Tuesday, August 31, 2021
Lawrence Zelenak (Duke), The American Families Plan and the Future of the Mass Income Tax, 172 Tax Notes Fed. 1277 (Aug. 23, 2021):
In this article, Zelenak argues that enactment of President Biden’s American Families Plan would threaten the status of the federal individual income tax as a tax imposed on most of the population, and he explores the fiscal citizenship implications of an income tax system under which almost all adults file tax returns but only about half pay tax.
The argument of this article has had a certain Duke of York quality (“He marched them up to the top of the hill / And he marched them down again”). After observing that no one seems to be concerned about the effect that enactment of the AFP would have on the income tax paying percentage, it argues that people should be concerned. It then turns around, however, and argues that the fiscal citizenship virtues of a mass income tax could survive — and even flourish — following enactment of the AFP. The article’s march up and down the hill has not been pointless, however, because the fiscal citizenship virtues of a mass income tax will not automatically survive the AFP’s transformative expansion of refundable tax credits. Rather, advocates of the AFP will have work to do to protect and enhance the fiscal-citizenship-promoting character of the income tax. Advocates should acknowledge the AFP’s downward effect on the income tax paying percentage of the population. They should then explain how the United States would still remain a nation of taxpayers from both multi-tax and multiyear perspectives. They should also emphasize how the tax return filing process recognizes and rewards the civic contributions (especially paid labor and child rearing) of return filers even when their net income tax liabilities are zero or negative. Finally, AFP advocates should keep in mind that Congress could enact both the substance and the tax-based administration of the proposals without officially designating the programs as part of the income tax, and that there may be significant (and wholly legitimate) symbolic advantages to that approach.