TaxProf Blog

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

Thursday, May 28, 2009

Law, Society & Taxation Panel #1: Distributive Justice, Tax Policy & Society

The four-day Law & Society Association Annual Meeting kicks off today in Denver.  The first Law, Society, and Taxation Panel today is Distributive Justice, Tax Policy, and Society:

Rarely has the United States -- or the world -- seen such extreme disparities in wealth and income. In the midst of what could become the worst economic downturn in generations, it is essential that Law & Society scholars consider the causes and solutions of these imbalances. This panel will investigate various aspects of the issues surrounding economic and social inequality and will discuss whether and how to address such inequality.

Richard Schmalbeck (Duke University) (Chair/Discussant)

This paper summarizes the long list of arguments offered by opponents of redistributive policies, exposing them as a series of excuses designed ultimately to justify doing nothing to help those who are less fortunate and who need a helping hand

An accessions tax is a tax, at progressive rates, on the aggregate lifetime gratuitous receipts of an individual in excess of a specified exemption. The main thesis of this article is that an accessions tax is not simply a reverse image of the current estate tax system, but is significantly different both in purpose and effect. An accessions tax is a tax on the unearned income (accessions to wealth) of individuals. In operation, the accessions tax can avoid many of the loopholes in the estate tax, because the accession can occur after the transferor’s death. Accessions would be taxed only when realized in cash or assets that are not hard to value. Since only trust distributions (as opposed to the acquisition of trust interests) would be taxed, actuarial tables would be irrelevant, and general powers of appointment would be ignored. Taxation of qualified hard-to-value property (such as interests in a closely-held business) would be deferred to conversion to cash (or other event whereby qualification lapses). Elaborate qualification rules for the spousal and charitable exclusions would not be necessary.:

The role of efficiency in determining tax policy is often over-emphasized at the expense of equity. Predictions of gains from increased efficiency seem more certain than gains from equity because efficiency gains appear quantifiable while equity gains seem intangible. This article suggests, however, that the results of efficiency analysis are also very uncertain because taxpayer responses are often unpredictable in theory and empirical data may be contradictory. This article considers some basic efficiency issues in tax policy to illustrate doubts about efficiency analysis. The prevailing belief that efficiency gains would arise from broadening the tax base and lowering rates is not certain because of transition effects. Also, the notion that high tax rates encourage tax evasion is not predicted in theory and results of empirical examinations are contradictory. Last, the argument that a consumption tax is more efficient than an income tax, while true in theory, is not clear in reality because of transition effects and behavioral responses. Having shown the weaknesses of applying efficiency analysis to some basic areas of tax policy, the article suggests, paradoxically, that efficiency analysis is also deficient because it is applied too narrowly. Traditional efficiency analysis has not considered another important source of efficiency gains--equity. Evidence exists that achieving equity contributes efficiency gains. Thus, the article concludes, the divide between the tangible results of achieving efficiency and the intangible results of equity is false. Benefits from achieving efficiency and equity are difficult to identify, but both make important tangible contributions.

Conferences, Tax | Permalink

TrackBack URL for this entry:

Listed below are links to weblogs that reference Law, Society & Taxation Panel #1: Distributive Justice, Tax Policy & Society:


I don't see how can you have a meaningful debate when you "expose" your opponent's arguments as "excuses" rather than responding them to them in logical fashion. This sounds more like the book of Stalin's speeches that I was given in college than an appropriate discussion of American public policy.

Posted by: mike livingston | May 28, 2009 6:46:37 AM