions against the key figures Oliver North and John Poindexter were reversed due to tainting by immunized evidence.[213] As for the President, although some in his administration belatedly claimed that an executive constitutional prerogative supported their actions, Reagan himself made statements recognizing Congress’s power over spending.[214] Furthermore, although he encouraged some aspects of the scandal, he seemed to lack full awareness of his administration’s actions.[215] Overall, then, the scandal’s constitutional significance seems captured not by the perpetrators’ bumbling machinations, but instead by the House-Senate committee’s assertion that “Congress’s exclusive control over the expenditure of funds cannot legally be evaded through use of gifts or donations made to the executive branch.”[216] “Were it otherwise,” the committee noted, “a President whose appropriation requests were rejected by Congress could raise money from private sources or third countries for armies, military actions, arms systems, and even domestic programs.”[217]

Indeed, the committee reinforced this assertion’s credibility by accepting other aspects of executive prerogative. Despite its strong assertion of congressional control over foreign aid, the committee simultaneously acknowledged that “[t]he Constitutional plan did not prohibit the President from urging other countries to give money directly to the Contras.”[218] It simply barred “receipt and expenditure of such funds by this government absent an appropriation,” even through the subterfuge of “a nominally private entity” that was “in reality an arm of the Government” whose expenditures “the Government is able to direct.”[219]

The committee here appeared to distinguish diplomatic communication from provision of aid, a distinction in accord with the established bipartisan practice—one that has since only grown stronger—of disregarding funding limitations on the content of diplomatic communications as well as, to some degree, the President’s choice of messengers.[220] Though debatable as a matter of first principles, this practice might reflect an implicit theory that, because the President’s own diplomatic communications do not require appropriated resources, limitations on the President’s choice of messengers inside or outside the government are equally invalid given their potential to manipulate the messages relayed through the President’s exercise of this resource-independent power.[221] At any rate, this theory might help explain—and thus limit—an established executive practice, even if it does not fully justify it.[222]

On the whole, although it did not frame its analysis in these terms, the Iran-Contra committee report ended up recognizing the same distinction between tangible aid and diplomatic communication that President Washington respected in negotiating with the Barbary states some two centuries earlier. Even if presidents may conduct foreign relations by determining the content of diplomatic messages relayed to foreign sovereigns, they cannot defy limits imposed by law on foreign aid.

2. Marijuana

The still more recent controversy over federal marijuana enforcement reflects the same constitutional boundary with respect to domestic administration. Though state and federal laws across the country uniformly banned marijuana earlier in the twentieth century, states began liberalizing their own laws in the 1990s, initially only for medical uses but eventually for recreational consumption as well.[223] After some waffling, the U.S. Justice Department under President Obama adopted an explicit policy of assigning low priority to enforcing federal marijuana prohibitions against parties who possessed or sold marijuana in compliance with state law and posed no threat to interstate interests.[224] Some enforcement efforts against dispensaries nevertheless continued.[225] In response, Congress adopted a recurrent appropriations rider beginning in fiscal year 2015 that forbade use of Justice Department funds to “prevent any of [certain listed states] from implementing their own laws that authorize the use, distribution, possession, or cultivation of medical marijuana.”[226]

Through this rider, Congress employed its power of the purse to control the executive exercise of a resource-dependent power—namely, the authority to enforce federal laws. In response, the Justice Department initially interpreted the rider narrowly, contending that it applied only to prosecutions of state officials (as opposed to private parties).[227] In other words, it read the funding restriction to apply only to prosecutions of those responsible for “implementing [state] laws,” as opposed to those subject to them.[228] The Ninth Circuit, however, rejected this view in a 2016 decision, holding instead that the rider prohibited prosecution of individual offenders and that such individuals could assert the rider as a defense in any prosecution.[229]

A year later, President Trump appeared to contest this reasoning and question whether the funding restriction was even constitutional. Joining the questionable company of Millard Fillmore, he issued a signing statement in 2017 indicating that he would “treat [the restriction] consistently with my constitutional responsibility to take care that the laws be faithfully executed”[230]—language that seemed to suggest doubts about whether an appropriations rider could limit executive enforcement choices.[231] Trump, however, appeared not to act on any such theory in practice. Indeed, despite revoking the Obama administration’s 2013 guidance and allowing individual U.S. Attorneys to set marijuana enforcement policy, the administration did not pursue any systematic crackdown on state-compliant marijuana.[232] On the contrary, Trump himself apparently assured a Colorado senator that he would not interfere with that state’s marijuana legalization.[233] In addition, his second Attorney General, William Barr, assured the Senate during his confirmation proceedings that he did “not intend to go after parties who have complied with state law in reliance on” Obama administration policies.[234]

Thus, in this example as in earlier ones, both executive practice and court rulings support what the constitutional structure should dictate in any event: Congress may employ its power of the purse to determine how and even whether executive officials enforce particular federal laws.

3. Lower-Salience Examples

The last two examples—Iran-Contra and marijuana enforcement—involved high-salience controversies that drew presidential attention. Yet broader patterns of administrative behavior support the same conclusions. In particular, in contemporaneous legal rulings addressing more routine aspects of modern administration, officials in all three branches of government applied precisely the same principles reflected in these examples.

In a 1984 decision, for example, the Fourth Circuit rejected a creative plan developed by the Federal Aviation Administration (FAA) for financing bus services for the Dulles International Airport outside Washington, D.C.[235] As a condition of waiving certain landing fees, the FAA required airlines to contribute to an ostensibly separate trust fund which then employed those contributions to purchase buses.[236] In a legal challenge to the purchase, the Fourth Circuit held that the FAA could not circumvent appropriations limitations and federal procurement laws by diverting fees in this way.[237] The fees, the court reasoned, belonged to the U.S. treasury, so upholding the bus-supply contract would have enabled an “end-run around normal appropriations channels” and allowed the agency “to supplement its budget by $3 million without congressional action.”[238] The Constitution as well as applicable laws foreclosed that result.[239]

To be sure, the FAA’s action might suggest that the executive branch contested these constraints, but in fact the Justice Department embraced the same basic principles as well. In a 1980 opinion, the Department’s Office of Legal Counsel (OLC) concluded that the government could not forgo damages in an environmental settlement in exchange for a commitment to pay certain sums to an outside conservation group.[240] Because of the miscellaneous receipts statute, the Office reasoned, the damages were owed to the U.S. treasury, and “the fact that no cash actually touches the palm of a federal official is irrelevant for purposes of” the miscellaneous receipts law, so long as “a federal agency could have accepted possession and retains discretion to direct the use of the money.”[241] In other words, “money available to the United States and directed to another recipient [was] constructively ‘received’ for purposes of” the statute, making the proposed settlement unlawful.[242] Some fifteen years later, the Department took the same position in litigation, leading a federal district court to conclude reluctantly that penalties ordered by the court under the Clean Water Act could only be paid into the treasury and not toward outside mitigation efforts.[243] Meanwhile, presumably reflecting Congress’s view, the Comptroller General applied the same reasoning in other cases,[244] albeit sometimes over the objection of executive agencies that construed applicable statutes more flexibly.[245]

The Justice Department has even applied the miscellaneous receipts statute to require payment into the treasury of earnings from undercover law enforcement operations. In a 1978 opinion (as later summarized by the Comptroller General), OLC determined that “all monies received by the Federal Bureau of Investigation (FBI) during undercover operations,” including even winnings from a particular hand in an illegal card game, must “be paid into the Treasury.”[246] Indeed, whereas the Comptroller General had accepted that immediate deposits might not be required if making them would jeopardize a law enforcement operation, the Justice Department reasoned that such operations were unauthorized to begin with if expeditious deposits were infeasible.[247] In response, Congress amended the law to grant the FBI and the Drug Enforcement Administration the authority to employ proceeds from undercover operations to offset those operations’ necessary and reasonable expenses.[248] Nevertheless, following the Attorney General’s reasoning, the Comptroller General later concluded that other agencies such as the Internal Revenue Service still lacked authority to retain earnings from undercover operations.[249] (Granting some commonsense flexibility, the Comptroller General did suggest that an entire card game, as opposed to a single hand, might constitute the relevant transaction for purposes of depositing miscellaneous receipts.)[250]

These opinions show the force of the executive branch’s resource-dependence in structuring government operations and maintaining effective checks and balances. Much as Alexander Hamilton recognized in the Republic’s early days that informant rewards required appropriations from Congress,[251] government lawyers two centuries later concluded that Congress’s power of the purse extended even to secret government efforts to catch lawbreakers in the act. The reasoning in both cases, as in the opinions on penal settlements and the FAA’s machinations, provides powerful confirmation of Congress’s authority to control resources for law enforcement and other resource-dependent executive functions.[252]

D. The Resource-Dependence Through-Line

A pattern thus emerges from these historical examples (and others like them): Congress may limit the resources available for enforcing federal laws and affording government benefits including foreign aid. As a necessary corollary, moreover, Congress may equally preclude presidents from circumventing such limits by enlisting private aid and assistance.

Though I have held aside here examples involving use of military force, the same principles apply to that resource-dependent power as well.[253] By contrast, presidents often may disregard funding limits on resource-independent powers, as indeed they have done in significant historical examples.[254] Thus, for example, opinions from the Supreme Court have acknowledged that Congress cannot limit the issuance of pardons or impose bills of attainder through funding limitations;[255] President Taft disregarded a ban on use of appropriations to submit a unified budgetary proposal to Congress;[256] later presidents have likewise disregarded limits on formulating recommended legislation;[257] and numerous presidents have disregarded funding constraints on the content of diplomatic communications.[258] By and large, historical practice confirms the important distinction implicit in the Constitution’s structure between powers that do and do not depend on congressionally authorized resources.

III. Contemporary Questions

If the Constitution thus grants Congress the power to control some key executive authorities but not others through its power of the purse, what implications should this framework carry in the present? This Article’s final Part draws out three points with contemporary relevance: First, presidents must respect resource levels set by law for resource-dependent activities; second, legal limits on public resources apply equally to private resources employed by presidents for public functions; and third, regulatory “deals” may violate the spirit, and at least sometimes the letter, of Congress’s authority over spending insofar as such deals expand agencies’ effective capacity or coerce private assistance for unrelated tasks.

A. Defying Resource Levels

A first, straightforward implication of certain executive powers’ resource-dependence is that Congress may determine the level of authorized resources for such activities. If Congress limits the funds or capacities available for enforcing certain laws, engaging in certain military operations, or dispensing certain benefits, the President lacks any constitutional prerogative to circumvent those limits by repurposing other resources or enlisting outside support. That is a key implication not only of Iran-Contra and the recent marijuana controversy,[259] but also of Congress’s rejection of President Monroe’s unauthorized shipbuilding and President Fillmore’s pretensions to an unlimited law enforcement power.[260] Likewise, by rejecting the FAA’s bus-funding scheme, the leveraging of penalties into funding for outside mitigation activities, and even the use of undercover operatives’ gambling winnings for further enforcement efforts, the modern cases and opinions discussed above make clear that agencies lack any inherent power to exceed their appropriations.[261] As the Comptroller General has put it, “[i]n addition to providing necessary funds, a congressional appropriation establishes a maximum authorized program level,” one that the agency “may not circumvent . . . by augmenting its appropriations from sources outside the government.”[262]

The reverse is also true. If Congress mandates expenditures for certain tasks, the duty of faithful execution requires presidents to make them.[263] Indeed, even if Congress merely provides appropriations without specifically mandating their expenditure, the duty of faithful execution requires presidents to employ them as necessary to accomplish statutory objectives.[264] Though less squarely presented in the historical examples discussed here, I have elsewhere discussed the general pattern of historical practice refuting any notion of a constitutional prerogative to defy spending mandates for resource-dependent powers.[265] Among other things, Congress forcefully asserted this view in 1974 by enacting the Impoundment Control Act.[266] That law, as amended over time, limits deferrals (that is, delays) of appropriated spending and requires new legislation to rescind (that is, cancel) such spending altogether—twin requirements that contradict any putative executive prerogative to take such actions unilaterally.[267] To quote testimony from the Comptroller General’s Government Accountability Office, the statute “operates on the constitutional premise that the President is required to obligate funds appropriated by Congress, unless otherwise authorized to withhold.”[268] In the half century since the law’s enactment, a general pattern of presidential compliance has only reinforced this constitutional understanding.[269]

Despite such overall compliance, adherence to this framework has never been perfect, and recent presidents have generally tended to stretch legal bounds. Even by those standards, however, the second Trump administration has shown particular disdain for Congress’s constitutional authority over resource levels. In the administration’s early days, Trump’s “Department of Government Efficiency” (DOGE) trimmed agency budgets, terminated personnel, and cancelled foreign aid; its then-head Elon Musk bragged that he fed the U.S. Agency for International Development “through the wood-chipper.”[270] In addition, at least initially, the administration cancelled grants and contracts, paused government assistance, and otherwise asserted policy control over spending in ways that appeared to defy legal limits on impoundments.[271] Later, it announced plans for a dramatic reduction in Department of Education staffing,[272] and during one recent government shutdown, in an apparent attempt to pressure Democratic legislators, it halted food assistance to some states, paused construction projects in key senators’ jurisdictions, and announced plans to cut even more staff.[273]

Even as it trimmed expenditures in these ways for some government functions, the administration sought to expand resources for accomplishing its priorities. It employed the military inventively to aid border enforcement, assigned immigration cases to law enforcement personnel from agencies with other functions, and deployed the national guard to maintain order in certain cities.[274] During the shutdown, it transferred funds creatively between accounts, tapped military research funds for salaries, and apparently accepted a private donation for military pay.[275] As discussed below in Section C, it also constructed regulatory deals to compel private spending or support for key administration priorities.

The administration’s legal justifications for these actions were not always clear, and some may have comported with statutory authorities regarding gifts, transfers, and funding cancellations. Congress, moreover, ratified some of the administration’s actions. Following procedures afforded by the Impoundment Control Act, it enacted legislation rescinding funds for foreign aid, public broadcasting, and other purposes.[276] In a major tax and spending bill, it also authorized massive spending on immigration enforcement, including use of certain military resources.[277] Overall, however, the administration’s pattern of behavior was difficult to explain without some presumed constitutional prerogative to determine funding levels even for resource-dependent executive functions, yet no such prerogative exists.

B. Defying Resource Constraints

A second, related implication is that private funds applied by the President to public purposes fall subject to legal limits by virtue of the President’s control. This principle is a necessary corollary of Congress’s authority to control public resources, and in her contemporaneous article Kate Stith correctly identified it as a central lesson of Iran-Contra’s repudiation.[278] As the joint House-Senate committee investigating the scandal observed, allowing the President to evade expenditure limits “through gifts and donations” would undermine “Congress’s exclusive control over the expenditure of funds.”[279] More broadly, as Stith noted, the miscellaneous receipts statute reflects the same understanding as well.[280]

Summing up the applicable framework, Stith observed that the Constitution reflects both “a Principle of the Public Fisc, asserting that all monies received from whatever source by any part of the government are public funds, and . . . a Principle of Appropriations Control, prohibiting expenditure of any public money without legislative authorization.”[281] Although Stith failed to recognize that resource-independent functions require a different analysis, her twin principles capture the correct framework for executive powers that do depend on congressionally controlled resources. As historical support for this view, furthermore, we can add the analysis in the nineteenth-century Attorney General opinions recognizing that Congress may assign functions to particular offices and then disable those functions with lack of funding,[282] as well as the modern Justice Department’s conclusion that undercover operatives cannot even spend gambling winnings on further law enforcement efforts without some statutory authority to do so.[283]

This principle bears importantly on recent efforts to accomplish presidential goals with funds placed under executive control by private parties. As a component of his administration’s tariff deal with Japan, President Trump apparently obtained commitments for large investments in the United States in accordance with presidential directions.[284] Similarly, in the apparent belief that it could circumvent an absence of appropriations by obtaining private contributions, the administration sought to pay military salaries during a government shutdown with funds from a donation.[285] Likewise, President Trump sought donations for a major White House renovation.[286] And following the United States’s capture of Venezuelan leader Nicolas Maduro in a military operation, Trump issued an executive order asserting control over Venezuelan oil revenues, although the precise structure and mechanics of his plans were unclear.[287]

These arrangements, again, may or may not comply with applicable laws regarding gift acceptance and expenditure of donated funds. As a constitutional matter, however, any laws limiting government expenditures in general, let alone any laws governing these particular expenditures, are binding on the President. Once funds are under executive control, the fact that outside parties originally provided them does not afford any lawful basis for disregarding applicable legal restraints.

C. Deals and Capacities

A last application relates to the emerging practice of “regulation by deal” or “transactional administration”—the practice, characteristic of both the first and second Trump administrations, of threatening regulatory penalties or withdrawing (sometimes unlawfully) certain government benefits so as to induce a settlement that effectuates desired regulatory objectives.[288]

Though mimicking bare-knuckle business tactics common in some industries, this approach, as critics have noted, circumvents procedural limitations and substantive constraints that aim to discipline and legitimate administrative actions.[289] The administration has nevertheless employed it across a range of regulatory contexts. In the first Trump administration, such deals enabled the government to advance industrial policy goals such as retaining manufacturing jobs and building domestic infrastructure.[290] Still more brazenly, the second Trump administration induced settlements with universities that required large penalty payments, internal measures to combat campus antisemitism, and adherence to colorblind standards for admissions and hiring.[291] Likewise, by threatening to launch civil rights investigations, revoke lawyers’ security clearances, and terminate clients’ government contracts, the administration induced settlements with law firms requiring, among other things, extensive investments in pro bono support for causes favored by the administration.[292] In some cases, firms ended up providing free services to the Commerce Department.[293]

Critics are right to fault these tactics for circumventing legal limits on administration. By undermining constraints on administrative remedies, these tactics may violate agency organic statutes.[294] Indeed, sometimes the steps taken to induce the deals were not even lawful in the first place: For instance, the administration unilaterally suspended universities’ federal grants and contracts without regard to procedural and substantive limitations on such funding cutoffs,[295] and it suspended security clearances in apparent retaliation for expressive activities protected by the First Amendment.[296]

Once again, however, a focus on federal administration’s resource-dependence should sharpen these critiques. In charging federal agencies with enforcing civil rights, administering subsidies and tax breaks, and protecting national security information, Congress was not authorizing unbounded application of legal tools to achieve executive policy aims. It was instead providing a set of calibrated resources and capacities for accomplishing statutory objectives. From that point of view, violating procedural constraints on administrative action not only violates the laws imposing those constraints, but also expands the government’s enforcement capacity beyond what would be possible with appropriated resources if applicable procedural requirements were respected. In that sense, it violates the resource-dependence of these functions just as much as unlawfully enlisting outside assistance or transferring resources between agencies.

The violation, furthermore, is doubly concerning when the resulting deals’ terms involve enhancing government capacity in other areas. In its law firm deals, again, the administration generally obtained commitments to provide pro bono services for favored causes, and some deals apparently resulted in firms providing free services to the Commerce Department.[297] Assuming these firms waived any expectation of compensation for their work, the administration may argue that it could accept this help notwithstanding the Anti-Deficiency Act’s prohibition on “voluntary services.”[298] Yet the services were not in reality uncompensated: They were apparently part of the consideration for a settlement of regulatory threats and penalties. And while the firms in question may have had legal exposure due to violations of civil rights statutes or other laws, Congress enacted those laws to induce compliance with their terms, not to give the executive branch leverage for achieving unrelated policy goals. To the extent the deals involved leveraging statutes in this manner, they were analogous to the proposed settlements discussed earlier that sought to convert penalties owed to the treasury into donations to outside organizations—settlements that the Justice Department and Comptroller General deemed unlawful.[299]

In all these ways, even if they were somehow technically lawful, these arrangements thwart key goals of the ADA and other applicable statutes. In particular, they threaten Congress’s authority to determine the effective capacity and relative funding of different government agencies and functions. In any judicial review of these settlements, courts should closely scrutinize the legality of any free services provided to the government, as well as the legal validity of any conditions unrelated to the statutory policies being enforced.[300]

In sum, regulation by deal poses threats not only to administrative regularity but also to congressional authority over agency resources and capacities. Such deals should be suspect when they involve either an unlawful streamlining of agency procedures or the extraction of resources for achieving unrelated executive policy goals.

Conclusion

Although U.S. presidents have often wished to escape their dependence on congressionally appropriated resources, no consistent historical practice has developed of evading limitations on funding for enforcing federal laws or providing federal benefits. These powers are properly resource-dependent under the Constitution’s text and structure, and Congress’s resulting authority over their exercise through its appropriations power has had real bite across American history. In the handful of examples discussed here, George Washington recognized his dependence on congressional appropriations for informant rewards and diplomatic payoffs; nineteenth-century officials recognized that incurring “coercive deficiencies” through enforcement activities in excess of appropriations still left them vulnerable to Congress’s eventual funding choices; and Reagan and Trump (in his first administration) both backed down from suggestions that they could maneuver around restrictions on government funds to aid foreign militants or enforce federal laws. In more routine cases, all three branches have applied these same principles to bar agencies from expanding their own effective capacity through outside contributions or diversion of funds owed to the treasury.

This historical pattern should now afford critical perspective on recent executive actions raising or lowering statutory funding levels for government activities, employing private resources to evade limits on public spending, and leveraging regulatory authorities to induce private actions. In an age of government austerity, presidents may well find themselves seeking ways like these to accomplish public functions with private resources, but the legality of such options is a matter for Congress and not the President alone.

  1. * Eucalyptus Foundation Endowed Chair, UC Law San Francisco (formerly UC Hastings). I am grateful to the Washington University Law Review’s editors for thoughtful comments and editing and for including this Article in the Law Review’s symposium on “Taxing, Spending, and the Constitution.” For helpful comments on earlier drafts, I also thank fellow symposium participants, as well as Jo Carillo, Ben Depoorter, Scott Dodson, Dave Owen, Nicole Ozer, and Jodi Short. Finally, I thank the UC Law SF academic dean for research support, Laura Belyavski and Bella Baldeon-Volkov for excellent research assistance, and Tony Pelczynski and other UC Law SF librarians for invaluable help locating sources. ↑

  2. . See, e.g., John D. Michaels, Essay, We the Shareholders: Government Market Participation in the Postliberal U.S. Political Economy, 120 Colum. L. Rev. 465, 469–70 (2020) [hereinafter Michaels, We the Shareholders] (arguing that, as an aspect of an emerging “public capitalism,” “[g]overnment is repositioning itself as a savvy market participant” and “using commercial rather than just sovereign levers to advance its various aims”); John D. Michaels, Constitutional Coup: Privatization’s Threat to the American Republic 2 (2017) (discussing a trend “over the past thirty-odd years” of “disassociating government goods and services from the government, at least as it has been traditionally conceived and staffed”); Gillian E. Metzger, Privatization as Delegation, 103 Colum. L. Rev. 1367, 1369 (2003) (noting “privatization’s political and practical ubiquity” and “the extensive intermixing of public and private”). ↑

  3. . Matthew B. Lawrence, Eloise Pasachoff & Zachary S. Price, Appropriations Presidentialism, 114 Geo. L.J. Online 1 (2025). ↑

  4. . Mahira Dayal, Simpson Thacher Lands Commerce Department Work After Trump Deal, Bloomberg Law (Nov. 5, 2025), https://news.bloomberglaw.com/business-and-practice/simpson-thacher-lands-commerce-department-work-after-trump-deal [https://perma.cc/9QHH-MHW8]. ↑

  5. . Bill Chappell, Trump Has Sued Universities for Billions. Here’s What the Strategy Tells Us, NPR (Jan. 29, 2026), https://www.npr.org/2026/01/29/nx-s1-5559293/trump-settlements-colleges-uni versities [https://perma.cc/Z4AE-VXF4]. ↑

  6. . River Akira Davis & Ana Swanson, Trump Hails Japan’s First Batch of U.S. Investments, N.Y. Times (Feb. 17, 2026), https://www.nytimes.com/2026/02/17/business/japan-trump-investments .html [https://perma.cc/N34M-4HVM]; Fact Sheet: President Donald J. Trump Secures Unprecedented U.S.–Japan Strategic Trade and Investment Agreement, White House (July 23, 2025), https://www. whitehouse.gov/fact-sheets/2025/07/fact-sheet-president-donald-j-trump-secures-unprecedented-u-s-ja
    pan-strategic-trade-and-investment-agreement/ [https://perma.cc/8D3E-XSL6]. ↑

  7. . Scott R. Anderson & Alex Zerden, Unpacking the Trump Administration’s Plans for Venezuela’s Oil Revenue, Lawfare (Feb. 2, 2026), https://www.lawfaremedia.org/article/unpacking-the-trump-administration-s-plans-for-venezuela-s-oil-revenue [https://perma.cc/7Y88-ZF6C]. ↑

  8. . Gram Slattery & Jarrett Renshaw, Trump Says Private Donor Gave $130 Million to Cover Military Pay During Shutdown, Reuters (Oct. 23, 2025), https://www.reuters.com/world/us/trump-sa ys-private-donor-gave-130-million-cover-military-pay-during-shutdown-2025-10-23/ [https://perma.cc
    /HW2H-E2YZ]. ↑

  9. . See Jonathan Edwards & Dan Diamond, Trump Fought to Keep the Ballroom Fundraising Contract Secret. Here’s What’s in It., Wash. Post (Apr. 21, 2026), https://www.washington
    post.com/politics/2026/04/21/trump-ballroom-donor-deal/ [https://perma.cc/47YF-VX48] (discussing arrangements to fund the ballroom construction through contributions to the nonprofit Trust for the National Mall). ↑

  10. . See Zachary S. Price, Funding Restrictions and Separation of Powers, 71 Vand. L. Rev. 357 (2018). ↑

  11. . Id. at 361, 389–93. ↑

  12. . Id. ↑

  13. . Off. of Pers. Mgmt. v. Richmond, 496 U.S. 414, 435 (1990) (White, J., concurring). ↑

  14. . See infra Section I.C. ↑

  15. . Price, supra note 9, at 361–62, 418–20. ↑

  16. . Learning Res., Inc. v. Trump, 146 S. Ct. 628, 693 (2026) (Kavanaugh, J., dissenting). ↑

  17. . See, e.g., Emma Kaufman, The Past and Persistence of Private Prosecution, 173 U. Pa. L. Rev. 89, 92 (2024) (“[T]he government has never had total control over criminal law enforcement.”). ↑

  18. . See, e.g., Nitisha Baronia, Jared Lucky & Diego A. Zambrano, Private Enforcement at the Founding and Article II, 114 Calif. L. Rev. 131 (2026); Sean Farhang, The Litigation State: Public Regulation and Private Lawsuits in the U.S. (2010); Randy Beck, Qui Tam Litigation Against Government Officials: Constitutional Implications of a Neglected History, 93 Notre Dame L. Rev. 1235 (2018); cf. Margaret H. Lemos & Max Minzner, For-Profit Public Enforcement, 127 Harv. L. Rev. 853 (2014) (discussing arrangements that give public agencies financial incentives for enforcement). ↑

  19. . U.S. Const. art. I, § 8, cl. 11. ↑

  20. . Price, supra note 9, at 418–20. ↑

  21. . Id. ↑

  22. . Zachary S. Price, Effectuating Congress’s Power of the Purse, 79 Fla. L. Rev. (forthcoming 2027) (manuscript at 44–47, 53), https://papers.ssrn.com/sol3/papers.cfm?abstract_id=6194119 [https://
    perma.cc/4DRH-KDNG]. ↑

  23. . Id. (manuscript at 10, 16, 53). ↑

  24. . Zachary S. Price, Symposium Essay, Trumpian Impoundments in Historical Perspective, 78 Stan. L. Rev. Online 19, 22 (2025); Price, supra note 9, at 367–68. For my discussion of the historical linkage between an effective power of the purse and the development of a powerful federal military and administrative state, see Price, supra note 21 (manuscript at 71–75). ↑

  25. . Such efforts, again, are just one component of a broader push for stronger executive control over spending. For an account of that broader trend, see Lawrence, Pasachoff & Price, supra note 2. ↑

  26. . Price, supra note 9, at 361–62. ↑

  27. . Id. at 373–78. ↑

  28. . See infra Section III.A. ↑

  29. . See infra Section III.B. ↑

  30. . Steven Davidoff Solomon & David Zaring, Transactional Administration, 106 Geo. L.J. 1097, 1100 (2018). ↑

  31. . See David Pozen, Regulation by Deal Comes for Higher Ed, Balkinization (July 23, 2025), https://balkin.blogspot.com/2025/07/regulation-by-deal-comes-to-higher-ed.html [https://perma.cc/T7 9L-K7ZG] (discussing the second Trump administration’s inducement of a settlement with Columbia University through unlawful funding cutoffs). ↑

  32. . Solomon & Zaring, supra note 29, at 1102–03, 1132–34; see also Steven M. Davidoff & David Zaring, Regulation by Deal: The Government’s Response to the Financial Crisis, 61 Admin. L. Rev. 463 (2009) (discussing similar strategies of “regulation by deal” in response to the 2008 financial crisis); cf. Michaels, We the Shareholders, supra note 1, at 531 (observing that “the protocols surrounding government market participation are in many respects (and at least for the time being) less onerous than those surrounding the design and implementation of command-and-control regulations, tax-and-transfer welfare programs, and even privatization and outsourcing initiatives”). ↑

  33. . See infra Section III.C. ↑

  34. . U.S. Const. art. I, § 9, cl. 7. ↑

  35. . Id. art. I, § 8. ↑

  36. . Id. art. II, § 3. ↑

  37. . See Price, supra note 23, at 21–22. ↑

  38. . Price, supra note 9, at 438. ↑

  39. . Id. at 427; see also Michael W. McConnell, The President Who Would Not Be King: Executive Power Under the Constitution 146 (2020) (“Both [the Take Care and Commander-in-Chief Clauses] place the President at the head of a hierarchical system, the substance of which is entirely within congressional control.”). ↑

  40. . For elaboration of the points in this paragraph, see Price, supra note 9, at 426–30, 438–40. On the role of privateers in framing-era military conflicts, see Nicholas Parrillo, The De-Privatization of American Warfare: How the U.S. Government Used, Regulated, and Ultimately Abandoned Privateering in the Nineteenth Century, 19 Yale J.L. & Humans. 1, 15–22 (2007). ↑

  41. . Presidential Statement on Signing the Consolidated Appropriations Act, 2017, 2017 Daily Comp. Pres. Doc. 312 (May 5, 2017) (indicating that he would “treat th[e] provision consistently with [his] constitutional responsibility to take care that the laws be faithfully executed”). ↑

  42. . Presidential Statement on Signing the Department of Defense and Full-Year Continuing Appropriations Act, 2011, 2011 Daily Comp. Pres. Doc. 263 (Apr. 15, 2011); see also David E. Bernstein, Lawless: The Obama Administration’s Unprecedented Assault on the Constitution and the Rule of Law 66–73, 77–79 (2015) (discussing Obama’s signing statement and noting popular references to this position as the “‘Energy Czar’ or ‘climate czar’”); Kevin Sholette, Note, The American Czars, 20 Cornell J.L. & Pub. Pol’y 219, 225 (2010) (discussing presidents’ use of “czar” positions to coordinate policy from the White House). ↑

  43. . See, e.g., Prohibition of Spending for Engagement of the Off. of Sci. & Tech. Pol’y with China, 35 Op. O.L.C. 116, 116 (2011). ↑

  44. . Price, supra note 9, at 361. ↑

  45. . Id. at 361–62. ↑

  46. . Id. at 370–73. ↑

  47. . The Federalist No. 58, at 297–98 (James Madison) (Ian Shapiro ed., 2009). ↑

  48. . Id.; Price, supra note 9, at 372–73. ↑

  49. . 5 Annals of Cong. 684, 699 (1796) (statement of Rep. William Vans Murray). ↑

  50. . Id. ↑

  51. . See Price, supra note 9, at 389–93. ↑

  52. . Id. ↑

  53. . Id. at 417–20. ↑

  54. . Id. at 418. ↑

  55. . See Price, supra note 23, at 21 (“[A]n impoundment prerogative is at odds with the formal constitutional text and structure.”). As discussed below, diplomacy is an important edge case when it comes to funding conditions and restrictions. See infra notes 64–69 and accompanying text; see also Price, supra note 9, at 449–50. ↑

  56. . See Kate Stith, Congress’ Power of the Purse, 97 Yale L.J. 1343, 1345, 1350–52 (1988) (noting that “Congress is obliged to provide public funds for constitutionally mandated activities”). ↑

  57. . Id. at 1350–51, 1351 n.32, 1362 (“Even where the President believes that Congress has transgressed the Constitution by failing to provide funds for a particular activity, the President has no constitutional authority to draw funds from the Treasury to finance the activity.”); see also Price, supra note 9, at 379–80 (critiquing this view). ↑

  58. . J. Gregory Sidak, The President’s Power of the Purse, 1989 Duke L.J. 1162, 1194 (“[T]he President has an implied power to incur claims against the Treasury to the extent minimally necessary to perform his duties and exercise his prerogatives under article II.”). ↑

  59. . See, e.g., Daniel Martin, Note, The Duty to Appropriate: Why Congress Has a Constitutional Obligation to Fund Criminal Law Enforcement, 106 Calif. L. Rev. 511, 538 (2018) (“Congress may not use appropriations bills to interfere with the President’s criminal law enforcement efforts.”); Jacques B. LeBoeuf, Limitations on the Use of Appropriations Riders by Congress to Effectuate Substantive Policy Changes, 19 Hastings Const. L.Q. 457, 458 (1992) (“[A]ppropriations riders must not interfere with the President’s duty to uphold the law.”). ↑

  60. . See infra Part II; Price, supra note 9, at 380–81. ↑

  61. . See Price, supra note 9, at 427, 438–39 (arguing that Congress has “sole control” over military resources and that Congress’s power of the purse assures it “continuing control” over law enforcement). ↑

  62. . See Stith, supra note 55, at 1345. ↑

  63. . Id. at 1345, 1396; see also The Federalist No. 58, supra note 46, at 298 (James Madison) (“This power over the purse may, in fact, be regarded as the most complete and effectual weapon with which any constitution can arm the immediate representatives of the people, for obtaining a redress of every grievance, and for carrying into effect every just and salutary measure.”); cf. Bridget A. Fahey & Raul Castro Fernandez, The Structural Law of Data, 93 U. Chi. L. Rev. 67, 98 (2026) (characterizing the Appropriations Clause as establishing “a punishing default, and a burdensome altering rule,” by providing that “[a]bsent affirmative appropriations by Congress, the government is—by default—disabled from expending funds”). ↑

  64. . Saikrishna Bangalore Prakash, Spirit, 173 U. Pa. L. Rev. 937, 998 (2025); see also Philip Bobbitt, Constitutional Interpretation 72 (1991) (“If government could be funded without statutory action, then the system of representative government would be circumvented.”). As Margaret Lemos and Guy-Uriel Charles have observed, financing government functions with gifts may also distort government priorities and produce public confusion about the level of capacity that given levels of taxation can support. Margaret H. Lemos & Guy-Uriel Charles, Public Programs, Private Financing, 81 Law & Contemp. Probs., no. 3, 2018, at 137, 155–57, 158–59 [hereinafter Lemos & Charles, Public Programs]; see also Margaret H. Lemos & Guy-Uriel Charles, Patriotic Philanthropy? Financing the State with Gifts to the Government, 106 Calif. L. Rev. 1129, 1134 (2018) (noting that gifts may “pull[] government officials into projects they would not otherwise pursue” and “paper over the government’s weaknesses”). ↑

  65. . See Price, supra note 9, at 407; cf. Charles L. Black, Jr., Some Thoughts on the Veto, Law & Contemp. Probs., Spring 1976, at 87, 89 (observing that Congress, “without violating the Constitution,” could reduce the President to “a man living in a modest apartment, with perhaps one secretary to answer the mail; that is where one appropriation bill could put him, at the beginning of a new term”). My article argued that a certain narrow category of funding limitations on support for resource-independent presidential powers could be unduly manipulative and thus unconstitutional. Price, supra note 9, at 407–13. ↑

  66. . See U.S. Const. amend. I. ↑

  67. . See Price, supra note 9, at 391 & n.133 (noting that “the president need not rely entirely on public appropriations to obtain advice and assistance in exercising” resource-independent powers and observing that “[p]residents have long claimed authority to seek counsel from anyone they choose, whether within the government or outside it”); see also infra notes 253–57 and accompanying text (discussing examples in which presidents defied funding conditions targeting resource-independent powers); Edward S. Corwin, Presidential Power and the Constitution: Essays 74 (Richard Loss ed., 1976) (discussing presidents’ historical use of outside advisers). ↑

  68. . See Ryan M. Scoville, Ad Hoc Diplomats, 68 Duke L.J. 907, 908–10 (2019) (describing presidents’ recurrent use of “irregular agents” for diplomacy). ↑

  69. . See id. at 915; U.S. Const. art. II, § 2. ↑

  70. . For my discussion of diplomacy’s tenuousness as a resource-independent power, see Price, supra note 9, at 454–58. For a critique of this claimed presidential power and its expansive application by the executive branch, see generally Jean Galbraith, The Runaway Presidential Power over Diplomacy, 108 Va. L. Rev. 81 (2022). ↑

