Monday, October 3, 2022
Jeesoo Nam (USC; Google Scholar) presents Just Taxation of Crime: Should the Commission of Crime Change One’s Tax Liability?, 54 Ariz. St. L.J. ___ (2023), at San Diego today as part of its Tax Law Speaker Series:
The tax law treats criminals differently from non-criminals. Should it? Under the public policy doctrine, various tax deductions are disallowed if they are closely tied to criminal activity. Running a criminal enterprise is thus tax disadvantaged compared to running a non-criminal enterprise.
This Article considers a variety of possible explanations. (1) The tax disadvantage provides an incentive not to commit crime. (2) The tax disadvantage helps to bring deserved punishment to the criminal. (3) Criminals have given up their right not to be taxed. (4) Criminals have taken an unfair advantage and so must be stripped of that unfair advantage. (5) Taxpayers deserve to bear the full cost of their criminal activities with no help from others.
This Article argues in favor of (5) as the best explanation. Since taxpayers deserve to bear the full cost of their criminal activities, the public policy doctrine should be expanded to prohibit all deductions tied to criminal wrongdoing rather than just the ones which are currently prohibited.