Clause 5 of Rule XXI
Tax and tariff measures and amendments
§1066. Restriction on bills and amendments carrying taxes or tariffs.
5. (a)(1) A bill or joint resolution carrying a tax or tariff measure may not be reported by a committee not having jurisdiction to report tax or tariff measures, and an amendment in the House or proposed by the Senate carrying a tax or tariff measure shall not be in order during the consideration of a bill or joint resolution reported by a committee not having that jurisdiction. A point of order against a tax or tariff measure in such a bill, joint resolution, or amendment thereto may be raised at any time during pendency of that measure for amendment.
(2) For purposes of paragraph (1), a tax or tariff measure includes an amendment proposing a limitation on funds in a general appropriation bill for the administration of a tax or tariff.
HOUSE RULES AND MANUAL NOTES
Subparagraph (1) was added in the 98th Congress (H. Res. 5, Jan. 3, 1983, p. 34). Subparagraph (2) was added in the 108th Congress (sec. 2(o), H. Res. 5, Jan. 7, 2003, p. 7). Before the House recodified its rules in the 106th Congress, this provision was found in former clause 5(b) of rule XXI (H. Res. 5, Jan. 6, 1999, p. 47).
A point of order under this paragraph against a provision in a bill is in order at any time during consideration of the bill for amendment in Committee of the Whole (Aug. 1, 1986, p. 18649). On October 4, 1989, the chair of the Committee of the Whole, before ruling on several points of order under this paragraph, enunciated several guidelines to distinguish taxes and tariffs on the one hand and user or regulatory fees and other forms of revenue on the other (p. 23260). On the opening day of the 102d Congress, Speaker Foley inserted in the Congressional Record the following statement of jurisdictional concepts underlying those same distinctions and indicated his intention to exercise his referral authority under rule X in a manner consistent with this paragraph (Jan. 3, 1991, p. 64 (reiterated at the beginning of each Congress, e.g., Jan. 4, 1995, p. 551; Jan. 3, 2001, p. 39)):
Clause 5(b) (current clause 5(a)) of rule XXI prohibits the reporting of a tax or tariff matter by any committee not having that jurisdiction. Most of the questions of order arising under this clause since its adoption in 1983 have related to provisions that clearly affected the operation of the Internal Revenue Code or the customs laws. From time to time, however, such a question has related to a provision drafted as a user or regulatory fee levied on members of a class that occasions or avails itself of a particular governmental activity, typically to generate revenue in support of that activity. In order to provide guidance concerning the referral of bills, to assist committees in staying within their appropriate jurisdictions under rule X, to assist committees without jurisdiction over tax or tariff measures in complying with clause 5(b) of rule XXI, and to protect the constitutional prerogative of the House to originate revenue bills, the Speaker will make the following statement: Standing committees of the House (other than the Committees on Appropriations and Budget) have jurisdiction to consider user, regulatory and other fees, charges, and assessments levied on a class directly availing itself of, or directly subject to, a governmental service, program, or activity, but not on the general public, as measures to be utilized solely to support, subject to annual appropriations, the service, program, or activity (including agency functions associated therewith) for which such fees, charges, and assessments are established and collected and not to finance the costs of Government generally. The fee must be paid by a class benefiting from the service, program or activity, or being regulated by the agency; in short, there must be a reasonable connection between the payors and the agency or function receiving the fee. The fund that receives the amounts collected is not itself determinative of the existence of a fee or a tax. The Committee on Ways and Means has jurisdiction over “revenue measures generally” under rule X. That committee is entitled to an appropriate referral of broad-based fees and could choose to recast such fees as excise taxes. A provision only reauthorizing or amending an existing fee without fundamental change, or creating a new fee generating only a de minimis aggregate amount of revenues, does not necessarily require a sequential referral to the Committee on Ways and Means. The Chair intends to coordinate these principles with the Committee on the Budget and the Congressional Budget Office, especially in the reconciliation process, so that budget scorekeeping does not determine, and reconciliation directives and their implementation will not be inconsistent with, committee jurisdiction. Further, it should be emphasized that the constitutional prerogative of the House to originate revenue measures will continue to be viewed broadly to include any meaningful revenue proposal that the Senate may attempt to originate.