  71. . See supra note 17 and accompanying text. ↑

  72. . See supra note 18 and accompanying text. ↑

  73. . 31 U.S.C. § 3302(b). ↑

  74. . See, e.g., Scheduled Airlines Traffic Offs., Inc. v. Dep’t of Def., 87 F.3d 1356, 1361 (D.C. Cir. 1996) (characterizing the Act as “deriv[ing] from and safeguard[ing] a principle fundamental to our constitutional structure, the separation-of-powers precept embedded in the Appropriations Clause, that ‘[n]o Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law’”); Effect of 31 U.S.C. § 484 on the Settlement Auth. of the Att’y Gen., 4B Op. O.L.C. 684, 685 (1980) (observing that “[t]he Constitution commits to the legislative branch of government control over public expenditures” and characterizing the Act as a statute “designed to ensure that congressional prerogatives under this constitutional scheme are not diminished by executive action”); 2 Off. of Gen. Counsel, U.S. Gen. Accountability Office, Principles of Federal Appropriations Law 6-168 to -169 (3d ed. 2006) [hereinafter 2 Principles of Appropriations Law] (observing that the Act’s “effect . . . is to ensure that the executive branch remains dependent upon the congressional appropriations process” and that the law, “[v]iewed from this perspective, . . . emerges as another element in the statutory pattern by which Congress retains control of the public purse under the separation of powers doctrine”). ↑

  75. . United States v. Burnison, 339 U.S. 87, 90 (1950) (“Uninterrupted usage from the foundation of the Government has sanctioned [acceptance of gifts by the United States].”). ↑

  76. . 2 Principles of Appropriations Law, supra note 73, at 6-222; see also Lemos & Charles, Public Programs, supra note 63, at 152 (“the default rule under federal law is that donors may not earmark gifts for particular purposes”); Erika Lietzan, User Fee Programs, 76 Admin. L. Rev. 375, 396–97 (2024) (discussing related rules for fees collected by agencies). ↑

  77. . 2 Principles of Appropriations Law, supra note 73, at 6-222 to -223. ↑

  78. . Id. at 6-170. ↑

  79. . Id. ↑

  80. . 31 U.S.C. §§ 1341–1342, 1350. ↑

  81. . 18 U.S.C. § 209 (generally criminalizing, for both donor and recipient, the supplementation of government employees’ salaries). ↑

  82. . Exch. Nat’l Bank of Chi. v. Abramson, 295 F. Supp. 87, 89–90 (D. Minn. 1969) (noting that the “statute is designed to prohibit outsiders from supplementing a government employee’s salary” and that “[t]he evils of such, were it permitted, are obvious”). ↑

  83. . 31 U.S.C. § 1342. ↑

  84. . See, e.g., Voluntary Servs.–Deputy Collector of Internal Revenue, 27 Comp. Gen. 131, 132–33 (1920); Emp. of Retired Army Off. as Superintendent of Indian Sch., 30 Op. Att’ys Gen. 51, 53–55 (1913). ↑

  85. . See Retired Army Off., 30 Op. Att’ys Gen. at 52–53, 55. ↑

  86. . See Applicability of the Antideficiency Act upon a Lapse in an Agency’s Appropriation, 4A Op. O.L.C. 16, 16 (1980) (adopting this interpretation). The statute provides an exception for emergencies affecting the safety of lives and property, 31 U.S.C. § 1342, terms construed broadly to allow many safety-related and law enforcement functions to continue, albeit without payment to the employees in these roles until after the funding lapse ends. See Zachary S. Price, Government “Shutdowns” and the U.S. Constitution, Verfassungsblog (Oct. 8, 2025), https://verfassungsblog.de/
    government-shutdowns-and-the-u-s-constitution/ [https://perma.cc/L5MS-C4X5] (discussing these principles). ↑

  87. . Price, supra note 85. ↑

  88. . 2 Principles of Appropriations Law, supra note 73, at 6-97, 6-110 (deeming the ADA inapplicable “where acceptance of services without compensation is specifically authorized by law, and where the government and the volunteer have a written agreement that the services are to be rendered gratuitously with no expectation of future payment”). ↑

  89. . Stith, supra note 55, at 1372–73. ↑

  90. . See Retired Army Off., 30 Op. Att’ys Gen. at 55–56. ↑

  91. . See Participation in Cong. Hearings During an Appropriations Lapse, 19 Op. O.L.C. 301, 301 (1995) (observing that these officers are “entitled to their salaries by virtue of the office that they hold and without regard to whether they perform any services during the period of appropriations lapse”). ↑

  92. . Stith, supra note 55, at 1361–62. ↑

  93. . See supra note 66; Price, supra note 9, at 391 & n.133 (noting historical support for this view). ↑

  94. . See Price, supra note 9, at 407–13 (discussing examples and offering a limited defense of this practice). ↑

  95. . See generally id. ↑

  96. . Id. at 427–32. ↑

  97. . Alexander Hamilton, Additional Estimates for 1790 (Mar. 2, 1790), in 1 American State Papers: Finance 38 (Walter Lowrie & Matthew St. Clair Clarke eds., 1832). ↑

  98. . Id. ↑

  99. . See Lucius Wilmerding, Jr., The Spending Power: A History of the Efforts of Congress to Control Expenditures 23 (1943) (noting later appropriation). ↑

  100. . Alexander Hamilton, Explanation, Daily Advertiser (N.Y.) (Nov. 11, 1795), reprinted in 19 The Papers of Alexander Hamilton 400, 405 (Harold C. Syrett ed., 1973); see also Price, supra note 21 (manuscript at 22–23) (discussing Hamilton’s views). ↑

  101. . Thomas Jefferson, Mediterranean Trade (Dec. 28, 1790), in 1 American State Papers: Foreign Relations 104 (Walter Lowrie & Matthew St. Clair Clarke eds., 1833). ↑

  102. . Id. at 104–05. ↑

  103. . Id. at 105. ↑

  104. . Id. ↑

  105. . Id. ↑

  106. . Gerhard Casper, Separating Power: Essays on the Founding Period 63–64 (1997). ↑

  107. . Id. at 60–61. ↑

  108. . The classic study of this practice is Wilmerding, supra note 98. The term “coercive deficiency,” however, appears in earlier congressional debates. See, e.g., 40 Cong. Rec. 1274 (1906) (statement of Rep. Lucius Littauer) [https://perma.cc/9EQE-BS5X] (observing that 1905 ADA amendments aimed “to put an end to this system of coercive deficiencies”). ↑

  109. . Price, supra note 21 (manuscript at 24–26). ↑

  110. . Hamilton, supra note 96. ↑

  111. . Hamilton, supra note 99, at 402. ↑

  112. . Casper, supra note 105, at 60–61. ↑

  113. . See Price, supra note 21 (manuscript at 18). ↑

  114. . Id. (manuscript at 25–29). ↑

  115. . See, e.g., Sidak, supra note 57, at 1188–89 (defending such a prerogative); Martin, supra note 58, at 535 (arguing that when Congress denies funds to enforce a law, the President may “determine that it [is] her constitutional duty to continue prosecuting federal criminal law and force Congress into a political response”). ↑

  116. . See Price, supra note 21 (manuscript at 35–36). ↑

  117. . Id. ↑

  118. . See, e.g., Mark Thomas, Rehabilitating the Comptroller General as a Check on Appropriations Presidentialism 20–21 (unpublished manuscript), https://papers.ssrn.com/sol3/papers
    .cfm?abstract_id=5342970 [https://perma.cc/4PJP-9MN5] (discussing officers’ personal liability, during a later period, for unlawful expenditures of treasury funds); 15 Annals of Cong. 1018–19 (1800) (discussing a naval officer who apparently employed his own funds to complete some partially constructed marine barracks). ↑

  119. . 4 Annals of Cong. 791 (1794). ↑

  120. . George Washington, Impressed American Seaman (Feb. 8, 1792), in 1 American State Papers: Foreign Relations, supra note 100, at 131. ↑

  121. . Id. Hamilton’s November 1791 request for 1792 appropriations included some $50,000 for deficiencies, indicating that the government had overspent during the prior year. Casper, supra note 105, at 83. ↑

  122. . Josh Chafetz, Congress’s Constitution: Legislative Authority and the Separation of Powers 59 (2017). ↑

  123. . Id.; see also Richard D. Rosen, Funding “Non-Traditional” Military Operations: The Alluring Myth of a Presidential Power of the Purse, 155 Mil. L. Rev. 1, 103 (1998) (observing that presidents “have recognized the extra-constitutional nature of their expenditures, returning to Congress for the appropriations required to cover their spending”). ↑

  124. . See Zachary S. Price, Enforcement Discretion and Executive Duty, 67 Vand. L. Rev. 671, 716–42 (2014) (discussing evidence of a limited understanding of enforcement discretion in the early Republic). ↑

  125. . See infra Section II.B.2. ↑

  126. . See infra Section II.B.1. ↑

  127. . See supra Section II.A.2. ↑

  128. . Transfer of Specific Appropriations of House of Representatives to Contingent Fund, 3 Op. Att’ys Gen. 442 (1839). ↑

  129. . Id. at 443. ↑

  130. . Exec. Power of Appointment, 4 Op. Att’ys Gen. 248 (1843). ↑

  131. . Id. ↑

  132. . Id. ↑

  133. . Id. at 249. ↑

  134. . Id.; see also Comp. of Laborers in the Exec. Dep’ts, 9 Op. Att’ys Gen. 117, 121 (1857) (concluding that appropriations statutes could limit laborers’ salaries even when different “salary laws” provided for greater compensation because “the salary laws . . . must be so confined in their operation as not to interfere with the proper execution of the laws appropriating money for the hire of laborers”). ↑

  135. . As Judge David Barron has recounted, the opinion’s author, Attorney General Jeremiah Black, made clear that federal officials could defend federal installations. David J. Barron, Waging War: The Clash Between Presidents and Congress, 1776 to ISIS 119–21, 123, 128–29 (2016). He even took steps to ensure that military officers could hold Fort Sumter, the installation in South Carolina that rebel forces eventually attacked, following Abraham Lincoln’s inauguration, in the first battle of the Civil War. Id. at 123–25, 132. ↑

  136. . Power of the President in Executing the Laws, 9 Op. Att’ys Gen. 516, 519 (1860). ↑

  137. . Id. ↑

  138. . For discussion of this idea’s historical prevalence even in the military context, see Zachary S. Price, Congress’s Power over Military Offices, 99 Tex. L. Rev. 491 (2021). ↑

  139. . Brooks D. Simpson, The Reconstruction Presidents 173–74, 214 (1998); Support of the Army, 15 Op. Att’ys Gen. 209, 209 (1877). ↑

  140. . Rutherford B. Hayes, Veto Message (June 23, 1879), in 9 A Compilation of the Messages and Papers of the Presidents 4493, 4495 (James D. Richardson ed., 1897) [hereinafter Compilation MPP]. ↑

  141. . Heather Cox Richardson, The Death of Reconstruction: Race, Labor, and Politics in the Post-Civil War North, 1865–1901, at 158 (2001); Simpson, supra note 138, at 220–26. ↑

  142. . Support of the Army, 15 Op. Att’ys Gen. at 209. ↑

  143. . Id. ↑

  144. . Cf. Sergeant Richard P. Stevenson, 62 Comp. Gen. 39 (1982) (concluding that the miscellaneous receipts statute required a serviceman to deliver to the treasury certain fees he received in return for jury service performed while not in leave status). ↑

  145. . Support of the Army, 15 Op. Att’ys Gen. at 211. ↑

  146. . Id. ↑

  147. . Id.; see also Rutherford B. Hayes, Special Session Message (Oct. 15, 1877), in 9 Compilation MPP, supra note 139, at 4404 (“The adjournment of the last Congress without making appropriations for the support of the Army for the present fiscal year has rendered necessary a suspension of payments to the officers and men of the sums due them for services rendered after the 30th day of June last.”). ↑

  148. . 31 U.S.C. § 1342; Act of May 1, 1884, ch. 37, 23 Stat. 17; Applicability of the Antideficiency Act upon a Lapse in an Agency’s Appropriation, 4A Op. O.L.C. 16 (1980) (interpreting ADA to require cessation of agency functions during a lapse in appropriations). As noted earlier, under executive branch opinions, the ADA does not prevent officers from working during a funding lapse if they are Senate-confirmed or otherwise earn their salaries by virtue of their status, without regard to whether they perform any duties. See supra notes 87–90 and accompanying text. Before 1953, this understanding applied generally to officers, but a statute that took effect that year established that most officers earn compensation only in return for actual work. See Auth. to Emp. White House Offs. Exempt from the Ann. & Sick Leave Act During Appropriations Lapse, 35 Op. O.L.C. 40, 40–41, 43 (2011). ↑

  149. . See supra Section II.A.2. ↑

  150. . Act of Mar. 3, 1819, ch. 75, 3 Stat. 510 (providing, among other things, that “the President of the United States be, and hereby is, authorized and requested to employ so many of the public armed vessels, as, in his judgment, the service may require, with suitable instructions to the commanders thereof, in protecting the merchant vessels of the United States and their crews from piratical aggressions and depredations”); Act of Mar. 3, 1819, ch. 101, 3 Stat. 532 (providing that the President is “authorized, whenever he shall deem it expedient, to cause any of the armed vessels of the United States, to be employed” to patrol for ships engaged in the illegal slave trade and “to instruct and direct the commanders of all armed vessels of the United States, to seize, take, and bring into any port of the United States, all ships or vessels of the United States, wheresoever found,” that violated acts of Congress forbidding that trade). ↑

  151. . H.R. Doc. No. 16-10, at 4 (1819); 35 Annals of Cong. 805, 807–08 (1819) (statement of Rep. Samuel Smith). ↑

  152. . 35 Annals of Cong. 805, 808 (1819) (statement of Rep. Samuel Smith). ↑

  153. . Id. ↑

  154. . H.R. Doc. No. 16-10, at 4. ↑

  155. . See Wilmerding, supra note 98, at 83 (discussing this background); Act of Mar. 3, 1795, ch. 45, § 16, 1 Stat. 433, 437–38. ↑

  156. . See Wilmerding, supra note 98, at 83 (discussing statutes); Act of Mar. 3, 1809, ch. 28, 2 Stat. 535, 535–36. ↑

  157. . See Wilmerding, supra note 98, at 83–98 (discussing this practice and the resulting debate). ↑

  158. . Id. ↑

  159. . Act of May 1, 1820, ch. 52, 3 Stat. 567. ↑

  160. . See Price, supra note 21 (manuscript at 27). ↑

  161. . Harold H. Bruff, Untrodden Ground: How Presidents Interpret the Constitution 118 (2015). ↑

  162. . Id. ↑

  163. . Proclamation 56: Calling on Citizens to Assist in the Recapture of a Fugitive Slave Arrested in Boston, Massachusetts (Feb. 18, 1851), https://www.presidency.ucsb.edu/documents/proclamation-56-calling-citizens-assist-the-recapture-fugitive-slave-arrested-boston [https://perma.cc/H89C-NPYC]. ↑

  164. . Letter from Millard Fillmore, President, to Daniel Webster, Sec’y of State (Oct. 28, 1850), in 1 Papers of Millard Fillmore 335 (Frank H. Severance ed., 1907). ↑

  165. . Id. at 335–36. ↑

  166. . Id. at 336. ↑

  167. . Id. ↑

  168. . Fugitive Slave Act of 1850, Pub. L. No. 31-60, § 5, 9 Stat. 462, repealed by Act of June 28, 1864, ch. 166, 13 Stat. 200. ↑

  169. . Letter from Millard Fillmore to Daniel Webster, supra note 163, at 336. ↑

  170. . Robert W. Coakley, The Role of Federal Military Forces in Domestic Disorders 1789–1878, at 129 (1988) (quoting Letter from Millard Fillmore to Daniel Webster, supra note 163, at 336). ↑

  171. . Id. ↑

  172. . Letter from Millard Fillmore to Daniel Webster, supra note 163, at 336. ↑

  173. . Coakley, supra note 169, at 130. ↑

  174. . President Millard Fillmore, Message to the Senate (Feb. 19, 1851), in 6 Compilation MPP, supra note 139, at 2637, 2641. ↑

  175. . Id. at 2641. ↑

  176. . Id. ↑

  177. . Id. ↑

  178. . Id. ↑

  179. . Id. ↑

  180. . Id. at 2640. In the same passage, Fillmore recognized still greater congressional authority over the militia. “The President,” he wrote, “can not call the militia into service, even to execute the laws or repel invasions, but by the authority of acts of Congress passed for that purpose.” Id. ↑

  181. . Fugitive Slave Act of 1850, Pub. L. No. 31-60, § 5, 9 Stat. 462, 463, repealed by Act of June 28, 1864, ch. 166, 13 Stat. 200. ↑

  182. . Cong. Globe, 31st Cong., 2d Sess. 828 (1851). ↑

  183. . Coakley, supra note 169, at 130–31. ↑

  184. . Id.; see also David J. Barron & Martin S. Lederman, The Commander in Chief at the Lowest Ebb—A Constitutional History, 121 Harv. L. Rev. 941, 991 (2008) (“[A]lthough it is difficult to know quite what to make of the Senate committee’s silence on the constitutional question, the legislature’s refusal to amend the statute surely does not suggest that Congress assented to Fillmore’s suggestion of constitutional difficulties.”). Three years later, during the presidency of Franklin Pierce, the Attorney General issued an opinion embracing the posse comitatus theory, and a large contingent of militia and regular forces assisted in removing another fugitive from Boston. Coakley, supra note 169, at 132–37. Though one study calls the use of military personnel in this operation “clearly unlawful,” William C. Banks & Stephen Dycus, Soldiers on the Home Front: The Domestic Role of the American Military 66 (2016), it at least comported with the posse theory endorsed by the Senate committee and to that extent involved no assertion of a preclusive presidential prerogative to defy statutory restraints on military resources. ↑

  185. . In an impressive study of historical uses of the military for law enforcement, Christopher Mirasola notes that “executive practice between the Fillmore and Hayes administrations” is “difficult to parse.” Christopher Mirasola, Sovereignty, Article II, and the Military During Domestic Unrest, 15 Harv. Nat’l Sec. J. 199, 231 (2023). Although an Attorney General opinion endorsed Fillmore’s posse comitatus theory, see Extradition of Fugitives from Service, 6 Op. Att’ys Gen. 466, 473 (1854), presidents employed conflicting theories and made conflicting claims, see Mirasola, supra, at 231, and Congress eventually restricted the use of the military for law enforcement in the Posse Comitatus Act of 1878, Pub. L. No. 45-263, 20 Stat. 145, 152 (1878). Mirasola persuasively argues that these examples likely do not establish a valid constitutional authority as a matter of historical practice according to accepted standards for practice-based interpretation. Mirasola, supra, at 231–32. ↑

  186. . I previously discussed this episode in Price, supra note 9, at 384–85, 441–43; see also Simpson, supra note 138, at 220–24, 226. ↑

  187. . See, e.g., Simpson, supra note 138, at 199. ↑

  188. . Id.; see also Pamela Brandwein, Rethinking the Judicial Settlement of Reconstruction 184–92 (2011) (arguing that “definitive” abandonment of Reconstruction enforcement did not occur until the 1890s). ↑

  189. . Simpson, supra note 138, at 220. ↑

  190. . Id. at 220–21. ↑

  191. . Id. at 222. ↑

  192. . Rutherford B. Hayes, Veto Message (Apr. 29, 1879), in 9 Compilation MPP, supra note 139, at 4475, 4480, 4483. ↑

  193. . Simpson, supra note 138, at 222–23. ↑

  194. . Hayes, supra note 139, at 4495; see also Simpson, supra note 138, at 223 (discussing this measure’s context, including Congress’s separation of these judiciary expenses from other appropriations that Hayes finally approved); Ari Hoogenboom, Rutherford B. Hayes: Warrior and President 400 (1995) (explaining that by this point Hayes had signed appropriations bills including an army funding bill including “a face-saving, meaningless clause preventing the army from being used as a police force at the polls”). ↑

  195. . Hayes, supra note 139, at 4496. ↑

  196. . Hoogenboom, supra note 193, at 400. ↑

  197. . Rutherford B. Hayes, Special Message (June 30, 1879), in 9 Compilation MPP, supra note 139, at 4474, 4475. ↑

  198. . Rutherford B. Hayes, Third Annual Message (Dec. 1, 1879), in 10 Compilation MPP, supra note 139, at 4509, 4525. ↑

  199. . Id. ↑

  200. . See supra note 147. ↑

  201. . Hayes, supra note 197, at 4525–26. ↑

  202. . See Hoogenboom, supra note 193, at 402 (“Hayes had saved the election laws, but the Democrats had prevented the appropriation of the $600,000 needed for marshals.”). ↑

  203. . Simpson, supra note 138, at 182. ↑

  204. . See Gregory P. Downs, After Appomattox: Military Occupation and the Ends of War 2 (2015) (discussing the centrality of military authority to civil rights protection during Reconstruction). ↑

  205. . For my account of this transition, see Price, supra note 21 (manuscript at 71–75). ↑

  206. . For my development of this argument, see id. (manuscript at 77–79). ↑

  207. . Bruff, supra note 160, at 368–72. ↑

  208. . Id. ↑

  209. . Id.; Report of the Congressional Committees Investigating the Iran-Contra Affair, S. Rep. No. 100-216, H.R. Rep. No. 100-433, at 4–5, 6–9 (1987). ↑

  210. . S. Rep. No. 100-216, H.R. Rep. No. 100-433, at 4–5, 6–9. ↑

  211. . Id. at 411. For an account of the scandal focusing on this effort to circumvent appropriations control through use of the Enterprise, see Bobbitt, supra note 63, at 69–71. ↑

  212. . S. Rep. No. 100-216, H.R. Rep. No. 100-433, at 4–5, 6–9. ↑

  213. . See United States v. Poindexter, 951 F.2d 369 (D.C. Cir. 1991); United States v. North, 910 F.2d 843 (D.C. Cir. 1990), modified in part on reh’g, 920 F.2d 940 (D.C. Cir. 1990); Bruff, supra note 160, at 532 n.69. ↑

  214. . S. Rep. No. 100-216, H.R. Rep. No. 100-433, at 406, 412. ↑

  215. . Bruff, supra note 160, at 369–72. ↑

  216. . S. Rep. No. 100-216, H.R. Rep. No. 100-433, at 412. ↑

  217. . Id. ↑

  218. . Id. at 413. ↑

  219. . Id. The report observes in a footnote that the administration received this same advice internally. Id. at 421 n.11. For a somewhat less optimistic appraisal of the scandal’s aftermath, see Bruff, supra note 160, at 373 (suggesting that the subsequent investigations “failed to drive home the fundamental unconstitutionality of the secret policies and operations in a way that the public could understand”); cf. Bobbitt, supra note 63, at 82 (lamenting inattention to constitutional issues in televised hearings). ↑

  220. . See supra notes 67–69 and accompanying text. ↑

  221. . Price, supra note 9, at 458–62. ↑

  222. . Id. at 454–58. ↑

  223. . Jonathan H. Adler, Introduction: Our Federalism on Drugs, in Marijuana Federalism: Uncle Sam and Mary Jane 1, 1 (Jonathan H. Adler ed., 2020) [hereinafter Marijuana Federalism]. ↑

  224. . Memorandum from James M. Cole, Deputy Att’y Gen., to All U.S. Att’ys 1–2 (Aug. 29, 2013), https://www.justice.gov/iso/opa/resources/3052013829132756857467.pdf [https://perma.cc/ZCL3-F2BW]; Memorandum from James M. Cole, Deputy Att’y Gen., to All U.S. Attorneys 2 (Feb. 14, 2014), http://www.dfi.wa.gov/documents/banks/dept-of-justice-memo.pdf [https://perma.cc/CCT7-HYJR%5D. ↑

  225. . Zachary S. Price, Federal Nonenforcement: A Dubious Precedent, in Marijuana Federalism, supra note 222, at 123, 125; see also United States v. Marin All. for Med. Marijuana, 139 F. Supp. 3d 1039, 1046–47 (N.D. Cal. 2015) (discussing congressional concerns about such enforcement). ↑

  226. . Consolidated and Further Appropriations Act, 2015, Pub. L. No. 113-235, div. B, tit. V, § 538, 128 Stat. 2130, 2217 (2014); see also Price, supra note 224, at 125. ↑

  227. . Memorandum from Patty Merkamp Stemler, Chief, Appellate Section, Criminal Div., U.S. Dep’t of Just., to All Fed. Prosecutors 1–2 (Feb. 27, 2015), https://www.scribd.com/doc/273620932/ Depart-of-Justice-Says-Medical-Marijuana-Law-Doesn-t-Impact-Prosecutions [https://perma.cc/W5B
    B-A6QD]. ↑

  228. . Id. ↑

  229. . United States v. McIntosh, 833 F.3d 1163, 1177 (9th Cir. 2016). ↑

  230. . Presidential Statement on Signing the Consolidated Appropriations Act, 2017, supra note 40. ↑

  231. . Price, supra note 9, at 377–78, 448. ↑

  232. . Price, supra note 224, at 126. ↑

  233. . Id. ↑

  234. . Confirmation Hearing on the Nomination of Hon. William Pelham Barr to Be Attorney General of the United States: Hearing Before the S. Comm. on the Judiciary, 116th Cong. 799 (2019) (responses of William P. Barr, nominee to be Att’y Gen., to questions for the record from Sen. Cory Booker). ↑

  235. . Motor Coach Indus., Inc. v. Dole, 725 F.2d 958, 960–61 (4th Cir. 1984). ↑

  236. . Id. at 961. ↑

  237. . Id. at 967. ↑

  238. . Id. at 968. ↑

  239. . Id.; see also Scheduled Airlines Traffic Offs., Inc. v. Dep’t of Def., 87 F.3d 1356, 1362 (D.C. Cir. 1996) (applying these same principles to require payment into the treasury of fees required from service-providers as a requirement of certain military contracts); SBA’s Imposition of Oversight Rev. Fees on PLP Lenders, B-300248, 2004 WL 77801 (Comp. Gen. Jan. 15, 2004) (following Dole’s reasoning to invalidate an agency’s augmentation of its appropriations through fees retained by agency contractors). ↑

  240. . Effect of 31 U.S.C. § 484 on the Settlement Auth. of the Att’y Gen., 4B Op. O.L.C. 684, 684 (1980). ↑

  241. . Id. at 688. ↑

  242. . Id. ↑

  243. . United States v. Smithfield Foods, Inc., 982 F. Supp. 373, 375–76 (E.D. Va. 1997). ↑

  244. . See, e.g., Nuclear Regul. Comm’n’s Auth. to Mitigate Civ. Penalties, 70 Comp. Gen. 17 (1990); Commodity Futures Trading Comm’n—Donations Under Settlement Agreements, B-210210, 1983 WL 197623 (Sept. 14, 1983). ↑

  245. . See Dep’t of Energy Use of Consent Ords. to Distribute Petroleum Overcharge Settlement Funds, 62 Comp. Gen. 379, 380 (1983) (“In our opinion, [the Department of] Energy has been using consent orders improperly in a number of cases by making or allowing the oil companies to make distribution of overcharge refunds without prior efforts to identify those overcharged and the amounts of overcharges.”). ↑

  246. . See Requirement to Deposit Receipts from IRS Undercover Operations into the Treasury, 67 Comp. Gen. 353, 354 (1988) (describing OLC opinion). ↑

  247. . Id. ↑

  248. . Id. at 354–55. ↑

  249. . Id. at 356. ↑

  250. . Id. ↑

  251. . See supra Section II.A.1. ↑

  252. . In an arguable counterexample, as Mirasola has documented, presidents since the late nineteenth century have claimed a constitutional “protective power” to defend federal property with military forces, as well as an “emergency authority” to quell major civil disturbances with the military. Mirasola, supra note 184, at 207. As Mirasola shows, however, these claimed authorities are questionable not only as a matter of constitutional text and structure but also as a matter of practice. Id. at 205. Furthermore, whether these putative presidential powers can override a specific limitation on use of government resources appears untested. In other words, even assuming they are valid, these executive powers might apply only in the absence of specific appropriations limitations, not in the face of them, much as appears to be the case with respect to unilateral executive use of military force. See Price, supra note 9, at 429 (“[P]resuming front-end initiative [with respect to use of force] absent specific restraints precludes neither back-end congressional authority to terminate an operation by denying funds, nor even front-end authority to deny resources for possible operations looming on the horizon”). In any event, finally, these putative protective and emergency powers involve use of government resources, not any presumed authority to enlist private assistance. ↑

  253. . Price, supra note 9, at 427–32. ↑

  254. . Id. at 394–401, 407–13. ↑

  255. . Off. of Pers. Mgmt. v. Richmond, 496 U.S. 414, 435 (1990) (White, J., concurring) (indicating that Congress could not “impair the President’s pardon power by denying him appropriations for pen and paper”); United States v. Lovett, 328 U.S. 303, 316 (1946) (deeming a law an unconstitutional bill of attainder even though “the punishment is inflicted through the instrumentality of an Act specifically cutting off the pay of certain named individuals found guilty of disloyalty”). ↑

  256. . Price, supra note 21 (manuscript at 50, 54). ↑

  257. . See generally Statutory Mandate to Propose Legis. in Response to Medicare Funding Warning, 40 Op. O.L.C. 66, 66 (2016). ↑

  258. . See generally Prohibition of Spending for Engagement of the Off. of Sci. & Tech. Pol’y with China, 35 Op. O.L.C. 116, 116 (2011). ↑

  259. . See supra Sections II.C.1–2. ↑

  260. . See supra Section II.B.2. ↑

  261. . See supra Section II.C.3. ↑

  262. . Hon. Christopher S. Bond, B-300248, 2004 WL 77861, at *3 (Comp. Gen. Jan. 15, 2004); see also Learning Res., Inc. v. Trump, 146 S. Ct. 628, 693 (2026) (Kavanaugh, J., dissenting) (noting Congress’s authority to halt tariff enforcement “by not approving annual appropriations necessary for the Executive Branch to continue to implement the tariffs”). ↑

  263. . Price, supra note 23, at 21. ↑

  264. . Id. ↑

  265. . Price, supra note 9, at 434–37, 446–48. ↑

  266. . Pub. L. No. 93-344, 88 Stat. 297. ↑

  267. . Price, supra note 23, at 23; see also 2 U.S.C. §§ 683–684 (requiring transmission to Congress of a rescission proposal whenever the President determines that “budget authority should be rescinded for fiscal policy or other reasons” and forbidding policy-based deferrals of budget authority absent specific statutory authorization). ↑

  268. . Hearing on Protecting Congress’ Power of the Purse and the Rule of Law: Hearing Before the H. Comm. on the Budget, 116th Cong. 87 (2020) (statement of Thomas H. Armstrong, Gen. Couns., Gov’t Accountability Off.). ↑

  269. . See, e.g., Chafetz, supra note 121, at 65 (“The Impoundment Control Act’s checks have generally been effective.”); Bruff, supra note 160, at 345 (“Presidents have avoided renewing controversy for fear of being compared to Richard Nixon.”). ↑

  270. . Jonathan Swan et al., Inside Musk’s Aggressive Incursion into the Federal Government, N.Y. Times (Feb. 4, 2025), https://www.nytimes.com/2025/02/03/us/politics/musk-federal-government.html [https://perma.cc/3GDL-CC99]. ↑

  271. . See Lawrence, Pasachoff & Price., supra note 2, at 3–5; Samuel R. Bagenstos, The Crisis of Appropriations Law, 103 Wash. U. L. Rev. 1719 (2026). ↑

  272. . Ken Thomas & Matt Barnum, Trump Signs Order to Begin Dismantling Education Department. Here’s What to Know., Wall St. J. (Mar. 20, 2025), https://www.wsj.com/politics/policy /trump-education-department-executive-order-e88561b5 [https://perma.cc/MRR6-TM59]. ↑

  273. . Zachary S. Price, Trump’s Power Grab Over the Budget Is Breaking the Constitutional Design, Atlantic (Dec. 20, 2025), https://www.theatlantic.com/ideas/2025/12/trump-government-spending-congress/685337/ [https://perma.cc/3E38-L3TP]. ↑

  274. . Id. ↑

  275. . Id. In a later shutdown that took place as this Article was going to press, the administration again interpreted applicable statutes creatively to shift funds and pay certain government employees. See Zachary S. Price, A Tale of Two Shutdowns and Growing Presidential Power, Yale J. on Reg.: Notice & Comment (Mar. 31, 2026), https://www.yalejreg.com/nc/a-tale-of-two-shutdowns-and-growing-pres idential-power/ [https://perma.cc/D4JU-K7LY] (discussing relevant actions and legal questions). ↑

  276. . Rescissions Act of 2025, Pub. L. No. 119-28, 139 Stat. 467. ↑

  277. . Act of July 4, 2025, Pub. L. No. 119-21, tit. II, § 20011, 139 Stat. 72, 125. ↑

  278. . Stith, supra note 55, at 1345. ↑

  279. . Report of the Congressional Committees Investigating the Iran-Contra Affair, S. Rep. No. 100-216, H.R. Rep. No. 100-433, at 412 (1987). ↑

  280. . Stith, supra note 55, at 1364. ↑

  281. . Id. at 1345; see also Bobbitt, supra note 63, at 72–81 (discussing multiple constitutional reasons to reject use of private resources as a means of circumventing public oversight in the Iran-Contra scandal). ↑

  282. . See supra Section II.B.1. ↑

  283. . See supra Section II.C.3. ↑

  284. . Davis & Swanson, supra note 5. The status of this deal following the Supreme Court’s rejection of tariff authority under one statute was unclear as this Article was finalized. ↑

  285. . Slattery & Renshaw, supra note 7. ↑

  286. . Edwards & Diamond, supra note 8. ↑

  287. . Anderson & Zerden, supra note 6. ↑

  288. . Solomon & Zaring, supra note 29, at 1099. ↑

  289. . Id. at 1102–03. ↑

  290. . Id. at 1101. ↑

  291. . Pozen, supra note 30. ↑

  292. . Dayal, supra note 3. ↑

  293. . Id. ↑

  294. . Solomon & Zaring, supra note 29, at 1102–03. ↑

  295. . Pozen, supra note 30. ↑

  296. . Ryan Lucas, Federal Judge Strikes Down Trump Order Targeting the Law Firm Perkins Coie, NPR (May 2, 2025), https://www.npr.org/2025/05/02/nx-s1-5385355/perkins-coie-trump-exec utive-order-law-firms [https://perma.cc/DXC5-522Y]. ↑

  297. . Dayal, supra note 3. ↑

  298. . See supra notes 87–89 and accompanying text. ↑

  299. . See supra Section II.C.3. ↑

  300. . See Nicole Huberfeld & Matthew B. Lawrence, The Missing Constitutional Law of Executive Conditions, 103 Wash. U. L. Rev. 1767, 1809 (2026) (likewise arguing that funding conditions imposed by the executive branch that “induce[] states or private parties to provide resources to the executive in excess or contravention of those provided by Congress” warrant “more searching scrutiny”). I have elsewhere made analogous arguments that waiver conditions should relate closely to policy goals reflected in the statutory provisions being waived, see Zachary S. Price, Seeking Baselines for Negative Authority: Constitutional and Rule-of-Law Arguments over Nonenforcement and Waiver, 8 J. Legal Analysis 235, 268–69 (2016), and that conditions in deferred prosecution agreements should relate closely to the underlying criminal charges, see Zachary S. Price, Law Enforcement as Political Question, 91 Notre Dame L. Rev. 1571, 1633–36 (2016). ↑

The Missing Constitutional Law of Executive Conditions

Posted on by Nicole Huberfeld & Matthew B. Lawrence
Huberfeld & Lawrence_The Missing Constitutional Law of Executive ConditionsDownload

Abstract

This Article contributes to the development of the constitutional law of executive conditions. The appropriations presidentialism of the second Trump Administration—the shift from bilateral executive/legislative cooperation and compromise in federal spending to executive unilateralism in defiance of congressional control—has forced courts into the administration of federal spending like never before. As a result, judges have been forced to confront legal questions that remained mostly dormant during the era of executive/legislative cooperation, including questions about the constitutionality of efforts to encourage through spending conditions what the federal government cannot mandate (or has not mandated) directly, like speech or silence on particular subjects. Early decisions resolving these questions have failed to appreciate an important distinction. Statutory conditions articulated by Congress or an executive actor formally exercising delegated legislative authority (statutory conditions) and executive conditions articulated by executive branch actors exercising non-enforcement, agenda-setting, or other executive powers (executive conditions) are different in constitutionally salient ways that can and should inform the development of workable doctrine. Yet courts, advocates, and scholars have only begun to map these differences and to draw the lines that will help to inform doctrinal development.

Work is needed to develop differences between statutory and executive conditions from the various perspectives courts consider in resolving constitutional questions—text, history, tradition, and function. After distinguishing statutory and executive conditions, the Article focuses on functional differences. It develops differences between statutory and executive conditions from the standpoint of the constitutional values that courts consider in resolving hard interpretive and precedential questions. Separation of powers, federalism, and anti-subordination values all favor closer constitutional scrutiny of executive conditions than courts usually apply to statutory conditions. At the same time, operational considerations create a reason for courts to hesitate to scrutinize executive conditions that may not be present with regard to statutory conditions—namely, that review of executive conditions could interfere with day-to-day program administration and so diminish federal capacity.

