Executive Order 13789: Identifying and Reducing Tax Regulatory Burdens

What the Executive Order is

In the Federal Register, Executive Order (EO) 13789 "Identifying and Reducing Tax Regulatory Burdens" was published.   This EO has 3 sections.  The first section is a preamble, providing the rationale, the second section is the meat and the third section has some standard legal language required for constitutionality.

Section 1

In this section, it starts out positing an ideal situation in that the tax system should be simple, fair, efficient and pro-growth as well as talking about how regulations should be in an ideal world: to bring clarity and guidance to taxpayers.  So let's parse all these words.  by "simple", one believes that there should not be complex language, involved calculations, etc. involved in determine what someone or some corporation has to pay in taxes.  Insofar as this goes, I think everyone would agree.  By "fair", it is not clear what is meant as this word is quite loaded.  One way to implement fairness is that everyone pays the same.  But the same what? Amount? Rate? Proportion to income? Proportion to something else?  By "efficient", well, again here, I think most people agree that there should be as little government cost in the processing as possible.  By "pro-growth", we run into another loaded term.  I assume that this is intended to be growth of the economy.  I am not really sure how tax policy gets designed to be pro-growth.  One can make the argument that low levels of taxation promote growth.  Combining these things, you end up with competing priorities.  If you want to use tax policy to target social and economic objectives, it is difficult to do while maintaining simplicity and efficiency.  The tax code has at least partially arrived at the state it is in from the propensity of Congress to use it to promote specific kinds of activities (both economic as well as social activities) by providing for deductions or tax credits.  Further weighing against simplicity and efficiency is the question of fairness.
Fundamentally, fairness comes down to the question that for a given income level, what is an appropriate contribution to running the government?  What other circumstances should be considered other than gross income?  The more circumstances that are considered, the less simple and efficient the tax system will be.  The selection of what are appropriate circumstances to consider is partly a moral question and a question of the philosophy of life espoused by the respondent.  Often, people suggest a simple flat tax: regardless of the circumstances of one's life, a specific percentage of your earnings is paid in tax.  I would argue that this is a fundamentally immoral proposition because it fails to consider what circumstances which are beyond the control of a taxpayer such that the prescribed burden would in fact significantly harm that person.  By the same argument, I would suggest that a marginal rate of 80% for taxable income above $500,000 would be moral since it is very unlikely to cause significant harm to the taxpayer.  They won't like it no doubt, but given notice, the taxpayer can arrange their affairs to assure they will not be harmed by such a tax rate.
Depending on how one might define pro-growth, it certainly would conflict with the goals of simplicity, efficiency and fairness for any definition stated.  As such, this section is a mess of contradictions and just goes to show how the authors and the President do not have any fundamental philosophy or ideology that underpins the actions taken.

Section 2

In subsection (a) it calls for a report to be written and provided to the President within 60 days.  In this report, significant tax regulations issued since Jan 1, 2016 are to be reviewed.  Interestingly, while "significant" has been defined previously in an Executive Order, the section specifically says that this definition is not to be used.  However it fails to define significant and as such it is left to the discretion of the Secretary of the Treasury.  Basically, the report will outline what regulations the Secretary of the Treasury would like to change and clearly will be a product of ideology and the lobbying efforts of special interests.  The section does identify that the regulations that should be targeted include those that: (i) impose an undue financial burden on United States taxpayers; (ii) add undue complexity to Federal tax laws; or (iii) exceed the statutory authority of the IRS.
Since there is no basis given as to what might constitute an undue financial burden, this is going to be an arbitrary choice for the writers of the report.  Further it should be noted that taxpayers are both individuals as well as corporations.  The conclusions seem obvious.
The second point is a bit of a contradiction in that a review of regulations is required, but as regulations are subservient to laws, how can a regulation add complexity to a law?  Simply eliminating a regulation does not re-write the law although it may then allow the law to be simplified later by Congress.  I am not against the idea that reducing the number of special cases that need to be considered can result in simplicity and efficiency without affecting the fairness and morality of the tax laws and regulations, however, it is an incredibly difficult job to sort out what is what here because the tax code is so complex.
Finally, I doubt that any existing regulations truly exceed the statutory authority of the IRS.  These kinds of things are rooted out by certain groups and challenged in court pretty much immediately.  So unless there is going to be a significant change in the interpretation of the what the statutory authority of the IRS is, I don't see this as a useful criterion.
In subsection (b) it calls for a final report to be written and published in the Federal Register within 150 days.  I applaud the requirement for publishing it in the Federal Register as this promotes transparency and accountability in government.  I would encourage those who write these EO's for the President to sign to include such a requirement for all non-classified subjects.
In subsection (c) it calls for consideration of expanding the scope of "significant regulations".  Currently, any "significant" regulations are defined in EO 12866 and its successors and these require additional steps to be taken prior to implementation.  Expanding the scope of these steps will slow down government which seems to be what the goal is as a step to reduce the impact of government on day to day life.  Ultimately, if the scope is changed, this will need to be done by a successor EO to effect the change.  In subsection (d), other documents will be revised to implement the change.

Section 3

This section is boilerplate caveats present in nearly all Executive Orders.