Filed Date: 11/6/1978
Status: Precedential
Modified Date: 1/29/2017
November 6, 1978 78-97 MEMORANDUM OPINION FOR THE ASSISTANT TO THE PRESIDENT FOR DOMESTIC AFFAIRS AND POLICY Enrolled Bills— Effect of Order of Approval by the President—Revenue and Energy Tax Acts of 1978 (26 U.S.C. § 46
) This responds to the inquiry o f your office concerning the effect of the President’s contemplated order o f signing on provisions of the Revenue Act of 1978 (Revenue Act) and o f the Energy Tax Act o f 1978 (Energy Act) relating to the 10 percent investment tax credit on certain depreciated property. Because the Revenue Act extends the 10 percent rate indefinitely by rewording § 46(a) (2) (B) of the Internal Revenue Code o f 1954, 26 U .S.C . § 46(a) (2) (B) (1976), which Congress had already amended in the Energy Act, the President’s approval o f the two bills in either order will necessarily result in the revision of § 46(a) (2) (B), as provided in the Revenue Act, and will extend the 10 percent credit indefinitely. (A chart is appended to this opinion to facilitate understand ing o f the successive revisions of the Internal Revenue Code.) Section 38 of the Internal Revenue Code of 1954, 26 U .S.C . § 38 (1976), provides for an investment tax credit with respect to certain depreciable property. The amount o f the credit allowed is determined by § 45 of the Code. As originally enacted in 1954, the general rate permitted for qualified property was 7 percent. 28 U .S.C . § 46(a) (1) (current version at 26 U .S.C. § 46(a) (2) (1976)). In 1975, Congress amended § 46 to raise temporarily the general investment tax credit from 7 percent to 10 percent. Tax Reduction Act of 1975, § 301(a), Pub. L. 94-12,89 Stat. 26
, 36 (1975). Under “ transitional rules’’ added to § 46 by § 301(a) of the 1975 Act, 26 U .S.C . § 46(a) (1) (D) (current version at 26 U.S.C . § 46(a) (2) (D) (1976)), the 10 percent credit applied, in general, to qualified investments made prior to January 1, 1977. In 1976, Congress enacted a major revision o f § 46. Subsection 46(a) (1) (D) became § 46(a) (2) (D), and was amended to extend the general 10 percent credit to qualified investments made prior to January 1, 1981. Tax Reform Act of 1976, § 802(a), Pub. L. 94-455,94 Stat. 1520
, 1580 (1976). 422 On October 14, 1978, both Houses o f Congress passed a conference- approved version of the Energy Tax Act of 1978, H.R. 5263, 95th C ong., 2d sess. Section 301(a) of the bill again effects a major amendment o f § 46, but its version of subsection 46(a) (2) (D), which would become § 46(a) (2) (B), would still result in a drop of the regular business investment credit rate from 10 percent to 7 percent on December 31, 1980. Congress several hours later again amended § 46 in passing the Revenue Act of 1978, H.R. 13511, 95th C ong., 2d sess.1 Under § 311 of the Revenue bill, § 46 of the Code would be further amended to create a general tax credit rate of 10 percent with no time limitation. Section 311 accomplishes this purpose by rewording § 46(a) (2) (B), as already amended by the Energy Act, to eliminate any time limit on the extension of the 10 percent rate. That Congress, in enacting the Revenue Act, both recognized and intended to amend further the amendment of § 46(a) (2) (B) as enacted in the Energy bill is clear from the way in which § 311 of the Revenue Act describes § 46(a) (2) (B). Section 311 reads: (A) 10-PERCENT INVESTM ENT CREDIT.— Subparagraph (B) of section 46(a) (2) (defining regular percentage) is amended to read as follows: (B) REGULAR PERCENTAGE.— For purposes of this para graph, the regular percentage is 10 percent. The reference in § 311 to “ Subparagraph (B) o f section 46(a) (2) (defining regular percentage)” makes sense only if the Energy Act has already amended 46(a) (2) (B) because, without the amendment effected by the Energy Act, § 46(a) (2) (B) would not define regular percentage, as indicated in § 311. Currently, without the Energy Act in force, § 46(a) (2) (B) as revised in 1976 discusses credit allowances in excess of the 10 percent rate, a wholly different subject. Section 311 is sensible only if Congress considered and intended to amend the amendment to § 46 it had already passed in the Energy Tax Act. This conclusion is buttressed by other sections of the Revenue Act that refer expressly to the Energy Tax Act o f 1978.2 Regardless of the order in which the President signs the two Acts passed by Congress on October 14, 1978, a court subsequently construing them will be bound by two elementary principles: statutes are to be interpreted, so far as possible, to give effect to the intent of the legislature; statutes in p a ri m ateria. 'A s indicated by the Congressional R ecord, 124 Cong. R ec.'D 1564, D 1567. D1573, D1575 (daily ed ., Oct. 14, 1978), each House passed the Revenue Act subsequent to its own approval of the Energy Tax Act. Were the relevant provisions o f the acts in conflict, application o f the general rule that where statutes in pari materia are absolutely repugnant, the one passed later will prevail, Sutherland, Statutes and Statutory Construction SS 23.17. 51.03 (4th cd. 1972). would still lead to the conclusion that the Revenue Act would control. 2See. e.g.. the technical am endm ent effected by the Revenue Act o f 1978. § 3 1 1(c) (2). 423 especially when enacted closely in tim e, are to be interpreted, so far as possible, to avoid a contradiction between them. We conclude that the intent of Congress as manifested in the language o f the Revenue bill and as evidenced in identical paragraphs o f the committee reports on the Revenue Act of 1978, S. Rept. 95-1263, 95th C ong., 2d sess. 112 (1978); H . R ept. 95-1445, 95th C ong., 2d sess. 62 (1978), to extend permanently the 10 percent investment tax credit rate, requires an interpretation o f both bills that would extend the 10 percent rate indefinitely. The President, by signing the Revenue Act first, is incapable of altering C ongress’ clearly expressed m eaning.3 L eon U lm a n D epu ty A ssistant Attorney GeneraI Office o f L egal Counsel ’A contrary result would be inconsistent with the legislative role delegated by the Constitution entirely to Congress. APPENDIX Legislation Regular Rate Time Section In How Amendment to o f Investment Limit Which Time Time Limit Is Tax Credit Limit Appears Accomplished Provided Internal 7 percent None Revenue Code (26 U .S.C . of 1954 § 4 6 (a )(l)) Tax Reduction 10 percent Invest 26 U .S.C. Transitional time Act of 1975 ments §46(a) (1) (D) rules inserted in made new §46(a) (1) (D). prior to 1-1-77 Tax Reform 10 percent Invest 26 U .S.C. §46(a) (I) (D) Act of 1976 ments §46(a) (2) (D) moved to §46(a) (2) made (D); dates changed prior to to conform to extend to 1-1-81 ed time limit. Energy Tax 10 percent Invest 26 U .S.C. Transitional rules Act of 1978 ments §46(a) (2) (B) eliminated; time made in limits embodied in period entirely rewritten ending version of §46(a) 12-31-80 (2) (B). Revenue 10 percent None §46(a) (2) (B) re Act of written to abolish 1978 time limit on 10 per cent rate and rever sion to 7 percent rate. EXTENSIONS OF THE 10 PERCENT REGULAR RATE INVESTM ENT TAX CREDIT 425