Paul L. Caron

Tuesday, November 27, 2012

Lawsky: How Tax Models Work

Sarah B. Lawsky (UC-Irvine), How Tax Models Work, 53 B.C. L. Rev. 1657 (2012):

Unlike many social and physical sciences, legal scholarship includes little or no discussion of what models mean, how they are connected to the real world of law and policy, or how they should, and should not, be used by legal scholars. This void exists notwithstanding legal scholarship’s increasing reliance on explicit modeling in fields such as law and economics. This article uses the example of economic modeling in tax scholarship to investigate how legal scholarship uses models, and how models in legal scholarship work. The article lays out a path between two extremes. At one extreme is scholarship that employs models without either reflection or self-consciousness to make real-world recommendations; at the other is scholarship that rejects models because their assumptions are too far from reality. This article argues that neither approach is correct. Models are useful and important for legal scholarship, but not in the way that some critics and proponents seem to believe. Drawing from literature in the philosophy of science, this article argues that we reason from economic models through a mix of deductive and ampliative logic, through leaps, creativity, and intuition. Models cannot provide certainty about what the law should be; rather, economic models are merely one kind of voice in an ongoing and necessarily inconclusive conversation. This article concludes by drawing on this deeper understanding of models and modeling to propose ways that legal scholarship can and should use economic models.

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Not a word about Stanley Surrey and the "tax expenditure" concept or how the tax writing committees "score" legislative proposals. Incredible that there is no discussion of how these models directly impact tax policy and tax law. The author even notes the disconnect between theorizing and practical application:

"A model is also more useful if the author makes explicit why the model creates a credible world, and how the model connects to the real world. Legal scholarship, like economic scholarship, often fails to tie its models to the real world, leaving implicit precisely what the reader is to make of the model."

p. 1691. Absolutely incredible.

Posted by: TexEcon | Nov 28, 2012 7:47:44 AM