Weekly SSRN Tax Article Review And Roundup: Holderness Reviews Taxation And Law And Political Economy By Bearer-Friend, Glogower, Kleiman & Wallace

This week, Hayes Holderness (Richmond) reviews Jeremy Bearer-Friend (George Washington; Google Scholar), Ari Glogower (Ohio State; Google Scholar), Ariel Jurow Kleiman (Loyola-L.A.; Google Scholar), & Clinton G. Wallace (South Carolina; Google Scholar), Taxation and Law and Political Economy, 83 Ohio St. L.J. ___ (2022).

One bit of folk wisdom among tax professors is that many students interested in law careers addressing social inequities will fail to consider tax law as an area of practice in favor of something like criminal law. I suppose the idea is that tax law is just about numbers and math and making sure that rich people and corporations don’t pay taxes. With such a framing, one can understand the lack of appeal to this set of students. Of course, if these students are lured into a tax class, it seems they are often delightfully surprised at the role taxation can play in shaping social policy. So how did tax law earn its muted reputation, and can or should that reputation change?

Though their article is not about how to get more students to enroll in their classes, Jeremy Bearer-Friend, Ari Glogower, Ariel Jurow Kleiman, and Clint Wallace have answers to these questions. 

In Taxation and Law and Political Economy, the authors provide an overview of how social issues such as equality and democratic participation became sidelined in tax discussions (though maybe not that sidelined), and, relying on the nascent Law and Political Economy (“LPE”) project, offer the start of a path forward for tax law to earn a new reputation by refocusing discussions on those social issues.

Relying on scholarship by Angela Harris and Jay Varellas as well as that of Jebediah Britton-Purdy, David Singh Grewal, Amy Kapczynski, and K. Sabeel Rahman, the authors explain (with admirable clarity) the LPE project. In short, LPE scholarship and thinking rejects the dominance of neoclassical economics in driving governmental action and policies. According to LPE scholars, relatively unchallenged efficiency and neutrality values of neoclassical economics elevate market forces over government interventions, but those market forces have proven incapable of addressing broader social issues and, ultimately, have had a large role in creating or entrenching those issues. Weak governmental interventions do little to rectify the harms. LPE’s solution is a reorientation of the law following the recognition that markets do not exist beyond the law, rather they are shaped by it. As such, lawmakers and scholars should elevate normative values other than efficiency and economic neutrality in their discussions, allowing the law to tackle social issues without fear of the all-powerful market.

Does this mean abandoning efficiency and neutrality values altogether? Perhaps, but the authors push back against that idea, urging that LPE scholars deemphasize those values without abandoning them. To support their case, the authors turn to what they know best: tax scholarship. Though tax law has embraced neoclassical economics for some time, it has shown an impressive capability to also consider social issues like wealth inequity—the endurance of progressive rate brackets in the federal income tax is case in point. And critical tax scholars have long raged against deifying efficiency and neutrality in tax law, instead advocating for tax reforms that address structural inequities.

In sum, tax law, while not perfect, offers the LPE project a blueprint of how LPE goals might be achieved. In fact, a reader of Taxation and Law and Political Economy would be forgiven for thinking that critical tax scholarship is the progenitor of the LPE project. But the authors’ goal is not to get in a turf war over these ideas, but to bring tax scholarship into conversation with the burgeoning LPE scholarship to allow both to learn from each other. For all its ability to consider social issues, tax law has not been resoundingly successful in addressing those issues in practice (see the folk wisdom about tax law’s reputation). As the authors note, LPE offers a fresh reminder for tax scholars and policymakers to examine their assumptions and values, which may lead to better results.

Though the authors’ goal is admittedly modest, it’s hard not to get excited over the conversation they introduce between tax and LPE. Frankly put, I wanted more (I’d pre-order a book!). The article craftfully introduces LPE to tax scholars and tax to LPE scholars, setting up a promising line of scholarship. As might be expected, there will be a lot of issues to hammer out. For instance, what is tax law’s relationship to other areas of law in an LPE world? At least in theory, tax law serves as the backdrop for the hands-off governmental approach to laws in the neoclassical economics world: any distributional inequities can/should be corrected by redistribution through taxes. Would deemphasizing the neoclassical economics approach generally lead to less redistributive taxes? Would it even matter if it did?

Bearer-Friend, Glogower, Jurow Kleiman, and Wallace make a convincing case that tax law and scholarship will play a major part in the blossoming of the LPE project, and in turn will benefit from that blossoming. Perhaps in the not-too-distant future, we can put to rest the old folk wisdom about tax law in favor of a more dynamic view.

Here’s the rest of this week's SSRN Tax Roundup:

• Thomas Aronsson (Umea), Olof Johansson‐Stenman (Gothenburg), & Ronald Wendner (Graz), Charity, Status, and Optimal Taxation: Welfarist and Non-Welfarist Approaches
• Malte Chirvi (Humboldt University of Berlin), Hans-Peter Huber (Humboldt University of Berlin), & Cornelius Schneider (Max Planck Institute), Biased Preferences for Wealth Taxation: The Case of Misperceived Tax Burden Consequences
• Jadrian Coppieters (Scarff Law Firm), Trust Planning and the Washington State Capital Gains Tax, Seattle U. L. Rev. (forthcoming)
• Lorraine Eden (Texas A&M), Taxing the Top 100: U.S. Estimates of Winners and Losers From Pillar One Amount A, Tax Management International Journal, 50 TMIJ 6, (2021)
• Sarah B. Lawsky (Northwestern), Teaching Algorithms and Algorithms for Teaching, 24 Fla. Tax Rev. 1 (2021)
• Michael Littlewood (Auckland), Robert Fitzroy and the Insolvency of the New Zealand Government, 1843-1845
• Doron Narotzki (Akron), A Progressive Tax Plan for A Progressive America, 171 Tax Notes Federal 1225 (May 24, 2021)
• Leopoldo Parada (Leeds), Commission v Poland C-562/19 P: Turnover Taxation and State Aid Law, Highlights & Insights on European Taxation (2021)
• Ad van Doesum (Maastricht) Ad & Frank Nellen (Maastricht), VAT in a Day (2021)