The adoption of subparagraph (2) in the 108th Congress established a different standard for determining a violation of this clause by an amendment to a reported general appropriation bill than for a provision in the appropriation bill itself. Before its adoption, a Member raising a point of order under this paragraph against a provision in, or an amendment to, a general appropriation bill affecting the use of funds therein (otherwise traditionally in order if admissible under clause 2 of rule XXI), carried the burden of showing a necessary, certain, and inevitable change in revenue collections or tax statuses or liabilities (Sept. 12, 1984, pp. 25108, 25109, 25120; July 26, 1985, p. 20806; Aug. 1, 1986, p. 18649; July 13, 1990, p. 17473; June 18, 1991, p. 15189). The intent of the rules change, as expressed during debate on the change, was “to ease the burden on the maker of a point of order [against an amendment] from having to show a necessary, certain and inevitable change in revenue collections, tax statuses, or liability as previous precedents required, to one of showing a textual relationship between the amendment and the administration of the Internal Revenue or tariff laws” (Jan. 7, 2003, p. 12). Under that standard the following amendments to a general appropriation bill have been held to impose a limitation on funds in violation of this clause: (1) to assess or collect any tax liability attributable to the inclusion of certain economic assistance in the taxpayer’s gross income (Sept. 9, 2003, p. 21531); (2) to process the importation of any product from Iran (June 18, 2004, pp. 13041, 13042); (3) for the accession of the Russian Federation into the World Trade Organization, thereby effecting changes to that country’s products under domestic tariff law (June 28, 2006, p. 12958); (4) to carry out various provisions of the Internal Revenue Code of 1986 (June 1, 2011, pp. 8520, 8521).
The precedents developed under this clause before its change in the 108th Congress still apply to the Chair’s determination whether a limitation in a general appropriation bill (rather than an amendment thereto) constitutes a tax or tariff measure proscribed by this paragraph. Prior precedents addressing amendments are still viable for that determination. The Chair will consider argument as to whether the limitation effectively and inevitably changes revenue collections and tax status or liability (Aug. 1, 1986, p. 18649). For example, in determining whether an amendment to a general appropriation bill proposing a change in IRS funding priorities constituted a tax measure proscribed by this paragraph, the Chair considered argument as to whether the change would necessarily or inevitably result in a loss or gain in tax liability and in tax collection (June 18, 1991, p. 15189).
A limitation on the use of funds contained in a general appropriation bill was held to violate this paragraph by denying the use of funds by the Customs Service to enforce duty-free entry laws with respect to certain imported commodities, thereby requiring the collection of revenues not otherwise provided for by law (Oct. 27, 1983, p. 29611). Similar rulings were issued: (1) where it was shown that the imposition of the restriction on IRS funding for the fiscal year would effectively and inevitably preclude the IRS or the Customs Service from collecting revenues otherwise due and owing by law or require collection of revenue not legally due or owing (July 26, 1985, p. 20806; Aug. 1, 1986, pp. 18649, 18650; July 17, 1996, p. 17563); and (2) where a provision in a general appropriation bill prohibited the use of funds to impose or assess certain taxes due under specified portions of the Internal Revenue Code (July 13, 1990, p. 17473). In the 98th Congress, the Chair sustained points of order under this paragraph against motions to concur in three Senate amendments to a general appropriation bill (not reported by the Committee on Ways and Means): (1) an amendment denying the use of funds in that or any other Act by the IRS to impose or assess any tax due under a designated provision of the Internal Revenue Code, thereby rendering the tax uncollectable through the use of any funds available to the agency (Sept. 12, 1984, p. 25108); (2) an amendment directing the Secretary of the Treasury to admit free of duty certain articles imported by a designated organization (Sept. 12, 1984, p. 25109); and (3) an amendment to the Tariff Act of 1930 to expand the authority of the Customs Service to seize and use the proceeds from the sale of contraband imports to defray operational expenses, and to offset owed customs duties under one section of that law (Sept. 12, 1984, p. 25120). A limitation on funds (above a specified amount) in any Act for the Internal Revenue Service to administer any tax collection contract was conceded to inevitably constrain the collection of revenues and was stricken from the bill (June 28, 2007, p. 17932). An amendment to a general appropriation bill proposing to divert an increase in funding for the IRS from spot-checks to targeted audits was held not to constitute a tax within the meaning of this paragraph because it did not necessarily affect revenue collection levels or tax liabilities (June 18, 1991, p. 15189).
