Monday, November 26, 2012
Chris Sanchirico (Pennsylvania) presents Optimal Tax Policy and the Symmetries of Ignorance, 66 Tax Law Rev. ___ (2012), at Washington University today as part of its Tax Colloquium Series hosted by Adam Rosenzweig:
What government-observable characteristics should determine the taxes that an individual pays and/or the transfers that she receives? This article focuses on a specific aspect of this fundamental question of tax policy: the implications of policymakers’ uncertainty regarding the outcomes of tax policy choices. The article identifies and questions two implicit premises in policy-uncertainty-based arguments against including taxable attributes other than labor earnings in the base. The first is that greater uncertainty surrounds the optimal taxation of non-labor-earnings attributes than surrounds the optimal taxation of labor earnings. The second is that tax policymakers ought to follow a kind of precautionary principle under which uncertainty regarding an attribute counsels base exclusion. The article explains why both premises are flawed.