Together, the functional differences between statutory and executive conditions indicate that, rather than evaluating executive conditions by reflexively applying (or refusing to apply) precedents developed in review of statutory conditions, courts should develop distinctive constitutional doctrines for executive conditions tailored to target and address abuses without unduly interfering with day-to-day program administration. Doing so not only would lead to better outcomes from the standpoint of constitutional values but would also facilitate doctrinal development by supporting clear, workable lines in an area in which such lines are notoriously hard to draw. The Article illustrates with two specific prescriptions. In the First Amendment context, courts have struggled to discern when a spending condition that requires (or forbids) expression is a permissible aspect of program definition or is impermissible leveraging of a program to regulate speech more broadly. By giving closer scrutiny to executive conditions articulated by novel executive branch actors or compounded by the executive branch across distinct statutory programs, courts can draw better lines and check abuses without interfering with ordinary program administration. And in the Spending Clause context, courts have struggled to identify when pressure turns to compulsion. Here, we suggest executive conditions that pull resources to achieve executive goals in excess of amounts appropriated or purposes delineated by Congress require more searching judicial scrutiny to safeguard Congress’s power of the purse.

Introduction

Conditions that a person or entity must satisfy to receive something of value from the government are a familiar regulatory tool.[3] At the national level, from civil rights to health care to defense, spending conditions help the federal government fulfill its purposes.[4] For example, conditions on Medicare and Medicaid dollars helped to desegregate southern hospitals and fight COVID-19,[5] and conditions on Medicaid and Affordable Care Act funding enable the federal government to operate those programs alongside—rather than in lieu of—states, combining federal fiscal capacity with state sovereignty and managerial expertise.[6]

Like other tools that the federal government uses to achieve its purposes, federal conditions on spending are subject to constitutional constraints. In cases challenging the constitutionality of conditions Congress imposes through statutes, federal courts have developed doctrines to limit the leveraging of federal dollars to regulate speech protected under the First Amendment;[7] to prevent disregarding federalism values through conditions on federal spending statutes;[8] and to ensure that conditions do not circumvent constitutional limits on targeting individuals for punishment through bills of attainder.[9]

The second Trump Administration has made unilateral, extensive, and often pioneering use of conditions to change behavior without new lawmaking by Congress,[10] prompting scores of lawsuits in an area in which litigation had been relatively unusual.[11] These lawsuits include challenges to an executive order imposing requirements that each recipient of federal funds “certify that it does not operate any programs promoting DEI that violate any applicable Federal anti-discrimination laws”;[12] challenges to executive orders sanctioning law firms by revoking or precluding government contracts, making threats of such sanctions, and requiring deals between law firms and executive branch actors to agree to such conditions to avoid sanctions;[13] challenges to executive actions penalizing universities by terminating grants, making conditional threats of losing federal funding for research, and negotiating deals to avoid sanctions;[14] and challenges to executive actions imposing new conditions on grant awards, or non-termination, based on agency “priorities.”[15] Of course, the Trump Administration is not the first presidency to have its use of conditions be questioned,[16] but its unprecedented willingness to defy congressional control has wrought an extraordinary number of spending controversies.[17] In this new era of appropriations presidentialism, what was once rare has become routine.[18]

All this novel constitutional litigation is forcing judges to confront legal questions that lay dormant during the prior era of bilateral executive/legislative compromise around the administration of federal spending. The doctrines courts now refine and develop will come to shape the way the federal government will work in the future.

Unconstitutional conditions doctrines have been front and center in the new wave of disputes about federal spending conditions, in part because federal district courts cannot address statutory and procedural issues that would otherwise moot overlapping constitutional questions.[19] But the Supreme Court’s leading unconstitutional conditions cases arose in the context of challenges to conditions imposed through federal legislation,[20] creating a significant, largely unanswered question about whether and how such doctrines apply in the context of challenges to conditions imposed by executive branch actors. The early cases arising out of Trump’s appropriations presidentialism are inconsistent on this issue. Unsurprisingly, the Department of Justice has argued that doctrines developed in the context of constitutional challenges to conditions imposed by Congress through legislation do not apply to conditions imposed by the executive branch through executive orders and actions.[21] Some courts have agreed,[22] while others have applied doctrines developed in the context of statutory conditions in reviewing conditions imposed by executive action without comment.[23] Questions have also emerged about the applicability of doctrine in the other direction—whether doctrines developed in the context of constitutional challenges to executive action unrelated to spending (such as conditions on criminal investigation and prosecution) apply to funding conditions articulated by executive actors.[24] Questions have also emerged about the extent to which Spending Clause and separation of powers limits entail distinct checks on executive conditions in light of the risk that such conditions might encroach on congressional control over spending and undermine the Appropriations Clause’s goal of ensuring that Congress controls the funding necessary to accomplish resource-dependent goals.[25]

This set of questions is ripe for synthesis, but prior scholarship has only begun to consider how the fact that a condition is articulated by the executive branch through some form of executive action, rather than by Congress through a statute, might impact the constitutional questions that conditions raise.[26] This symposium contribution advances the conversation by developing a distinction between two varieties of conditions and arguing that this distinction can and should matter for the development of unconstitutional conditions doctrines. The Article differentiates statutory conditions imposed directly by legislation or by final agency action exercising delegated legislative authority (as through a regulation) from executive conditions imposed (or threatened) by an executive branch actor through its exercise of enforcement discretion, agenda-setting choices, or decisions whether to behave illegally.[27] The Article argues that courts confronted with such hard constitutional questions about executive conditions should not simply apply doctrines developed for statutory conditions to answer those questions because executive conditions are different in constitutionally salient ways. Rather, courts should develop—and it is both possible and helpful to develop—particularized executive conditions doctrines tailored to the distinctive challenges such conditions present.

The distinction we draw may be intuitive to administrative law experts familiar with the test for whether an agency pronouncement is a “legislative rule” (insofar as it also focuses on authoritativeness) and constitutional lawyers familiar with Justice Jackson’s Youngstown framework (insofar as it also focuses on whether the executive branch is acting with the support of Congress, in the face of congressional silence, or in opposition to Congress).[28] But the distinction is somewhat subtle and addresses the wonky mechanics of the administrative state, where some agency actions exercise authority delegated to the executive branch by a statute and others do not. As we explain, a “statutory condition” includes both conditions imposed explicitly in legislation (like the Hyde Amendment) and conditions imposed by an executive branch actor formally exercising legislative authority delegated by a statute, such as rulemaking or adjudication (using Administrative Procedure Act terms).[29]

On the other hand, we describe an “executive condition” as any condition imposed by an executive branch actor exercising executive, rather than delegated legislative, power. This includes conditions on the exercise of non-enforcement discretion (like the requirement federal grantees certify elimination of DEI programs to avoid investigation), conditions on an agency’s choice to take some discretionary action (like those in the “compact” proposed to universities in exchange for favoritism in grant awards), or conditions on an agency’s choice whether to take a discretionary or even illegal (or arguably illegal) action (like the threat to cancel security clearances absent a promise of free legal services made to Paul Weiss, Jenner & Block, and other law firms).

To fully develop the missing constitutional law of executive conditions, it will be necessary to explore differences between statutory and executive conditions from all of the major perspectives courts consider in resolving constitutional questions—text, history, tradition, and function. The Article largely focuses on functional differences. Courts developing unconstitutional conditions doctrines have considered functional questions about how particular practices impact constitutionally salient values like political accountability, government capacity, state sovereignty, and individual liberty.[30] The Article argues that statutory conditions, whether articulated explicitly in a statute or by an executive branch actor pursuant to a statutory delegation, are functionally similar, so they should be subject to the same doctrinal checks as courts have developed in challenges to conditions articulated directly in statutes. Indeed, as we discuss below, plaintiffs could defeat any effort to treat such conditions differently from purely legislative conditions by raising “as-applied” challenges to underlying statutes conferring the executive’s authority.

By contrast, executive conditions differ from statutory conditions in important and cross-cutting ways. Executive conditions are less susceptible to the checks of political processes and judicial scrutiny that improve accountability and protect liberty because they do not require debate or participation and can be targeted, ephemeral, and secret.[31] Yet, judicial intervention to check allegedly unconstitutional executive conditions could pose a greater risk of interference with the day-to-day operation of government that is carried out by administrative agencies, potentially threatening both the federal government’s ability to achieve its purposes and Congress’s role in the administration of fiscal programs through legislation, appropriations, and oversight.[32] And while both statutory conditions and executive conditions have the potential to threaten state sovereignty and individual liberty, executive conditions trade concerns about legislative overreach for a risk of executive incursion on Congress’s power of the purse.

Reconciling these contrasting considerations yields two overarching prescriptions. First, executive conditions are different from statutory conditions in constitutionally meaningful ways, so courts should not apply precedents developed in the statutory condition context to executive conditions, except in limited circumstances. Rather than treat such prior precedents as wholly applicable or inapplicable, which has largely been the pattern so far, courts should only apply statutory conditions doctrines mutatis mutandis—that is, with necessary changes made for the distinct context. Second, courts, advocates, and scholars should develop doctrinal checks on executive conditions that avoid unduly inserting courts into the day-to-day operations of federal programs while simultaneously ensuring executive conditions do not evade the accountability that usually occurs through judicial review and political processes.

While full elaboration of implications for the doctrinal questions surrounding executive conditions is not possible here, we briefly illustrate the workability of our intervention by explaining how it can inform constructive doctrinal line-drawing—tests that root out serious abuses and promote accountability without unduly interfering with everyday administration—on two unsettled questions. First, we propose that courts tasked with translating the Supreme Court’s 2013 anti-leveraging decision in United States Agency for International Development (USAID) v. Alliance for Open Society International, Inc. from the statutory to the executive context should focus on whether an executive condition is articulated by the executive branch actor ordinarily engaged in program administration or by a novel actor who is not. Second, when it comes to whether and how Spending Clause doctrine might check executive conditions, we suggest that courts should not simply import the Dole test but must try to isolate whether an executive condition threatens congressional prerogatives (similar to the state sovereignty evaluation typical in evaluating conditional spending for cooperative federalism programs). Courts should ask whether a particular executive condition would permit the executive to achieve identifiable non-statutory, resource-dependent goals despite Congress’s attempt to control resources to achieve those goals through appropriations.[33]

The stakes are currently obvious and urgent. In particular, the doctrinal approaches that come to be endorsed by courts of appeals and the U.S. Supreme Court when they confront the first wave of substantive constitutional issues created by appropriations presidentialism will define the limits of unilateral presidential spending authority, shaping the structure of American government and reality of Americans’ liberty for as long as executive unilateralism is ascendant. But more subtle implications will materialize whether or not the norm of bilateralism in the administration of federal spending makes a comeback. Careless or aggressively rigorous doctrines for reviewing executive conditions could hobble executive capacity, limiting the ability of the federal government to “establish Justice, insure domestic Tranquility, provide for the common defense, promote the general Welfare, and secure the Blessings of Liberty.”[34] Similarly, unless courts carefully distinguish executive from statutory conditions, new precedents responding to executive aggrandizement may inadvertently diminish legislative power, compounding and cementing the resulting diminution of Congress.

Part I briefly describes the history of spending conditions as a critical tool of governance and summarizes recent questions in litigation about the applicability of precedents developed in constitutional challenges to statutory conditions in the context of executive conditions (and vice versa). Part II develops a functional approach for separately analyzing statutory and executive conditions, concluding that executive conditions on non-enforcement, discretionary action, and illegal action are different from conditions articulated through statute, rulemaking, or binding adjudication in cross-cutting, constitutionally salient ways. Part III is prescriptive, illustrating how our approach facilitates line drawing in a notoriously murky area.

I. Background

A. Conditions and Government Capacity

Conditions on spending are a common and usually unobjectionable tool that the federal government uses to achieve national policies. It is hard to imagine a spending or tax program that does not come with some kind of condition—a subsidy of $1,000 for every citizen conditions payment on citizenship; a gas tax rebate of $500 per vehicle owner conditions the rebate on vehicle ownership; a procurement contract for the purchase of ten gunboats requires bidders to build and deliver the gunboats; and so on. Moreover, conditions on federal spending and taxing are a way to influence behavior without immediately threatening sanction, arrest, or imprisonment, though these can follow for violation of such conditions. This can make conditions preferable to mandates from the perspective of liberty, autonomy, and state sovereignty. A government subsidy to encourage replacement of aging cars[35] may seem a slight to those unwilling to part with gas-guzzlers, but even the staunchest opponents presumably would not prefer a government mandate forbidding aging vehicles from public roadways altogether.

Conditions can achieve results that mandates alone could not. For example, after a federal court held in Simkins v. Moses H. Cone Memorial Hospital that the Equal Protection Clause prohibited racial segregation of federally funded hospitals,[36] most hospital segregation was unconstitutional.[37] However, such segregation remained commonplace throughout the South until the Civil Rights Act of 1964 and the Medicare Act combined to make compliance with Title VI, which prohibited racial and ethnic discrimination in programs that used federal funds, a condition of hospital eligibility for Medicare payments for senior citizens in 1965. The intersection of funding conditions facilitated desegregation of most hospitals within a span of months.[38]

As this illustrates, Congress often creates conditions explicitly in legislation. Indeed, the very first Congress put conditions on funds for military procurement to ensure the dollars it appropriated purchased the sorts of equipment it thought necessary—conditions on spending enabled it to fund the purchase of gunships but not muskets.[39] However, statutory conditions may also be clarified and elaborated by administrative agencies in the regular course of program administration. In Biden v. Missouri, for example, the Supreme Court upheld a binding regulation (promulgated by the Secretary of Health and Human Services (HHS) through rulemaking) that required Medicare providers to certify their staff were either vaccinated against COVID-19 or regularly tested for the virus.[40] The Court found that Congress had authorized HHS to create such a condition in implementing the statute’s requirement that hospitals and other health care providers protect patient safety.[41]

Moreover, conditions can emerge in the give-and-take of cooperative federalism or privatized programs as a federal agency works with a state, contractor, grant recipient, or other funding recipient to identify and address compliance and steer program execution consistent with agency priorities. Medicaid and Affordable Care Act waivers offer a rich, well-studied example of this give-and-take.[42]

B. Constitutional Checks on Statutory Spending Conditions

The Spending Clause has long been understood to permit Congress to spend for the general welfare and to place conditions on federal spending; indeed, as discussed above, any effort to define a program can be framed as creating conditions on the spending.[43] Under the Supremacy Clause, conditions imposed through federal law preempt contradictory state laws.[44] And Congress may delegate authority to impose conditions on spending so long as it provides intelligible principles to guide agency implementation of the conditions.[45]

That said, conditions can raise important constitutional issues for the freedom of speech, due process, prohibition on bills of attainder, and federalism limits on the spending power, among others.[46] We do not have space here to comprehensively survey all these doctrines, but we briefly highlight two of the most important: First Amendment anti-leveraging and federalism-based limits on conditional spending under South Dakota v. Dole.

1. First Amendment Protection from Leveraging

In USAID, a statutory provision limited eligibility for funding to combat HIV/AIDS to non-governmental organizations that both promised not to use federal funds in efforts to support legalization of prostitution and had a policy opposing prostitution and sex-trafficking. USAID implemented these conditions through a certification requirement in grant applications.[47] The Court held the second condition (requiring an explicit policy opposing prostitution and sex trafficking) violated the First Amendment by not merely defining the spending program but seeking to leverage spending to influence advocacy outside of the program.[48] The Court stated: “[T]he relevant distinction that has emerged from our cases is between conditions that define the limits of the government spending program—those that specify the activities Congress wants to subsidize—and conditions that seek to leverage funding to regulate speech outside the contours of the program itself.”[49] Courts and scholars have understood USAID as the latest in a line of “anti-leveraging” decisions that address the federal government’s use of conditions, especially conditions on funding, to compel or suppress speech.[50]

2. Conditions on Spending

In South Dakota v. Dole, the Court announced a four-part test for analyzing the constitutionality of conditions on funding Congress offers to states or private parties[51] to participate in national policies.[52] The spending must promote the general welfare, conditions must be unambiguous, conditions must be germane to the federal interest, and the conditions must not violate other constitutional provisions (like the First Amendment); in dicta, the Court observed that a point might exist where financial inducement impermissibly coerces states.[53] Several decisions built out aspects of this test, including Pennhurst, which pre-dated Dole (and became the second element of the Dole test),[54] wherein the Court held that certain language in the Developmentally Disabled Assistance and Bill of Rights Act of 1965 could not be a condition on funding if states could not have “ascertained” the conditions.[55] More recently, National Federation of Independent Business v. Sebelius turned the Dole coercion dicta into doctrine by holding the ACA’s mandatory expansion of Medicaid eligibility was an unconstitutionally coercive condition on states receiving Medicaid funding.[56] The coercion doctrine is nebulous, because the Court’s analysis seemed to rely at least in part on the germaneness of the Medicaid expansion to the rest of the Medicaid program, as well as the possibility that a state could lose 100 percent of its funding for noncompliance (which was always possible under the Medicaid Act). Whether the constitutional problem is the amount of federal funding, the percentage that could be lost, or the link between new funding conditions and older spending programs, as well as how to analyze these issues, remains undecided.[57]

C. Appropriations Presidentialism Centers Questions About Constitutional Checks on “Executive” Conditions

These and other constitutional checks on federal spending conditions (such as vagueness doctrine under National Endowment for the Arts v. Finley[58] and the ambiguity of conditions under Pennhurst) present difficult questions, like how to separate program definition from leveraging outside of the program in First Amendment cases[59] and the point at which encouragement becomes coercion in Spending Clause cases.[60] These questions have moved to the fore amidst the appropriations presidentialism of the second Trump Administration.

The Trump Administration’s assertion of broad, unilateral power to condition and terminate federal spending programs[61] prompted scores of lawsuits challenging new conditions on federal funds.[62] The lawsuits arising out of appropriations presidentialism have forced courts repeatedly to address questions about the limits of unconstitutional conditions doctrines that rarely came up in the past for at least two reasons. First is simply the volume of executive actions imposing unconstitutional conditions during 2025 and the frequency with which these actions have occurred without clear or even arguably legal basis.[63] Second, and more subtly, the Court’s “shadow docket”[64] ruling in Department of Education v. California created pressure for plaintiffs to forgo overlapping regulatory or statutory claims in favor of constitutional claims to avoid being channeled out of federal district court and into the Court of Federal Claims, which lacks the power to award timely emergency relief.[65] Cases that would have been litigated as APA cases prior to California are now being litigated as constitutional cases.

The details of this expanding body of constitutional spending doctrine matter. Careless development of doctrine today may yield “false negatives,” failing to award relief to plaintiffs that deserve it and facilitating executive branch aggrandizement that threatens liberty directly (by exposing Americans to new forms of unchecked presidential control) and indirectly (by degrading the separation of powers). At the same time, careless development of doctrine even in “no brainer” cases may yield future “false positives,” setting up decades of undesirable judicial interference in program administration that hobbles both administrative and legislative capacity.

A recurring question in these cases has been whether and how constitutional doctrines developed in the context of challenges to statutory funding conditions (such as the conditions in Pennhurst, NFIB, and USAID) apply to conditions imposed by the executive branch in the course of program administration. In some cases, advocates have argued and courts have applied doctrine developed in challenges to statutory conditions to executive conditions without comment.[66] In other cases, however, the potential difference between statutory and executive conditions has been an important point of contention. Consider four recent controversies.

First, in Wilmer-Hale’s challenge to an executive order and associated agency actions revoking security clearances, scrutinizing Wilmer-Hale clients’ government contracts, and otherwise targeting the firm for adverse discretionary executive actions,[67] the firm raised a Spending Clause challenge arguing the order “impose[d] unconstitutional conditions on federal contracts.”[68] The Department of Justice responded that Spending Clause doctrine was inapplicable because the conditions were imposed by executive order rather than legislation. The district court agreed,[69] and its approach has been adopted in at least one subsequent case.[70]

Second, in Harvard’s challenge to an executive order and associated agency actions terminating $2.2 billion worth of federal grants, awarded by more than a dozen federal agencies, as punishment for alleged failure to address antisemitism,[71] the university argued the termination entailed an effort to condition continued receipt of funds on the university’s expressive choices in violation of the First Amendment’s anti-leveraging doctrine, citing USAID.[72] The DOJ argued in response that the First Amendment’s anti-leveraging doctrine does not apply because the condition was a proposed executive settlement of a potential legal action for underlying violations.[73]

Third, in Perkins Coie’s challenge to an Executive Order analogous to the Wilmer-Hale order, amici argued the order is an unconstitutional bill of attainder.[74] Again, DOJ’s response was that the prohibition on bills of attainder does not apply to executive actions in the first place.[75] In an opinion avoiding the question as not properly presented, the district court noted that the application of the prohibition on bills of attainder “to unilateral presidential action not otherwise authorized by Congress, is worth further study and consideration.”[76]

Fourth, a number of grant termination and grant condition cases hinge on interpretation of a standard clause that agencies include in grant agreements made with awardees pursuant to 2 C.F.R. § 200.340(a)(4) (the “convenience clause”) or raise questions about conditions imposed through this clause. The convenience clause permits termination associated with changes in “program goals or agency priorities.”[77] The Trump Administration asserted this clause gives it broad authority to cancel awarded grants for failure to comply with newly announced policy priorities. State grantees have argued that reading the clause to have such an effect would violate Dole’s requirement that conditions on funds be clearly stated.[78] This argument is in some tension with the fact that, historically, courts have ignored Pennhurst and instead applied ordinary contract interpretation principles in disputes over the interpretation of grant agreements entered between a state and an agency.[79]

Related questions loom. Courts have also been asked to consider how doctrines developed to check executive enforcement discretion in other contexts might apply to grant administration. Specifically, district courts have divided as to the relevance of the Court’s recent unanimous decision in National Rifle Association of America v. Vullo in the spending context. In Vullo, the Court found a threat to investigate and prosecute banks that did business with the NRA violated the First Amendment’s free speech protection,[80] holding: “To state a claim that the government violated the First Amendment through coercion of a third party, a plaintiff must plausibly allege conduct that, viewed in context, could be reasonably understood to convey a threat of adverse government action in order to punish or suppress the plaintiff’s speech.”[81] Two district courts have found Vullo is inapplicable to executive conditions on spending-related enforcement actions,[82] while one court found Vullo’s principles—in particular the functional focus on the likely effect of a condition on speech—to be informative in adapting existing doctrines.[83]

Little prior precedent or scholarship aids courts in addressing these questions.[84] Moreover, while adversarial litigation can tease out precedential or interpretive arguments vis-à-vis particular doctrines, it is poorly positioned to explore overarching implications of the manner or source of a federal condition’s creation. The next Part turns to these implications.

II. Purely Executive Conditions Are Different

A. Statutory Versus Executive Conditions

In any given case, fully exploring the way the source or manner of a condition’s creation might impact its constitutionality from the standpoint of a particular constitutional provision (freedom of speech, spending power, etc.) could depend, among other things, on historical, textual, or precedential considerations specific to that constitutional provision.[85] A comprehensive analysis of all such factors is beyond the scope of this Article, though we hope to inform future work.

That said, as a starting point we see a clear dividing line between two types of conditions with important, cross-cutting implications for the values underlying constitutional conditions doctrines. This is the line between statutory and executive conditions previewed in the introduction. The line is not simply between conditions communicated by the legislature, on the one hand, and conditions communicated by the executive, on the other. Conditions communicated by the executive often merely interpret or implement conditions first articulated by Congress, using power to do so delegated by statute. Rather, the important distinction depends on the nature of the authority on which a condition communicated by an executive actor is based. The important distinction is between conditions articulated by executive actors exercising delegated legislative authority, on the one hand, and conditions articulated by executive actors wielding executive powers, on the other.[86]

In this Article, we thus use the term “statutory conditions” to include both conditions imposed explicitly or specifically by a statute and conditions articulated by executive branch actors exercising delegated legislative power, either to clarify or specify a statutorily articulated condition or to articulate new conditions. And we use the term “executive conditions” to refer to conditions articulated by executive branch actors not wielding delegated legislative power.

Agencies exercising delegated legislative authority to create legally binding rules, which can include conditions, typically do so through rulemaking.[87] Agencies may also issue binding conditions exercising legislative grants of authority through adjudication.[88] On the other hand, agencies also articulate conditions that, while influential, are not themselves created through the exercise of delegated legislative power. These conditions do not have the force of law but might rely upon executive non-enforcement discretion, agenda-setting discretion, or an ultra vires threat of illegal action.[89] They may come in the form of “guidance,” individualized letters, email messages, settlement offers, social media commentary, or other ad hoc methods.

The distinction between conditions imposed by executive branch actors exercising delegated legislative power, on the one hand, and conditions on the exercise of executive power, on the other, is familiar in administrative and constitutional law. It tracks the distinction between “legislative rules” that must go through notice and comment rulemaking under the APA and “guidance” that, because “nonbinding,” need not,[90] as well as the distinction under United States v. Mead Corp. between agency actions with the “force of law” and those lacking such effect.[91] It also tracks the distinctions that Eloise Pasachoff has drawn among federal grants—“policy,” “pork,” and “punishment.”[92] Finally and most fundamentally, this distinction also tracks Justice Robert Jackson’s Youngstown reasoning and framework for assessing the limits of presidential power. A condition imposed exercising delegated legislative power reflects congressional support and fits in the realm of maximum authority to act with the “express or implied authorization of Congress,” while a condition imposed without exercising delegated legislative power would either contradict congressional power or fall within the “zone of twilight” in which the President and Congress may have “concurrent authority.”[93] (We return to Youngstown’s utility for building a framework in Part III.)

Enforcement discretion—the power to decide whether or not to pursue sanctions or other means of enforcement for alleged violations of law—is perhaps the best-understood way executive actors can impose conditions without exercising delegated legislative authority.[94] Using enforcement discretion, executive branch actors can impose conditions on settlement, non-enforcement, or abandonment of/restraint from an investigation. While not legally binding when offered (a target need not accept a settlement offer), such conditions can (like other executive conditions) become legally binding if incorporated in an enforceable settlement agreement or contract. Conditions on the exercise of enforcement discretion are routine in the operation of cooperative federalism programs. For example, in assessing whether to pursue sanctions for a state’s alleged non-compliance with statutory conditions under the federal law of the Medicaid program, HHS might forgo enforcement proceedings if a state takes specified remedial steps.[95]

In addition to enforcement discretion, executive branch actors may also impose de facto influential conditions by threatening to act[96] in ways that, though illegal or potentially illegal, would cause irrevocable harm to the target.[97] The executive’s role in distributing funds appropriated by Congress and collecting taxes makes it distinctively capable of action or will[98]—seizing funds, refusing to pay grants, and so on—whether or not those actions are legally authorized. Moreover, the executive can move quickly and first, whereas other branches move slowly and, in the case of courts, may only react. As a result, threats of unlawful action may be used as leverage to force desired conduct or terms on threatened actors, even if the threatened action does not occur. The effectiveness of an executive threat to take illegal action presumably depends on many things, including the likelihood that subsequent judicial review or other remedial action would make the threatened entity whole and the threatened party’s strength and capacity to bear risk. But regardless of the precise usefulness of threats of illegality as a tool of influence, there is wide space in existing doctrine for such threats to be effective, created by the inherently limited capacity of courts, threshold (non-merits) barriers to judicial review, the cost of legal representation to litigate (and lack of free services), and limits on courts’ remedial authority.[99]

Furthermore, executive branch actors may impose de facto binding conditions by offering to exercise discretion to take (or not take) a legally authorized action only if certain conditions are met. In short, they may create a condition via the exercise of agenda-setting power. Consider, for example, HHS guidelines governing whether to grant state requests to depart from federal Medicaid rules pursuant to a “demonstration project waiver.”[100] The statute giving this power to the HHS Secretary is worded broadly, and the implementing guidelines have filled the gaps in a variety of ways, including, for example, a requirement that state waiver proposals be “budget neutral” for the federal government. Until very recently this was not a condition drawn from the statute, but a policy HHS created for determining whether to exercise its discretion to grant a state’s waiver application.[101] Though this condition entailed (to some experts) funny math, states honored it in developing demonstration waiver applications.[102]

To illustrate this distinction, Table 1 lists several well-known conditions that we would describe as “statutory conditions” because they were created through the exercise of direct or delegated legislative authority. Table 2 then offers well-known conditions that we would describe as “executive conditions” because they are implemented as a condition on enforcement discretion, on the exercise of a discretionary power, or as part of a threat to take illegal executive action.

Table 1: Illustrative Statutory Conditions

Condition

Statutory Source

Manner of Expression

Medicaid requirement that states reimburse providers sufficiently to support access

42 U.S.C. § 1396a(a)(30)(A)

Directly articulated in statute

Medicare requirement that providers periodically test unvaccinated employees for COVID

42 U.S.C. § 1302(a); 86 Fed. Reg. 61555 (Nov. 5, 2021)

Agency promulgated condition through notice and comment rulemaking in exercise of statutory authority to promulgate rules for efficient administration of Medicare and Medicaid.

Requirement that recipients of certain federal grants adopt a policy against human trafficking (at issue in USAID)

22 U.S.C. § 7631(f)

Condition in statute; agency promulgated regulation with more specific interpretation of statute pursuant to statutory authority to promulgate implementing regulations.

Requirement that Medicaid waivers be “budget neutral” (after 2025)

H.R. 1 § 71118

Congress amended the Medicaid statute to make this de facto condition on the executive branch’s approval of waivers an explicit statutory requirement.

Table 2: Illustrative Executive Conditions

Condition

Underlying Executive Power

Manner of Expression

Requirement in Cole memo that marijuana dispensers comply with state laws to be eligible for federal enforcement discretion

Enforcement discretion

Articulated by Attorney General in open letter[103]

Requirement that Medicaid waivers be “budget neutral” (prior to 2025)

For state waiver applications, executive discretion to deny based on this interpretation of a broadly worded statute.

For approved waivers, a deal between HHS and state that was reflected in waiver “terms and conditions”

For waiver applications, a condition articulated by HHS in guidance to states regarding its priorities in considering waiver requests

For approved waivers, inclusion in waiver terms and conditions

Requirement that DACA applicant be under 18

Enforcement discretion

Included in executive memorandum announcing DACA

Requirement that Paul Weiss donate pro bono time to government causes

Enforcement discretion/threat of illegality

Included in communication to firm threatening to cut off client contracts and security clearances

B. Statutory Conditions Are Functionally Alike Regardless of Which Branch Communicates Them

Conditions articulated directly by statute and by executive branch actors exercising delegated legislative power are not different in ways that necessarily require distinct doctrinal treatment. By contrast, major functional differences justifying distinct doctrinal treatment do exist between statutory conditions and executive conditions.

To start, three considerations counsel against differentiating between conditions articulated directly in legislation, on the one hand, and binding conditions articulated by an agency through rulemaking or adjudication pursuant to delegated legislative authority, on the other.[104] First, regulation is functionally analogous to legislation—it is transparent (rules and binding adjudications must be published), generally applicable, precedential, and susceptible to objective evaluation. While agency adjudication can take many forms, it is also ordinarily transparent and may be precedential. Moreover, the degree of interference with administrative capacity threatened by judicial review of rulemaking and completed adjudications is analogous to the degree of interference with legislative capacity threatened by judicial review of legislation. In either case, judicial review of a completed action hinders development of a particular rule but does not impede day-to-day implementation of that or other legal requirements.

Second, treating conditions imposed by the executive branch using delegated legislative authority differently from conditions imposed directly by legislation would create an easily exploited loophole.[105] Where barred by First Amendment, Spending Clause, or other doctrines from directly legislating toward a particular end, Congress could simply enact open-ended legislation giving an executive official or the President power to achieve the same end. This would frustrate values such as liberty, political accountability, state sovereignty, anti-subordination, and other ends served by constitutional limits on statutory conditions. However executive in nature regulatory or adjudicatory actions exercising delegated lawmaking power might be, they are also “legislative.”

Third, a procedural obstacle exists for any effort by courts to treat conditions articulated by statute differently from binding conditions articulated by an executive branch actor exercising delegated legislative power. Plaintiffs could simply frame their challenge in any case as an as-applied challenge to the constitutionality of the underlying statute articulating broad conditions for an agency to further specify or empowering the agency to issue new conditions with the force of law of its own, rather than as a direct challenge to the regulation or adjudication promulgating a specific condition pursuant to that delegated authority.[106] Indeed, that procedural approach may have benefits from the perspective of the value of political accountability because framing actions as “as-applied” challenges to particular statutes rather than only as challenges to executive actions would remind voters that such assertions of executive power are ultimately traceable to Congress’s choices in enacting or failing to amend broad legislative authority for executive branch actors.[107]

In light of these points of overlap, we do not see a need from a functional perspective for development of distinct doctrines governing legislative conditions imposed by statute, on the one hand, and legislative conditions imposed by executive actors exercising delegated legislative power, on the other. Harder questions are presented by conditions that do not exercise delegated legislative authority.

C. Executive Conditions Function Very Differently

A skeptic might argue the distinction we are drawing is overly technical or trivial. We would call an HHS rule requiring hospitals to test for COVID pursuant to a statutory provision authorizing the agency to impose conditions of participation a “statutory condition” but HHS guidance telling states the agency would refuse to exercise its discretion to approve a Medicaid waiver unless it is budget neutral an “executive condition.” Yet, from the perspective of regulated parties the two seem equally binding, and from the perspective of those not steeped in administrative law, both may look like agency actions. Are “statutory conditions” and “executive conditions” really so different? Yes.

Despite superficial similarities, major functional differences exist between statutory conditions and executive conditions and profoundly impact values including liberty, accountability, and capacity that underlie constitutional checks. These differences, summarized in Table 3 and elaborated upon below, are that executive conditions (1) are an inevitable and desirable source of flexibility in program administration; (2) can be secret, ephemeral, and threatened; (3) are controlled by the executive branch; (4) are not subject to political process safeguards of federalism and liberty including bicameralism and presentment; and (5) can be imposed by an executive branch actor other than the one selected by Congress in related delegations of legislative power. These differences are cross-cutting; they counsel neither more stringent constitutional checks for executive conditions nor less stringent such checks; rather, they counsel carefully tailored checks on executive conditions.

First, a functional consideration counsels care in the development of constitutional checks on executive conditions. Such conditions can be inevitable and desirable sources of flexibility in the day-to-day administration of programs that aid regulators and regulated parties alike. They thereby increase the capacity of the government. From the bonds required of brokers to host livestock auctions[108] to the staffing required of nursing homes to be eligible for Medicare reimbursement,[109] binding legal requirements can be difficult to interpret, and the penalties for their violation can be stark. Discretion can bring on-the-ground expertise and essential, ongoing relationships of collaboration and trust into day-to-day governance.[110] It can enhance executive capacity while minimizing regulatory burdens.[111] Or it can serve as a warning to those who are violating the law to cease while encouraging those who are not to continue on their way.[112]

Judicial review poses a potential threat to the flexibility that executive conditions may bring. Executive conditions can be developed informally—a few words, even a look from an investigator, or a hasty report and recommendation by an audit team[113]—without the formal legal process entailed in the issuance of binding pronouncements through rulemaking or adjudication. Judicial review of such conditions could impose costly and time-consuming processes, and the mere threat of such review may prompt prophylactic formalization. Administrators may choose rigidity and secrecy to reduce litigation risk.

Second, to state the obvious, executive conditions empower the executive rather than the legislative branch. This can cut two ways for the development and application of constitutional checks. On one hand, it means that concerns do not apply about non-review creating a loophole by which the legislative branch can achieve indirectly what it cannot achieve directly. So, to the extent that courts are concerned with limiting legislative power qua legislative power, rather than limiting governmental power more generally, that concern does not apply to executive conditions.

At the same time, executive conditions bring a danger of executive encroachment on powers the Constitution gave Congress—namely, the Appropriations Clause and the spending power. Conditions can be used to generate resources for the government; for example, consider law firms’ agreement to provide pro bono services consistent with President Trump’s priorities to avoid threatened sanctions.[114] As the Supreme Court recently emphasized, the Constitution’s reservation of control over the attainment and utilization of resources by the federal government reflects a founding-era consensus about the importance of separating power over the purse and the sword: “By the time of the Constitutional Convention, the principle of legislative supremacy over fiscal matters engendered little debate and created no disagreement.”[115] The use of executive conditions to coerce behavior arguably violates the Appropriations Clause and the Spending Clause, both by undermining their design and by usurping congressional authority.[116] Where conditions entail the exercise of delegated legislative power, Congress can effectively prevent an agency from imposing conditions by either repealing the delegation or including language that prevents such use. But Congress’s ability to check conditions on the exercise of enforcement discretion or the taking of discretionary actions is severely limited.[117]

This concern that executive conditions can encroach on legislative power in ways that Congress cannot check led the Ninth Circuit to find that a limit imposed by the DOJ on grant funding for “sanctuary cities” that was not authorized by statute was not only ultra vires but also a violation of the Spending Clause; other courts have reached similar conclusions.[118] On this theory, to which we return in Section III.B, the Appropriations Clause and the Spending Clause are an outer bound on executive powers much the way that the Court in NFIB saw federalism concerns forming an outer bound on the commerce power and the spending power.[119]

Third is a difference that impacts the likelihood courts will intervene to check unconstitutional executive conditions, whatever doctrines apply.[120] Executive conditions can be not only targeted but made in secret (never shared with the public), threatened (not merely imposed, but leveraged to achieve concessions), and ephemeral (issued not as a command but as a mere suggestion or in a way that is ambiguous about whether it is a command or a suggestion, and temporary). All of these things increase the likelihood that unconstitutional executive conditions will go unchecked by courts, no matter how stringent the doctrines courts apply.[121] The possibility of secrecy and threats also brings rule of law concerns, increasing the likelihood that individuals’ treatment may be due to personal factors and that like situations will not be treated alike—a fundamental feature of the rule of law.[122]

Consider Scott v. Department of Health and Human Services, in which Florida alleged HHS unconstitutionally threatened not to renew the state’s existing Medicaid waiver unless the state agreed to expand Medicaid eligibility under the ACA.[123] The grant of a demonstration project waiver itself is an exercise of delegated legislative power under Section 1115 of the Social Security Act and must be done publicly, but threats regarding the conditions under which the Secretary might approve, decline, or renew a waiver may be informal and could occur behind closed doors.[124] In the litigation, federal officials denied they ever made the threat that state officials claimed.[125] Amidst the factual dispute, Florida agreed to dismiss the case. But how do we know whether or not HHS made similar threats to other states, which then chose to expand rather than risk losing millions of federal dollars?

