CEI to Supreme Court: Please don’t let executive branch set tax rates

Yesterday, the Competitive Enterprise Institute filed an amicus brief urging the Supreme Court to recognize that only Congress has the authority to write the rules under which Americans live. Over the last decade, the executive branch has churned out 23 rules for every law passed by Congress. Yet it is Congress that the Constitution entrusts to set the rules—not the president. It’s time for the Supreme Court to put Congress back in control.

The case, FCC v. Consumers Research, concerns the Telecommunications Act of 1996, in which Congress delegated to the FCC the authority set the fees that fund “universal service” of telecommunications. Whatever the merits of universal service, the question of the tax rate belongs to the people’s elected representatives.

The problem of legislative bodies surrendering their authority to the executive is hardly new. In 1539 Parliament, the legislature of the United Kingdom, enacted the Proclamation by the Crown Act which granted the king’s proclamations the same weight as statutes.

The result? Sir William Blackstone called it “a statute, which was calculated to introduce the most despotic tyranny; and which must have proved fatal to the liberties of this kingdom, had it not been luckily repealed.” David Hume described it as “a total subversion of the English constitution.”

Even after its repeal, the king continued to issue proclamations as if they were law. Judges of the era refused to recognize such edicts, reinforcing the principle that only the legislature can make law. It was during this period that John Locke—a key influence on the American Founders— wrote “The legislative cannot transfer the power of making laws to any other hands.”

The US Constitution enshrines this principle through the Vesting Clauses, which vest all legislative power in Congress alone. Those vesting clauses must be read in light of the common law of agency, which prohibits subdelegation. While the executive can administer laws based on factual determinations, the legislative responsibility must remain with Congress. 

Some argue that J.W. Hampton, Jr., & Co. v. United States (1928) allowed the executive broad latitude to determine the law, but this misreads the case. J.W. Hampton explicitly reaffirmed the common law maxim prohibiting subdelegation: “The well known maxim ‘delegata potestas non potest delegari,’ applicable to the law of agency in the general and common law, is well understood, and has had wider application in the construction of our federal and state constitutions than it has in private law.”

It wasn’t until the World War II cases of Yakus v. United States (1944) and Lichter v. United States (1948) that the executive was allowed any discretion as to what the law is. According to Yakus, Congress has required people to follow whatever the executive says, and that is good enough. But think of the tyranny such a rule would allow! All the powers of government could be given to the president to be a government unto himself—and liberty would cease. Yakus and Licter were wartime aberrations, not constitutional imperatives, and should be overturned.

The FCC’s tax-setting authority is a textbook case of unconstitutional delegation. Congress cannot allow the executive branch to set whatever tax rates it chooses. If Congress can allow the FCC to set this tax, what stops it from letting the IRS dictate all tax rates? There is no limiting principle.

CEI urges the Supreme Court to restore the constitutional order by rejecting Congress’s attempt to avoid its duty. Lawmaking—especially when it comes to taxation—must remain in legislative hands.

This case will be argued before the Supreme Court on March 26, 2025, with a decision expected by the end of June.