Formal Tax Legislation
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Definition of 'Formal Tax Legislation'The process by which a proposed tax rule or tax change may become law in the United States. Formal tax legislation follows specific steps as defined by the U.S. Constitution. Formal tax legislation, like all federal laws, requires the consent of both houses of Congress (the Senate and the House of Representatives) and presidential approval. |
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Investopedia explains 'Formal Tax Legislation'The formal tax legislation process must follow specific steps:1. The tax bill originates in the House of Representatives with what is referred to the Ways and Means Committee. Once committee members reach an agreement regarding the legislation, a proposed tax law is written. 2. The tax bill goes to the full House for debate, amendment and approval. 3. The tax bill is passed to the Senate where it is reviewed. The Finance Committee may rewrite the proposal before it is presented to the full Senate. 4. Following Senate approval, the tax bill is sent to a joint committee of House and Senate members who work to create a compromise version. 5. The compromise version is sent to the House and Senate for approval. 6. Once Congress passes the bill, it is sent to the president who will either sign it into law or veto the bill. 7. In the event the president vetoes the tax bill, Congress can override the veto with a two-thirds vote of each house; if successful, the tax bill becomes law without the signature of the President. Citizens can influence tax laws through the informal tax legislation process, which includes contacting members of Congress and elected officials, attending town or county meetings, participating in lobbying efforts, circulating and signing petitions and by voting for particular candidates. |
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