The potential for secret, ephemeral, and threatened conditions cuts in two directions. Plainly, it cuts in favor of tailoring doctrine to facilitate review and/or increase the costs to the executive of unconstitutional threats that come to light in order to deter those threats. On the other hand, however, it cuts against doctrines that would permit review only of publicly announced executive conditions for fear of discouraging the executive branch from publicizing conditions and potentially driving them into the shadows.

Fourth, executive conditions may be created unilaterally, meaning they do not need to reflect agreement of elected representatives in Congress or satisfy the constitutional checks of bicameralism and presentment, limiting political accountability. These limits on congressional action—the need for agreement among a large number of diverse representatives and the requirement of passage through both the House and the Senate—were intended by the Framers as a check on the risk of faction, or subordination, meaning that those who hold power will use it to punish or extract rents from those who are not in power.[126] As James Madison put it, given that members of Congress would inevitably represent a “great variety of interests, parties, and sects . . . a coalition of a majority of the whole society could seldom take place on any other principles than those of justice and the general good,” leaving “less danger to a minor from the will of a major party.”[127] So, too, the political-process limits built into the legislative process are understood to be an important safeguard of federalism and state sovereignty.[128] Where conditions are imposed by the executive, such checks are not present. Thus, as Justice Kennedy explained, “liberty is threatened” when “the decision to spend [is] determined by the Executive alone.”[129]

Fifth, and relatedly, executive conditions need not be articulated by the agency or actor designated by Congress in creating a program and need not satisfy the procedural checks on agency actions that exercise delegated legislative power set out in the APA. Because delegated legislative power to create binding rules can be exercised only by the agency actor(s) designated by Congress, the role of agency expertise is increased in condition-creating decisions. This may mitigate the magnitude of conditions by designating the agency (or agencies) responsible for a given rule and increase congressional influence insofar as particular agencies tend to be in close touch with and somewhat responsive to congressional committees with jurisdiction over their authorities and appropriations.[130] Likewise, the procedural checks on binding agency action set out in the APA replicate (to an extent) process checks on legislative action.[131] By contrast, executive conditions can be articulated by the President, the Attorney General, or other individual executive branch actors not designated by Congress and not subject to usual agency processes. This facilitates tying together the leverage made possible by multiple spending statutes[132] while diminishing the effectiveness of committee-agency relationships that bring congressional influence into conditions, as well as circumventing procedural and workforce checks on agency action.

* * *

Executive conditions clearly can function differently from statutory conditions in ways that significantly impact the nature of judicial review and the effectiveness, benefits, and risks of constitutional checks. Table 3 summarizes these differences and implications.

Table 3: Summary of functional differences between statutory and executive conditions

Difference

Implication

Implication

Upshot

Source of program administration flexibility

Judicial review could interfere, reducing government capacity

Too much deference could leave executive discretion unchecked

Judicial review potentially costly, deference desirable in some situations

Executive, not legislature, controls

Lower risk of legislative self- aggrandizement

Higher risk executive uses conditions to circumvent Congress’s power of the purse

More stringent judicial check needed when condition is used for resource-dependent tasks[133]

Can be secret, targeted, threatened

Reduced checks such as political accountability, judicial review

Judicial checks only on public conditions may backfire and increase secrecy.

Checks should ensure programmatic success without sacrificing possible upside to closed-door negotiations but also should protect a threatened party.

No constitutional checks (or political safeguards) like bicameralism and presentment

Increased risk of executive power aggrandizement without other branches’ input and balance

Increased risk of faction, subordination, threats to state sovereignty

Stronger checks, especially when used to target parties outside political and judicial processes

Conditions can be imposed by an executive actor other than a legislatively designated agency/official.

Circumvent iron triangles

Pool inducements across agencies

Diminished political safeguards; contradict enabling legislation

From a functional standpoint, what should courts do? At a minimum, we suggest the possibility that these distinctions matter, perhaps a lot. Courts should not assume that either constitutional limits or particular doctrines operationalizing those limits that developed within challenges to statutory conditions would have the same effects if applied without alteration to executive conditions. Instead, they should consider ways that particular doctrines might exacerbate, address, or fail to address these functional differences and adjust the scrutiny and doctrinal tests they apply accordingly.

Importantly, the functional concerns weighing for or against judicial review do not apply equally to all executive conditions. Concerns that judicial review will interfere with desirable flexibility in implementation and enforcement of a statutory program do not apply if the executive uses conditions—such as threats of illegal action—not to advance the statutory program in good faith but rather to achieve ends outside of or even impermissible under the program. Similarly, concerns that the possibility of secrecy, targeting, and threatening may reduce the likelihood of judicial review apply only to secret, targeted, and threatened conditions. And the concern that executive conditions may reach across agencies, circumventing congressional influence, applies only when conditions are bundled or compounded. In other words, though valid, the concerns we anticipate do not outweigh the greater value in carefully drawing doctrinal lines that facilitate judicial review for executive conditions.

III. Line-Drawing Possibilities

Courts, advocates, and scholars should develop executive conditions doctrines that can thread the needle between stifling desirable flexibility in program implementation and ensuring meaningful checks to protect liberty, separation of powers, and state sovereignty. Courts and scholars developing the constitutional law of executive conditions could productively focus on doctrinal approaches that would account for the functional differences between executive and statutory conditions in terms of the kind of judicial review necessary (that is, how much deference or scrutiny) and the substance of the analysis (which doctrine is applicable).

We recognize that this point may seem abstract and conceptual and that courts are tasked not only with conceptualizing unconstitutional conditions but with identifying them in practice. Indeed, line-drawing in practice has proven a stubborn impediment to the development of unconstitutional conditions doctrines.[134] The distinction between executive and statutory conditions can be helpful in such real-world line drawing. Consider two specific areas of ongoing controversy: Section A addresses limits on the use of executive conditions to influence expression protected by the First Amendment. Section B addresses limits on the use of executive conditions to circumvent congressional control through the Appropriations and Spending Clauses.

A. Novelty and Compounding as Considerations in Anti-Leveraging Cases

As we have discussed, executive branch actors often use conditions to influence the expression of institutions and individuals, implicating First Amendment limits on such leveraging. For example, the Trump Administration threatened to terminate security clearances and contracts for certain law firms unless they agreed to advocate in court on behalf of particular positions pro bono.[135]

In assessing whether such efforts violate freedom of speech, courts have looked to USAID. As noted above, the Court explained in that case “the relevant distinction . . . is between conditions that define the limits of the government spending program—those that specify the activities Congress wants to subsidize—and conditions that seek to leverage funding to regulate speech outside the contours of the program itself.”[136] The trouble with the USAID test—as the Court acknowledged in articulating it—is that it can be difficult to discern whether a given condition “define[s] the limits of [a] Government spending program” or “seek[s] to leverage funding to regulate speech outside the contours of the federal program.”[137]

Focusing on what makes executive conditions distinctive yields two discrete, workable considerations that courts might use in adapting USAID from the statutory condition context to determine whether a particular threatened executive condition “seek[s] to leverage funding to regulate speech outside the contours of [a] program.”[138] First, courts could focus on the executive branch actor who articulates a condition. If articulated by the agency staff or leadership ordinarily engaged in administering a program—for approving awards, assessing compliance, and the like—then that could be a reason to believe the condition “define[s] the limits” of the program. On the other hand, if a condition is articulated by an executive actor not ordinarily engaged in administering a program, such as the President, Attorney General, or an unusual political appointee not routinely involved in the program, then this could be treated as a reason to more closely scrutinize the condition on the concern that the condition seeks to “leverage funding” to regulate “outside the contours of the program.”

This line has much to commend it. As a matter of simple logic, conditions articulated by unusual actors are more likely to reflect an effort to use conditions to achieve goals “outside” a program because internal program goals can be advanced by the actors ordinarily engaged in administration, while external or novel goals may require enlisting unusual actors.[139] This approach addresses the concern that executive conditions circumvent congressional controls by taking decisions out of the hands of agency actors who were given congressionally created authority. At the same time, focusing on conditions imposed by novel executive actors leaves ordinary program administration—in which conditions can be inevitable and desirable—to the usual workings of administrative law principles.[140]

How would “usual” actors be discerned from “unusual” ones? Program participants and current or former administrators could, for example, file declarations describing statutory delegations, past practices, or typical signatories in analogous agency correspondence. Courts assessing materiality for False Claims Act purposes, for example, routinely make an analogous inquiry into what factors an agency considers in administering a particular spending program.[141] This consideration would employ the same sort of evidence but as to a simpler question: not what the agency considers but who communicates the decision. And in some cases, the inquiry would be quite simple. To return to the example of litigation around Trump Administration executive orders addressing specific universities and law firms: While presidents routinely instruct agencies on priorities or agendas by executive order, it is not ordinary for the President to direct the administration of particular grants.

Second, courts could discern that executive conditions cutting across or compounding programs—such as threats to terminate all federal grants across an administering agency or even multiple agencies or to provide preference in all such grants for a particular actor—also seek to leverage funding to regulate speech “outside the contours of a program” rather than define the program.[142] Indeed, while this Article was in press, a district court employed such an approach in adjudicating various groups’ challenges to new grant conditions imposed by HUD and HHS. The executive conditions prohibited funding for programs that advance “gender ideology; diversity, equity, and inclusion; elective abortions; and antidiscrimination,” raising issues under USAID.[143] Judge Dubose held:

The landscape established by [USAID and related cases] considers challenges to funding conditions that were baked into the development of specific government programs by Congress, but here, the Challenged Conditions are being enacted “as extrinsic, extra-statutory conditions” on top of already existing and well-established programs. The categorical and expansive nature of the Challenged Conditions telegraph that the Defendants will deny federal funding to a whole class of programs based on viewpoint alone . . . . [T]hey likely violate the First Amendment.[144]

Judge Dubose had it right. Simple logic counsels that compounding conditions across programs (which Judge Dubose described as “class” treatment[145] and might be called “pooling”[146]) seeks to leverage multiple programs to achieve a goal beyond any one component program. Moreover, compounding to maximize influence on a particular target warrants increased judicial scrutiny because it would be consistent with the constitutional prohibitions we have explored.[147] It is also consistent with the Court’s concern in NFIB v. Sebelius regarding a threat to withhold funds allocated by previously enacted statutes (echoing Dole’s third prong, germaneness).[148] While the NFIB plurality did not interpret the Medicaid Act accurately,[149] the Court’s overarching concern is still salient: Just as the Court considered whether the possibility of withholding federal funding allocations across time and health insurance programs could increase pressure on states, so too pooled threats that combine federal funding allocations across programs may heighten pressure (which appears to be the intent). And again, scrutinizing conditions running across multiple programs leaves the flexibility deemed desirable in ordinary program administration undisturbed while maintaining checks on extrinsic executive conditions.

The two factors we suggest, actor novelty and compounding programs, also complement the Court’s recent decision in Vullo, which furthered anti-leveraging principles by stating an “official cannot do indirectly what she is barred from doing directly: A government official cannot coerce a private party to punish or suppress disfavored speech on her behalf.”[150] The Court continued: “To state a claim that the government violated the First Amendment through coercion of a third party, a plaintiff must plausibly allege conduct that, viewed in context, could be reasonably understood to convey a threat of adverse government action in order to punish or suppress the plaintiff’s speech.”[151] Vullo is especially useful for puzzling through the anti-leveraging analysis when combined with USAID, which might be combined as follows:

To state a claim that the government/agency/actor violated the First Amendment through coercion, a plaintiff must plausibly allege conduct that, viewed in context, does not define the limits of the government program and could be reasonably understood to convey a threat of adverse government/agency/official action in order to punish or suppress the plaintiff’s speech outside the contours of the program itself.

Considering novel actors and compounding programs would not render a “clear” line between program definition and impermissible leveraging. But, acknowledging the distinct circumstances of executive conditions, and focusing on these factors while drawing together USAID and Vullo, could bring clarity to a challenging analysis while tracking the distinctive constitutional and cross-cutting functional considerations presented by executive conditions.

B. Appropriations Clause and Spending Clause Cases

Litigants have invited courts to apply some or all of the Dole test for analyzing the constitutionality of conditional spending to executive conditions. Courts are divided so far, ranging from some applying the Dole test with little concern for the distinctiveness of executive conditions, to others rejecting it as wholly inapplicable. Relatedly, litigants have contended the executive broadly violates the Spending Clause and/or Appropriations Clause by using executive conditions to exercise power over funding.[152] We suggest a middle ground: The Dole test provides guidance but is not straightforwardly adaptable to the executive-condition environment. Dole does not wholly account for the ways in which executive conditions are different from legislative conditions, including that its analysis relies on federalism values in conditional spending programs but not on the separation of powers concerns that executive conditions raise;[153] that political safeguards of federalism applicable to the federal legislative process are a limited protection (at best) against purely executive action; and that judicial checks on executive conditions threaten the effective administration of cooperative federalism and other programs.

Therefore, we suggest the analysis may be guided by constitutional allocation of power—because Congress has the power of the purse—while recognizing how executive conditions may either further or thwart congressional choices to allocate or limit resources dedicated for particular programs. Executive actors have threatened state and private funding recipients with conditions using enforcement discretion; threats/promises of illegality; and threats/promises of discretionary action to obtain services, donations, and even funding for military action.[154] These conditions implicate not only Congress’s enumerated powers and separation of powers but also federalism principles, because executive unilateralism that circumvents or thwarts the existing terms of cooperative federalism programs shifts the power balance between the federal government and states. This power balance is often navigated by federal and state actors in dynamic negotiations that preserve state authority and policy preferences within federal programs (consider the example of Medicaid demonstration waivers above), and executive conditions engage in a unilateralism that not only avoids the checks inherent in legislative and rulemaking processes but also threatens the vertical balance of power.[155]

When this occurs—that is, the executive actor circumvents congressional funding decisions for an unsanctioned function through executive conditions—Youngstown’s framework for determining when the President exercises lawful implied authority may be instructive.[156] To be clear, we are not wading into debates over the nature of presidential power; rather, the Youngstown opinions created a taxonomy that offers a useful guide for deciphering when executive conditions should be reviewed more searchingly.

We propose analyzing the lawfulness of executive conditions by assessing when such conditions usurp, contradict, or otherwise interfere with Congress’s power, which reflects three well-known concurring opinions in Youngstown. The Court held the President could not issue executive orders taking over steel mill operations to support military action in Korea because he did not have express power to seize businesses (Congress actually debated and denied that power to the President).[157] The Frankfurter, Jackson, and Douglas concurrences explored how to determine whether the President may act if the Constitution or Congress has spoken (or not) to the issue. Justice Douglas focused on separation of powers, specifically other branches’ powers being usurped or hindered in performing their constitutional duties.[158] Justice Jackson’s concurrence included the usurpation notion but offered a three-part framework on which courts have continued to rely:

When the President acts pursuant to an express or implied authorization of Congress, his authority is at its maximum, for it includes all that he possesses in his own right plus all that Congress can delegate. . . . When the President acts in absence of either a congressional grant or denial of authority, he can only rely upon his own independent powers, but there is a zone of twilight in which he and Congress may have concurrent authority, or in which its distribution is uncertain. . . . When the President takes measures incompatible with the expressed or implied will of Congress, his power is at its lowest ebb, for then he can rely only upon his own constitutional powers minus any constitutional powers of Congress over the matter. . . . [W]hat is at stake is the equilibrium established by our constitutional system.[159]

This presidential power framework is useful here because of the particular, distinctive risks executive conditions pose, whether imposed by the President or another executive branch actor, when they are used to thwart or obtain resources allocated by Congress.

Only Congress has the power of the purse, and it sometimes enacts spending programs with broad contours that give executive actors power to create conditions to execute a program. This legislative allocation of power is consistent with the “maximum” articulated by Jackson’s concurrence. If Congress has not addressed the matter for which executive conditions are imposed, or if the executive creates conditions that are resource-dependent but not allocated by Congress, then the “zone of twilight” concept indicates courts may want to exercise some caution. The zone of twilight could result in either deferential or more searching judicial review, depending on the totality of a given case’s circumstances.

We agree with Price’s contribution to this volume[160] that the balance is tipped by considering whether the condition induces states or private parties to provide resources to the executive in excess or contravention of those provided by Congress, which resounds in the spending and appropriations powers. If the executive conditions in question provide resources to achieve resource-dependent purposes that might have been appropriated, then the executive may be acting with power at its “lowest ebb”—that is, the executive is usurping congressional authority over governmental resources—and the executive condition should receive more searching scrutiny.

In statutory interpretation terminology, legislation appropriating funds for various executive purposes might be best understood as appropriating only the funds designated in legislation only for the purposes so designated. Reading appropriations legislation to impliedly prohibit the executive’s generation and use of resources through executive conditions would place such conditions within the “lowest ebb” category of congressional opposition, rather than the “zone of twilight” in which executive conditions that do not generate resources might fall. And such an expressio unius est exclusio alterius reading can be justified for appropriations legislation by the Appropriations Clause, the Miscellaneous Receipts Act, and appropriations principles like the “pick and stick” rule that requires the executive branch to limit funding for a purpose similar to that provided by the first appropriation tapped for that purpose, even if others might have been available.[161]

This approach may address underlying concerns about (1) respecting rather than displacing congressional control over spending and (2) preventing leveraging from allowing the executive to accomplish resource-dependent goals without congressional approval. For example, C. Boyden Gray worried that bank settlement agreements during the Obama Administration posed a threat to congressional control;[162] this resource-based consideration would address precisely that concern. Resource-dependence is just one example—but a key one—for considering how states or private parties might demonstrate that executive conditions should not receive judicial deference and may be impermissible. It also offers a clear line-drawing example because Congress exercises the power of the purse, which also can be a check on constitutionally allocated executive powers.

Finally, returning to the question of whether Dole can be imported to executive conditions, we think the answer depends on whether a court is tasked with reviewing executive conditions that act upon states specifically. The Dole Court’s concern for preserving federalism values is a meaningful principle for evaluating executive conditions that involve resources and act upon states, because such values may underscore the need for courts to be skeptical of the asserted executive power. Through Dole as amended by NFIB and other key spending power decisions, the Court effectively warned Congress and agencies tasked with implementing conditional spending programs that statutory conditions will be deemed binding for states when they are clear and unambiguous (under Pennhurst and Arlington), the conditions are germane, and states cannot be coerced into participation by the threat of too much money being taken away (NFIB’s coercion doctrine). The Court also warned Congress’s spending power influence can be deemed unconstitutional when leveraging occurs, though it is more likely to occur when private parties are subject to conditions on spending (Dole’s fourth prong and its application in Rust and USAID). So, we suggest the Dole test may be relevant for executive conditions when they are resource-dependent and act upon states. This offers a possible analytical approach that draws on existing doctrine, tracks with the Jackson concurrence’s three-prong analysis of executive power, and provides sensible line-drawing.

Conclusion

Statutory conditions and executive conditions are distinct. While executive conditions may provide flexibility in program administration, they may also evade political accountability, judicial review, and political safeguards of federalism while threatening separation of powers and individual liberty. Developing distinct doctrines for executive conditions that target abuses while avoiding undue interference in program administration is both theoretically desirable and practically feasible. Courts confronting First Amendment anti-leveraging challenges to executive conditions should give closer scrutiny to conditions articulated by executive branch actors not typically involved in program administration, as well as conditions bundled across discrete statutory programs. And courts confronting Spending Clause challenges to executive conditions should consider the presence of a condition that generates resources for the executive in excess of limits set by Congress as a factor favoring a finding of unconstitutionality.

  1. * Edward R. Utley Professor of Health Law, Boston University School of Law and School of Public Health. ↑

  2. ** Professor of Law, Emory University School of Law. Many thanks for invaluable feedback to participants in the Washington University Law Review symposium “Taxing, Spending, and the Constitution”; the Health Law, Policy, Bioethics, and Biotechnology Workshop at Harvard Law School; and the faculty workshops at Emory Law, University of Texas Law School, and Boston University School of Law. ↑

  3. . See, e.g., Kousisis v. United States, 605 U.S. 114, 140 n.1 (2025) (Thomas, J., concurring) (“The Government often tries to use monetary incentives to advance political objectives.”). ↑

  4. . Our focus is conditions on spending, though our analysis may apply to other kinds of regulatory conditions. We leave this question to future work. ↑

  5. . E.g., Vanessa Burrows & Barbara Berney, Creating Equal Health Opportunity: How the Medical Civil Rights Movement and the Johnson Administration Desegregated U.S. Hospitals, 105 J. Am. Hist. 885 (2019) [https://doi.org/10.1093/jahist/jaz004]; Biden v. Missouri, 595 U.S. 87 (2022) (upholding executive condition that health care entities test or vaccinate their workers for coronavirus to be eligible for Medicare or Medicaid funding). ↑

  6. . Cf. David A. Super, Rethinking Fiscal Federalism, 118 Harv. L. Rev. 2544 (2005). ↑

  7. . Agency for Int’l Dev. v. All. for Open Soc’y Int’l, Inc., 570 U.S. 205, 206 (2013) (addressing constitutionality of condition in United States Leadership Against HIV/AIDS, Tuberculosis, and Malaria Act of 2003). ↑

  8. . South Dakota v. Dole, 483 U.S. 203, 205 (1987) (assessing constitutionality of “23 U.S.C. § 158, which directs the Secretary of Transportation to withhold a percentage of federal highway funds otherwise allocable from States” that allow purchase of alcohol by persons under twenty-one (citation omitted)). ↑

  9. . Selective Serv. Sys. v. Minn. Pub. Int. Rsch. Grp., 468 U.S. 841, 843 (1984) (rejecting claim that “Section 3 of the Military Selective Service Act” was an unconstitutional bill of attainder). ↑

  10. . See generally Matthew B. Lawrence, Eloise Pasachoff & Zachary S. Price, Appropriations Presidentialism, 114 Geo. L.J. Online 1 (2025). ↑

  11. . See Matthew B. Lawrence, Second-Class Administrative Law: Lincoln v. Vigil’s Puzzling Presumption of Unreviewability, 101 Wash. U. L. Rev. 1029 (2024) (discussing relative rarity of litigation about implementation of appropriations). ↑

  12. . Exec. Order No. 14173, 90 Fed. Reg. 8633 (Jan. 21, 2025). ↑

  13. . E.g., Wilmer Cutler Pickering Hale & Dorr LLP v. Exec. Off. of the President, 784 F. Supp. 3d 127 (D.D.C. 2025), modified, No. CV 25-917, 2025 WL 2105262 (D.D.C. June 26, 2025), appeal filed and consolidated sub nom. Perkins Coie LLP v. U.S. Dep’t of Just., No. 25-5241 (D.C. Cir. argued May 14, 2026); Jenner & Block LLP v. U.S. Dep’t of Just., 784 F. Supp. 3d 76, 97 (D.D.C. 2025), appeal filed and consolidated sub nom. Perkins Coie, No. 25-5241. ↑

  14. . Conor Clarke, The Conservative Case for Leaving Harvard Alone, The Atlantic (Apr. 18, 2025), https://www.theatlantic.com/ideas/archive/2025/04/harvard-trump-irs-nonprofit/682507/ [https://
    perma.cc/J5QU-V6MY]. ↑

  15. . See Governing for Impact, Challenging Federal Award Terminations (2025), https://governingforimpact.org/wp-content/uploads/2025/03/Challenging-Federal-Award-Terminations
    -2.pdf [https://perma.cc/4C6L-UEXD]. ↑

  16. . Cf. Matthew B. Lawrence, Fiscal Waivers and State “Innovation” in Health Care, 62 Wm. & Mary L. Rev. 1477, 1530–41 (2021) (discussing questions about conditions on Medicaid waivers dating back decades). ↑

  17. . Lawrence et al., supra note 8. ↑

  18. . For example, in the decade plus after it was decided, the Supreme Court’s 2013 decision in USAID was cited about a dozen times each year, but the case was cited in forty-six published decisions in 2025 alone. Shepard’s Citing Decisions Analysis by Date, LEXIS, advance.lexis.com (search “Agency for Int’l Dev. v. All. for Open Soc’y Int’l, Inc., 570 U.S. 205 (2013)” in search bar; then click “Citing Decisions” and next to “Shepard’s Citing Decision Analysis” select “Date”). ↑

  19. . See infra notes 62–63 and accompanying text (explaining that challenges to executive conditions are getting funneled to the Court of Federal Claims, which has limited jurisdiction). ↑

  20. . See, e.g., South Dakota v. Dole, 483 U.S. 203 (1987); Nat’l Fed’n of Indep. Bus. v. Sebelius, 567 U.S. 519 (2012); All. for Open Soc’y Int’l, 570 U.S. 205; Rust v. Sullivan, 500 U.S. 173 (1991). ↑

  21. . See infra Section I.C. ↑

  22. . See infra Section I.C. ↑

  23. . See infra Section I.C. ↑

  24. . See infra Section I.C. (discussing Nat’l Rifle Ass’n of Am. v. Vullo, 602 U.S. 175 (2024)). ↑

  25. . See infra Section I.C.; see generally Kate Stith, Congress’ Power of the Purse, 97 Yale L.J. 1343 (1988) (describing principles of appropriations control); Zachary S. Price, Funding Restrictions and Separation of Powers, 71 Vand. L. Rev. 357 (2018) (contrasting resource-dependent and resource-independent executive functions); Consumer Fin. Prot. Bureau v. Cmty. Fin. Servs. Ass’n of Am., Ltd., 601 U.S. 416, 427 (2024) (describing origins of the Appropriations Clause). ↑

  26. . See, e.g., Douglas M. Spencer, Sanctuary Cities and the Power of the Purse: An Executive Dole Test, 106 Iowa L. Rev. 1209, 1232–35 (2021) (addressing how Dole test might be different for executive conditions). Solomon and Zaring focus on administrative procedure questions posed by what they call “transactional administration,” not constitutional questions, but their examples and emphasis on transparency are helpful. Steven Davidoff Solomon & David Zaring, Transactional Administration, 106 Geo. L.J. 1097 (2018); see also Steven M. Davidoff & David Zaring, Regulation by Deal: The Government’s Response to the Financial Crisis, 61 Admin. L. Rev. 463, 468 (2009). Finally, one of us previously explored the greater susceptibility to subordination of executive conditions. See Matthew B. Lawrence, Subordination and Separation of Powers, 131 Yale L.J. 78, 90 (2021). Two additional articles address the interaction of the Pennhurst doctrine (regarding interpretation of conditions imposed on states) and the Chevron doctrine; although Chevron has been invalidated, those articles’ discussions of the relationship between conditions doctrine and executive power remain invaluable. See David Freeman Engstrom, Drawing Lines Between Chevron and Pennhurst: A Functional Analysis of the Spending Power, Federalism, and the Administrative State, 82 Tex. L. Rev. 1197, 1216–22 (2004); Peter J. Smith, Essay, Pennhurst, Chevron, and the Spending Power, 110 Yale L.J. 1187, 1233–36 (2001). Many fine articles address doctrines we discuss but, while invaluable, do not specifically study distinctions between conditions imposed by statute (directly or via delegation) and conditions imposed through executive action. ↑

  27. . “Illegal behavior” should not be a source of power for the executive, but the executive has the first mover advantage, and its illegal actions can cause irreparable harm regardless of whether courts might later intervene. See Terry M. Moe & William G. Howell, Unilateral Action and Presidential Power: A Theory, 29 Presidential Stud. Q. 850, 867 (1999) (discussing “the president’s powers of unilateral action”). In practice, this means that the executive may threaten (or promise) illegal action as a way to coerce a person or institution to agree to terms that might themselves later come to be practically or legally binding. The terms of any deal resulting from such a threat are “executive conditions,” as we develop herein. ↑

  28. . See infra notes 88–91 and accompanying text (discussing existing doctrinal tests that overlap with distinction between statutory conditions and executive conditions drawn here). ↑

  29. . For an example of a statutory condition, consider an HHS regulation now going through notice and comment rulemaking that would amend the Code of Federal Regulations to require state Medicaid plans to exclude coverage for certain treatments for gender dysphoria. See Medicaid Program; Prohibition on Federal Medicaid and Children’s Health Insurance Program Funding for Sex-Rejecting Procedures Furnished to Children, 90 Fed. Reg. 59441 (proposed Dec. 19, 2025) (to be codified at 42 C.F.R. pts. 441, 457). HHS purports to be exercising power to impose binding conditions delegated by statute in the proposed regulation, so if it is finalized, we would consider this condition to be “statutory” even though it was originally articulated by an executive branch actor. ↑

  30. . See Printz v. United States, 521 U.S. 898, 922–23 (1997) (pointing to state sovereignty, federal effectiveness, accountability, and liberty as underlying values). ↑

  31. . See Lawrence, supra note 9. ↑

  32. . See Lawrence et al., supra note 8, at 22–29 (arguing that judicial interference in spending cases risks displacing Congress’s oversight role). ↑

  33. . See Price, supra note 23, at 365 n.12; infra Section III.B. (identifying concurring opinions in Youngstown Sheet & Tube Co. v. Sawyer as this framework’s inspiration). ↑

  34. . U.S. Const. pmbl. ↑

  35. . See, e.g., Cash for Clunkers, https://www.cashforclunkers.org/ [https://perma.cc/H96Z-XASG]. ↑

  36. . Simkins v. Moses H. Cone Mem’l Hosp., 323 F.2d 959 (4th Cir. 1963), cert. denied, 376 U.S. 938 (1964). ↑

  37. . Joshua Herb, Health Policy in Action – A Brief History of Hospital Desegregation in the United States, Ass’n for Acad. Surgery (Feb. 27, 2025), https://www.aasurg.org/health-policy-in-action-a-brief-history-of-hospital-desegregation-in-the-united-states/ [https://perma.cc/P3K5-SGVC]. ↑

  38. . Burrows & Berney, supra note 3. ↑

  39. . See generally Price, supra note 23. ↑

  40. . 595 U.S. 87, 93 (2022). ↑

  41. . Id. ↑

  42. . See Abbe R. Gluck & Nicole Huberfeld, What Is Federalism in Health Care For?, 70 Stan. L. Rev. 1689 (2018); Lawrence, supra note 14; Samuel R. Bagenstos, Federalism by Waiver After the Health Care Case, in The Health Care Case: The Supreme Court’s Decision and Its Implications 227 (Nathaniel Persily, Gillian E. Metzger & Trevor W. Morrison eds., 2013); David J. Barron & Todd D. Rakoff, In Defense of Big Waiver, 113 Colum. L. Rev. 265 (2013); 42 U.S.C. § 1315 (Social Security Act waiver authority (Medicaid)); Patient Protection and Affordable Care Act, Pub. L. No. 111-148, § 1332, 124 Stat. 120, 203–08 (2010) (state innovation waivers for commercial health insurance in the ACA). ↑

  43. . Fullilove v. Klutznick, 448 U.S. 448, 474 (1980) (“Congress [may] . . . further broad policy objectives by conditioning receipt of federal moneys upon compliance by the recipient with federal statutory and administrative directives.”). ↑

  44. . Nicole Huberfeld, Spending Programs and the New Roberts Court, 24 Yale J. Health Pol’y, L. & Ethics 1, 40 (2026). ↑

  45. . FCC v. Consumers’ Rsch., 606 U.S. 656, 673 (2025). ↑

  46. . E.g., ACORN v. United States, 618 F.3d 125 (2d Cir. 2010) (bills of attainder). ↑

  47. . Agency for Int’l Dev. v. All. for Open Soc’y Int’l, Inc., 570 U.S. 205 (2013). ↑

  48. . Id. ↑

  49. . Id. at 214–15 (emphasis added). ↑

  50. . See, e.g., Sam Bagenstos, Employing the Anti-Leveraging Test to Effectively Protect Grantee Speech, Knight First Amend. Inst.: Fed. Funding & the First Amend. (May 21, 2025), https://
    knightcolumbia.org/blog/employing-the-anti-leveraging-test-to-effectively-protect-grantee-speech [htt
    ps://perma.cc/LB67-NDHR] (discussing USAID case); Michael C. Dorf, Conditional Funding Can Raise Difficult Legal Questions. Trump’s Freezes Don’t, Knight First Amend. Inst.: Fed. Funding & the First Amend. (May 13, 2025), https://knightcolumbia.org/blog/conditional-funding-can-raise
    -difficult-legal-questions-trumps-freezes-dont [https://perma.cc/ZY8Z-NGBS]. ↑

  51. . Daniel S. Cohen, A Gun to Whose Head? Federalism, Localism, and the Spending Clause, 123 Dick. L. Rev. 421, 436–37 (2019). ↑

  52. . South Dakota v. Dole, 483 U.S. 203 (1987). ↑

  53. . Id. at 207–11. In Arlington Central School District Board of Education v. Murphy, the Court amended the second Dole prong slightly to clear and unambiguous conditions, further promoting state-protective federalism values. 548 U.S. 291, 296 (2006). ↑

  54. . Nicole Huberfeld, Clear Notice for Conditions on Spending, Unclear Implications for States in Federal Healthcare Programs, 86 N.C. L. Rev. 441 (2008) (describing Pennhurst and explaining the Arlington modification to Dole). ↑

  55. . Pennhurst State Sch. & Hosp. v. Halderman, 451 U.S. 1, 17–18 (1981); see also Samuel R. Bagenstos, Spending Clause Litigation in the Roberts Court, 58 Duke L.J. 345 (2008) (discussing implementation of constitutional checks on spending power through interpretive doctrines). ↑

  56. . 567 U.S. 519, 588 (2012) (plurality opinion). ↑

  57. . See Huberfeld, supra note 42 (mapping the high volume of state-led litigation attempting to discern contours and outer limits of the coercion doctrine). ↑

  58. . Nat’l Endowment for the Arts v. Finley, 524 U.S. 569 (1998). ↑

  59. . Agency for Int’l Dev. v. All. for Open Soc’y Int’l, Inc., 570 U.S. 205, 215 (2013) (“The line is hardly clear.”). ↑

  60. . NFIB, 567 U.S. at 585 (plurality opinion) (“It is enough for today that wherever that line may be, this statute is surely beyond it. Congress may not simply ‘conscript state [agencies] into the national bureaucratic army . . . .’”). ↑

  61. . Lawrence et al., supra note 8. ↑

  62. . At the authors’ last count there were already more than 338 cases in which a lower court had reached a decision on a request for injunctive relief, with lower courts granting such relief in 226 of those cases and denying them in 112. See Litigation Tracker: Legal Challenges to Trump Administration Actions, Just Sec. (Mar. 12, 2026), https://www.justsecurity.org/107087/tracker-litigation-legal-challenges-trump-administration/ [https://perma.cc/WB5M-R2FM]. ↑

  63. . E.g., AIDS Vaccine Advoc. Coal. v. U.S. Dep’t of State, 803 F. Supp. 3d 164, 184 (D.D.C. 2025) (“Defendants’ reasons for not developing an argument here over the numerous months and opportunities given may be many, including that, even having changed their position, there is not a plausible interpretation of the statutes that would justify the billions of dollars they plan to withhold.”). ↑

  64. . Cf. Maureen E. Brady & Richard Re, The Docket That Cannot Be Named, SCOTUSblog: Controlling Opinions (May 4, 2026), https://www.scotusblog.com/2026/05/the-docket-that-cannot-be-named/ [https://perma.cc/7D3W-ZBAM] (describing naming confusion surrounding processes other than merits docket by which Supreme Court issues orders). ↑

  65. . The APA’s legal, procedural, and substantive checks on agency action are at least as protective as underlying constitutional safeguards, see Vt. Yankee Nuclear Power Corp. v. Nat. Res. Def. Council, 435 U.S. 519 (1978) (APA requirements ordinarily satisfy the Constitution), so ordinary disputes about agency action center around questions of statutory authority, procedure, or rationality (arbitrary and capricious review under the Administrative Procedure Act). But as interpreted by the Supreme Court in Department of Education v. California, 604 U.S. 650 (2025), the Tucker Act channels many disputes about federal spending out of APA actions in district court and into contract disputes in the Court of Federal Claims. The Court of Federal Claims cannot grant preliminary relief, lacks many APA protections, and has very limited ability to consider constitutional questions. The Court’s opinion in California focused on the connection between a lawsuit and underlying grant or contract provisions, so plaintiffs have understandably shied away from claims focused on such provisions and toward claims focused on larger constitutional violations in bringing cases in district court. For a prominent issue brief highlighting this interaction in encouraging constitutional claims, see Governing for Impact, Challenging Funding Conditions Imposed by the Executive Branch 17 (2025), https://governingforimpact.org/wp-content/uploads/2025/09/Funding-Conditions-Issue-Brief-final.pdf [https://perma.cc/CN97-MATX%5D. ↑

