Disaster! Tax Legislation in Crises

Abstract

Congress cuts and pastes in times of crisis. This Article, a study of tax legislation passed in response to natural disasters and national crises during the years 2000–2020, documents and examines Congress’s use of recurring provisions from one disaster relief bill to the next. Of 272 individual statutes included in the study, Congress drew 200 from prior legislation. Far from being cabined, as they appeared when passed, these recurring tax relief statutes affected taxpayers over a broad geography throughout the entire twenty-year study period. Data also shows that recurring provisions tended to expand in scope over time. Many required taxpayers who claimed them either to hold assets or to expend resources in socially favored ways, affording relief to those who already had means. In addition, recurring tax provisions often designated a federal declaration of disaster as their on-switch, leaving taxpayers who suffered equivalent economic harm outside of disaster areas without relief despite being similarly situated for tax purposes. With these and other findings, the study documents the likelihood that recurring crisis-motivated tax relief provisions are potential contributors to both the racial wealth gap and the overall wealth gap and that they also may work against the interests of newly established or very small businesses. Recurrence in the crisis-motivated tax context is of genuine immediate concern. The study shows that recurring provisions tended to ossify over time, with Congress permanently codifying some and repeatedly incorporating others into recurring tax disaster relief packages. At the same time, destabilization of environmental and geopolitical conditions may necessitate Congress’s more frequent use of cut-and-paste. Recurrence does not have to be a bad guy, though. With its tendency to extend and broaden relief measures over time and place, recurrence done without politicization and with proper advance consideration of its likely long-term distributional effects could be a constructive means of balancing interests of timeliness, efficiency, and the equitable distribution of resources.