Paul L. Caron

Tuesday, February 16, 2021

Osofsky Reviews Wallace's The Troubling Case Of The Unlimited Pass-Through Deduction

Jotwell (Tax) (2016)Leigh Osofsky (North Carolina; Google Scholar), Troubling Legislation (JOTWELL) (reviewing Clint Wallace (South Carolina), The Troubling Case of the Unlimited Pass-Through Deduction: Section 2304 of the CARES Act, 88 Univ. of Chi. L. Rev. Online  (2020)):

Clint Wallace’s short essay, The Troubling Case of the Unlimited Pass-Through Deduction: Section 2304 of the CARES Act, is well worth a read for tax scholars, non-tax scholars, and non-scholars alike. The essay addresses what may be thought of by some as one of the “esoteric” provisions of the CARES Act. The upshot is that, by using the very esoteric nature of the provision as cover, Congress slipped costly, regressive, unjustifiable legislation into the CARES Act, which was sold to the public as progressive, emergency relief from the COVID-19 disaster.

The essay is important for a number of reasons. First, it educates readers about how the CARES Act resurrects an unlimited pass-through deduction for high-income taxpayers. Second, by doing so, it helps readers understand how the CARES Act was actually regressive in important ways. Third, it more broadly cautions readers about some of the unseemly aspects of legislation, in which legislators benefit favored groups in ways that the public is unlikely to understand. Finally, by writing this short essay, Wallace models how scholars have a duty to shine a light on these aspects of the legislative process.

Wallace isn’t the only person to have noticed what section 2304 of the CARES Act accomplished. The New York Times, for instance, ran an article, Bonanza for Rich Real Estate Investors, Tucked Into Stimulus Package. Americans for Tax Fairness lambasted the “millionaires giveaway.” And other media and advocacy sources chimed in as well. But the fact that Wallace wrote a scholarly essay about the provision is significant. In so doing, Wallace modeled how it is the job of scholars, and not just reporters or advocates, to examine and critique the work that Congress is actually doing. By engaging in this work in this short but consequential essay, Wallace contributes to scholars’ understanding of what is really happening in the world, as well as the public’s understanding of scholars’ place in it.

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