  66. . Jenner & Block LLP v. U.S. Dep’t of Just., 784 F. Supp. 3d 76, 109–10 (D.D.C. 2025) (applying legislative condition caselaw to executive condition, referring to case addressing constitutionality of statutory condition as more broadly applying when “the government” seeks to leverage its power to regulate speech), appeal filed and consolidated sub nom. Perkins Coie LLP v. U.S. Dep’t of Just., No. 25-5241 (D.C. Cir. argued May 14, 2026); City of Fresno v. Turner, No. 25-cv-7070, 2025 WL 2469330, at *5–6 (N.D. Cal. Aug. 27, 2025) (applying Pennhurst and NFIB), appeal filed, No. 25-7378 (9th Cir. Nov. 24, 2025); Am. Ass’n of Univ. Professors v. Trump, 815 F. Supp. 3d 907 (N.D. Cal. 2025) (invalidating threat to cut off U.C. system’s grant funding unless system agreed to proffered conditions). ↑

  67. . Exec. Order No. 14250, 90 Fed. Reg. 14549 (Mar. 27, 2025). ↑

  68. . Complaint for Declaratory and Injunctive Relief at 54–55, Wilmer Cutler Pickering Hale & Dorr LLP v. Exec. Off. of the President, 784 F. Supp. 3d 127 (D.D.C. 2025) (No. 25-917), modified, No. CV 25-917, 2025 WL 2105262 (D.D.C. June 26, 2025), appeal filed and consolidated sub nom. Perkins Coie, No. 25-5241. ↑

  69. . “The Court finds that the firm has failed to state a Spending Clause claim.” Wilmer-Hale, 784 F. Supp. 3d at 162 (rejecting Spending Clause challenge to contractual condition imposed by executive order because “[t]he Spending Clause is implicated when Congress imposes a spending or funding condition” but “[t]he President issued the Order”). ↑

  70. . Bd. of Educ. for the Silver Consol. Schs. v. McMahon, 791 F. Supp. 3d 1272, 1288 (D.N.M. 2025) (“[W]ithout alleging congressional action, Plaintiff ‘cannot state a claim under the Spending Clause.’” (quoting Wilmer-Hale, 784 F. Supp. 3d at 162)). ↑

  71. . President & Fellows of Harvard Coll. v. U.S. Dep’t of Health & Hum. Servs., 798 F. Supp. 3d 77 (D. Mass. 2025), appeal filed, No. 25-2231 (1st Cir. Dec. 31, 2025). ↑

  72. . Id. at 123. ↑

  73. . Id. at 124 (referring to amicus brief of Professor Aaron Caplan); Memorandum in Support of Defendants’ Cross-Motion for Summary Judgment and Opposition to Plaintiff’s Motion for Summary Judgment at 38, President & Fellows of Harvard Coll., 798 F. Supp. 3d 77 (No. 1:25-cv-11048) (“It is an open question whether the unconstitutional conditions doctrine can even be properly applied to settlement negotiations at all.”). ↑

  74. . Perkins Coie LLP v. U.S. Dep’t of Just., 783 F. Supp. 3d 105, 173 n.36 (D.D.C. 2025), appeal filed, No. 25-5241 (D.C. Cir. argued May 14, 2026). ↑

  75. . Id. at 174 n.36. ↑

  76. . Id. ↑

  77. . See, e.g., Washington v. U.S. Dep’t of Com., 812 F. Supp. 3d 1169, 1177 (W.D. Wash. 2025) (describing provision, citing 2 C.F.R. § 200.340(a)(4)). ↑

  78. . See Complaint for Declaratory and Injunctive Relief at 68–69, New Jersey v. U.S. Off. of Mgmt. & Budget, No. 1:25-cv-11816 (D. Mass. filed June 24, 2025) (“[N]o statute authorizes Defendants to terminate grant awards based on newly identified ‘program goals or agency priorities’ unknown to Plaintiffs at the time of the award. If there were such a statute, it would violate the Spending Clause because it would not set forth unambiguously the terms upon which grants may be terminated.”); cf. City of Fresno v. Turner, No. 25-cv-7070, 2025 WL 2721390, at *14 (N.D. Cal. Sept. 23, 2025) (reasoning, in voiding grant conditions imposed by agency on vagueness grounds, that the conditions “are not ‘merely add[itive]’” to those imposed by the underlying statute; “they digress from them” (alteration in original)), appeal filed, No. 25-7378 (9th Cir. Nov. 24, 2025). ↑

  79. . Bridget A. Fahey, Federalism by Contract, 129 Yale L.J. 2326 (2020). ↑

  80. . Nat’l Rifle Ass’n of Am. v. Vullo, 602 U.S. 175 (2024). ↑

  81. . Id. at 191. ↑

  82. . For cases declining to apply Vullo in the context of a challenge to termination of funding for failure to abide by executive conditions, see Nat’l Urb. League v. Trump, 783 F. Supp. 3d 61, 103 (D.D.C. 2025) (concluding in challenge to non-DEI certification requirement that “this is not a case of the government ‘relying on the threat of invoking legal sanctions’ to ‘achieve the suppression of disfavored speech’” because “the Certification Provision addresses only DEI programs that violate federal antidiscrimination law” (emphasis added) (quoting Vullo, 602 U.S. at 189)); Chi. Women in Trades v. Trump, 778 F. Supp. 3d 959, 986 (N.D. Ill. 2025) (“[E]ven if ‘coercion’ encompasses more than investigation and prosecution, it likely does not encompass the termination of government funding.”); see also Nat’l Urb. League, 783 F. Supp. 3d at 104 (following Chi. Women in Trades). ↑

  83. . For a case incorporating aspects of Vullo into the resolution of a challenge to termination of funding for failure to abide by executive conditions, see Jenner & Block LLP v. U.S. Dep’t of Just., 784 F. Supp. 3d 76, 97 (D.D.C. 2025) (concluding in challenge to law firm order that “[i]n this context, retaliation amounts to something akin to the impermissible ‘scheme of informal censorship’ that arises when government actors use the ‘threat of invoking legal sanctions and other means of coercion to achieve the suppression of disfavored speech’” (quoting Vullo, 602 U.S. at 188–89)), appeal filed and consolidated sub nom. Perkins Coie LLP v. U.S. Dep’t of Just., No. 25-5241 (D.C. Cir. argued May 14, 2026). ↑

  84. . See supra note 24 (collecting sources). ↑

  85. . Cf. John F. Manning, Separation of Powers as Ordinary Interpretation, 124 Harv. L. Rev. 1939, 1945 (2011) (“[T]he idea of separation of powers, properly understood, reflects many particular decisions about how to allocate and condition the exercise of federal power.”). ↑

  86. . Trump v. United States, 603 U.S. 593, 607 (2024) (“No matter the context, the President’s authority to act necessarily ‘stem[s] either from an act of Congress or from the Constitution itself.’” (quoting Youngstown Sheet & Tube Co. v. Sawyer, 343 U.S. 579, 585 (1952)). ↑

  87. . For example, HHS’s promulgation of the requirement that health care providers test or vaccinate for COVID was such a rule: The interim final rule was published with a preamble and explanation in the Federal Register and published in the Code of Federal Regulations. Medicare and Medicaid Programs; Omnibus COVID–19 Health Care Staff Vaccination, 86 Fed. Reg. 61555 (Nov. 5, 2021) (to be codified at 42 C.F.R. pts. 416, 418, 441, 460, 482, 483, 484, 485, 486, 491, 494). This created a legally binding condition on Medicare and Medicaid funding through exercise of the power delegated by Congress to HHS to promulgate regulations elaborating statutory “health and safety” conditions. See, e.g., 42 U.S.C. § 1395x(e)(9); 42 U.S.C. § 1396d; see also Biden v. Missouri, 595 U.S. 87 (2022). ↑

  88. . See SEC v. Chenery Corp., 332 U.S. 194 (1947). ↑

  89. . On the threat of illegal action as a source of presidential power, see supra note 25. ↑

  90. . See Cass R. Sunstein, Essay, “Practically Binding”: General Policy Statements and Notice-and-Comment Rulemaking, 68 Admin. L. Rev. 491, 495–99 (2016). ↑

  91. . United States v. Mead Corp., 533 U.S. 218 (2001). ↑

  92. . Eloise Pasachoff, Executive Branch Control of Federal Grants: Policy, Pork, and Punishment, 83 Ohio St. L.J. 1113 (2022). ↑

  93. . Youngstown Sheet & Tube Co. v. Sawyer, 343 U.S. 579, 635–38 (1952) (Jackson, J., concurring). ↑

  94. . See generally Zachary S. Price, Enforcement Discretion and Executive Duty, 67 Vand. L. Rev. 671 (2014). ↑

  95. . Simon Brewer, Note, The Attorney General’s Settlement Authority, 130 Yale L.J. 174, 184 (2020) (“No statute explicitly authorizes DOJ to enter into settlements that make policy or otherwise constrain the future exercise of executive-branch discretion or policymaking.”). ↑

  96. . Cf. Trump v. United States, 603 U.S. 593, 608 (2024) (“If the President claims authority to act but in fact exercises mere ‘individual will’ and ‘authority without law,’ the courts may say so.”). ↑

  97. . As described by Professors Starr and Lakier, certain threats the Trump Administration has made to universities to cut off funding on alleged Title VI grounds are in fact threats to engage in action that courts would likely hold to be unlawful because they are based on unprecedented and incorrect interpretations of Title VI and the Equal Protection Clause. See Sonja A. Starr & Genevieve Lakier, The Constitution and the War on DEI 7 (Univ. Chi. L. Sch., Working Paper No. 25-35, 2025) (“Many of those targeted by the war on DEI have chosen to abandon DEI-related policies and expression, notwithstanding the weakness of the administration’s legal theories. That outcome—preemptive compliance—is obviously what the administration is attempting to achieve.” (footnote omitted)). Cf. David Pozen, Regulation by Deal Comes to Higher Ed, Balkinization (July 23, 2025), https://balkin.blogspot.com/2025/07/regulation-by-deal-comes-to-higher-ed.html [https://perma.cc/D7
    94-KELQ]. ↑

  98. . Cf. Moe & Howell, supra note 25. ↑

  99. . See, e.g., Lawrence et al., supra note 8 (describing barriers to judicial review of unilateral executive funding actions). ↑

  100. . 42 U.S.C. § 1315. ↑

  101. . See Lawrence, supra note 14, at 1494–96. The July 2025 budget reconciliation bill formalized budget neutrality as a Section 1115 Waiver statutory requirement. One Big Beautiful Bill Act of 2025, Pub. L. No. 119-21, § 71118, 139 Stat. 72, 306. See Nicole Huberfeld & Matthew Lawrence, Why It Matters: HR1’s Change to Medicaid Waiver Budget Neutrality Rules, Petrie-Flom Ctr.: Bill of Health (Feb. 19, 2026), https://petrieflom.law.harvard.edu/2026/02/19/why-it-matters-hr1s-change-to-medicaid-waiver-budget-neutrality-rules/ [https://perma.cc/E7KH-Z45H%5D. ↑

  102. . The Government Accountability Office has issued several reports regarding the lack of standards for budget neutrality in Section 1115 Waiver applications and implementation. See, e.g., U.S. Gov’t Accountability Off., GAO-25-107445, Medicaid Demonstrations: Action Needed to Address New Cost Concerns (2025), https://www.gao.gov/products/gao-25-107445 [https://
    perma.cc/GUR7-R4TW]. ↑

  103. . See Memorandum from Deputy Att’y Gen. James M. Cole, U.S. Dep’t of Just., Guidance Regarding Marijuana Enforcement (Aug. 29, 2013), https://www.justice.gov/iso/opa/resources/3052
    013829132756857467.pdf [https://perma.cc/DV2E-SFAM]. ↑

  104. . See Manning, supra note 83; Lawrence, supra note 24. ↑

  105. . Spencer, supra note 24, at 1215 (“Congressional delegation should not be a loophole in the Dole doctrine.”). Concern about this loophole is one reason that courts and scholars have cited for routine application of the First Amendment to executive action despite the fact that the Amendment’s text specifically refers only to lawmaking by Congress. See Daniel J. Hemel, Executive Action and the First Amendment’s First Word, 40 Pepp. L. Rev. 601 (2013). ↑

  106. . Cf. Moody v. NetChoice, 603 U.S. 707 (2024) (recent Supreme Court case emphasizing utility of “as applied” challenges). ↑

  107. . Cf. Lawrence et al., supra note 8 (arguing there is no substitute for congressional action in addressing appropriations presidentialism). ↑

  108. . See Packers and Stockyards Act of 1921, 7 U.S.C. §§ 181–229(b). ↑

  109. . Cf. Off. of Inspector Gen., U.S. Dep’t of Health & Hum. Servs., OEI-04-18-00450, Some Nursing Homes’ Reported Staffing Levels in 2018 Raise Concerns: Consumer Transparency Could Be Increased (2020) (describing CMS practice of downgrading nursing home star ratings for insufficient staffing). ↑

  110. . Price, supra note 92, at 675 (finding enforcement discretion “create[s] a safety valve that protects citizens from overzealous enforcement of general prohibitions” (footnote omitted)). ↑

  111. . Cf. David A. Super, Against Flexibility, 96 Cornell L. Rev. 1375 (2011) (describing benefits of flexibility while arguing that these benefits are overstated); Aaron L. Nielson, How Agencies Choose Whether to Enforce the Law: A Preliminary Investigation, 93 Notre Dame L. Rev. 1517 (2018). ↑

  112. . See, e.g., Off. of Inspector Gen., U.S. Dep’t of Health & Hum. Servs., Special Fraud Alert: Speaker Programs (2020). ↑

  113. . See John Blevins, Retaliation by Raised Eyebrow, 60 Ga. L. Rev. (forthcoming 2026), https:
    //papers.ssrn.com/sol3/papers.cfm?abstract_id=5503698 [https://perma.cc/LG95-HK5L] (manuscript at 7–19) (describing history of informal regulatory approaches). ↑

  114. . See Melissa Quinn, Law Firm Skadden Cuts $100 Million Pro Bono Deal with Trump to Avoid Executive Order, CBS News (Mar. 28, 2025), https://www.cbsnews.com/news/law-firm-skadden-cuts-100-million-pro-bono-deal-trump-avoid-executive-order/ [https://perma.cc/72UC-KGC4%5D. ↑

  115. . Consumer Fin. Prot. Bureau v. Cmty. Fin. Servs. Ass’n of Am., Ltd., 601 U.S. 416, 431 (2024); see also id. at 463 (Alito, J., dissenting) (“[T]he Appropriations Clause demands legislative control over the source and disposition of the money used to finance Government operations and projects.”); see also U.S. Dep’t of the Navy v. Fed. Lab. Rels. Auth., 665 F.3d 1339, 1347 (D.C. Cir. 2012) (explaining without congressional appropriations power, “the executive would possess an unbounded power over the public purse of the nation[] and might apply all its monied resources at his pleasure” (quoting 3 Joseph Story, Commentaries on the Constitution of the United States § 1342, at 213–14 (1833))). ↑

  116. . For sources pointing toward such an argument, see infra notes 152–58. ↑

  117. . See Cary Coglianese, Gabriel Scheffler & Daniel E. Walters, Unrules, 73 Stan. L. Rev. 885, 952–59 (2021) (discussing barriers to litigation and judicial review for challenges to agency carveouts and dispensations). ↑

  118. . City & Cnty. of San Francisco v. Trump, 897 F.3d 1225, 1232 (9th Cir. 2018) (“Aside from the power of veto, the President is without authority to thwart congressional will by canceling appropriations passed by Congress.”); Cnty. of Santa Clara v. Trump, 250 F. Supp. 3d 497, 530–31 (N.D. Cal. 2017); Nat’l Council of Nonprofits v. Off. of Mgmt. & Budget, 763 F. Supp. 3d 36, 56 (D.D.C. 2025) (rejecting executive “attempt[] to wrest the power of the purse away from the only branch of government entitled to wield it”), appeal filed, No. 25-5148 (D.C. Cir. argued Feb. 6, 2026); New York v. Trump, 764 F. Supp. 3d 46, 51 (D.R.I. 2025) (“The Executive Branch has a duty to align federal spending and action with the will of the people as expressed through congressional appropriations, not through ‘Presidential priorities.’” (emphasis omitted)), aff’d in part and vacated in part, 171 F.4th 1 (1st Cir. 2026); PFLAG, Inc. v. Trump, 766 F. Supp. 3d 535, 564–65 (D. Md. 2025); Washington v. Trump, 768 F. Supp. 3d 1239, 1262 (W.D. Wash. 2025) (concluding because executive did not identify any statute arguably granting authority to condition funding on institutions’ non-provision of gender-affirming care, “[t]he President’s power is . . . ‘at its lowest ebb’” (quoting Youngstown Sheet & Tube Co. v. Sawyer, 343 U.S. 579, 637 (1952) (Jackson, J., concurring))), appeal filed, No. 25-1922 (9th Cir. argued Mar. 5, 2026); see Washington, 768 F. Supp. 3d at 1262 (“President Trump’s Executive Orders purport to do something not even Congress may do: ‘surprise[] states with post acceptance . . . conditions’ on federal funds and ‘impose conditions on federal grants that are unrelated to the federal interest in particular national projects or programs.’” (alteration in original) (citing City of Los Angeles v. Barr, 929 F.3d 1163, 1175 (9th Cir. 2019))). ↑

  119. . Nat’l Fed’n of Indep. Bus. v. Sebelius, 567 U.S. 519, 536 (2012); see also id. at 631 (Ginsburg, J., concurring in part, concurring in the judgment in part, and dissenting in part). ↑

  120. . Cf. Daryl J. Levinson, Rights Essentialism and Remedial Equilibration, 99 Colum. L. Rev. 857 (1999). ↑

  121. . A secret condition that is never disclosed cannot be challenged by third parties whom it might impact and will be disclosed by the target only if they overcome barriers, such as the fear of retaliation and the cost of litigation, to bringing suit. Cf. Nicholas R. Parrillo, Administrative Law as a Choice of Business Strategy: Comparing the Industries Who Have Routinely Sued Their Regulators with the Industries Who Rarely Have, 93 Geo. Wash. L. Rev. 1031 (2025). The fact that executive conditions can be mere suggestions (or in APA terms, guidance) reduces the likelihood that affected parties will have standing and a cause of action. ↑

  122. . Richard A. Epstein, Government by Waiver, 7 Nat’l Affs. 39, 54 (2011) (“The fate of our rights and liberties is left to the wisdom and discretion of individuals; we are therefore governed by men, not by laws. It was this exact circumstance that our system of government was designed to avoid . . . .”); ACUS Recommendation 2017-7, Regulatory Waivers and Exemptions, 82 Fed. Reg. 61742 (Dec. 29, 2017) (notice) (“[W]hen an agency decides to waive legal requirements for some but not all regulated parties, the decision to grant a waiver or exemption may create the appearance—or perhaps even reality—of irregularity, bias, or unfairness.”). ↑

  123. . Complaint for Injunctive and Declaratory Relief, Scott v. U.S. Dep’t of Health & Hum. Servs., No. 3:15-cv-195 (N.D. Fla. dismissed Apr. 28, 2015). ↑

  124. . Lawrence, supra note 14, at 1513. ↑

  125. . Id. at 1534–35; Defendants’ Memorandum in Opposition to Plaintiffs’ Motion for Preliminary Injunction, Scott, No. 3:15-cv-195. ↑

  126. . Lawrence, supra note 24, at 96–97. By subordination in this separation of powers context, we mean Madison’s goal of structuring the Constitution “to guard one part of the society against the injustice of the other part.” The Federalist No. 51, at 323–24 (James Madison) (Clinton Rossiter ed., 1961) (“Different interests necessarily exist in different classes of citizens. If a majority be united by a common interest, the rights of the minority will be insecure . . . In a society under the forms of which the stronger faction can readily unite and oppress the weaker, anarchy may as truly be said to reign as in a state of nature . . . .”). For expositions of Madison’s view of “justice” as “the protection of ‘minority’ groups against systematic ‘oppression’ or ‘tyrannization’ by more powerful groups acting through the political process and the government,” see James S. Liebman & Brandon L. Garrett, Madisonian Equal Protection, 104 Colum. L. Rev. 837, 840 n.3, 862 (2004); see also Akhil Reed Amar, The Bill of Rights and the Fourteenth Amendment, 101 Yale L.J. 1193, 1215 (1992) (noting that insofar as Madison viewed “liberty” as “liberty against popular majorities” he “was a man ahead of his time”). ↑

  127. . The Federalist No. 51, supra note 123, at 325 (James Madison). ↑

  128. . See, e.g., Robert A. Mikos, Medical Marijuana and the Political Safeguards of Federalism, 89 Denv. U. L. Rev. 997 (2012) (describing the theory and applying it to medical marijuana legalization). ↑

  129. . Clinton v. City of New York, 524 U.S. 417, 451 (1998) (Kennedy, J., concurring); see also Bond v. United States, 572 U.S. 844 (2014). ↑

  130. . See Keith E. Hamm, Patterns of Influence Among Committees, Agencies, and Interest Groups, 8 Legis. Stud. Q. 379, 396 (1983) (summarizing literature). ↑

  131. . See Jon D. Michaels, An Enduring, Evolving Separation of Powers, 115 Colum. L. Rev. 515, 548–49 (2015). ↑

  132. . Cf. Daphna Renan, Pooling Powers, 115 Colum. L. Rev. 211 (2015) (describing how multiple agencies may pool power to achieve purposes not possible for any one agency). ↑

  133. . Price, supra note 23. ↑

  134. . See Agency for Int’l Dev. v. All. for Open Soc’y Int’l, Inc., 570 U.S. 205, 215 (2013) (“The line is hardly clear . . . .”); Nat’l Fed’n of Indep. Bus. v. Sebelius, 567 U.S. 519, 585 (2012) (plurality opinion) (“It is enough for today that wherever that line may be, this statute is surely beyond it.”). ↑

  135. . Jenner & Block LLP v. U.S. Dep’t of Just., 784 F. Supp. 3d 76, 88–91 (D.D.C. 2025), appeal filed and consolidated sub nom. Perkins Coie LLP v. U.S. Dep’t of Just., No. 25-5241 (D.C. Cir. argued May 14, 2026). ↑

  136. . USAID, 570 U.S. at 214–15 (emphasis added). ↑

  137. . Id. ↑

  138. . Id. ↑

  139. . This reflects the inevitable specialization and relationship formation that occurs even among political leadership who are responsible for overseeing implementation of a particular program. Cf. Anya Bernstein & Cristina Rodríguez, The Accountable Bureaucrat, 132 Yale L.J. 1600, 1628 (2023) (“[P]olitical accountability comes not only from the presence and influence of the political appointee, but also from the relationships between politicals and careers . . . .”); Gonzales v. Oregon, 546 U.S. 243, 253–54 (2006) (expressing skepticism because interpretive rule regarding applicability of the Controlled Substances Act to assisted suicide drugs was articulated by Attorney General rather than the Administrator of the Drug Enforcement Administration, who ordinarily oversees CSA implementation). ↑

  140. . While we hesitate to use the term “major conditions doctrine,” in this way the above approach is broadly analogous to the skepticism for novel agency actions—and, in the view of some commenters, focus on who drives agency actions in assessing their legality—of the major questions doctrine. See Jodi L. Short & Jed H. Shugerman, Major Questions About Presidentialism: Untangling the “Chain of Dependence” Across Administrative Law, 65 B.C. L. Rev. 511 (2024) (noting that major questions cases decided by Roberts Court have involved agency actions that were presidentially directed). ↑

  141. . See Universal Health Servs., Inc. v. United States ex rel. Escobar, 579 U.S. 176 (2016). ↑

  142. . Cf. Jenner & Block LLP v. U.S. Dep’t of Just., 784 F. Supp. 3d 76, 102 (D.D.C. 2025) (“Rather than ensuring that national secrets remain with those who will keep them, Section 2’s process ‘seek[s] to leverage’ the Executive’s control over security clearances as a way to change speech.” (emphasis added) (citing Agency for Int’l Dev. v. All. for Open Soc’y Int’l, Inc., 570 U.S. 205 (2013))), appeal filed and consolidated sub nom. Perkins Coie LLP v. U.S. Dep’t of Just., No. 25-5241 (D.C. Cir. argued May 14, 2026). ↑

  143. . R.I. Coal. Against Domestic Violence v. Kennedy, 807 F. Supp. 3d 94, 95 (D.R.I.), modified, 812 F. Supp. 3d 180 (D.R.I. 2025). ↑

  144. . Id. at 104–05. ↑

  145. . Id. ↑

  146. . See Renan, supra note 130. ↑

  147. . See U.S. Const. art. I, § 9, cl. 3; art. I, § 10, cl. 1. ↑

  148. . Nat’l Fed’n of Indep. Bus. v. Sebelius, 567 U.S. 519, 582 (2012) (plurality opinion). ↑

  149. . Nicole Huberfeld, Elizabeth Weeks Leonard & Kevin Outterson, Plunging into Endless Difficulties: Medicaid and Coercion in National Federation of Independent Business v. Sebelius, 93 B.U. L. Rev. 1, 73 (2013). ↑

  150. . Nat’l Rifle Ass’n of Am. v. Vullo, 602 U.S. 175, 189 (2024) (“[T]he First Amendment prohibits government officials from relying on the ‘threat of invoking legal sanctions and other means of coercion . . . to achieve the suppression’ of disfavored speech.” (quoting Bantam Books, Inc. v. Sullivan, 372 U.S. 58, 67 (1963))). ↑

  151. . Id. at 191. Scholarship around “jawboning” focuses on use of executive power to coerce a person or entity to censor or regulate the speech of a third party. See Derek E. Bambauer, Against Jawboning, 100 Minn. L. Rev. 51, 57 (2015) (defining jawboning as “a specific type of informal pressure by a government actor on a private entity: one that operates at the limit of, or outside, that actor’s authority” and discussing attempts by “regulators to employ informal rather than formal means” of censorship); Will Duffield, Jawboning Against Speech: How Government Bullying Shapes the Rules of Social Media, Cato Inst. (Sept. 12, 2022), https://www.cato.org/policy-analysis/jawboning-against-speech [https://perma.cc/D29U-TQUR] (“Government officials can use informal pressure — bullying, threatening, and cajoling — to sway the decisions of private platforms and limit the publication of disfavored speech. The use of this informal pressure, known as jawboning, is growing.”); Genevieve Lakier, Enforcing the First Amendment in an Era of Jawboning, 93 U. Chi. L. Rev. (forthcoming 2026) (manuscript at 1), https://papers.ssrn.com/sol3/papers.cfm?abstract_id=5162523 [https://perma.cc/WR
    J8-W9CY] (explaining that jawboning entails creation of “informal system of censorship” (quoting Bantam Books, 372 U.S. at 67)). Vullo nominally involved such a pattern. One question facing courts is how much they should draw from Vullo in assessing claims that executive branch actors have conditioned spending to coerce people or entities to do things other than regulate the speech of third parties, such as remain silent about particular topics or engage in particular expression. ↑

  152. . See supra notes 56–61 and accompanying text (discussing arguments about applicability of checks to executive conditions); supra note 116 and accompanying text (discussing Ninth Circuit precedent finding executive conditions violate Spending Clause). ↑

  153. . Prof. Spencer suggested a stringent Dole test for executive conditions to address accountability concerns. Spencer, supra note 24, at 1238–40. ↑

  154. . See Zachary S. Price, Public Functions and Private Resources, 103 Wash. U. L. Rev. 1813 (2026) (developing an analogous argument). ↑

  155. . Gluck & Huberfeld, supra note 40, at 1733–46 (detailing the dynamic negotiation of Medicaid waivers to expand eligibility under the ACA). ↑

  156. . See Youngstown Sheet & Tube Co. v. Sawyer, 343 U.S. 579 (1952). ↑

  157. . Id. at 598–99, 602 (Frankfurter, J., concurring) (noting that legislative history showed Congress debated and withheld such authority); see also id. at 657–58 (Burton, J., concurring) (same). ↑

  158. . Id. at 629–33 (Douglas, J., concurring). See also id. at 631–32 (“The President has no power to raise revenues. That power is in the Congress by Article I, Section 8 of the Constitution. . . . [U]ntil and unless Congress acted, no condemnation would be lawful. The branch of government that has the power to pay compensation for a seizure is the only one able to authorize a seizure or make lawful one that the President had effected [sic]. That seems to me to be the necessary result of the condemnation provision in the Fifth Amendment.”). ↑

  159. . Id. at 635–38 (footnotes omitted) (Jackson, J., concurring). ↑

  160. . See Price, supra note 152. ↑

  161. . See 1 U.S. Gov’t Accountability Off., GAO-04-261SP, Principles of Federal Appropriations Law (3d ed. 2004), https://www.gao.gov/assets/gao-04-261sp.pdf [https://perma.cc/
    K6DQ-JW85]. ↑

  162. . See Settling the Question: Did Bank Settlement Agreements Subvert Congressional Appropriations Powers?: Hearing Before the Subcomm. on Oversight & Investigations of the H. Comm. on Fin. Servs., 114th Cong. 47 (2016) (statement of Ambassador C. Boyden Gray, Partner, Boyden Gray & Assocs.) (describing bank settlement agreements that “obligate the banks to provide hundreds of millions of dollars to third party credit counseling services and lawyers’ trust funds” and asserting that “[t]hese provisions raise difficult questions under the Appropriations Clause and the Miscellaneous Receipts Act”); Paul J. Larkin, Jr., The Justice Department’s Third-Party Payment Practice, the Antideficiency Act, and Legal Ethics, Federalist Soc’y Rev., Oct. 2016, at 28, 29 (concluding that the Appropriations Clause, the Antideficiency Act, and the Miscellaneous Receipts Act prohibit the Justice Department from entering settlements requiring payments to third parties). ↑

The Crisis of Appropriations Law

Posted on by Samuel R. Bagenstos
Bagenstos_The Crisis of Appropriations LawDownload

Introduction

Appropriations law is a unique body of federal law. Appropriations law imposes its own somewhat baroque set of statutory interpretation rules, approves of very broad delegations to the Executive Branch without meaningful limiting principles, and is often exempt from judicial review. One leading scholar has referred to these and related differences from ordinary public law doctrine as reflecting “appropriations marginalization” and “appropriations exceptionalism.”[2]

But perhaps that is all about to change. Donald Trump’s historically aggressive challenge to Congress’s power of the purse has spurred an unusually large volume of exceptionally high-stakes appropriations law litigation. That litigation has already prompted lower courts to abandon a hands-off approach. The Supreme Court’s initial responses have largely sought to divert these issues out of the federal district courts and to the Court of Federal Claims.[3] But the Supreme Court may yet find itself expanding judicial enforcement of appropriations law principles—particularly the constitutional and statutory prohibition on executive impoundment of funds appropriated by the legislature.

The potential implications go beyond the availability of judicial review for impoundment cases, however. The baroque statutory interpretation principles governing federal spending have been developed largely by the Government Accountability Office (GAO)—an agency of the Legislative Branch—as well as by lawyers within the Executive Branch. Although courts have occasionally weighed in on those principles, they have not been the prime movers. Rather, they have largely confirmed and entrenched the practices of those Article I and Article II entities.

And those appropriations-specific statutory interpretation principles, as well as the general reticence of courts to engage in typically intrusive judicial review, are built on a particular vision of interbranch relations. In that vision, it is the annual appropriations process, bolstered by ongoing congressional oversight, that is the principal check on the Executive Branch: The Constitution gives Congress the power of the purse, it gives Congress the tools to enforce that power, and Congress can be expected to use those tools. Judicial enforcement is thus largely unnecessary. Rather, the Executive Branch has an incentive to create a robust internal system of enforcing the expectations that congressional appropriators had when they adopted the relevant spending legislation.

Many of the unusual features of appropriations law can be well understood as implementing that robust internal system. The corpus of appropriations law is full of highly specific statutory interpretation principles that seem to depart significantly from the rules ordinarily applied by courts. But those principles make a lot more sense when seen as reflecting Congress’s expectations when crafting legislation in the very specific context of federal spending. Executive Branch lawyers and budget officers hold their agencies to these principles so that they do not disregard those congressional expectations, lest the agencies be punished by funding cuts or restrictive riders in the next appropriations cycle. And when the GAO elaborates and implements these principles, it is performing a form of congressional oversight that helps to inform the Executive Branch and Members of Congress when agencies have not satisfied appropriators’ expectations. Legislators can follow up with their own, increasingly intrusive forms of oversight, as well as responsive action in later spending bills.

So long as this vision of interbranch relations holds, there is no particular need for courts to engage in searching judicial review; the agencies already have a strong incentive to heed congressional expectations, and the annual appropriations process provides a much more effective remedy than litigation if the agencies fail to do so. Nor is there any need to fear unduly broad delegation. Congress adopts new, must-pass legislation every year that can correct the Executive Branch if it is misusing delegated authority. And congressional appropriators are constantly supervising the exercise of that authority through the oversight process—backed by the threat of withholding or restricting further funds.

The first Trump Administration put pressure on the vision of interbranch relations on which so much of appropriations law is premised. The impoundment of security assistance funds intended for Ukraine—which led to Trump’s first impeachment, and in which GAO found a violation of the Impoundment Control Act—is only the most notable example.

But the second Trump Administration has gone significantly farther. The administration has engaged in impoundment on a massive scale. It has refused to comply with the apportionment transparency law Congress passed in the wake of the Ukraine scandal. And it has repeatedly removed, sidelined, or run roughshod over those offices and officials within the Executive Branch who would otherwise impose internal checks on its actions. Although GAO has now issued several opinions finding the administration in violation of appropriations laws, congressional appropriators have largely remained passive in the face of Trump’s actions—thinking that if they can just pass full-year appropriations laws, perhaps with some tweaks to make them slightly more specific and concrete than in the past, the administration will (this time) feel bound to carry them out.

The vision of interbranch relations that underlies appropriations law doctrine seems to be breaking down before our eyes. The Executive Branch is abandoning its robust system of internal checks. And Congress does not seem to be enforcing its power of the purse through oversight and the annual appropriations process. It is thus sensible to consider whether these changes in the world should spur changes in the law.

Many will argue that the right response is to expand the judicial role. There may well be a place for expanded judicial review, especially in this moment of crisis, but the courts are unlikely to be the solution. That is in part because many of the most significant appropriations law questions will not present an Article III case or controversy. And it is in part because judicial formalism is not well suited to resolving the merits of appropriations disputes, which involve complex and evolving situations where there’s a need for flexibility and mutual accommodation between the branches. The best solution would be for Congress to take steps to reclaim its power.

After elaborating on the analysis discussed above, this Article will identify some steps Congress could take, ranging from the simple to the complex. The Article will offer the most robust case in modern scholarship for primarily political, rather than judicial, enforcement of appropriations law.

I. Why Is Appropriations Law Exceptional?

A. A Brief Precis of Appropriations Law Exceptionalism

Appropriations law departs from ordinary public law principles in many respects. Professor Gillian Metzger labeled this phenomenon “appropriations exceptionalism.”[4]

Examples of appropriations exceptionalism include significant limitations on judicial review. Some of these come from statute, such as the channeling to the Court of Federal Claims of cases seeking recovery of federal funds that were unlawfully withheld.[5] When a party can obtain relief in the Court of Federal Claims—even if that relief will come many years down the line—that party will not be able to invoke federal district court jurisdiction under the Administrative Procedure Act (APA) to seek immediate relief.[6] Thanks in large part to the Supreme Court’s recent underexplained actions on the “shadow docket,” there remains great uncertainty regarding when APA jurisdiction exists to stop an ongoing refusal to spend money.[7]

Even when remedies in the Court of Federal Claims do not oust the federal district courts of jurisdiction under the APA, procedural doctrines will often keep appropriations-related cases out of court. When an Executive Branch appropriations decision is understood to be the “allocation of funds from a lump-sum appropriation,” for example, the Supreme Court has held that the decision will not be reviewable under the APA because “the decision to allocate funds ‘is committed to agency discretion by law.’”[8] As Professor Matthew Lawrence has shown, that holding stands in tension with typical understandings of the APA’s “committed to agency discretion” doctrine.[9] Plaintiffs will also often find it difficult to establish standing to challenge Executive Branch appropriations decisions, because they cannot show injury, causation, or redressability,[10] or because they cannot satisfy the APA “zone of interests” test.[11] In general, courts have “[o]ften . . . declined to decide cases on the merits” when they address “issue[s] of executive compliance with appropriations limitations.”[12]

As a result of these doctrines, appropriations law, more than perhaps any other area of federal law, is primarily elaborated and enforced as something like “internal administrative law.”[13] Even here, though, appropriations law is distinctive: Counsel within Executive Branch agencies, with guidance and direction from the Department of Justice’s Office of Legal Counsel and the Office of Management and Budget’s General Counsel, address appropriations law issues in the first instance.[14] But a Legislative Branch agency, the GAO, plays a central role as well—both in elaborating general principles through its widely consulted Red Book and in issuing decisions addressing whether particular Executive Branch actions complied with appropriations law.[15]

Exceptionalism does not end with the forum in which appropriations law questions are resolved. It also extends to the substance of appropriations law. Exceptionalist doctrines include a ready acceptance of broad grants of authority to the Executive Branch to determine how (and sometimes even how much) to spend, often without specific statutory constraints, yet with little suggestion that nondelegation principles might impose any limits.[16]

Those doctrines also include a number of statutory interpretation principles that are “specific to the appropriations context.”[17] For example, the Supreme Court has said that the general presumption against repeals by implication “is ‘especially’ strong ‘in the appropriations context.’”[18] This super-strong presumption against repeal stems from a more general principle of appropriations law—that provisions in appropriations statutes are strongly presumed to apply only to the particular fiscal year for which they are enacted.[19] The Supreme Court established the rule before the Civil War.[20] GAO has said that the “presumption can be overcome if the provision uses language indicating futurity or if the provision is of a general character bearing no relation to the object of the appropriation.”[21] But both GAO and the courts have read these exceptions in an extremely limited way. As for words of futurity, Congress’s use of the word “hereafter” will “often” suffice—but it “may not guarantee that an appropriation act provision will be found to constitute permanent law.”[22] In Auburn Housing Authority v. Martinez,[23] for example, the Second Circuit held that the following language should be interpreted as applying only to the 1999 Fiscal Year:

Notwithstanding any other provision of law, no funds in this Act or any other Act may hereafter be used by the Secretary of Housing and Urban Development to determine allocations or provide assistance for operating subsidies or modernization for certain State and city funded and locally developed public housing units.[24]

The court held that another provision of the same appropriations law, which included even stronger permanent-law language, demonstrated that Congress knew how to make its intentions clearer if it wanted to.[25]

As Auburn Housing Authority demonstrates, even language that prohibits the spending of funds from “this [Act] or any other Act” will often be held to apply only to the particular fiscal year for which the underlying appropriations law is enacted.[26] And that is true despite the use of the word “any,” the addition of the word “hereafter,” and the lack of any express temporal limitation. That is not ordinary plain-text interpretation.

