Paul L. Caron

Tuesday, May 24, 2022

Spivack: The Happy Families Of Tax Law

Carla Spivack (Oklahoma City), The Happy Families of Tax Law, 100 N.C. L. Rev. 601 (2022): 

This Article points to the difference between the treatment of wealthy families and poor families who apply for tax benefits and argues that the same treatment should apply to both. I show that tax breaks for the wealthy and benefits for the poor are both government expenditures that deplete the public fisc; indeed, some have called tax benefits for the rich “hidden” or “submerged” forms of welfare. Yet, as I discuss, the law treats wealthy applicants for tax breaks quite differently from the way it treats poor people applying for similar benefits. The wealthy receive tax breaks based on assumptions about their family dynamics, without any inquiry into the dynamics in a particular family. By contrast, poor people applying for benefits face scrutiny of their intimate lives, relationships, and spaces to establish eligibility. In essence, this Article argues that what’s sauce for the goose is sauce for the gander.

I advocate for the same treatment of the recipients of government aid at both ends of the spectrum. If the poor must open their family lives to scrutiny as the price for benefits, why shouldn’t the rich? I propose that the law employ a presumption that families cooperate in maximizing their wealth and require evidence of disunity to overcome that presumption and prove eligibility for the tax benefit. For the sake of pragmatism, however, I also suggest a safe harbor: a modest statutory discount rate for minority interests with no questions asked. Any applicant seeking a deeper discount would have to show evidence of serious family dysfunction to overcome the presumption.

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