In the 99th Congress, the following provisions in a reconciliation bill reported from the Committee on the Budget were ruled out as tax measures not reported from the Committee on Ways and Means: (1) a recommendation from the Committee on Education and Labor excluding certain interest on obligations from the Student Loan Marketing Association from application of the Internal Revenue Code, affecting interest deductions against income taxes (Oct. 24, 1985, pp. 28776, 28827); and (2) a recommendation from the Committee on Merchant Marine and Fisheries expanding tax benefits available to shipowners through a capital construction fund (Oct. 24, 1985, pp. 28802, 28827). In the 101st Congress, the following provisions in an omnibus budget reconciliation bill were ruled out: (1) a fee per passenger on cruise vessels, with revenues credited as proprietary receipts of the Coast Guard to be used for port safety, security, navigation, and antiterrorism activities (Oct. 4, 1989, p. 23260); (2) a per acre “ocean protection fee” on oil and gas leaseholdings in the Outer Continental Shelf, with receipts to be used to offset costs of various ocean protection programs (Oct. 4, 1989, p. 23261); (3) an amendment to the Internal Revenue Code relating to the tax deductibility of pension fund contributions (Oct. 4, 1989, p. 23262); (4) a fee incident to termination of employee benefit plans, with receipts to be applied to enforcement and administration of plans remaining with the system (Oct. 4, 1989, p. 23262); and (5) a fee incident to the filing of various pension benefit plan reports required by law, with revenues to be transferred to the Department of Labor for the enforcement of that law (Oct. 5, 1989, p. 23328).
To a bill reported from the Committee on Education and Labor authorizing financial assistance to unemployed individuals for employment opportunities, an amendment providing instead for tax incentives to stimulate employment was held to be a tax measure in violation of this paragraph (Sept. 21, 1983, p. 25145). A provision in a bill reported from the Committee on Foreign Affairs imposing a uniform fee at ports of entry to be collected by the Customs Service as a condition of importation of a commodity was held to constitute a tariff within the meaning of this paragraph (June 4, 1985, p. 14009), as was an amendment to a bill reported from that committee amending the tariff schedules to deny “most favored nation” trade treatment to a certain nation (July 11, 1985, p. 18590). A provision in a general appropriation bill creating a new tariff classification was held to constitute a tariff under this paragraph (June 15, 1994, p. 13103). A motion to concur in a Senate amendment constituting a tariff measure (imposing an import ban on certain dutiable goods) to a bill reported by a committee not having tariff jurisdiction was ruled out under this paragraph (Sept. 30, 1988, p. 27316). A proposal to increase a fee incident to the filing of a securities registration statement, with the proceeds to be deposited in the general fund of the Treasury as offsetting receipts, was held to constitute a tax within the meaning of this paragraph because the amount of revenue derived and the manner of its deposit indicated a purpose to defray costs of Government, generally (Oct. 23, 1990, p. 32650). To a bill reported by the Committee on Transportation and Infrastructure, an amendment increasing a user fee was ruled out as a tax measure where the fee overcollected to offset a reduction in another fee, thus attenuating the relationship between the amount of the fee and the cost of the Government activity for which it was assessed (May 9, 1995, p. 12180). To a bill reported by the Committee on Science, Space, and Technology, an amendment proposing sundry changes in the Federal income tax by direct amendments to the Internal Revenue Code of 1986 was ruled out of order as carrying a tax measure in violation of this paragraph (Sept. 16, 1992, p. 25205), as were amendments to a general appropriation bill proposing in part to temper recently enacted reductions in rates of tax on income (July 10, 2003, p. 17535, p. 17576).
