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Friday, May 10, 2024

Weekly SSRN Tax Article Review And Roundup: Kim Reviews Raskolnikov's Law For The Rich

This week, Young Ran (Christine) Kim (Cardozo; Google Scholar) reviews a recent paper by Alex Raskolnikov (Columbia), Law for the Rich, 109 Minn. L. Rev. __ (2024).

Kim (2023)

With respect to the heated debate on introducing higher, more effective taxes on the rich, like a wealth tax, Alex Raskolnikov (Columbia) asks a provocative question in his recent essay, Law for the Rich, 109 Minn. L. Rev. (forthcoming 2024)—why not  propose legal reforms to expand the scope beyond tax law and introduce a separate general (non-tax) law for the rich, encompassing property law, contract law, corporate law, antitrust law, IP law, labor law, and so on (collectively, the Law for the Rich (LFR))?

Raskolnikov explains that although there is no such LFR, it is possible to envisage a practicable one and implement it. For example, in property law, "time limits can be shortened or lengthened if the negatively affected party happens to be the rich."

The "open and notorious" requirement for adverse possession may be dropped if the owner is rich and the possessor is not. Indeed, distributionally-informed reforms in individual laws have been proposed by many scholars, as seen in various articles in footnote 20 of Raskolnikov's essay. Nonetheless, "none of the proposals go as far as to include an LFR-style of income or wealth threshold," and thus, cannot reach the redistributive goals that LFR could achieve.

Then, why do we not have LFR even if it is practical and necessary? Raskolnikov first turns to theory. However, neither political philosophy nor economic analysis nor practical design considerations offer a plausible answer for such a lack. Then, is there a simple yet fundamental answer as to why we do not have LFR or why none of the bright minds have proposed such ideas outside of tax law? Raskolnikov finds a clue by observing Major League Baseball (MLB) and makes an analogy to law. Professional leagues have both redistributive taxes (e.g., a luxury tax in the MLB) and redistributive non-tax rules (e.g., expansion of the number teams eligible to play in the postseason). The latter is acceptable by the fans and the league because, Raskolnikov explains, it shares three distinct features: 1) redistributive effects are not obvious, 2) the costs of these redistributive rules are not highly concentrated, and 3) it does not change the fundamental structure of the game. Going back to law, general legal rules with progressive distributional effects in individual laws proposed by scholars can satisfy all three prongs, and therefore would be acceptable. On the other hand, LFR flunks two and possibly all three prongs because "it imposes burdens that are obvious, highly concentrated, and possibly contrary to one of the fundamental elements of law itself." Raskolnikov concludes that this is why LFR would be perceived as unfair, whereas redistribution through tax law would not. Hence, it makes sense for policymakers to choose redistributive taxes over redistributive legal rules: "When it comes to high-end inequality, there is no plausible alternative to taxes." 

As a long-time student of Roman Law, I would have thought that LFR might be similar to Roman Law, where the ius civile ("citizen law") only applied to Roman citizens—the privileged class of people in the Roman Empire—and different rules applied to the rest of the people. It made me uncomfortable to accept the idea of LFR in modern society as LFR may create a privileged class, like Roman citizens, officially recognized and authenticated by the legal regime. I was able to find the grounds of my resistance in Raskolnikov's essay. LFR is obvious. Its costs are concentrated. And it violates the fundamental elements of rules. Moreover, it also sheds light on my transition of passion from Roman Law to tax law, perhaps because I was able to fill what I thought was deficient in Roman Law, or the older version of LFR, into tax law.  

This essay reveals our unconscious notion of fairness and the level of tolerance in changing the fundamental principles of law for redistribution in such a thought-provoking way. Further, it also reviews a remarkably rich body of contemporary literature on a progressive legal system in property law, contract law, intellectual property law, antitrust law, corporate and labor law, trust law, law and economics, and not to mention tax law. Readers would be thrilled when they find how Raskolnikov concisely yet elegantly introduces political theory, such as the rule of law by Joseph Raz, Friedrich Hayek, Robert Nozick, Paul Gowder, Critical Legal Studies, and Marx, the theory of justice by consequentialists and deontologists, and moral philosophy by Ingrid Robeyns, Liam Murphy, and Thomas Nagel. No need to be overwhelmed by the above names. Even if you are, don't miss Part III where Raskolnikov observes MLB structures and takes lessons from those structures to the LFR discussion, per Ludwig Wittgenstein's advice!

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

https://taxprof.typepad.com/taxprof_blog/2024/05/weekly-ssrn-tax-article-review-and-roundup-kim-reviews-raskolnikovs-law-for-the-rich.html

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