The Rule of Law as a Law of Standards: Interpreting the Internal Revenue Code

This Essay seeks to demonstrate that the interpretive use of standards in applying provisions of the Internal Revenue Code is not inconsistent with the rule of law. Part I discusses the relationship between rules and the rule of law and explains why we think so many tax scholars are drawn to a view of the tax law as consisting primarily of rules. We then demonstrate that the definition of income is properly understood as a standard. Part II addresses the descriptive dimension of this claim, summarizing and expanding our previous discussion of the definition of income to determine whether the term is susceptible to construction as a rule. We show that even a brief trip through some of the litigation required to determine whether certain items are income leads to the conclusion that the definition of income is not a rule. Part III addresses the normative dimension of our claim. There, we tease out the functions served by interpreting income as a standard and question where the interpretive authority lies with respect to the Code in order to argue that income ought to be treated as a standard. Part IV turns to several examples of what Professor Lawrence Zelenak regards as either a “disregard” or an “underenforcement” of the law to clarify our understanding of interpretation. We then conclude by observing that the Code does not “read itself”: Deciding whether a provision is itself a rule or a standard is itself an act of interpretation. Moreover, interpreting a provision as a standard is fully consistent with the rule of law

Taxes, Power, and Personal Autonomy

This Article explores the ways in which tax systems confer and distribute power. All tax systems impose burdens. Even more importantly, some tax systems empower. The extent to which a tax system empowers reflects and implements important values. The concepts of avoidance power and burden power are examined and applied to the federal income tax system and the federal employment tax system. The Author argues that the analysis of the ways in which tax systems empower and a determination of who the systems empower should become a standard part of tax policy analysis. The analysis of choice developed in this Article could be applied to the ongoing debate regarding alternatives to the federal income tax system

Untangling Tax Reforms: Simple Taxes, Complex Choices

This Article applies concepts of empowerment to two tax reform proposals: The Freedom and Fairness Restoration Act of 1995 (Armey Flat Tax) and the USA Tax Act of 1995 (Nunn-Domenici Tax). The concepts of avoidance power, the power to avoid the imposition of taxes, and burden power, the power to shift the economic burden that taxes impose, are both analyzed in the context of these tax proposals. The author considers the degree of avoidance and burden power conferred by each proposal, and concludes with some observations regarding the values implicated by the distribution of power each proposal would produce