Passage of tax rate increases
§1067. Three-fifths vote to increase income tax rates.
(b) A bill or joint resolution, amendment, or conference report carrying a Federal income tax rate increase may not be considered as passed or agreed to unless so determined by a vote of not less than three-fifths of the Members voting, a quorum being present. In this paragraph the term “Federal income tax rate increase” means any amendment to subsection (a), (b), (c), (d), or (e) of section 1, or to section 11(b) or 55(b), of the Internal Revenue Code of 1986, that imposes a new percentage as a rate of tax and thereby increases the amount of tax imposed by any such section.
HOUSE RULES AND MANUAL NOTES
This provision was added in the 104th Congress (sec. 106(a), H. Res. 6, Jan. 4, 1995, p. 463), and in the 105th Congress it was amended to clarify the definition of “Federal income tax rate increase” as limited to a specific amendment to one of the named subsections (H. Res. 5, Jan. 7, 1997, p. 121). Before the House recodified its rules in the 106th Congress, this provision was found in former clause 5(c) of rule XXI (H. Res. 5, Jan. 6, 1999, p. 47). On one occasion the Chair held that a provision repealing a ceiling on total tax liability attributable to a net capital gain was not subject to the original version of this paragraph (Apr. 5, 1995, p. 10614). The modified version of this paragraph comprises three elements (an amendment to a pertinent section of the Internal Revenue Code of 1986, the imposition of a new rate of tax thereunder, and an increase in the amount of tax thereby imposed) and a measure that does not fulfill even the first element does not carry a Federal income tax rate increase (Jan. 18, 2007, pp. 1621, 1622 (sustained by tabling of appeal); Mar. 3, 2011, pp. 3173, 3174). This paragraph does not apply to a concurrent resolution (Speaker Gingrich, May 18, 1995, p. 13499). A resolution reported from the Committee on Rules rendering this paragraph inapplicable may be adopted by majority vote (Oct. 26, 1995, p. 29477). The Speaker rules on the applicability of this paragraph only pending the question of final passage of a measure alleged to carry a Federal income tax rate increase, and not in advance upon adoption of a special order rendering this paragraph inapplicable (Oct. 26, 1995, p. 29477).
Consideration of retroactive tax rate increases
§1068. Prohibition against retroactive income tax rate increase.
(c) It shall not be in order to consider a bill, joint resolution, amendment, or conference report carrying a retroactive Federal income tax rate increase. In this paragraph—
(1) the term “Federal income tax rate increase” means any amendment to subsection (a), (b), (c), (d), or (e) of section 1, or to section 11(b) or 55(b), of the Internal Revenue Code of 1986, that imposes a new percentage as a rate of tax and thereby increases the amount of tax imposed by any such section; and
(2) a Federal income tax rate increase is retroactive if it applies to a period beginning before the enactment of the provision.
HOUSE RULES AND MANUAL NOTES
This paragraph was added in the 104th Congress (sec. 106(b), H. Res. 6, Jan. 4, 1995, p. 463), and it was amended in the 105th Congress to clarify the definition of “Federal income tax rate increase” (H. Res. 5, Jan. 7, 1997, p. 121). Before the House recodified its rules in the 106th Congress, this provision was found in former clause 5(d) of rule XXI (H. Res. 5, Jan. 6, 1999, p. 47).