Thursday, January 31, 2019
Diane Klein (La Verne), U.S. v. Davis and Prof. Cain’s Rewritten Opinion: An Intersectional Argument for Capping Section 1041:
Tax cases are about rich people. Given the demographic distribution of income and wealth in the United States, that means tax cases are mostly about rich White people. The tax issue in Davis can be stated simply: when shall transfers of appreciated assets incident to divorce be taxed? But thinking about these rules only from the point of view of the taxpayers themselves, and what is “fair” inter se or as compared to others similarly situated, may distract us from seeing broader issues also properly considered in tax policy. When we take into account not just sex/gender and marital status, but also race and class, the focus on one sort of inequality (between divorcing couples in different states) obscures another that is larger and more far-reaching (race-based wealth inequality). To address this, I suggest an amendment to Section 1041, a limit on tax-free transfers of appreciated assets incident to divorce.
The cap is intended to balance desirable flexibility and asset preservation at divorce with legitimate fiscal and equity concerns in what at least aspires to be a progressive tax system.