Thursday, April 15, 2021
Daniel Hemel (Chicago; Google Scholar) presents Law and the New Dynamic Public Finance virtually at Duke today as part of its Tax Policy Workshop Series hosted by Richard Schmalbeck & Lawrence Zelenak:
The “new dynamic public finance” literature has generated important insights for the design of tax systems and social insurance programs in recent years. But with few exceptions, legal scholars in tax and related fields have yet to engage with the dynamic public finance literature. That lack of engagement is unfortunate, both because insights from dynamic public finance can enrich legal analysis and because lessons from law can inform dynamic public finance research.
This essay explores the potential for cross-pollination between law and the new dynamic public finance. It addresses the design of age-dependent labor income taxes, capital taxation, the taxation of intergenerational wealth transfers, and constitutional aspects of tax law. Three themes emerge. First, the dynamic public finance literature highlights circumstances in which tax interventions and legal technologies can be complementary. In these cases, the dynamic public finance literature may motivate legal scholars to refocus attention on decades-old doctrinal challenges.
Second, dynamic public finance highlights circumstances in which tax interventions and legal technologies can be substitutes. For example, dynamic public finance points to the possibility that capital taxation can relieve pressure on more intrusive methods of determining eligibility for social insurance programs.
Finally, and most importantly, insights from the dynamic public finance literature can assist legal scholars and policymakers in designing tax-and-transfer mechanisms that more effectively reduce lifetime income inequality and intergenerational wealth gaps. But for that vision to become reality, lawyers will need to engage critically and sustainedly with the new dynamic public finance literature’s lessons and limits.