TaxProf Blog

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

Monday, February 12, 2018

Bank Presents When Did Tax Avoidance Become Respectable? Today At UC-Irvine

Bank (2016)Steven Bank (UCLA) presents When Did Tax Avoidance Become Respectable?, 70 Tax L. Rev. ___ (2018), at UC-Irvine today as part of its Tax Law and Policy Colloquium Series hosted by Omri Marian:

No matter how many tax scandals are revealed in the media — and there have been many in the past year, involving a diverse set of taxpayers ranging from Donald Trump to Apple — what is most remarkable is that, by and large, the public has considered them relatively non-scandalous. This was not always the case. During the 1930s, even the most innocuous tax avoidance maneuvers, such as buying tax-exempt bonds, were attacked as morally suspect. When did that change and why? This Article offers a novel attempt to gauge the respectability of tax avoidance — using a unique, hand-collected dataset of newspaper advertisements for tax planning services in prominent national papers between 1930 and 1970 — and concludes that a shift occurred after World War II. The Article then explains the reason for this shift, suggesting that a combination of extremely high rates, a broadened base of taxpayers subject to that rate, and a deterioration of the wartime consensus for the rate structure laid the foundation for the respectability of tax avoidance in the 1950s and 1960s.

In effect, just as the high wartime rates for the wealthy had been justified as a means of compensating for the sacrifice of the poor during the war, the pursuit, and tacit approval, of tax avoidance after the war was a means of compensating for the high rates at a time when the sacrifice rationale for them had ceased to be compelling. This history parallels the modern experience with corporate tax shelters and has lessons for those seeking to reform the current tax system.

Colloquia, Scholarship, Tax | Permalink


Given Scottish merchants smuggled goods from and to the colonies to avoid English taxes, the answer, at least as far as America goes, is roughly about 1740.

Posted by: ruralcounsel | Feb 13, 2018 4:09:18 AM

Good paper. Figures 3 and 4 are the key. A tax rate of over 50% shocks the conscience, and how can anyone take a rate of 90% seriously? In fact, did even the lawmakers who wrote the tax bills really intend for anyone to pay that much, or did they purposely include enough avoidance provisions so the actual rate woudl be less?

Posted by: Eric Rasmusen | Feb 13, 2018 8:57:05 AM