Paul L. Caron

Wednesday, July 18, 2018

Buchanan Reviews Abreu's The 2017 Tax Act: Requiem For Ability to Pay

Jotwell (Tax) (2016)Neil H. Buchanan (George Washington), The Ability-To-Pay Principle and the Counterintuitive Distributive Justice Analysis of Alimony Payments (JOTWELL) (reviewing Alice Abreu, Tax 2018: Requiem for Ability to Pay, 52 Loyola L.A. L. Rev. ___ (2018)):

The tax bill that Republicans in Congress passed, and that Donald Trump signed in December 2017, might end up being one of the shortest-lived tax laws in U.S. history. Not only are large elements of it explicitly temporary, but the political moment that led to its passage seems already to be passing, quite likely to be followed by a time when progressive tax policy will once again be politically viable.

However, even if this bill lapses or is repealed (in whole or in part), Alice Abreu provides an important contribution to our understanding of what just happened in Tax 2018: Requiem for Ability to Pay. The title of the article telegraphs the importance of the issue that she identifies as the most unfortunate aspect of the new tax law. Whereas objective analysts knew that the bill’s changes would make the tax system less progressive than it had been, Abreu explains that seemingly unrelated elements of the bill add up to a repudiation of the very idea of progressive taxation. ...

I encourage readers to engage with the other arguments in Abreu’s admirably parsimonious (17 page) article. Without any real debate, our tax system has been transformed from one that at least aimed to impose equal tax rates on people with equal ability to pay into a system that makes a mockery of that notion of distributive justice by deliberately mismeasuring people’s true incomes. Abreu makes us aware of what has just happened in the name of the American people.

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Horizontal equity suffered when legitimate adjustments like employee-paid business expenses were eliminated. It's all about reducing the "sticker price" statutory tax rate while imposing tax on phantom income. Just as was done in 1986.

Posted by: AMTbuff | Jul 18, 2018 4:01:38 PM

Whenever you hear words like "distributive justice," hang onto your wallet!

Posted by: Tim Kelly | Jul 18, 2018 1:52:14 PM