Other rules of statutory construction in the appropriations context differ substantially from ordinary plain-text interpretation. When Congress adopts an appropriations statute, it provides that the money will be spent for some purpose it identifies. That purpose may be defined very specifically, very generally, or somewhere in between.[27] If Congress identifies the relevant purpose at a high level of generality, that will give the Executive Branch substantial discretion to decide how to spend the money.[28] But administrators will be bound by whatever purpose, at whatever level of generality, Congress has specified.[29]

In many cases, however, GAO and the courts have determined that expenditures made by agencies go beyond the statutorily authorized purpose even when they are fully consistent with the appropriations text enacted by Congress. One example is the very unusual application in the appropriations context of the specific-controls-the-general canon of statutory interpretation. In ordinary statutory interpretation, that canon applies only when two different provisions conflict with each other. As Scalia and Garner say, it “deals with what to do when conflicting provisions simply cannot be reconciled—when the attribution of no permissible meaning can eliminate the conflict.”[30] In the face of such a conflict, the rule that the specific controls the general would treat the more specific provision “as an exception to the general” one.[31]

In the appropriations context, however, GAO and the courts have often applied the specific-controls-the-general canon not to resolve conflicts between appropriations provisions but to create them. Consider one of the classic Comptroller General opinions on this topic.[32] In 1909, Congress adopted a statute that authorized the use of court fines and fees to pay for, among other things, the construction and maintenance of jails in Alaska.[33] In a later appropriations statute, Congress appropriated funds “for repairs, betterments, and improvements of United States jails” during 1925.[34] When repairs to the jail in Nome, Alaska, cost more than court administrators could pay for with the fines and fees they had collected, they sought to use the 1925 appropriation. But the Comptroller General concluded that the expenditure was impermissible. He recognized that the 1925 appropriation “provides for repairs of jails generally and would include Alaska if not otherwise provided for.”[35] But he said that the 1909 statute providing specifically for Alaska jails was “in the nature of a specific appropriation which operates to exclude use of the general appropriation.”[36]

Under ordinary statutory interpretation principles, the specific-controls-the-general canon would not have even come into play. That canon applies only in the case of conflict, and there was no conflict between the two statutes. By their terms, both statutes authorized spending money to repair the Nome jail—the fines and fees statute because it was a jail in Alaska, and the 1925 appropriation because it was a United States jail. And nothing in the text of either statute said it provided the exclusive means of financing anything that was covered by its terms. Just as the same criminal conduct often violates both a general fraud statute and a more specific statute prohibiting fraud in a particular context—without a need for prosecutors or a court to choose between them—under general statutory interpretation principles both statutes should have provided a basis for funding the Nome jail, without a need for administrators to choose between them.

The Alaska jails opinion is hardly an outlier. To the contrary, it represents the mainstream understanding of appropriations law. As GAO says, “[t]he cases illustrating this rule are legion,” and the “key point is that the agency does not have an option. If a specific appropriation exists for a particular item, then that appropriation must be used and it is improper to charge any other appropriation for that item.”[37]

Or consider a 2005 decision from the D.C. Circuit. In its Fiscal Year 2004 appropriations law, Congress appropriated $190 million to the Department of Energy’s Nuclear Waste Fund “‘[f]or nuclear waste disposal activities to carry out the purposes of’” the Nuclear Waste Policy Act (NWPA).[38] But the statute separately stated that, under the Department’s Defense Environmental Services fund, “‘$1,000,000 shall be provided to the State of Nevada . . . to conduct scientific oversight responsibilities and participate in licensing activities pursuant to the’ NWPA.”[39]

Nevada argued it should be eligible not just for the $1 million Congress specifically appropriated under the Defense Environmental Services fund, but also for a share of the $190 million Congress appropriated nationwide under the Nuclear Waste Fund. The D.C. Circuit rejected that argument. It held that “the $1 million appropriated expressly for Nevada would seem to bar any grants from the $190 million Waste Fund appropriation.”[40]

Again, though, there was no reason to apply the specific-controls-the-general canon. On the face of the statutory provisions, both would provide a proper source of funding for Nevada’s nuclear waste disposal activities. And neither provision contained any language that purported to make it exclusive of the other. The D.C. Circuit applied the specific-controls-the-general canon to create a statutory conflict where one did not exist.

Indeed, GAO has gone further and held that even where two equally general appropriations would, on their face, provide authority to pay for a particular object, an agency may not use both. Instead, under the rule appropriations lawyers call “pick and stick,” the agency must choose which appropriation it will use, and stick with that choice at least until the next fiscal year—and if an agency does wish to change in the next fiscal year, it must inform Congress of its intent “as early as possible in the fiscal year, so that Congress is aware of that information during the annual appropriations cycle.”[41] This rule massively departs from ordinary statutory interpretation, where there is no need to choose which of two statutory provisions applies to a particular situation if there is no conflict between them.

B. The Vision of Interbranch Relations on Which Appropriations Law Exceptionalism Rests

What explains these unusual features of appropriations law? Obviously, there can be no single explanation for a phenomenon that extends so broadly across an area of the law, with many individual applications.[42] To a significant extent, though, all of these features can be understood as resting on a particular vision of interbranch relations. In this vision, Congress is extremely active in superintending the appropriations process. Through annual spending legislation and ongoing oversight, Congress has powerful tools to ensure that the Executive Branch carries out its will in implementing appropriations laws. And these tools give the Executive Branch an incentive to create a robust internal system of ensuring that its agencies will carry out Congress’s will.[43]

As I show later in this Section, that vision does a good job of explaining the unusual features of appropriations law. And for a long time, it was a vision that was very well grounded in reality.[44] As Professor Zachary Price notes, “[t]hrough the ingenious practice, begun with the very first Congress, of appropriating funds only one year at a time, Congress has ensured that presidents must always come back every year seeking money just to keep the government’s lights on.”[45] Because Congress must pass new appropriations every year, congressional appropriators can punish the Executive Branch’s failure to heed their intentions by cutting funding for the offending program,[46] cutting funding for other programs that are priorities of the incumbent administration, adding funding specifically “earmarked” for congressional priorities,[47] or adopting corrective legislative language as “riders” to the appropriations bill.[48]

These tools give Congress “ongoing leverage over executive policy.”[49] Knowing they have that leverage available to them, congressional appropriators often frame their spending bills in broad terms, with the understanding that the money will be used in accordance with plans set forth in legislative history, Executive Branch budget submissions, or even more informal communications between the branches.[50] Agencies have tended to adhere to these understandings, because “[t]hey would be foolish, except in extreme cases where the language is flatly inconsistent with the statute, to defy the committees on which they depend for appropriations by ignoring” them.[51]

Moreover, the Executive Branch and Congress have developed a practice that, despite the Supreme Court’s holding in INS v. Chadha,[52] amounts to a legislative veto of administrative reallocations of spending (“reprogrammings”) that deviate from the understandings developed during the appropriations process. The Executive Branch generally will not “reprogram” appropriated funds without first seeking permission from the Chairs and Ranking Members of the Appropriations Committees or relevant subcommittees.[53] Notwithstanding Chadha, agencies have tended to adhere to this practice precisely because they do not wish to provoke retaliation from Congress in the next appropriations cycle.[54] Sometimes, appropriations laws have included statutory text that on its face authorizes Appropriations Committee vetoes of reprogramming, transfer, or other spending decisions[55]—text that on its face violates Chadha. Yet “[d]espite frequently protesting the provisions in presidential signing statements, the executive has since Chadha often chosen to work informally with the relevant congressional committees to address their concerns as expressed in vetoes or threatened vetoes.”[56] Other times, those laws include requirements that the Executive Branch notify the Appropriations Committees a certain period of time in advance of particular spending decisions, to give the appropriators time to object.[57] Although such notification requirements do not purport to bind agencies to heed appropriators’ objections, agencies tend to do so.[58] Failure to heed those objections would come “at great peril” of retaliation by Congress in the next year’s appropriation.[59] As Professor Michael Berry put it in 2016, “[t]he increased use of the committee veto during the last two decades has disproportionately enhanced the oversight reach of the Appropriations Committees of both Houses.”[60] Even absent committee veto provisions, agencies have tended to engage frequently with their appropriators throughout the fiscal year to ensure that they do not deviate too greatly from congressional expectations.[61]

There is reason to believe that the drafters of the Constitution intended, by giving Congress the appropriations power, to give it precisely that sort of control over Executive Branch decisions. It is a commonplace that the drafters took as a given the legislative power of the purse as it had evolved in England, particularly after the Glorious Revolution of 1688, when Parliament “secured supremacy in fiscal matters.”[62] The post-Revolution Parliament instituted the practice of annual appropriations precisely to secure control over the King: “the granting of revenue only for a short duration not only forced the regular calling of parliaments—something all four of the Stuart monarchs had tried, at one time or another, to do without—but also forced regular negotiation with Parliament, and those negotiations often led to concessions.”[63] Indeed, “parliamentary control of appropriations served as a means of leverage to degrade royal authority over time.”[64] As Montesquieu noted just a few decades before the Founding, annual parliamentary appropriations made the executive power “dependent” on the legislative power, thus providing that leverage.[65] The same idea seems to lie behind Madison’s statement, in Federalist 58, that the “power over the purse may, in fact, be regarded as the most complete and effectual weapon with which any constitution can arm the immediate representatives of the people, for obtaining a redress of every grievance, and for carrying into effect every just and salutary measure.”[66]

In short, a coherent vision of interbranch relations regarding appropriations would say that Congress is extremely vocal in letting the Executive Branch know what it wants in the appropriations process, that Congress is extremely active in policing implementation of spending laws to ensure that the Executive Branch follows its will, and that Congress has—and is willing to use—powerful tools to punish the Executive Branch if it deviates from Congress’s desires.[67] That vision, at least until recently, fit well with experience. It also seems to have fit with Founding-Era understandings of the power of the purse.

Under that vision of interbranch relations, the unusual features of appropriations law make a lot of sense. A strong judicial role is unnecessary, because Congress has the tools to enforce the law and is willing to use them. Nor need we worry about broad formal delegations to the Executive Branch, because Congress has—and is willing to use—its own means of constraining the administration of those delegations. The Supreme Court expressly noted this point when it held the allocation of a lump-sum appropriation unreviewable: “of course, we hardly need to note that an agency’s decision to ignore congressional expectations may expose it to grave political consequences.”[68]

And the odd statutory interpretation principles that apply to appropriations laws may simply implement the understandings of appropriators. The strong presumptions against reading appropriations statutes as permanent law, or as effecting repeals of prior statutes, may be understood as presuming that Congress followed its own rules barring the use of appropriations bills to make substantive legislation.[69] Although Congress does not always follow its own rules in this regard[70]—and if Congress does adopt substantive legislation in an appropriations bill, that legislation is fully binding and valid—we might treat the rules as at the least establishing a strong interpretive presumption against reading appropriations text as permanent or substantive legislation.[71]

The unusual application of the specific-controls-the-general rule in the appropriations context may simply reflect appropriators’ baseline premise—that they generally do not intend to fund the same activity out of separate line items, even if the language describing multiple line items might textually be read to cover that activity. The extension of this application in the “pick and stick” rule—which requires an agency to notify appropriators one budget cycle in advance if it wishes to change which of two equally specific appropriations it wishes to use to fund a particular activity—highlights the connection with appropriators’ expectations. And, indeed, congressional staff report that they rely on GAO’s Red Book, which has extensively elaborated the specific-controls-the-general and pick-and-stick principles, in drafting appropriations bills.[72]

The GAO plays a key role in general in this vision of interbranch relations, as the guardian of “Congress’s constitutional prerogatives.”[73] It systematizes and communicates congressional expectations by publishing and periodically updating its Red Book. It further elaborates on those principles by investigating and issuing decisions on appropriations law controversies that Members of Congress refer to it. Those decisions inform congressional appropriators about instances in which agencies have not heeded their expectations and directives, setting the scene for Congress to punish the Executive Branch in the next budget cycle if the agency does not change its ways. All of this gives the Executive Branch a strong incentive to create a robust internal system to ensure compliance with appropriations law as elaborated by the GAO.

II. Trump and the Death of the Vision of Interbranch Relations on Which Appropriations Law Exceptionalism Rests

As I showed in the last Part, much of what makes appropriations law exceptional can be understood as resting on a particular vision of interbranch relations—one in which Congress has substantial power over the Executive Branch and will effectually use it. That vision was one that seems to have informed the Constitution’s founders. And it largely reflected reality until very recently.

But reality is increasingly diverging from that vision. The first Trump Administration put substantial pressure on it, and the second Trump Administration bids fair to kill it entirely. In this Part, I describe the massive change we are undergoing.

A. Pressure on the Vision: The First Trump Administration

During President Trump’s first term, his administration took a number of steps that pressed hard against prior understandings of the relationship between the Executive and Legislative Branches regarding spending.

One of the clearest instances involved the funding of President Trump’s border wall project. When Trump and Congress reached an impasse over border wall funding during negotiations for the Fiscal Year 2019 appropriations, a thirty-five-day partial government shutdown ensued.[74] The President asked for the Department of Homeland Security (DHS) to receive $5.7 billion in border wall funding for that year, but, in the end, Congress appropriated only $1.375 billion.[75]

But on the same day he signed the appropriations bill containing the smaller number, Trump “announced that his Administration had identified ‘up to $8.1 billion’ from three additional funding sources ‘to build the border wall.’”[76] First, he declared a national emergency,[77] and directed the Department of Defense (DOD) to spend on the project $3.6 billion that had been appropriated for military construction. Under 10 U.S.C. § 2808, DOD may “undertake military construction projects . . . not otherwise authorized by law that are necessary to support such use of the armed forces,” when the President declares a national emergency.[78] Second, he directed DOD to use its internal transfer authorities to transfer $2.5 billion into the Drug Interdiction Account, and he directed that the money be used for border wall construction. Under 10 U.S.C. § 284, DOD may “provide support for the counterdrug activities or activities to counter transnational organized crime of any other department or agency,” including through “[c]onstruction of roads and fences and installation of lighting to block drug smuggling corridors across international boundaries of the United States.”[79] And under the transfer provision of the relevant appropriation act, DOD had the power to transfer up to $4 billion from other Department accounts “for higher priority items, based on unforeseen military requirements, than those for which originally appropriated and in no case where the item for which funds are requested has been denied by the Congress.”[80] Finally, he directed the Department of the Treasury to use $601 million from the Treasury Forfeiture Fund to pay for wall construction. The statute governing that fund permits it to be used “in connection with the law enforcement activities of any Federal agency.”[81]

It sure looked like Trump was trying unilaterally to reverse Congress’s decision not to appropriate additional money for the border wall. Critics in Congress charged that Trump was disregarding Congress’s constitutional power of the purse. And both litigation and a GAO investigation quickly ensued.

The litigation proved inconclusive: A district court enjoined the $2.5 billion transfer into the Drug Interdiction Account,[82] but the Supreme Court stayed that order.[83] On the merits appeals, the Ninth Circuit held that the transfer violated the appropriations act’s provision limiting DOD transfers to those “based on unforeseen military requirements” for items that had not “been denied by the Congress.”[84] The court concluded that “the need for a border wall was not unforeseen,” that “the need was unrelated to a military requirement,” and that “surely when Congress withheld additional funding for the border wall, it intended to withhold additional funding for the wall, regardless of its source.”[85] And the court also concluded that it was unlawful for the administration to spend the $3.6 billion in military construction on the border wall, because “the projects fail to satisfy two of the statutory requirements: they are neither necessary to support the use of the armed forces, nor are they military construction projects.”[86] But while appeals of the Ninth Circuit’s decisions were pending in the Supreme Court, President Biden took office and issued a day-one executive order ending the Trump-declared national emergency, reversing the transfers, and ceasing the use of military construction, counterdrug, and Treasury Forfeiture Fund money for the border wall.[87] The Supreme Court accordingly vacated the Ninth Circuit’s decisions in light of the changed circumstances.[88] In the end, “[d]espite some isolated injunctions over the course of the year, none was kept in place by an appeals court, and several lawsuits foundered on ‘standing’ grounds.”[89]

GAO’s inquiry reached a more definitive conclusion. GAO determined that the transfers into the counterdrug account were consistent with the appropriations act’s transfer provision, and that the use of those funds on the border wall was proper.[90] The office concluded that the “military requirements” that underlay the transfers to the counterdrug fund were “unforeseen” at the time Congress adopted the appropriations act, because DHS did not request assistance from DOD until after the President signed that act into law.[91] And it determined that the funds transferred by DOD had not been “denied by Congress,” for two reasons: First, DOD had not requested any border wall funds from Congress; only DHS had.[92] Second, “a reduction from the amount requested is not tantamount to a denial of the item by Congress.”[93]

In light of GAO’s determination, and the inconclusive end to the litigation, one might reasonably see the first Trump Administration’s efforts to circumvent the denial of border wall appropriations as a hardball tactic but not a violation of the power of the purse. But those efforts nonetheless put substantial pressure on traditional understandings of the relationship between the Executive Branch and Congress in spending matters.

The partial government shutdown triggered by the border wall fight put additional pressure on those traditional understandings. During the shutdown, the Trump Administration expansively interpreted the exceptions to the Antideficiency Act to enable a number of public-facing government functions to continue even though Congress had not appropriated money for them.[94] In many instances, it reversed longstanding positions held by both the Executive Branch and the GAO. For example, although the Office of Management and Budget (OMB) had long concluded that the Internal Revenue Service could not pay tax refunds during a lapse in appropriations, Trump’s OMB flipped that position during the 2019 shutdown.[95] The administration also kept county offices of the Department of Agriculture’s Farm Service Agency open,[96] continued work on the Office of Information and Regulatory Affairs’ review of agency regulations,[97] and continued publishing regulations and other documents in the Federal Register.[98] And the administration unilaterally shifted spending for some key programs to funds that did not depend on the passage of a new appropriations bill. For instance, it moved up the date on which it would pay funds to states for their February 2019 Supplemental Nutrition Assistance Program allocation, so that it could spend the money before funding lapsed.[99] And it used recreation fees for trash collection and maintenance at national parks, so they could remain open during the shutdown.[100]

In each of these instances, GAO concluded that the administration had violated Congress’s power of the purse.[101] And GAO said that future actions along the same lines would constitute “knowing and willful” violations of the Antideficiency Act[102]—a statute that carries criminal penalties.[103]

The first Trump Administration did not accept these determinations. Instead, Trump’s OMB General Counsel issued a memorandum to the General Counsels of other agencies “remind[ing]” them that the GAO is a Legislative Branch agency, and that “[w]hen an agency of the Legislative Branch interprets a law differently than the Executive Branch, the Executive Branch is not bound by its views.”[104] As a news report on the memorandum noted, the OMB General Counsel’s stiff-arm to GAO was part of a pattern: “The Trump administration ha[d] rebuffed the watchdog on multiple occasions.”[105]

The administration’s stance toward GAO became even more hostile with the investigations of the summer 2019 withholding of security funds from Ukraine. The Ukraine withholdings formed the basis for President Trump’s first impeachment, so their story is well known. During July and August of 2019, the Trump Administration held off on sending Ukraine hundreds of millions of dollars in aid that Congress had appropriated. The evidence, most notably the transcript of Trump’s “perfect phone call” with Ukraine President Volodymyr Zelenskyy, suggested that the Trump Administration was intentionally holding up the aid to pressure the Ukraine government to dig up dirt on Hunter Biden.[106] But the official story proffered by the Administration was that OMB had paused the spending “to allow for an interagency process to determine the best use of such funds.”[107]

The Senate acquitted the President in the impeachment proceedings. While those proceedings were pending, however, GAO issued its own ruling that the Trump Administration had violated the Impoundment Control Act (ICA) by withholding the Ukraine Security Assistance funds. GAO emphasized that the ICA “does not permit deferrals for policy reasons.”[108] It reasoned that “[f]aithful execution of the law does not permit the President to substitute his own policy priorities for those that Congress has enacted into law.”[109] Because Congress had appropriated the funds for Ukraine security, GAO explained, the Administration could not delay spending the funds to determine whether it agreed with Congress’s policy judgment—and that, it said, is just what the Administration had done.[110]

Two aspects of the Ukraine episode are especially relevant. First, the investigations surrounding the Ukraine withholdings unearthed the first Trump Administration’s pervasive use of apportionment authority as a tool for questioning Congress’s judgments about how to spend federal funds. Congress established the apportionment procedure in the Antideficiency Act to ensure that agencies did not overspend their appropriations.[111] Under that procedure, an agency may not spend appropriated money until it is “apportioned” by OMB, and it may not spend more than OMB has apportioned.[112] OMB, in turn, is supposed to apportion the money to ensure that it is fully spent before the appropriation expires, but not spent so soon that the agency will come back to Congress seeking an extra “deficiency” appropriation.[113] Indeed, the ICA specifically amended the Antideficiency Act to state that “[i]n apportioning or reapportioning an appropriation, a reserve may be established only”: “to provide for contingencies”; “to achieve savings made possible by or through changes in requirements or greater efficiency of operations”; or “as specifically provided by law.”[114]

Although the apportionment process has long been a tool by which OMB exercises policy control over the agencies, the ICA’s amendments made clear that apportionments may not be a vehicle for second-guessing Congress’s policy judgments.[115] Rather, they are the means by which Congress enlists the Executive Branch in carrying out the legislative policy judgments set forth in the appropriations acts. Yet the Ukraine controversy revealed that the first Trump Administration had turned this principle on its head.

Second, Trump’s OMB responded by aggressively attacking Congress’s existing understandings, institutions, and protections of its power of the purse. Most notably, on January 19, 2021—the last full day of the first Trump Administration—OMB Director Russell Vought sent a fourteen-page letter to the House Budget Committee Chair, which argued, among other things, that: “the Committee and Government Accountability Office (GAO) take an over-expansive and incorrect view of Congress’s power of the purse, which infringes upon the President’s own constitutional authorities”; that “the Committee’s and GAO’s view on the proper balance of power between the Legislative and Executive Branches is historically inaccurate”; and that “the Impoundment Control Act of 1974 (ICA) is unworkable in practice and should be significantly reformed or repealed.”[116] This last-minute poison pen letter prefigured the extraordinarily aggressive posture Vought—who would return as OMB Director—would take in the second Trump Administration.

B. Can the Vision Survive? The Second Trump Administration

When he returned to his job as OMB Director in 2025, Vought picked up where he left off in January 2021—though at a much more frenetic pace. And he wasn’t shy about what he was doing. In an on-the-record presentation to reporters, he made the case for “chang[ing] the paradigm” of appropriations, specifically in an effort to make it “less bipartisan.”[117] He said that “[t]here is no voter in the country that went to the polls and said, ‘I’m voting for a bipartisan appropriations process,’” even though he thought such a process was “something that appropriators want to maintain.”[118] During his second stint, Vought has repeatedly said that the ICA is unconstitutional, and that the apportionment process gives OMB the power to shut off spending that Congress appropriated.[119]

It is not just words. As three leading scholars have described it, “the new Trump Administration has asserted broad unilateral authority to defy congressional control over federal spending.”[120]

The second Trump Administration has acted aggressively to withhold funds that Congress appropriated but that do not fit the President’s policy priorities. These actions began on day one of the administration, when the President signed three key executive orders. One required termination of “equity-related” grants and contracts.[121] Another required all agencies to “immediately pause the disbursement of funds appropriated through the Inflation Reduction Act of 2022 (Public Law 117-169) or the Infrastructure Investment and Jobs Act (Public Law 117-58), including but not limited to funds for electric vehicle charging stations made available through the National Electric Vehicle Infrastructure Formula Program and the Charging and Fueling Infrastructure Discretionary Grant Program.”[122] And a third ordered “[a]ll department and agency heads with responsibility for United States foreign development assistance programs” to “immediately pause new obligations and disbursements of development assistance funds to foreign countries and implementing non-governmental organizations, international organizations, and contractors pending reviews of such programs for programmatic efficiency and consistency with United States foreign policy, to be conducted within 90 days of this order.”[123] The order directed OMB to “enforce this pause through its apportionment authority.”[124]

A week later, OMB issued a memorandum requiring agencies across the government to “temporarily pause all activities related to obligation or disbursement of all Federal financial assistance, and other relevant agency activities that may be implicated by the executive orders, including, but not limited to, financial assistance for foreign aid, nongovernmental organizations, DEI, woke gender ideology, and the green new deal.”[125] The administration withdrew the grants-freeze memo the next day, but the White House Press Secretary announced at the same time that “this is NOT a rescission of the federal funding freeze.”[126] Two courts quickly determined that the withdrawal of the memo did not moot challenges to the freeze and issued orders blocking the freeze.[127]

But agencies continued to hold up spending grant funds that had previously been appropriated. In many cases involving existing grants, the administration canceled them based on the assertion that they no longer effectuated agency priorities—sometimes with no further explanation, but often with a brief boilerplate statement that the grant involved “equity,” “DEI,” climate change, foreign aid, or some other topic disfavored by the Trump regime (even in cases where the statutes creating the grants programs specifically directed them to address these topics).[128] In other cases, particularly those involving new grant awards, the administration slow-walked approvals and imposed new internal procedural barriers.[129]

All of these actions triggered further litigation, including enforcement actions in the original grants-freeze cases,[130] and separate challenges to grants terminations on the ground that they were arbitrary and capricious, violated the authorizing statutes, or violated the Constitution.[131] Some of these cases resulted in district court orders issuing injunctive relief.[132]

But the Trump Administration has appealed virtually all of the significant decisions.[133] In shadow-docket rulings involving requests to stay those district court orders, the Supreme Court has increasingly suggested that federal district courts cannot generally issue injunctions against specific grant terminations; rather, terminated grantees must file in the Court of Federal Claims and seek damages, while their research projects will likely terminate—and their labs in many cases close—in the meantime.[134] As Professor Matthew Lawrence has noted, relief in the Court of Federal Claims will typically “come, if at all, many days late and many dollars short.”[135] And a D.C. Circuit opinion involving foreign-aid grants held that grantees could not sue to challenge the termination of their grants; any private right of action, it held, was foreclosed by the Comptroller General’s authority to sue to enforce the ICA—though a subsequent amendment to the decision indicated that its holding applied only to a private right of action to enforce the ICA itself, rather than to a private right of action to enforce the underlying appropriations act.[136]

The freezes, terminations, and impediments to grants represented one important category of Trump’s effort to unilaterally override Congress’s power of the purse. Another important category involved Trump’s actions to close agencies created and funded by Congress, or lay off so many agency staff that they could not perform the tasks for which Congress created and funded them. The most prominent agency closure cases involved the United States Agency for International Development—which then-Department of Government Efficiency (DOGE) head Elon Musk pledged to feed to a “wood chipper”[137]—and the Department of Education,[138] though Trump also sought to close less prominent agencies like the United States Institute of Peace[139] and the Institute of Museum and Library Services.[140] And mass layoff cases spanned the government—including most notably the Department of Education itself (which the President recognized he could not formally close, but which his administration gutted by “slash[ing] the agency’s work force in half”)[141] and the Department of Health and Human Services (where his administration cut almost a quarter of agency staff).[142] Once again, though, litigation against these actions has had limited effect. Although district courts have issued relief in some cases, and appeals remain pending, the Supreme Court has shown a willingness to let the Trump Administration have its way.[143]

In the meantime, GAO has repeatedly found that actions of the second Trump Administration violated the ICA. In particular, the office held that the administration unlawfully impounded appropriated funds when agencies:

  • withheld appropriations for the National Electric Vehicle Infrastructure Formula Program created by the Biden-era Bipartisan Infrastructure Law;[144]
  • terminated thousands of grants, and reduced overall spending to about 19 percent of the congressional appropriation, in the Institute of Museum and Library Services;[145]
  • withheld funds from Head Start grant programs;[146]
  • withheld grants Congress created in the Bipartisan Infrastructure Law to enable schools to make energy efficiency improvements;[147]
  • terminated over 1,800 grants at the National Institutes of Health (NIH) and imposed substantial procedural barriers and delays on new NIH grants;[148] and
  • delayed funds for the Emergency Food and Shelter Program, Shelter and Services Program, and Next Generation Warning Assistance at the Federal Emergency Management Agency.[149]

OMB Director Vought and General Counsel Mark Paoletta (who also returned to his first-term role) responded by attacking the GAO, picking up where they left off at the end of the first Trump Administration. They tried to cut GAO’s budget and limit its power to go to court to enforce the ICA.[150] They repeatedly told agencies to disregard GAO’s legal conclusions.[151] And they informed GAO that the administration would cooperate with GAO inquiries only “when doing so does not impede its ability to carry out President Trump’s agenda.”[152]

Taken together, these actions amount in practice to the assertion of a presidential power to impound funds appropriated by Congress.[153] Add in the attacks on GAO in response to findings of ICA violations, and the picture gets even clearer.

The renewed attack on GAO is just one way the second Trump Administration has sought to undermine the institutions that enable congressional oversight of its execution of appropriations laws. Another key example relates to what has become known as “apportionment transparency.” In response to the first Trump Administration’s use of apportionment authority to second-guess the policy judgments incorporated in appropriations acts, Congress in 2022 adopted “a statute requiring the Executive Branch to publish its apportionment decisions on a publicly available online database within two days of the decision.”[154] OMB complied with the statute until March 2025, when it took the database offline.[155] In a letter to congressional leaders, Director Vought explained that publishing the apportionments had “a chilling effect on the deliberations within the Executive Branch,” “undermined OMB’s effectiveness in supervising agency spending,” and potentially risked disclosing information in a way that would “pose a danger to national security and foreign policy.”[156]

Here, litigation has proven fruitful. A federal district court held that the administration had violated the apportionment transparency law. It permanently enjoined OMB “from removing the Public Apportionments Database or otherwise ceasing to post apportionment information on a publicly available website in the time and manner required by the 2022 and 2023 Acts without statutory authorization.”[157] Although the Trump Administration appealed, the D.C. Circuit denied a stay. And OMB has resumed posting apportionment documents on its website (though there are indications that it has moved some important information out of the formal apportionment documents in an effort to evade or skirt the court’s ruling).[158] Those documents showed that Trump’s OMB was using the apportionment process to hold up “billions of dollars from low-income housing services, education assistance, medical research grants and other programs approved by Congress.”[159]

Perhaps the administration’s most aggressive attack on the traditional understanding of interbranch relations has come in the rescission process. The ICA set up a process in which the President may propose to rescind appropriations.[160] The proposal must detail the particular spending the President seeks to rescind, as well as the reasons for the rescission.[161] Congress considers the proposed rescission under special fast-track rules—crucially, ones that require only a simple majority in the Senate.[162] Congress must “complete[] action” on any rescission bill “before the end of the first period of 45 calendar days of continuous session of the Congress after the date on which the President’s message is received by the Congress.”[163] To enable Congress to consider and vote on the proposal, the ICA gives the Executive Branch the authority to hold off on spending the money the President seeks to rescind, but the statute emphasizes that “[a]ny amount of budget authority proposed to be rescinded . . . shall be made available for obligation unless, within the prescribed 45-day period, the Congress has completed action on a rescission bill rescinding all or part of the amount proposed to be rescinded or that is to be reserved.”[164]

When the same party controls the presidency and both houses of Congress, the ICA’s rescission process provides a tool for unraveling some key presuppositions about how the appropriations process works. The requirement that annual appropriations bills overcome a Senate filibuster has helped ensure that the process remains relatively bipartisan even in a highly polarized era, because it is extremely rare for one party to have a sixty-vote supermajority.[165] The bipartisan nature of the process has been somewhat eroded by the increasing use of budget reconciliation bills during periods of unified government, because those bills require only a simple majority in the Senate to pass.[166] But the reconciliation process is generally limited to mandatory funding, rather than annual discretionary appropriations.[167] And the Byrd Rule has significantly limited the degree to which reconciliation bills can make new policy, even if that rule has come under pressure in recent years.[168]

But the rescissions process could, in times of unified government, completely undermine the bipartisan nature of even the annual appropriations process. Democrats and Republicans can negotiate an appropriations bill that gives enough to both sides to obtain sixty votes in the Senate, the President can sign it into law, then the majority party can turn around and pass a rescission bill that eliminates the concessions they made to the minority. If Presidents use the rescission process too freely—in particular, to second-guess policy concessions made when negotiating an appropriations bill, rather than to respond to circumstances that changed since the enactment of such a bill—the appropriations process could break down. Why would the minority party engage in negotiations and give their votes to pass an annual appropriation if they knew that the majority could use the ICA’s rescission provisions to go back on the deal the next day?

Perhaps out of a norm of forbearance,[169] presidents prior to Trump had used the ICA’s rescission provisions sparingly, and Congress had passed rescission laws under those provisions even more sparingly. Before the second Trump Administration, Congress had voted on bills under the special ICA rescission procedures only twice since 1979.[170] Congress enacted a very large number of rescissions during that time, of course, but it relied on unanimous consent and regular-order procedures, rather than the ICA procedures that skirt the filibuster.[171]

But in July 2025 the second Trump Administration pushed through a rescission bill that cut $9 billion in previously appropriated funds.[172] The bill passed with only Republican votes, and it was justified purely by the Administration’s policy disagreement with the prior appropriation.[173] Although $9 billion is a relatively small number in the context of the overall federal budget, the 2025 rescission bill was proof of concept that a bare Republican majority in the Senate is willing to use the ICA’s rescission process to go back on bipartisan agreements that were necessary to get sixty votes for the annual appropriations bill.

The Trump Administration upped the ante on August 29, 2025, when it proposed a new $5 billion rescission of foreign aid funds. Because he sent Congress the proposal within forty-five days of the end of the fiscal year, when the funds at issue were set to expire, Vought asserted that the ICA’s forty-five-day deferral provision permitted the administration to refuse ever to spend the funds, regardless of whether Congress acted on a rescission bill.[174] Although GAO had previously concluded that the ICA does not authorize such “pocket rescissions”[175]—and a federal district court agreed when it enjoined the Administration’s action[176]—Vought has emphatically disputed that conclusion.[177] The Supreme Court stayed the injunction on the shadow docket; it stated that “[t]he Government, at this early stage, has made a sufficient showing that the Impoundment Control Act precludes respondents’ suit, brought pursuant to the Administrative Procedure Act, to enforce the appropriations at issue here.”[178]

In any context, the assertion of a “pocket rescission” power would have been understood as an aggressive challenge to congressional prerogatives; after all, it is effectively a claim that the ICA, which Congress adopted to limit the executive refusal to spend appropriated funds, actually authorizes that very refusal. And the assertion was even more aggressive in the context of the particular funds the Trump Administration targeted: The administration had been sitting on those funds, refusing to spend them, for months, triggering litigation that alleged an unlawful impoundment. A pocket rescission here would thus effectively ratify an ongoing impoundment of funds.

With its aggressive actions to aggrandize executive power, the second Trump Administration has threatened to overturn the understanding of interbranch relations that has long informed appropriations law. But there is another side to the equation. Under the received wisdom, Congress is not powerless when the Executive Branch oversteps its role in federal spending. Rather, as we saw in Section II.A, Congress has powerful tools to discipline the President.

But Congress has not taken any effective action—or even particularly tried to take any effective action—to strike back at the most significant aspects of Trump’s self-aggrandizement. Across the administration, executive officials have disregarded appropriations laws, impounded funds, stiff-armed oversight, and used rescissions in unprecedented ways to undo bipartisan deals made in Congress. And Congress has had opportunities to clap back. When annual government funding expired in March and September 2025, it could have adopted extremely short-term extensions to ensure that the Executive Branch would actually spend the funds appropriated; it could have cut funds for programs the President cared about if the President did not lift the grant freezes and spend funds appropriated to other programs; it could have restricted the use of federal funds to pay officials who engage in impoundments; and it could have just straightforwardly cut the salaries of individuals who have engaged the most egregious behavior challenging Congress’s power of the purse. (I include a fuller menu of potential congressional responses in Part III below.) But it did none of these things.[179] Indeed, although Democratic legislators triggered the longest government shutdown in history when they refused to pass new appropriations at the end of September 2025, they focused almost entirely on the policy issue of extending health insurance subsidies; they did not insist on any provisions to protect Congress’s power of the purse.

