TaxProf Blog

Editor: Paul L. Caron, Dean
Pepperdine University School of Law

Wednesday, October 12, 2005

Is Miers a Tax Textualist?

Miers_2Following up on Sunday's post on Harriet Miers' responsibility as managing partner for the shoddy tax shelter opinions issued by the Locke, Liddell & Sapp law firm:  Vic Fleischer disagrees with his colleague Stephen Bainbridge's casual dismissal of the relevance of Miers' role in the opinions and draws three lessons that offer insights into the Miers nomination:

        1. Does she really have good judgment?
        2. Forget compromise, stand and fight.
        3. Miers will be a literalist.

Vic's observations on Miers as a tax textualist are particularly interesting:

I have precious little evidence, but when added to all the vague talk that Miers is a "practical" lawyer with "real world experience", etc., I'll go ahead and make a prediction: Miers will be a literalist when it comes to interpreting statutes.

The tax shelters provide a nice window into the problem. As once explained by Taxprof Joe Bankman, there is a split among tax professionals. Some of us, mostly the tax elitists and the older generation of tax professionals, prefer to interpret statutes with purpose in mind. And we frequently look to non-literal interpretations of the Code (business purpose doctrine, step transaction, economic substance doctrine, etc.) as a necessary part of tax practice. Others, especially the younger generation and those trained by or sharing ideologies with the Scalia school of statutory interpretation, prefer the plain meaning approach. They tend to read the Code literally, and see nothing particularly wrong with tax shelters. In the two instances we have seen (the CDS shelter and the Rainbo Club property) Miers seems to have voiced no concern about a literal interpretation of the Code.

Of course, I could be wrong. Perhaps Miers secretly opposes tax shelters and would apply common law doctrines to trump literal readings of the Code. But it would be nice to find out more at the confirmation hearings.

Many Conglomerate readers may find the literal/plain meaning approach to statutory interpretation appealing, and that is a respectable position. Congress, after all, can amend its statutes to close loopholes. But literalism has its costs. It is an approach that is often bad for business law (Enron) and for the tax law in particular. In tax, it has led to the bizarre situation where tax professionals might go to jail for devising tax shelters that, on the civil liability side, at least if they land in the right courtroom with a literalist judge unwilling to apply common law tax doctrines, will be upheld as perfectly legal.

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