Fairness Spillovers - The Case of Taxation

It is standardly assumed that individuals adjust to perceived unfairness or norm violations in precisely the same area or relationship where the original offense has occurred. However, grievances over being exposed to injustice may have even broader consequences and also spill over to other contexts, causing non-compliant behaviour there. We present evidence that such 'fairness spillovers' can incur large economic costs: A belief that there is unfairness in taxation in the sense that the rich don't pay enough taxes is associated with a twenty percent higher level of paid absenteeism from work.fairness, beliefs, taxation, work morale

Invisible Taxpayers

The paradigm tax dispute involves a taxpayer on one side and the government on the other. In that traditional dyad, only the taxpayer matters, even though the interrelatedness of taxpayers across the fiscal system means that the outcome of any one dispute often affects the interests of many other taxpayers. Yet everyone else is invisible to the legal system, without enforceable rights in the administrative or judicial structure. This article focuses attention on such invisible taxpayers and what justice for them would require. It proposes a theory of tax injury that is determined by “legal shares” and argues that conventional standing doctrine can accommodate broader taxpayer access if courts acknowledge the financial interrelatedness of taxpayers. Invisibility deprives taxpayers of both economic fairness (a traditional tax policy norm) and democratic fairness (a norm requiring tax institutions to treat people with equal respect and concern). This article explains how the Supreme Court has turned tax expenditures into invisible laws. It evaluates tax expenditures as tax law, challenging the standard scholarly approach that assumes tax expenditures should be not only economically, but also legally, equivalent to direct spending programs. Examination of invisible taxpayers and invisible laws reveals some troubling truths about the tax system. Invisibility has led to substantial injustice for real people. It has allowed unconstitutional taxation to proceed without challenge. And it has reduced the role of courts in taxation to a very narrow one, while simultaneously allowing unchecked discretion for both Congress and the Internal Revenue Service. This article explains (1) how standing doctrine denies redress to some taxpayers who suffer injustice, and (2) how tax expenditures make some harms immune from attack. It argues that both courts and administrative procedures could ameliorate these injustices

Invisible Taxpayers

The paradigm tax dispute involves a taxpayer on one side and the government on the other. In that traditional dyad, only the taxpayer matters, even though the interrelatedness of taxpayers across the fiscal system means that the outcome of any one dispute often affects the interests of many other taxpayers. Yet everyone else is invisible to the legal system, without enforceable rights in the administrative or judicial structure. This article focuses attention on such invisible taxpayers and what justice for them would require. It proposes a theory of tax injury that is determined by “legal shares” and argues that conventional standing doctrine can accommodate broader taxpayer access if courts acknowledge the financial interrelatedness of taxpayers. Invisibility deprives taxpayers of both economic fairness (a traditional tax policy norm) and democratic fairness (a norm requiring tax institutions to treat people with equal respect and concern). This article explains how the Supreme Court has turned tax expenditures into invisible laws. It evaluates tax expenditures as tax law, challenging the standard scholarly approach that assumes tax expenditures should be not only economically, but also legally, equivalent to direct spending programs. Examination of invisible taxpayers and invisible laws reveals some troubling truths about the tax system. Invisibility has led to substantial injustice for real people. It has allowed unconstitutional taxation to proceed without challenge. And it has reduced the role of courts in taxation to a very narrow one, while simultaneously allowing unchecked discretion for both Congress and the Internal Revenue Service. This article explains (1) how standing doctrine denies redress to some taxpayers who suffer injustice, and (2) how tax expenditures make some harms immune from attack. It argues that both courts and administrative procedures could ameliorate these injustices

Theories of Distributive Justice and Limitations on Taxation: What Rawls Demands from Tax Systems Symposium - Rawls and the Law: Panel VI: Property, Taxation, and Distributive Justice

This Essay attempts to map out how such an inquiry would be conducted in light of Rawls. Rather than searching in theories of justice for required precepts of taxation, we might more fruitfully ask what constraints, if any, a particular theory of justice imposes on the tax system. Application of such an approach to Rawls\u27s theory of justice may explain his apparent preference for a flat consumptionbased tax. This preference is otherwise quite puzzling in light of much of what Rawls wrote about economic justice, and might lead us to expect him to endorse a progressive income tax. If Rawls\u27s discussion of economic justice is treated as offering limitations rather than mandates for taxation, then a variety of tax systems may be part of a just Rawlsian society, including a flat consumption-based tax. Extension of this approach to other political theories might produce a shorter list of acceptable taxes, depending on the extent to which the chosen theory is likely to constrain government action

Don\u27t Give Up on Taxes

Professor Sugin discusses professor Edward D. Kleinbard\u27s latest book, We are Better Than This (2015, Oxford) about the fiscal system and the broader implications of progressive taxation as a policy goal

Don't tax me? Determinants of individual attitudes toward progressive taxation

This contribution empirically analyses the individual determinants of tax rate preferences. For that purpose we make use of the representative German General Social Survey (ALLBUS) that offers data on the individual attitudes toward progressive, proportional, and regressive taxation. Our theoretical considerations suggest that beyond self-interest, information, fairness considerations, economic beliefs and several other individual factors drive individual preferences for tax rate structures. Our empirical results indicate that the self-interest view does not offer the sole explanation for the heterogeneity in attitudes toward progressive taxation. Rather, we show that the choice of the favoured tax rate is also driven by fairness considerations. --tax progression,policy preferences,fairness,ALLBUS

Tax uniformity as a requirement of justice

Barbara Fried takes the view that uniform taxation-that is, a single rate applicable to all income levels-cannot be defended on any grounds of justice. She goes further by saying that, of all possible rate structures, it might be "the hardest one"? to ground in "a"? theory of fairness. Using the contractarian-constitutional perspective advanced by John Rawls and James Buchanan, this article argues that tax uniformity can be seen as a requirement of justice. After modelling how the political world realistically decides to distribute tax shares (self-interested parties act under a majority constraint), I show how the uniformity principle could emerge from the constitutional contract. In other words, rational individuals would choose uniformity as a procedural constraint under a "veil of uncertainty"?; that is, with limited knowledge regarding their positions under the future application of the rule. Moreover, I elucidate how the uniformity requirement integrates generalized criteria of fairness and efficiency into fiscal politics as it precludes fiscal exploitation and constrains majorities, and their most influential subgroups, to opt for policies in the direction of the Pareto frontier, and as such promotes outcomes acceptable to all participants

Rhetoric and Reality in the Tax Law of Charity

This Article contrasts the rhetoric of public benefit connected to charity in the law with the reality of private control of charitable organizations. It argues that the tension between the rhetoric and reality have produced norms of entitlement that undermine taxation. It offers an approach to the role of charity under the law by defining the obligations of government in a just society, qualifying the economic framework dominant in the literature concerning charities, and identifying what private charity can achieve that governments cannot. This Article concludes by endorsing the charitable deduction in the tax law on terms consistent with this revised approach

Rationale underlying the Treasury proposals

Tax reform ; Taxation