Perhaps most notably, despite some grumbling, and defections from a couple of members of the majority party, Congress affirmatively cooperated in passing the July rescissions package that threatens to unravel the whole structure of inter-party bargaining on which the appropriations process relies.[180] And the appropriations bills reopening the government in late 2025 contained no language to bar use of the ICA’s rescission process on them—even for “pocket” rescissions. When Congress passed full-year appropriations for every agency but DHS in early February 2026, appropriators bragged that they had seized back the power of the purse from the President.[181] But in fact they limited their actions to ones that made their appropriations more specific,[182] along with some essentially unenforceable language designed to prevent the Trump Administration from closing the Department of Education.[183] But, once again, Congress did not include specific language to address the ICA rescissions issue, visit any consequence on the administration for violating Congress’s instructions, or otherwise protect the power of the purse. Small wonder that an administration spokesperson described the law as not “compromis[ing]” its “executive authorities to control spending” in any way.[184] Nor is it a surprise that, even after the adoption of full-year appropriations that refused to make cuts to NIH and other grant programs, all indications are that OMB continues to hold up release of the funds.[185]

It is perhaps not surprising that Republicans, who occupy the majority, have not pushed back against the Trump Administration. The Trump experience confirms the wisdom that we now live in a system of “separation of parties, not powers.”[186] Even so, Republican appropriators have undermined their own role both by going along with the President’s actions in general and, in particular, by voting for the July 2025 rescissions package that threatens to undermine their ability to make deals on appropriations bills in the future. In this regard, it’s notable that the two Republican Senators who voted against the rescissions package, Susan Collins and Lisa Murkowski, are senior appropriators; Collins chairs the Senate Appropriations Committee.[187] Senator Collins also forcefully criticized the Trump Administration’s “pocket rescissions” on the day OMB Director Vought announced them.[188] But these noises of Republican opposition have not been matched by effectual action to check the Trump Administration.

What might be more surprising is that Democrats have not significantly pushed back, either. The sixty-vote threshold for appropriations bills gives them a tool to do so: They can withhold support for government funding if the bill does not include provisions establishing effective checks on Executive Branch overreach. But Democrats refused to play that card when they provided the necessary votes to fund the government in March 2025.[189] And they ultimately agreed to end the late 2025 shutdown without any new power-of-the-purse provisions. With Congress so closely divided, and the Democrats focused on retaking power in the midterms, they chose to focus on the issues they thought would resonate with the public—health care costs, not Congress’s power of the purse. As Professor Frances Lee has written, “When majority control of Congress hangs in the balance, members have more reason to prioritize their partisan identity over their institutional identity.”[190]

At this point, it looks like the vision of interbranch relations that informs the odd shape of appropriations law is all but dead. The second Trump Administration has demonstrated that a determined President can systematically and pervasively override Congress’s spending decisions, and thwart key tools of congressional oversight, without triggering any effective response from Congress or the courts. In this context, it is hard to believe that Executive Branch officials still fear retribution for crossing their appropriators.[191] As a result, agencies no longer have a powerful incentive to create a robust body of “internal administrative law” anticipating and enforcing congressional expectations. If the vision of interbranch relations on which appropriations law is built has so substantially changed, there is every reason to expect the doctrines and institutional structures of appropriations law to change as well. In the next Part, I offer some proposals for how to address the new reality.

III. Responding to the Crisis in Appropriations Law

To review the bidding: In Part I, I argued that the odd rules and institutional structures of appropriations law rest on a particular vision of interbranch relations—one in which Congress has, and is willing to use, powerful tools to enforce on the Executive Branch its intent in adopting appropriations legislation. That vision makes sense of some of the unusual features of appropriations law doctrine, as well as of its implementation primarily through internal administrative law rather than through judicial review. In Part II, I showed that appropriations law’s animating vision is increasingly divorced from reality, as the Trump Administration aggrandizes the Executive Branch and Congress fails to push back effectively.

In this Part, I explore how to respond to this crisis. It is natural to think that the response should take the form of a more robust judicial role in enforcing appropriations law.[192] And I will get there. But Congress is in a far better position to take action—and it is after all Congress’s own power of the purse that is at issue. I thus begin, in Section III.A, with steps that Congress can take to push back on Executive Branch overreach in the immediate term. In Section III.B, I turn to more systemic changes that Congress can make to the appropriations law framework. Although the first Trump Administration spurred some calls for reform to existing laws like the ICA and the Antideficiency Act,[193] the second Trump Administration has shown that those proposed reforms were too tame. I suggest some more radical statutory changes. Finally, in Section III.C, I turn to judicial remedies. There is a role for the courts, particularly in providing immediate relief to those who rely on federal grants. But I am skeptical that judicial review is the most significant part of the solution here. Congress needs to stand up for its power of the purse. If it does, a much more robust judicial role will be unnecessary. If it does not, courts are unlikely to solve the problem whatever we might want them to do.

A. What Congress Can Do in the Immediate Term

As I showed in Part II, Congress has not taken effective action to check the Trump Administration’s disregard of its power of the purse. Many would argue that there is nothing they can do about Trump’s actions. Congress can adopt appropriations laws, but if the President doesn’t spend the money, how can Congress make him? Many legislators have offered up this argument to deflect criticism of their failure to respond to Trump. They have said that if Trump refuses to follow the law it is the courts, not Congress, that can make him comply.[194]

This argument is initially alluring. But it ultimately lets legislators off the hook too easily. Congress in fact has any number of tools to effectively force action by the Executive Branch. The use of these tools would be unorthodox, to be sure. But Congress hasn’t needed to use them much—or in some cases at all—in the past. Now that the Executive Branch is mounting an unprecedented challenge to the legislative power of the purse, it would be more than appropriate for Congress to respond with equally unprecedented force.

What might Congress do? A Congress committed to defending its power of the purse could use annual appropriations as leverage in a much more aggressive way than legislators have in the recent past. If the Executive Branch refuses to spend funds appropriated for projects or programs that the President doesn’t like, Congress can respond by refusing to appropriate funds for programs that he does like—and specifically prohibiting transfers or reprogrammings that would evade this refusal.

Congress can also attach riders that prohibit the spending of funds for the salaries of officials who withhold appropriated funds.[195] Congress can use the “Holman Rule” to single out the officials who are particularly responsible for impounding funds, and cut their salaries to $1.[196] (OMB Director Vought would be an obvious candidate here, but one can imagine many others.) Constitutional objections might be raised against specific salary restrictions—particularly those that target named individuals or high-ranking White House aides[197]—but Congress might well decide that the President’s aggressive attacks on its power deserve an equally aggressive response.

Nor need Congress wait to impose these costs until the next appropriations cycle. Congress could write them into an appropriations act as self-executing conditions for obligating funds, or as self-executing consequences for not obligating funds. It could, for example, provide in an appropriations act that money for specific programs that are a high presidential priority would not be available until the government obligates money for other specific programs that the Executive Branch would otherwise be tempted not to spend. (Congress could say that funds appropriated for Immigration and Customs Enforcement (ICE) detention could not be obligated until the Executive Branch obligated funds appropriated for foreign aid, vaccines, or medical research, for example.) Congress could also say that unless a certain percentage of funds appropriated for particular programs are obligated by a given date, no money shall be spent on salaries for the political appointees responsible for that program for the rest of the fiscal year.[198]

Should Congress find these sorts of conditional appropriations (or conditional riders) too cumbersome, it has a ready response—shortening the terms of appropriations acts. If the Executive Branch has to come back to Congress for funding not every year but every couple of months, it will have a strong incentive to hold to any deal it negotiated to unlock funds in the first place. Congress could adopt special fast-track procedures to limit the debate and floor time occupied by these short-term appropriations, without sacrificing the sixty-vote requirement in the Senate.

Congress can also take action specifically directed at the techniques the Trump Administration has used to override the policy decisions embedded in appropriations acts. One of these techniques is relying on the special procedures governing rescissions in Sections 1012 and 1017 of the ICA.[199] Trump has used these procedures to enable a bare partisan majority to unravel bipartisan deals enacted in prior appropriations bills, as well as to justify its “pocket rescissions.” Congress could foreclose these techniques in any annual appropriations act by simply including a provision that the special procedures governing rescission shall not apply to any appropriation in that act. Going further, Congress could, and should, eliminate the ICA’s rescission provisions as a matter of permanent law. Congress frequently makes rescissions as part of the ordinary appropriations process. There is no need for a special fast-track procedure for presidentially proposed rescissions, nor is there a need for a provision allowing funds to be withheld pending a rescission request. Recent experience has shown that the ICA’s rescission procedures empower executive abuses that cannot be justified by any public-regarding benefit those procedures offer. I discuss this issue further in Section III.B below.

Apportionment is the other technique the Trump Administration has employed to thwart Congress’s policy decisions. The Antideficiency Act generally requires the President (or OMB, his delegee) to apportion appropriated funds before an agency may spend them.[200] But Congress has the power to eliminate or change that requirement, or to create exceptions to it. In the immediate term, appropriations acts could identify those programs the Trump Administration is particularly likely to resist and provide its own apportionment schedule for them. For example, the act could state that the apportionment requirement of 31 U.S.C. § 1512 shall not apply to a $1 billion appropriation for foreign aid, and that $250 million shall be available for obligation on each of October 1, January 1, April 1, and July 1. Such a provision would deny OMB the opportunity to use the apportionment process to delay or withhold funds from that account. (More general reforms to the apportionment requirement would offer a longer-term solution; I offer some suggestions in that regard in Section III.B below.)

Finally, although I do not believe the courts will provide the ultimate solution here, individuals and entities who depend on federal funds have suffered great harm by being denied an immediate remedy to keep the money flowing when the Trump Administration has refused to spend appropriated dollars. An appropriations act could include a provision stating that the prospect of subsequent availability of a damages remedy in the Court of Federal Claims will not foreclose a cause of action in federal district court seeking immediate injunctive relief against an unlawful termination or withholding of a federal grant. Such a provision would flip the Supreme Court’s emerging doctrine, which originated in its Department of Education v. California stay order, making the Tucker Act the exclusive remedy for unlawful grants terminations.[201] Congress could, and should, make that provision permanent law.

B. Changing the Appropriations Law Framework Statutes

1. Existing Proposals

Responding to the first Trump Administration’s encroachments on congressional power, good-government groups coalesced around a major proposal to amend the key framework statutes that govern the appropriations process.[202] Some significant aspects of that proposal have been adopted in various appropriations statutes since then—including, most notably, the apportionment transparency requirement discussed in Section II.B, which Congress made permanent law in 2023.[203]

Professor Eloise Pasachoff, who testified in Congress to support the good-government groups’ proposal, has provided the most extensive academic defense of the amendments the proposal would effectuate—and has added a few suggestions that go further. She describes the proposals she supports as falling into four categories:

1. “[T]ransparency and Informational Reforms.”[204]

2. “[S]ubstantive reforms,” including, with respect to OMB, making clear that “the power to apportion appropriated spending is not an independent source of policy authority”; “requiring timely apportionment; and restricting the ability to propose rescissions or deferrals in the final ninety days of the fiscal year,” and, with respect to agencies, “making agencies report and explain their disagreements with GAO’s findings of Antideficiency Act violations; adding the potential for civil penalties for violations of the Impoundment Control Act; and requiring identification and explanation of whether Antideficiency Act violations merited criminal investigation.”[205]

3. Strengthening “GAO’s authority to conduct investigations and obtain information relating to potential Antideficiency Act and Impoundment Control Act violations.”[206]

4. Expanding the ICA by “clarifying that special messages are required even in the context of the GAO-created category of programmatic delay,”[207] and “add[ing] a fast-track mechanism to review the administration’s policy choices stemming from” OMB and agency spending decisions “based on expansive interpretations of spending statutes.”[208]

These proposals seem to me worthy, by and large. Aside from the provision barring “pocket rescissions” by prohibiting rescission proposals in the last ninety days of a fiscal year, though, they fail to respond to the significance of the current crisis in appropriations law. For the most part, these proposals are informational in nature—they will ensure that we all know more about Executive Branch violations of the power of the purse, but they will leave it to Congress to respond in each instance. Yet Congress has proved itself unwilling to act in the face of even highly aggressive presidential encroachments on its appropriations power, particularly in times of unified government. There is no reason to believe that just shedding more light on what the Executive Branch is doing in particular cases will make a difference.

That is especially true in light of the continued room for disagreement about how to apply the basic substantive principles of appropriations law. The proposal to clarify that the apportionment power is not an independent source of policymaking authority for the Executive Branch illustrates the problem. Both the courts and GAO have already recognized that the apportionment power does not give the President authority to second-guess the policy judgments made by Congress in appropriations acts.[209] It is true that OMB Director Vought and General Counsel Paoletta have disagreed with that proposition, so clarifying it in statute may do some good (though you could easily imagine Vought and Paoletta challenging such a statute on Article II grounds). But that change would not in any significant way rein in abuse of the apportionments authority, because a smart administration official can virtually always find some “programmatic” reason to hold up or condition an apportionment. Even in the cases in which GAO has found a violation of the ICA, the administration has typically had at least a colorable, though not ultimately persuasive, argument that it was acting to serve the efficiency and economy goals that underlie the apportionment requirement.[210] It will thus be difficult to override a determined administrator’s argument that a delay is programmatic even with an effective procedural means of enforcing the ICA. And absent a truly effective means of enforcing the ICA, it will be all but impossible.

That brings me to the proposed (slight) expansion of GAO’s authority to sue to enforce the ICA. For reasons discussed in Section III.C below, I am doubtful that the courts will ultimately vindicate Congress’s power of the purse in these cases, particularly where the question whether the Executive Branch was asserting an independent power to make policy is arguable. And I am especially wary about relying on GAO for such litigation. For one thing, the prohibition on presidential removal of the Comptroller General, on which the Supreme Court relied in categorizing GAO as an agency of Congress in Bowsher v. Synar,[211] has not been tested against the current Supreme Court’s much more aggressive unitary-executive approach. It is entirely possible that the Supreme Court, as currently constituted, would permit the President to fire a Comptroller General who brought suit against the Executive Branch. Perhaps more likely, courts will continue to consider GAO a Legislative Branch agency, but will apply limitations on congressional standing to bar it from suing the administration for violating the ICA.[212] I am fully on board with the project of overturning the Supreme Court’s current expansive understanding of executive power. But that is a longer-term project. In the near term, GAO litigation is likely an insufficient response to the crisis of appropriations law.

Something similar can be said about proposals to expand the use of legislative vetoes in appropriations law matters. I fully agree with Professor Josh Chafetz that Chadha is one of the most pernicious Supreme Court decisions in recent decades and should be overturned.[213] A fortiori, I agree with the more narrow suggestion, offered by Professor Metzger and Professor Peter Strauss, that legislative vetoes should be permitted in the context of appropriations law even if nowhere else.[214] But getting the Court to overrule or find significant exceptions to Chadha, while worthy, is also a longer-term project. It will not provide a response to the crisis any time soon.

And, indeed, given Congress’s current supine posture on the power of the purse, there is reason to doubt that Congress would actually use the legislative veto tool on matters of significance even if that tool were available.[215] As with the process-based reforms championed by good-government groups, legislative-veto legislation that relies on Congress to respond to individual instances of Executive Branch overreach is likely to fail, as legislators bow to Presidential and electoral pressure to keep their powder dry.

2. New Proposals

So what reforms to the appropriations framework statutes might work? The good-government groups and Professor Pasachoff are not wrong to target the portions of the Antideficiency Act (ADA) and the ICA that the two Trump Administrations have abused. But their proposals merely seek to limit those abuses around the edges; effective amendments to these statutes will need to cut much more deeply.

Start with the ADA. In both Trump Administrations, OMB has used the apportionment power as a tool to substitute its policy judgments for those Congress embodied in appropriations acts. And because the ADA prohibits agencies from spending money that exceeds an apportionment—on pain of criminal penalties, no less—agencies have had no effective recourse. Transparency reforms may help to call attention to instances in which OMB is abusing the apportionment power, but they will not effectively constrain those abuses. Nor will efforts to emphasize, yet again, that the apportionment power does not grant independent policymaking authority to the executive.

Instead, Congress needs to seize control of apportionments. Currently, the ADA’s apportionment provisions require that “an appropriation available for obligation for a definite period shall be apportioned to prevent obligation or expenditure at a rate that would indicate a necessity for a deficiency or supplemental appropriation for the period,” and “[a]n appropriation for an indefinite period and authority to make obligations by contract before appropriations shall be apportioned to achieve the most effective and economical use.”[216] They grant the President (and OMB, to whom he delegated this power) discretion to achieve these goals by apportioning “as [he] considers appropriate.”[217]

Congress adopted the apportionment requirement in 1905 because agencies had repeatedly demonstrated a tendency to spend down their appropriations early in the fiscal year, and then come back to Congress seeking more.[218] Even if some kind of apportionment process may remain necessary to achieve that goal, there is no reason why Congress must trust the Executive Branch to determine how and when to apportion funds. Congress could specify the apportionment itself. It might, for example, repeal the apportionment provisions of the ADA and state that, unless a contrary provision appears in a particular appropriations act, spending appropriated for a single fiscal year shall be available for obligation on a quarterly basis, with one-fourth of the appropriation available at the start of the first quarter of the fiscal year, one-fourth at the start of the second quarter, and so forth. Multi-year appropriations could be available in equal fractions each quarter as well. For no-year appropriations, Congress could adopt a similar presumptive rule of time-based availability. These rules would limit the ability of agencies to overspend early in the period of availability of an appropriation, without relying on OMB to determine how to do that.

Crucially, these time-based rules would simply be off-the-rack terms. For any specific appropriation, Congress would be free to depart from those terms by specifying a different basis for doling out funds. An appropriation for a construction project, for example, might specify that a certain portion would be available immediately for the agency to engage in planning activities, another chunk would be available for ground-clearing activities once the agency completed the plan, and another chunk would be available to finish construction once the ground clearing was done—or whatever other more precise formula for doling out the money makes sense for that particular project. And Congress would be free, in a particular appropriations act or in a framework statute, to apply non-time-based rules like these to broad categories of appropriations. It could even decide, for certain appropriations or categories of appropriations, that the issues were so complex and contingent on fast-moving events, and the risk of executive overreach was so small, that it would be appropriate for OMB to make apportionment decisions. But absent some special provision like that, the new framework would take apportionment authority away from the Executive Branch and return it to Congress itself.

A more modest proposal would retain the executive apportionment authority in the first instance, but give an agency the power to spend funds if OMB did not apportion them within a specified period of time, such as ninety days. Such a proposal would preserve any coordination and planning benefits that the current apportionment process provides, without empowering the White House to hold up congressionally enacted funding indefinitely.

As to the ICA, the rescission provisions have proved to be the significant source of Executive Branch abuse. The Trump Administration’s assertion of a “pocket rescission” power, which reads a statute intended to limit presidential impoundments as somehow affirmatively authorizing those impoundments during the last forty-five days of a fiscal year, cries out for a response.[219] As noted in the previous Section, the good-government groups have offered an effective countermove by proposing that the ICA’s rescission provisions may not be used during the last ninety days of a fiscal year.[220] (The groups use ninety, rather than forty-five, days to acknowledge the reality that it may as a practical matter take some time to obligate funds once they become available after the end of the forty-five-day withholding period.)

That is a good start, but it does not address the other abuse of the ICA’s rescissions provisions—the use of those provisions to unravel bipartisan deals made during the annual appropriations process.[221] Beyond simply making pocket rescissions unavailable, Congress should entirely repeal the ICA provisions setting up the special process for rescissions. That special process is unnecessary—Congress is free to, and very frequently does, rescind spending without using that process. For decades, the President and Congress barely used the ICA’s special rescission process, despite adopting many, many rescissions.[222] Now that the Trump Administration has shown that presidents can and will use that process, however, it threatens to unravel Congress’s ability to enter into bipartisan agreements to pass appropriations acts in the first place. The costs of the ICA’s rescissions provisions now clearly exceed their benefits.[223]

Finally, Congress should provide a right to immediate judicial relief to keep federal grants from being unlawfully cut off. In particular, as I argued above, Congress should specify that the prospect of subsequent availability of a damages remedy in the Court of Federal Claims will not foreclose a cause of action in federal district court seeking immediate injunctive relief against an unlawful termination or withholding of a federal grant.[224] Such a provision could be included in an appropriations act (preferably with sufficient words of futurity to make it permanent law). But Congress could also codify it as an amendment to the ICA, the Administrative Procedure Act, or the Tucker Act.

C. The Role of Judicial Remedies

As my discussion of relief for improperly terminated grants suggests, I believe there is a role for expanded judicial remedies in addressing the crisis in appropriations law. Other commentators have also suggested that courts should become more intensively involved in policing the Executive Branch’s compliance with Congress’s power of the purse. As I noted above, Professor Pasachoff argues for expanding GAO’s power to sue for ICA violations.[225] And Professor Metzger makes at least a tentative case “that the specific limits Congress includes in appropriations acts be judicially enforceable,” primarily through broader congressional standing to sue.[226] Professor Lawrence, by contrast, has expressed wariness of a robust judicial role in appropriations disputes[227]—and Professor Pasachoff herself has noted that “[g]iven the unceasing nature of the executive budget process and the slow pace of litigation, there is no way for courts reliably to police executive budget decisions.”[228]

Although courts may play an important role in providing immediate relief to federal grantees who have unlawfully lost their federal funds, I am skeptical that judicial review is a systemic, long-term solution to the crisis in appropriations law. Rather, it is Congress that needs to step up, use the tools it has, and develop more creative tools to assert its power.[229] In Sections III.A and III.B, I have described what I think Congress should do. Here, I explain why I think the solution should not rely significantly on courts.

For one thing, judicial formalism is not well suited to resolving the merits of appropriations disputes. Judging, at least in our current era, is highly formalist and rule bound. But many appropriations issues—including a very large fraction of those that result in major disputes—involve complex and evolving situations where flexibility, adaptation, and mutual accommodation are the order of the day. These are the kinds of issues best addressed by a political rather than a judicial process. The Supreme Court emphasized these dynamics when it held that the allocation of funds from a lump-sum appropriation is committed to agency discretion by law. The Court noted that “the very point of a lump-sum appropriation is to give an agency the capacity to adapt to changing circumstances and meet its statutory responsibilities in what it sees as the most effective or desirable way.”[230] When Congress departs from the lump-sum approach and imposes more specific restrictions or requirements on the use of funds, an agency’s failure to heed those specific demands might well be an appropriate target for judges.[231] But that is a different question than whether Congress should place principal reliance on judicial review to ensure that the Executive Branch complies with its funding conditions.

Indeed, the judicial process is unlikely to prove an effective champion of Congress’s power of the purse, even in the best-case scenario. Under prevailing interpretations of Article III’s case-or-controversy requirement, federal courts will look for discrete violations of law, rather than broad policies that seem somehow disrespectful of law.[232] That has been a problem in the cases involving Trump’s allegedly unlawful dismantlement of agencies and mass firing of federal employees.[233] The plaintiffs made a strong case that it would be impossible to prudently obligate agency appropriations after having eliminated various offices and fired so many staff. But there was no way to conclusively establish the point—and in particular no clear point at which understaffing becomes an illegal impoundment. (Is firing 10 percent of the staff enough? 25? 50?) Although GAO was willing to find that a substantial slowdown in agency spending constituted an impoundment, despite the absence of any clear line dividing the lawful from the unlawful,[234] formalist judges are likely to be extremely uncomfortable engaging in that sort of reasoning.

Moreover, courts are historically a highly conservative force within government.[235] During the Roberts Court in particular, the federal courts have adopted an aggressive version of the “unitary executive theory” that has cleared away key limits Congress has sought to place on the President.[236] It is doubtful that a judiciary with such strong pro-executive leanings can be expected to vigorously defend Congress’s power of the purse. Even if they might be inclined to do so, they certainly will not—or will not do so effectively—if Congress appears not to care and fails to stand up for its own rights. As Justice Robert Jackson wrote in his Youngstown concurrence, we should “have no illusion that any decision by [the Supreme] Court can keep power in the hands of Congress if it is not wise and timely in meeting its problems”; “only Congress itself can prevent power from slipping through its fingers.”[237] Congress needs to take the lead in asserting its power here, and in challenging Executive Branch intrusions.[238]

Conclusion

The Trump Era has already worked a massive change in the practice of interbranch relations on which the doctrines of appropriations law are premised. And the Trump Administration continues to press for further aggrandizement of executive authority over spending. If Congress does not fight back, and soon, we may see a durable shift, in which the Legislative Branch loses significant aspects of the power of the purse. If so, we will have experienced an Ackermanian “constitutional moment” as significant as those in the New Deal, the First Reconstruction, and the Civil Rights Era.[239]

The question is whether Congress will indeed fight back. I have offered an agenda for Congress to follow if it chooses to do so. The political dynamics I described above might make us skeptical that enough, and influential enough, Members of Congress will make that choice.[240] But if we believe that legislative control of the purse strings is a core democratic institution—and an essential check on executive oppression—we should do what we can to press Congress to stand up for itself.

  1. * Frank G. Millard Professor of Law, University of Michigan Law School; Arlene Susan Kohn Professor of Social Policy, University of Michigan Gerald R. Ford School of Public Policy. Thanks to participants in the Washington University Law Review symposium on Taxing, Spending, and the Constitution, for which this Article was prepared. Thanks also to Nicholas Bagley, Don Herzog, Nina Mendelson, Julian Mortenson, and Zachary Price for very helpful comments on the piece. ↑

  2. . Gillian E. Metzger, Taking Appropriations Seriously, 121 Colum. L. Rev. 1075, 1083–84 (2021). ↑

  3. . See NIH v. Am. Pub. Health Ass’n, 145 S. Ct. 2658, 2659 (2025); Dep’t of Educ. v. California, 604 U.S. 650, 651 (2025). ↑

  4. . Metzger, supra note 1, at 1083–84. ↑

  5. . See 28 U.S.C. § 1491(a)(1). ↑

  6. . See 5 U.S.C. § 702 (“Nothing herein . . . confers authority to grant relief if any other statute that grants consent to suit expressly or impliedly forbids the relief which is sought.”). ↑

  7. . See NIH, 145 S. Ct. at 2659; Dep’t of Educ., 604 U.S. at 651. On the continued confusion created by the Court’s shadow docket rulings, see President & Fellows of Harvard Coll. v. U.S. Dep’t of Health & Hum. Servs., 798 F. Supp. 3d 77, 105 n.9 (D. Mass. 2025). ↑

  8. . See Lincoln v. Vigil, 508 U.S. 182, 192–93 (1993) (quoting 5 U.S.C. § 701(a)(2)); Metzger, supra note 1, at 1120–21. ↑

  9. . See Matthew B. Lawrence, Second-Class Administrative Law: Lincoln v. Vigil’s Puzzling Presumption of Unreviewability, 101 Wash. U. L. Rev. 1029 (2024). ↑

  10. . Many spending decisions aren’t targeted at particular beneficiaries of government programs; they simply limit spending that benefits the public at large. Cf. United States v. Richardson, 418 U.S. 166 (1974). ↑

  11. . See Metzger, supra note 1, at 1122–23. ↑

  12. . Kate Stith, Congress’ Power of the Purse, 97 Yale L.J. 1343, 1387 (1988). ↑

  13. . See, e.g., Matthew B. Lawrence, Disappropriation, 120 Colum. L. Rev. 1, 82–83 (2020); Christopher J. Walker, Administrative Law Without Courts, 65 UCLA L. Rev. 1620, 1638 (2018); Eloise Pasachoff, Craig Schulman & Angelene Superable, GAO’s Role in Appropriations Oversight, Brookings Inst. (June 18, 2025), https://www.brookings.edu/articles/gaos-role-in-appropriations-oversight/ [https://perma.cc/9Z9C-QUAV]. The term “internal administrative law” was coined by Jerry Mashaw. See generally Jerry L. Mashaw, Bureaucratic Justice: Managing Social Security Disability Claims (1983). For subsequent discussions, see Anya Bernstein & Cristina Rodríguez, The Accountable Bureaucrat, 132 Yale L.J. 1600 (2023); Elizabeth Magill, Foreword, Agency Self-Regulation, 77 Geo. Wash. L. Rev. 859 (2009); Gillian E. Metzger & Kevin M. Stack, Internal Administrative Law, 115 Mich. L. Rev. 1239 (2017); Christopher J. Walker, Constraining Bureaucracy Beyond Judicial Review, Daedalus, Summer 2021, at 155; Christopher J. Walker & Rebecca Turnbull, Operationalizing Internal Administrative Law, 71 Hastings L.J. 1225 (2020). ↑

  14. . See Stith, supra note 11, at 1388–89. ↑

  15. . See Metzger, supra note 1, at 1130; Stith, supra note 11, at 1389–91. ↑

  16. . See Consumer Fin. Prot. Bureau v. Cmty. Fin. Servs. Ass’n of Am., 601 U.S. 416, 421 (2024); Lincoln v. Vigil, 508 U.S. 182, 192 (1993). See generally Christine Kexel Chabot, The Founders’ Purse, 110 Va. L. Rev. 1027 (2024); Michael B. Rappaport, The Selective Nondelegation Doctrine and the Line Item Veto: A New Approach to the Nondelegation Doctrine and Its Implications for Clinton v. City of New York, 76 Tul. L. Rev. 265 (2001). Broadly written appropriations statutes date from the beginning of the Republic. See Louis Fisher, Presidential Spending Discretion and Congressional Controls, 37 Law & Contemp. Probs. 135, 136 (1972) (describing how President Jefferson quickly concluded that narrowly specifying appropriations would be impractical). ↑

  17. . Metzger, supra note 1, at 1127. ↑

  18. . Me. Cmty. Health Options v. United States, 590 U.S. 296, 315 (2020) (quoting Robertson v. Seattle Audubon Soc’y, 503 U.S. 429, 440 (1992)); see also Tenn. Valley Auth. v. Hill, 437 U.S. 153, 190 (1978) (stating that “[t]he doctrine disfavoring repeals by implication . . . . applies with even greater force when the claimed repeal rests solely on an Appropriations Act”). ↑

  19. . See GAO, Principles of Federal Appropriations Law 2-86 (4th ed. 2016) [hereinafter GAO Red Book]. ↑

  20. . Minis v. United States, 40 U.S. (15 Pet.) 423, 445 (1841). ↑

  21. . GAO Red Book, supra note 18, at 2-86. ↑

  22. . Id. ↑

  23. . 277 F.3d 138 (2d Cir. 2002). ↑

  24. . Id. at 144. ↑

  25. . See id. (“Section 519(n)(4) explicitly states that ‘[t]his subsection shall apply to fiscal year 1999 and each fiscal year thereafter.’”). ↑

  26. . See GAO Red Book, supra note 18, at 2-88. ↑

  27. . See id. at 3-20. ↑

  28. . See Lincoln v. Vigil, 508 U.S. 182, 192 (1993). ↑

  29. . See 31 U.S.C. § 1301(a) (“Appropriations shall be applied only to the objects for which the appropriations were made except as otherwise provided by law.”); Lincoln, 508 U.S. at 193 (stating that “an agency is not free simply to disregard statutory responsibilities” and that “Congress may always circumscribe agency discretion to allocate resources by putting restrictions in the operative statutes”). ↑

  30. . Antonin Scalia & Bryan A. Garner, Reading Law: The Interpretation of Legal Texts § 28 (2012). ↑

  31. . Id. ↑

  32. . See A-5216, 4 Comp. Gen. 476 (1924). ↑

  33. . See id. at 478. ↑

  34. . See id. (“Miscellaneous expenses, U. S. Courts, 1925” (citing Act of May 28, 1924, ch. 204, 43 Stat. 205, 221)). ↑

  35. . Id. at 478. ↑

  36. . Id. ↑

  37. . GAO Red Book, supra note 18, at 3-409. ↑

  38. . Nevada v. Dep’t of Energy, 400 F.3d 9, 12 (D.C. Cir. 2005) (quoting Energy and Water Development Appropriations Act, 2004, Pub. L. No. 108-137, 117 Stat. 1827, 1855 (2003)). ↑

  39. . Id. (quoting Energy and Water Development Appropriations Act, 2004, Pub. L. No. 108-137, 117 Stat. 1827, 1865 (2003)). ↑

  40. . Id. at 16 (citations omitted). ↑

  41. . GAO Red Book, supra note 18, at 3-410. ↑

  42. . Professor Metzger identifies three rationales that have been repeatedly articulated to support the unusual aspects of appropriations law: “a perception of appropriations as primarily an issue for the political branches; an identification of government funds as especially tied to sovereignty; and a normative prioritization of substantive legislation.” Metzger, supra note 1, at 1132. I focus in the text on the first of these rationales, because I think it makes—or at least once made—the most sense of the doctrine. ↑

  43. . As Professor Kate Stith put it in her classic article on Congress’s power of the purse, “[t]he genius of regulating executive branch activities by limitations on appropriations is that these limitations can be bureaucratically and contemporaneously enforced without the need for litigation or after-the-fact congressional investigations in every case.” Stith, supra note 11, at 1360 (footnote omitted). ↑

  44. . For a book-length argument that Congress retains significant control of the appropriations process despite facially broad delegations to the Executive Branch, see D. Roderick Kiewiet & Mathew D. McCubbins, The Logic of Delegation: Congressional Parties and the Appropriations Process (1991); see also Mathew D. McCubbins & Daniel B. Rodriguez, Canonical Construction and Statutory Revisionism: The Strange Case of the Appropriations Canon, 14 J. Contemp. Legal Issues 669, 670 (2005). ↑

  45. . Zachary S. Price, Funding Restrictions and Separation of Powers, 71 Vand. L. Rev. 357, 367–68 (2018); see Josh Chafetz, Congress’s Constitution: Legislative Authority and the Separation of Powers 58 (2017) (“Notwithstanding the fact that the text of the Constitution allows for indefinite appropriations in all contexts other than the army, the practice from the beginning of the Republic has largely been one of annual appropriations.”). ↑

  46. . See Lawrence, supra note 12, at 59–60. ↑

  47. . See Jack M. Beermann, Congressional Administration, 43 San Diego L. Rev. 61, 89 (2006). ↑

  48. . See id. at 85; Metzger, supra note 1, at 1093–94. See generally Neal E. Devins, Regulation of Government Agencies Through Limitation Riders, 1987 Duke L.J. 456 (criticizing the use of appropriations riders). For a discussion of the variety of riders Congress has adopted in the environmental context, see Richard J. Lazarus, Congressional Descent: The Demise of Deliberative Democracy in Environmental Law, 94 Geo. L.J. 619 (2006). On the use of appropriations riders in the national security context, see Peter Raven-Hansen & William C. Banks, Pulling the Purse Strings of the Commander in Chief, 80 Va. L. Rev. 833, 834–35 (1994). ↑

  49. . Price, supra note 44, at 368. To similar effect, see Jonathan H. Adler & Christopher J. Walker, Delegation and Time, 105 Iowa L. Rev. 1931, 1956 (2020); Devins, supra note 47, at 461; Jonathan S. Gould, A Republic of Spending, 123 Mich. L. Rev. 209, 267 (2024); Jennifer L. Selin, What Makes an Agency Independent?, 59 Am. J. Pol. Sci. 971, 975 (2015). See generally Chafetz, supra note 44, at 71–73; Alexander Bolton, Gridlock, Bureaucratic Control, and Nonstatutory Policymaking in Congress, 66 Am. J. Pol. Sci. 238 (2022). ↑

  50. . See Beermann, supra note 46, at 137; Daniel A. Farber, Jonathan S. Gould & Matthew C. Stephenson, Workarounds in American Public Law, 103 Tex. L. Rev. 503, 526 (2025); see also Richard F. Fenno, Jr., The Power of the Purse: Appropriations Politics in Congress 291 (1966) (“Once the Committee’s ability to hurt it is recognized, the most obvious way for the agency to ensure a favorable kind of relationship with the Committee is simply to do each year precisely what the Committee tells it to do . . . .”); Fisher, supra note 15, at 137 (“Theoretically, the money could be spent for just about anything, and yet there exists a moral understanding between the Commission and the appropriations subcommittees that the money will be spent in accordance with the Commission’s budget estimates, as amended by congressional actions and directives included in committee reports.”); Abbe R. Gluck & Lisa Schultz Bressman, Statutory Interpretation from the Inside—An Empirical Study of Congressional Drafting, Delegation, and the Canons (pt. 1), 65 Stan. L. Rev. 901, 980 (2013) (reporting that 32 percent of congressional staff surveyed reported that “the purpose of the committee report in the appropriations context is essentially to legislate—that is, to direct where the money appropriated is going”). ↑

  51. . John C. Roberts, Are Congressional Committees Constitutional?: Radical Textualism, Separation of Powers, and the Enactment Process, 52 Case W. Res. L. Rev. 489, 564 (2001); see also Louis Fisher, Congressional Abdication on War & Spending 182 (2000) (similar). ↑

