Paul L. Caron

Friday, November 18, 2022

Hayashi Presents Tax Law Enforcement And Redistributive Politics Today At Florida


Andrew Hayashi (Virginia; Google Scholar) presents Tax Law Enforcement and Redistributive Politics (with Yehonatan Givati (Hebrew University)) at Florida today as part of its Tax Colloquium hosted by Charlene Luke:

Although most Americans think that there is too much income inequality, support for redistribution through the income tax is tepid. This is a problem, because the income tax must play an important role in any serious effort to reduce income inequality, and an influential view among scholars holds that the income tax should be the only tool of redistribution. Why are people unhappy about income inequality but ambivalent about the primary legal tool for addressing it? In this Article, we explain how it is possible to hold these seemingly contradictory views and why tax law underenforcement is partly responsible for this contradiction. Underenforcement undermines taxpayer morale, increases the efficiency costs of using tax law for redistribution, and generates a distribution of tax burdens that is different than would be the case if the law were perfectly enforced. 

We show how improvements in tax enforcement can not only raise more revenue for redistribution and improve the equity of the tax law that we currently have, but can also raise support for even greater income redistribution and change the tax laws that we might have. These effects also explain why tax enforcement policy is a political battleground, with parties that dislike redistribution wanting to weaken tax law enforcement and parties that favor redistribution wanting to invest in tax law enforcement. We provide support for these novel theoretical arguments with evidence from an original survey.

Colloquia, Scholarship, Tax, Tax Scholarship, Tax Workshops | Permalink