  52. . 462 U.S. 919 (1983). ↑

  53. . See Roberts, supra note 50, at 564. ↑

  54. . See Beermann, supra note 46, at 138. ↑

  55. . See Michael J. Berry, The Modern Legislative Veto: Macropolitical Conflict and the Legacy of Chadha 85, 97 (2016). ↑

  56. . Curtis A. Bradley, Reassessing the Legislative Veto: The Statutory President, Foreign Affairs, and Congressional Workarounds, 13 J. Legal Analysis 439, 461 (2021) (citations omitted). ↑

  57. . See Berry, supra note 54, at 86, 97. ↑

  58. . See id. at 86–87. ↑

  59. . Louis Fisher, The Legislative Veto: Invalidated, It Survives, 56 Law & Contemp. Probs. 273, 290 (1993); see also Conor Clarke & Daniel Epps, The Practice of Executive Constitutionalism, 111 Va. L. Rev. 1531, 1567 (2025). ↑

  60. . Berry, supra note 54, at 96–97. ↑

  61. . Matthew B. Lawrence, Eloise Pasachoff & Zachary S. Price, Appropriations Presidentialism, 114 Geo. L.J. Online 1, 8–9 (2025). ↑

  62. . Consumer Fin. Prot. Bureau v. Cmty. Fin. Servs. Ass’n of Am., 601 U.S. 416, 428 (2024). ↑

  63. . Chafetz, supra note 44, at 51. ↑

  64. . Price, supra note 44, at 371. Professor Price expresses doubts that this understanding of legislative power—to the extent that it gave Parliament leverage to renegotiate the constitutional balance of power with the King over time—translates perfectly to a U.S. constitutional system that might be understood “to fix in place a system of separated powers.” Id. at 371–72. ↑

  65. . See Montesquieu, The Spirit of the Laws, Book XI, Ch. 6 (1748), https://montesquieu
    .ens-lyon.fr/spip.php?article2730 [https://perma.cc/F2ST-HGMG]. ↑

  66. . The Federalist No. 58 (James Madison). ↑

  67. . Yes, Congress is a “they,” not an “it,” Kenneth A. Shepsle, Congress is a “They,” Not an “It”: Legislative Intent as Oxymoron, 12 Int’l Rev. L. & Econ. 239 (1992), and here I am writing mostly about the members of the congressional Appropriations Committees. Yet there is good reason to think that those committees are representative of, and see themselves as bound to represent, the broader membership of their party caucuses. See McCubbins & Rodriguez, supra note 43, at 695–707. Gluck, O’Connell, and Po argue that “[a]gencies fearing the punishing (or seeking the rewarding) ‘power of the purse’ may want to please appropriations committees and party leaders more than their oversight committees.” Abbe R. Gluck, Anne Joseph O’Connell & Rosa Po, Unorthodox Lawmaking, Unorthodox Rulemaking, 115 Colum. L. Rev. 1789, 1834 (2015). But if the Appropriations Committees are broadly representative of their caucuses, that may not be a bad thing. ↑

  68. . Lincoln v. Vigil, 508 U.S. 182, 193 (1993). ↑

  69. . See Rebecca M. Kysar, Interpreting by the Rules, 99 Tex. L. Rev. 1115, 1130–31 (2021). ↑

  70. . See, e.g., Barbara Sinclair, Unorthodox Lawmaking: New Legislative Processes in the U.S. Congress 77 (5th ed. 2017) (noting that must-pass legislation, including appropriations bills, “evokes high amending activity, suggesting that senators are using such bills as vehicles for legislating”). ↑

  71. . For a contrary suggestion, see Kysar, supra note 68, at 1133; see also Victoria F. Nourse, A Decision Theory of Statutory Interpretation: Legislative History by the Rules, 122 Yale L.J. 70, 132 (2012) (arguing that the Supreme Court’s super-strong presumption against repeal by implication in appropriations statutes misunderstands the legislative process). My point is not to defend the unusual principles of appropriations law on the merits, but rather to explain why they might be understood as reflecting a particular view of interbranch relations. ↑

  72. . See Lisa Schultz Bressman & Abbe R. Gluck, Statutory Interpretation from the Inside—An Empirical Study of Congressional Drafting, Delegation, and the Canons (pt. 2), 66 Stan. L. Rev. 725, 750 (2014). ↑

  73. . Jesse M. Cross & Abbe R. Gluck, The Congressional Bureaucracy, 168 U. Pa. L. Rev. 1541, 1594 (2020) (quoting an anonymous GAO staffer); see also Frederick C. Mosher, The GAO: The Quest for Accountability in American Government 277–281 (1979) (describing the many aspects of GAO’s role as a servant of Congress). ↑

  74. . See, e.g., Jennifer K. Elsea & Edward C. Liu, Cong. Rsch. Serv., R45908, Legal Authority to Repurpose Funds for Border Barrier Construction, 2 (2019), https://www
    .congress.gov/crs_external_products/R/PDF/R45908/R45908.7.pdf [https://perma.cc/BB4L-YHUJ]. ↑

  75. . See id.; Pub. L. No. 116-6, § 230(a)(1), 133 Stat. 13, 28 (2019). ↑

  76. . Elsea & Liu, supra note 73, at 2. ↑

  77. . See Proclamation No. 9844, 84 Fed. Reg. 4949 (Feb. 15, 2019). ↑

  78. . 10 U.S.C. § 2808(a). ↑

  79. . 10 U.S.C. § 284(a), (b)(7). ↑

  80. . Department of Defense and Labor, Health and Human Services, and Education Appropriations Act, 2019 and Continuing Appropriations Act, 2019, Pub. L. No. 115-245, § 8005, 132 Stat. 2981, 2999 (2018). ↑

  81. . 31 U.S.C. § 9705(g)(4)(B). ↑

  82. . Sierra Club v. Trump, No. 19-cv-00892, 2019 WL 2715422 (N.D. Cal. June 28, 2019). ↑

  83. . Trump v. Sierra Club, 588 U.S. 930 (2019). ↑

  84. . California v. Trump, 963 F.3d 926, 934 (9th Cir. 2020). ↑

  85. . Id. at 944, 949. ↑

  86. . Sierra Club v. Trump, 977 F.3d 853, 879 (9th Cir. 2020), vacated sub nom. Biden v. Sierra Club, 142 S. Ct. 56 (2021). ↑

  87. . See Proclamation No. 10142, 86 Fed. Reg. 7225 (Jan. 20, 2021). ↑

  88. . See Biden v. Sierra Club, 142 S. Ct. 46 (2021); Biden v. Sierra Club, 142 S. Ct. 56 (2021). ↑

  89. . Eloise Pasachoff, The President’s Budget Powers in the Trump Era, in Executive Policymaking: The Role of OMB in the Presidency 69, 81 (Meena Bose & Andrew Rudalevige eds., 2020). ↑

  90. . See Dep’t of Defense—Availability of Appropriations for Border Fence Construction, B-330862, 2019 WL 4200949 (Comp. Gen. Sept. 5, 2019). ↑

  91. . See id. at *8 (“DOD’s authority to construct fences in support of civilian agencies is dependent upon a request from such agency under section 284. That authority, and a corresponding military requirement for construction, did not materialize until after submission of the President’s Budget and enactment of DOD’s appropriations and thus was not forecast in DOD’s budget submission.”). ↑

  92. . See id. at *9. ↑

  93. . Id. at *10. ↑

  94. . The Antideficiency Act generally prohibits making obligations or expenditures in the absence of, or in excess of, an appropriation. See 31 U.S.C. § 1341(a)(1). It also prohibits the government from “accept[ing] voluntary services . . . except for emergencies involving the safety of human life or the protection of property.” 31 U.S.C. § 1342. ↑

  95. . See U.S. Dep’t of the Treasury—Tax Return Activities During the Fiscal Year 2019 Lapse in Appropriations, B-331093, 2019 WL 5390179, at *3 (Comp. Gen. Oct. 22, 2019). ↑

  96. . See U.S. Dep’t of Agric.—Operations of the Farm Service Agency During the Fiscal Year 2019 Lapse in Appropriations, B-331092, 2020 WL 3501349, at *1–2 (Comp. Gen. June 29, 2020). ↑

  97. . See Off. of Mgmt. & Budget—Regulatory Review Activities During the Fiscal Year 2019 Lapse in Appropriations, B-331132, 2019 WL 6909516 (Comp. Gen. Dec. 19, 2019). ↑

  98. . See Nat’l Archives & Records Admin.—Publication of Federal Register During the Fiscal Year 2019 Lapse in Appropriations, B-331091, 2020 WL 4013489 (Comp. Gen. July 16, 2020). ↑

  99. . See U.S. Dep’t of Agric.—Early Payment of SNAP Benefits, B-331094, 2019 WL 4241055 (Comp. Gen. Sept. 5, 2019). ↑

  100. . See Dep’t of the Interior—Activities at National Parks During the Fiscal Year 2019 Lapse in Appropriations, B-330776, 2019 WL 4200991 (Comp. Gen. Sept. 5, 2019). ↑

  101. . See sources cited supra notes 94–99. ↑

  102. . See sources cited supra notes 94–99. ↑

  103. . See 31 U.S.C. § 1350. ↑

  104. . Memorandum from Mark Paoletta, Gen. Couns., Off. of Mgmt. & Budget, Exec. Off. of the President, to Agency General Counsels (Nov. 5, 2019), https://trumpwhitehouse.archives.gov/wp-content/uploads/2019/11/Memo-to-Agencies-on-A-11.pdf [https://perma.cc/7J2G-ZXSS]. ↑

  105. . Eric Katz, White House Tells Agencies They Can Ignore Legal Decisions on Spending Violations, Gov’t Exec. (Nov. 19, 2019), https://www.govexec.com/management/2019/11/white-house-tells-agencies-they-can-ignore-legal-decisions-spending-violations/161395/ [https://perma.cc/
    ZAX4-JLEP]. ↑

  106. . See Rachael Bade & Karoun Demirjian, Unchecked: The Untold Story Behind Congress’s Botched Impeachments of Donald Trump 120, 330 (2022). ↑

  107. . Off. of Mgmt. & Budget—Withholding of Ukraine Security Assistance, B-331564, 2020 WL 241373, at *2–3 (Comp. Gen. Jan. 16, 2020) (quoting footnotes to the relevant apportionments of DOD Ukraine Security Assistance funds). ↑

  108. . Id. at *5. ↑

  109. . Id. at *6. ↑

  110. . See id. At essentially the same time as the Administration was holding up the spending of DOD’s Ukraine Security Assistance funds, it was also holding up a State Department proposal to send congressionally appropriated Foreign Military Financing (FMF) funds to Ukraine. Unlike with the Ukraine Security Assistance funds, GAO determined that the delay in spending the FMF funds was permissible. Off. of Mgmt. & Budget—Application of the Impoundment Control Act to 2019 Apportionment Letters and Congressional Notification for State Department Foreign Military Financing, B-331564.1, 2022 WL 407112, at *8–9 (Comp. Gen. Feb. 10, 2022). GAO emphasized that “Congress did not designate FMF funds for Ukraine, and the administration was free to consider whether to provide any FMF assistance for Ukraine at all.” Id. at *13. Given “[t]hat wide grant of discretion” from Congress, GAO found it appropriate for OMB to have engaged in “a policy process to permit executive branch officials to determine a use of the FMF funds that was consistent foremost with the law but also with the President’s policy priorities.” Id. ↑

  111. . See Samuel R. Bagenstos, Opinion, Trump Is Openly Defying a Law Created to Rein in His First-Term Abuses, Wash. Post (Apr. 8, 2025), https://www.washingtonpost.com/opinions/2025
    /04/08/apportionments-congress-trump-omb-vought/ [https://perma.cc/S83V-2H4K]. ↑

  112. . See 31 U.S.C. § 1517(a). ↑

  113. . See 31 U.S.C. § 1512(a). ↑

  114. . 31 U.S.C. § 1512(c)(1). ↑

  115. . See City of New Haven v. United States, 809 F.2d 900, 906 n.18 (D.C. Cir. 1987). ↑

  116. . Letter from Russell T. Vought, Dir., & Mark R. Paoletta, Gen. Couns., Off. of Mgmt. & Budget, Exec. Off. of the President, to John Yarmuth, Chairman, Comm. on the Budget, H.R. (Jan. 19, 2021), https://trumpwhitehouse.archives.gov/wp-content/uploads/2021/01/Response-to-House-Budget-Committee-Investigation.pdf [https://perma.cc/VG68-2JAG]. ↑

  117. . Katherine Tully-McManus, Russ Vought: Appropriations Process ‘Has to Be Less Bipartisan,’ Politico (July 17, 2025), https://www.politico.com/live-updates/2025/07/17/congress/russ-vought-appropriations-process-has-to-be-less-bipartisan-00459479 [https://perma.cc/4YFX-MQR3]. ↑

  118. . Id. ↑

  119. . See id.; Riley Beggin & Jacob Bogage, Trump Budget Officials Claim Sweeping Spending Power from Congress, Records Show, Wash. Post (Aug. 19, 2025), https://wapo.st/4fWF74f [https://perma.cc/7DV3-TZF9]; Alan Rappeport, Russell Vought Poised to Expand Power of White House Budget Office, N.Y. Times (Jan. 20, 2025), https://www.nytimes.com/2025/01/15/business
    /russell-vought-budget-office-confirmation-hearing.html [https://perma.cc/G4DJ-Y9XA]. ↑

  120. . Lawrence, Pasachoff & Price, supra note 60, at 3–4. ↑

  121. . Exec. Order No. 14151 § 2(b)(i), 90 Fed. Reg. 8339, 8339 (Jan. 20, 2025). ↑

  122. . Exec. Order No. 14154 § 7(a), 90 Fed. Reg. 8353, 8357 (Jan. 20, 2025). ↑

  123. . Exec. Order No. 14169 § 3(a), 90 Fed. Reg. 8619, 8619 (Jan. 20, 2025). ↑

  124. . Id. ↑

  125. . Memorandum from Matthew J. Vaeth, Acting Dir., Off. of Mgmt. & Budget, Exec. Off. of the President, for Heads of Exec. Depts. and Agencies (Jan. 27, 2025), https://www.nytimes.com
    /interactive/2025/01/27/us/omb-memo.html [https://perma.cc/SR7L-E6WP] (emphasis added). ↑

  126. . New York v. Trump, 769 F. Supp. 3d 119, 133 (D.R.I. 2025). ↑

  127. . See id. at 131–32 (discussing grant of the temporary restraining order); Nat’l Council of Nonprofits v. Off. of Mgmt. & Budget, 775 F. Supp. 3d 100, 111–12 (D.D.C. 2025) (same). The First Circuit recently affirmed in substantial part the District of Rhode Island’s preliminary injunction against the grants freeze. See New York v. Trump, 171 F.4th 1 (1st Cir. 2026). ↑

  128. . See, e.g., Am. Pub. Health Ass’n v. NIH, 791 F. Supp. 3d 119 (D. Mass. 2025) (describing grant cancellations at NIH). In a few cases, the first Trump Administration canceled grants for similar reasons. See Eloise Pasachoff, Executive Branch Control of Federal Grants: Policy, Pork, and Punishment, 83 Ohio St. L.J. 1113, 1183–84 (2022). But the second Trump Administration has done so on a much more widespread basis. ↑

  129. . See, e.g., New York v. Trump, 777 F. Supp. 3d 112 (D.R.I. 2025) (holding that FEMA had violated the court’s earlier preliminary injunction by imposing new procedural hurdles). ↑

  130. . See, e.g., id. See generally Nat’l Council of Nonprofits, 775 F. Supp. at 121 (noting that “agencies continued implementing OMB’s freeze” and that “the District of Rhode Island had to enforce its TRO mere days after it was entered”). ↑

  131. . See, e.g., Am. Pub. Health Ass’n, 791 F. Supp. 3d 119; Am. Ass’n of Physicians for Hum. Rts. v. NIH, 795 F. Supp. 3d 678 (D. Md. 2025). ↑

  132. . See, e.g., New York, 777 F. Supp. 3d at 112; Am. Pub. Health Ass’n, 791 F. Supp. 3d at 119; Am. Ass’n of Physicians for Hum. Rts., 795 F. Supp. 3d at 678. ↑

  133. . In a few instances, the Trump Administration has given in after litigation and bipartisan political pressure. The most notable of these include the Administration’s precipitous withholding of $5 billion in education funding, on which states and school districts across the country were relying to pay their bills in the approaching school year, in late June 2025, see Sequoia Carrillo, Education Department Says It’s Releasing More Than $5 Billion in Frozen Grants, NPR (July 25, 2025), https://www.npr.org/2025/07/25/nx-s1-5480226/trump-school-funding-grants [https://perma.cc/2H9
    L-G8YX], and its cancellation of funds for the Americorps program. See McKenna Horsley, Kentucky Americorps Funding Restored After Democrats Sue Trump Administration, WKMS (Aug. 31, 2025), https://www.wkms.org/government-politics/2025-08-31/kentucky-americorps-funding-restored-after
    -democrats-sue-trump-administration [https://perma.cc/2EZR-DG9R]. ↑

  134. . See NIH v. Am. Pub. Health Ass’n, 145 S. Ct. 2658 (2025); Dep’t of Educ. v. California, 604 U.S. 650 (2025). ↑

  135. . Lawrence, supra note 12, at 74. ↑

  136. . Glob. Health Council v. Trump, No. 25-5097, 2025 WL 2326021, at *1 (D.C. Cir. Aug. 13, 2025), amended by 153 F.4th 1 (D.C. Cir. 2025). ↑

  137. . See Donald Moynihan & Rachael Zuppke, The Death of USAID: How Elon Musk and Donald Trump Ended America’s Foreign Aid Agency, 45 Pub. Admin. & Dev. 327 (2025). ↑

  138. . See Exec. Order No. 14242, 90 Fed. Reg. 13679 (Mar. 20, 2025). ↑

  139. . See U.S. Inst. of Peace v. Jackson, 783 F. Supp. 3d 316 (D.D.C. 2025). ↑

  140. . See Rhode Island v. Trump, 781 F. Supp. 3d 25 (D.R.I. 2025). ↑

  141. . McMahon v. New York, 145 S. Ct. 2643, 2650 (2025) (Sotomayor, J., dissenting). ↑

  142. . See Brandon Roberts, Annie Waldman & Pratheek Rebala, How Deeply Trump Has Cut Federal Health Agencies, ProPublica (Aug. 21, 2025), https://projects.propublica.org/federal-health
    -worker-cuts-rfk-trump-administration/ [https://perma.cc/3SQ8-3XKZ]. ↑

  143. . See Trump v. Am. Fed’n of Gov’t Emps., 145 S. Ct. 2635 (2025) (granting stay of injunction against government-wide reductions in force); McMahon, 145 S. Ct. 2643 (granting stay of injunction against reductions in force at the Department of Education). ↑

  144. . U.S. Dep’t of Transp.—Application of the Impoundment Control Act to Memorandum Suspending Approval of State Electric Vehicle Infrastructure Deployment Plans, B-337137, 2025 WL 1521234 (Comp. Gen. May 22, 2025). ↑

  145. . Inst. of Museum & Library Servs.—Applicability of the Impoundment Control Act to Reduction of Agency Functions, B-337375, 2025 WL 1714233 (Comp. Gen. June 16, 2025). ↑

  146. . Dep’t of Health & Hum. Servs.—Application of Impoundment Control Act to Availability of Head Start Program Funds, B-337202, 2025 WL 2096054 (Comp. Gen. July 23, 2025). ↑

  147. . Dep’t of Energy—Application of the Impoundment Control Act to Renew America’s School Program Appropriations, B-337208, 2025 WL 2170988 (Comp. Gen. July 31, 2025). ↑

  148. . Dep’t of Health & Hum. Servs.—Application of Impoundment Control Act to Availability of Funds for Grants, B-337203, 2025 WL 2238152 (Comp. Gen. Aug. 5, 2025). ↑

  149. . Dep’t of Homeland Sec.—Application of the Impoundment Control Act to Federal Emergency Management Agency Fiscal Year 2025 Federal Assistance Appropriations, B-337204.1, 2025 WL 2641529 (Comp. Gen. Sept. 15, 2025); Dep’t of Homeland Sec.—Application of the Impoundment Control Act to Federal Emergency Management Agency Prior Year Federal Assistance Appropriations, B-337204.2, 2025 WL 2780320 (Comp. Gen. Sept. 29, 2025). ↑

  150. . See Tony Romm, White House Leads Push to Block Watchdog’s Inquiries into Spending Cuts, N.Y. Times (July 22, 2025), https://www.nytimes.com/2025/07/22/us/politics/trump-spending-government-accountability-office.html [https://perma.cc/8PPS-NHP5]. ↑

  151. . See id.; see also Chris Marquette, White House Directs DOT to Ignore GAO Ruling on EV Funding Pause, Politico (June 4, 2025), https://www.politico.com/news/2025/06/04/white-house-dot-gao-ev-funding-00384230 [https://perma.cc/PA4Q-2XLF]. ↑

  152. . Eric Katz, White House Says It Will Cooperate with Top Watchdog Only When It Does Not ‘Unduly Burden’ Trump’s Agenda, Gov’t Exec. (May 30, 2025), https://www.govexec.com
    /oversight/2025/05/white-house-says-it-will-cooperate-top-watchdog-only-when-it-does-not-unduly-burden-trumps-agenda/405713/ [https://perma.cc/8HC9-TCQV]. ↑

  153. . See Zachary S. Price, Essay, Trumpian Impoundments in Historical Perspective, 78 Stan. L. Rev. Online 19, 21 (2025). ↑

  154. . Citizens for Resp. & Ethics in Wash. v. Off. of Mgmt. & Budget, 791 F. Supp. 3d 29, 37 (D.D.C. 2025). Congress added this requirement as a one-year provision in the 2022 appropriations act, see Pub. L. No. 117-103, § 204(b), 136 Stat. 49, 257 (2022) (codified at 31 U.S.C. § 1513 note), then made it permanent law in the 2023 appropriations act, see Pub. L. No. 117-328, § 204(1), 136 Stat. 4459, 4667 (2022) (codified at 31 U.S.C. § 1513 note). ↑

  155. . See Citizens for Resp. & Ethics in Wash., 791 F. Supp. 3d at 37. ↑

  156. . Id. at 41 (quoting letters from Russell Vought, Dir. OMB, to H.R. & S. Appropriations Comms (Mar. 29, 2025)). ↑

  157. . Id. at 61. ↑

  158. . See Devin O’Connor & Joe Carlile, Ctr. on Budget and Pol’y Priorities, Trump Administration Abused Spending Safeguards to Advance Its Agenda — and Illegally Hid Its Actions (2025), https://www.cbpp.org/research/federal-budget/trump-administration-abused-spending-safeguards-to-advance-its-agenda-and [https://perma.cc/E5T5-KZFW]. ↑

  159. . Beggin & Bogage, supra note 118; see also Alicia Parlapiano, Emily Badger & Alex Lemonides, In Budget Logs It Tried to Hide, White House Wrests More Control over Spending, N.Y. Times (Aug. 29, 2025), https://www.nytimes.com/2025/08/29/upshot/trump-congress-federal-budget
    .html [https://perma.cc/RQ8V-72J6]. ↑

  160. . 2 U.S.C. § 683. ↑

  161. . Id. ↑

  162. . 2 U.S.C. § 688. ↑

  163. . 2 U.S.C. § 682(3). ↑

  164. . 2 U.S.C. § 683(b). ↑

  165. . See Sahil Kapur & Frank Thorp V, Bipartisan Government Funding Is at Risk of Dying in Trump’s Washington, NBC News (July 20, 2025), https://www.nbcnews.com/politics/congress
    /bipartisan-government-funding-dying-trump-spending-cuts-shutdown-rcna219344 [https://perma.cc/
    YQ4U-75F6]. ↑

  166. . See Megan S. Lynch, Cong. Rsch. Serv., R40480, Budget Reconciliation Measures Enacted into Law Since 1980 (2025). ↑

  167. . See Richard Kogan & David Reich, Ctr. on Budget and Pol’y Priorities, Introduction to Budget “Reconciliation,” (2022), https://www.cbpp.org/research/introduction-to-budget-reconciliation [https://perma.cc/N94G-2ABF]. ↑

  168. . See Jonathan S. Gould, The Senate’s Shadow Doctrine, 61 Harv. J. on Legis. 317 (2024). ↑

  169. . See Steven Levitsky & Daniel Ziblatt, How Democracies Die: What History Reveals About Our Future 8 (2018) (describing “forbearance, or the idea that politicians should exercise restraint in deploying their institutional prerogatives” as among the “basic norms [that] have preserved America’s checks and balances in ways we have come to take for granted”). ↑

  170. . James V. Saturno, Cong. Rsch. Serv., R48432, The Impoundment Control Act of 1974: Background and Congressional Consideration of Rescissions 9 (2025). ↑

  171. . See id. at 9, 11. ↑

  172. . Pub. L. No. 119-28, 139 Stat. 467 (July 24, 2025). ↑

  173. . See Scott Neuman & Lexie Schapitl, Congress Rolls Back $9 Billion in Public Media Funding and Foreign Aid, NPR (July 18, 2025), https://www.npr.org/2025/07/18/nx-s1-5469912/npr-congress-rescission-funding-trump [https://perma.cc/V6SX-PWEN]. ↑

  174. . See Ryan Nobles & Alexandra Marquez, White House Plans to Use ‘Pocket Rescissions’ to Slash Billions in Foreign Aid, NBC News (Aug. 29, 2025), https://www.nbcnews.com/politics
    /white-house/trump-pocket-rescissions-slash-foreign-aid-congress-rcna227973 [https://perma.cc/U9
    4F-NQU2]. ↑

  175. . See Impoundment Control Act—Withholding of Funds Through Their Date of Expiration, B-330330, 2018 WL 6445752 (Comp. Gen. Dec. 10, 2018). ↑

  176. . See AIDS Vaccine Advocacy Coal. v. U.S. Dep’t of State, 803 F. Supp. 3d 164, 194 (D.D.C. 2025), appeal dismissed, No. 25-5317, 2026 WL 476138 (D.C. Cir. Feb. 18, 2026). ↑

  177. . See Letter from Russell T. Vought, supra note 115. ↑

  178. . Dep’t of State v. AIDS Vaccine Advocacy Coal., 146 S. Ct. 19, 19 (2025). ↑

  179. . See Trump Signs GOP’s 6-Month Government Funding Bill Passed by Congress, PBS News (Mar. 15, 2025), https://www.pbs.org/newshour/politics/trump-signs-gops-6-month-government-funding-bill-passed-by-congress [https://perma.cc/4FEG-742G]. On a few occasions, pressure from Members of Congress has encouraged the administration to restore funding for particular programs, see, e.g., cases cited supra note 132, but this is a small part of the overall picture. ↑

  180. . See Sean Michael Newhouse, Senate Clears Amended Bill to Claw Back Billions in Foreign Aid and Public Media Funding, Gov’t Exec. (July 17, 2025), https://www.govexec.com/manage
    ment/2025/07/senate-clears-amended-bill-claw-back-billions-foreign-aid-and-public-media-funding/4067
    93/ [https://perma.cc/S2AF-GRF9] (noting that Senators Susan Collins and Lisa Murkowski voted no). ↑

  181. . See Catie Edmondson, Congress Quietly Used Funding Law to Try to Rein in Trump on Spending, N.Y. Times (Feb. 10, 2026), https://www.nytimes.com/2026/02/10/us/politics/congress-white-house-spending-law.html [https://perma.cc/D9J8-XHX6]. ↑

  182. . See id. ↑

  183. . See Pub. L. No. 119-75, div. B, tit. III, 140 Stat. 173, 304 (Feb. 3, 2026) (stating that “the Department of Education shall support staffing levels necessary to fulfill its statutory responsibilities including carrying out programs, projects, and activities funded in this title of this Act in a timely manner”). ↑

  184. . Edmondson, supra note 180. ↑

  185. . See, e.g., Max Kozlov, Alexandra Witze & Dan Garisto, White House Stalls Release of Approved US Science Budgets, Science (Feb. 27, 2026), https://www.nature.com/articles/d41586-026-00601-0 [https://perma.cc/5TMN-JG2Z]; Sandhya Raman, Trump Administration Funding Delays Worry NIH Grant Recipients, Bloomberg L. (Mar. 3, 2026), https://news.bloomberglaw.com/
    health-law-and-business/trump-administration-funding-delays-worry-nih-grant-recipients-23 [https://
    perma.cc/LP67-9XGX]. ↑

  186. . See Daryl J. Levinson & Richard H. Pildes, Separation of Parties, Not Powers, 119 Harv. L. Rev. 2311 (2006). ↑

  187. . See Roll Call Vote 119th Congress – 1st Session, U.S. Senate, (July 17, 2025), https://
    http://www.senate.gov/legislative/LIS/roll_call_votes/vote1191/vote_119_1_00411.htm [https://perma.cc/74
    3F-6H2Y]. ↑

  188. . See Jennifer Bendery, Susan Collins Rips Trump’s ‘Unlawful’ Effort to Cancel $5 Billion in Foreign Aid, HuffPost (Aug. 29, 2025), https://www.huffpost.com/entry/susan-collins-pocket-rescission-unlawful-russ-vought_n_68b1c678e4b072bf6d646310 [https://perma.cc/AF4K-J2RD]. ↑

  189. . See Annie Karni, Schumer, Facing Backlash for Not Forcing a Shutdown, Says He’ll Take ‘the Bullets,’ N.Y. Times (Mar. 14, 2025), https://www.nytimes.com/2025/03/14/us/politics/schumer-trump-government-shutdown.html [https://perma.cc/D54D-GUBR]. ↑

  190. . Frances E. Lee, Insecure Majorities: Congress and the Perpetual Campaign 287 (2016). ↑

  191. . See Josh Chafetz, The Chadha Presidency, 115 Geo. L.J. (forthcoming 2026) (manuscript at 40–41) (on file with author). ↑

  192. . Prior scholarship has argued for such an expanded judicial role. See Metzger, supra note 1, at 1164–67. ↑

  193. . See, e.g., Eloise Pasachoff, Modernizing the Power of the Purse Statutes, 92 Geo. Wash. L. Rev. 359 (2024). ↑

  194. . See, e.g., Robin Young & Julia Corcoran, House Minority Leader Hakeem Jeffries on the Democrats’ Fight Against Trump, WBUR (Mar. 28, 2025), https://www.wbur.org/hereandnow/2025/
    03/28/hakeem-jeffries-trump [https://perma.cc/CPK6-CZC7]. ↑

  195. . See generally L. Anthony Sutin, Check, Please: Constitutional Dimensions of Halting the Pay of Public Officials, 26 J. Legis. 221 (2000). ↑

  196. . See James V. Saturno, Cong. Rsch. Serv., R44736, The Holman Rule (House Rule XXI, Clause 2(b)) (2023). ↑

  197. . See United States v. Lovett, 328 U.S. 303, 315–18 (1946). See generally Price, supra note 44; Sutin, supra note 194. ↑

  198. . Congress did something like this in the most recent iteration of the National Defense Authorization Act for Fiscal Year 2026. See Pub. L. No. 119-60, § 1052, 139 Stat. 718, 1043 (providing that “not more than 75 percent” of the Secretary of Defense’s travel budget “may be obligated or expended until the Secretary of Defense” submits to Congress various overdue reports and “provides to the Committees on Armed Services of the House of Representatives and the Senate unedited video of strikes conducted against designated terrorist organizations in the area of responsibility of the United States Southern Command”). ↑

  199. . 2 U.S.C. §§ 683, 688. ↑

  200. . 31 U.S.C. §§ 1512, 1517. ↑

  201. . See Dep’t of Educ. v. California, 604 U.S. 650, 651 (2025); NIH v. Am. Pub. Health Ass’n, 145 S. Ct. 2658, 2658–59 (2025). ↑

  202. . For a good discussion of their efforts, see Pasachoff, supra note 192. ↑

  203. . See supra note 153. ↑

  204. . Pasachoff, supra note 192, at 405–06 (emphasis added). ↑

  205. . Id. at 410 (emphasis added). ↑

  206. . Id. at 415 (emphasis added). ↑

  207. . Id. at 420. ↑

  208. . Id. at 421–22. ↑

  209. . See supra text accompanying notes 106–13. ↑

  210. . See supra text accompanying notes 107–09. ↑

  211. . 478 U.S. 714, 727–28 (1986). ↑

  212. . See Pasachoff, supra note 192, at 419 n.398 (stating that it is “an open question” whether GAO would have standing in such a suit); cf. Metzger, supra note 1, at 1165 (stating that “it is far from clear that Congress could have standing to sue for a violation of an appropriations statute”). ↑

  213. . See Chafetz, supra note 190. ↑

  214. . See Metzger, supra note 1, at 1159–60; Peter L. Strauss, Was There a Baby in the Bathwater? A Comment on the Supreme Court’s Legislative Veto Decision, 1983 Duke L.J. 789, 813–15. ↑

  215. . On this point, I might quibble with Chafetz, supra note 190, but a full treatment would take me outside the scope of this paper. ↑

  216. . 31 U.S.C. § 1512(a). ↑

  217. . 31 U.S.C. § 1512(b)(2). ↑

  218. . See Bagenstos, supra note 110. ↑

  219. . See supra text accompanying notes 173–77. ↑

  220. . See supra text accompanying note 204. ↑

  221. . See supra text accompanying notes 167–72. ↑

  222. . See supra text accompanying notes 168–69. ↑

  223. . Again, one could consider a more modest but still significant reform along these lines: Barring the use of the ICA’s rescission process for one-year appropriations, or for multi-year or no-year appropriations during the first year in which they are available. Such a reform would prevent the ICA from unraveling the bipartisan appropriations process while leaving the fast-track rescission procedures available for use after an appropriations cycle ends. ↑

  224. . See supra text accompanying note 200. ↑

  225. . See supra text accompanying notes 203–07. ↑

  226. . Metzger, supra note 1, at 1164–67. ↑

  227. . See Lawrence, supra note 12, at 74–88. ↑

  228. . Pasachoff, supra note 88. ↑

  229. . One way to think of my argument is as using appropriations law as a salutary example of what Professors Bowie and Renan have called “the republican separation of powers,” which “relies on representative institutions using political negotiation, statecraft, and the check of public opinion to decide which reading of the Constitution’s abstract commitments to build upon.” Nikolas Bowie & Daphna Renan, The Separation-of-Powers Counterrevolution, 131 Yale L.J. 2020, 2029 (2022). I argue that Congress’s power of the purse is best defended and elaborated through such a give-and-take republican process, rather than principally through the courts. ↑

  230. . Lincoln v. Vigil, 508 U.S. 182, 192 (1993). ↑

  231. . Id. at 193 (stating that “Congress may always circumscribe agency discretion to allocate resources by putting restrictions in the operative statutes”). ↑

  232. . See Lujan v. Nat’l Wildlife Fed’n, 497 U.S. 871, 891 (1990); Norton v. S. Utah Wilderness All., 542 U.S. 55, 64–65 (2004). ↑

  233. . See, e.g., Nat’l Treasury Emps. Union v. Vought, 149 F.4th 762 (D.C. Cir. 2025) (relying on these principles to reject challenge to shutdown of the Consumer Financial Protection Bureau); Ass’n for Educ. Fin. & Pol’y, Inc. v. McMahon, 786 F. Supp. 3d 13 (D.D.C. 2025) (relying on these principles to reject challenge to dismantlement of the Institution for Education Sciences); see also McMahon v. New York, 145 S. Ct. 2643 (2025) (granting stay of injunction barring layoffs at the Department of Education); Trump v. Am. Fed’n of Gov’t Emps., 145 S. Ct. 2635 (2025) (granting stay of injunction barring implementation of government-wide orders directing layoffs); cf. Maryland v. USDA, 151 F.4th 197, 204 (4th Cir. 2025) (rejecting, on standing grounds, states’ challenge to mass layoff of federal probationary workers, and stating that the “clash of views” regarding whether the layoffs were “a harsh and dislocating action that works significant hardship on many civil servants—individuals who committed their considerable energy and talents to serving the nation” or instead “part of a long-overdue effort to downsize the federal government and trim unnecessary expenses” must “ultimately be resolved by the voters”). ↑

  234. . See supra text accompanying note 144. ↑

  235. . See, e.g., Ryan D. Doerfler & Samuel Moyn, The Ghost of John Hart Ely, 75 Vand. L. Rev. 769 (2022). For a critique of this view, though one I do not find fully persuasive, see Joshua Braver & Gregory Elinson, A Progressive Judiciary? Judicial Review and National Politics from Reconstruction to the Present, 66 Ariz. L. Rev. 841 (2024). ↑

  236. . See generally Gillian E. Metzger, The Roberts Court and Executive Power, 713 Annals Am. Acad. Pol. & Soc. Sci. 88 (2024). ↑

  237. . Youngstown Sheet & Tube Co. v. Sawyer, 343 U.S. 579, 654 (1952) (Jackson, J., concurring); see also Fisher, supra note 50, at 183 (suggesting courts won’t stand up for Congress if Congress won’t stand up for itself). ↑

  238. . To similar effect, see Lawrence, Pasachoff & Price, supra note 60, at 27. ↑

  239. . See Bruce Ackerman, We the People: The Civil Rights Revolution (2014); Bruce Ackerman, We the People: Transformations (1998); Bruce Ackerman, We the People: Foundations (1991). ↑

  240. . See supra text accompanying notes 185–89. ↑