Chartism and the Income Tax

Although the identity of Chartism was bound up with political demands, many in the movement consistently pressed for the repeal of duplicative taxes on consumption and the introduction of even-handed taxation of land, capital and labour. Earlier popular radicals had asked for limited tax relief. Chartist leaders from the outset saw a link between fiscal problems and the democratic deficit prolonged by the Reform Act, insisting that a broader franchise would quickly lead to a broad direct tax. Novel features of their tax agenda emerged as they transformed views first aired in radical attacks on the replacement of workers with machinery and on the house and window taxes. By 1842, when Peel reinstated the income tax, they were arguing in their own words for the equity and neutrality of such a measure. Historians of the movement have neglected the coherence and detail of this Chartist agitation. With Peel’s defeat, and Disraeli’s failed attempt to extend the income tax, parliamentary hearings on making the tax permanent reflected elements of the movement’s distinctive views

Transparency and Taxation

An unexpectedly partisan political debate over redistributive tax measures has recently come to focus on fiscal transparency. In this debate, fiscal transparency and tax neutrality are often spoken of interchangeably. They are, however, distinct. Tax legislation is neutral if it does not influence economic choices. It is transparent if the public can understand how tax burdens are allocated and the reasons for their allocation. Neutrality and transparency differ therefore not only in their primary focus but also in the types of evidence that may support assertions concerning them. A feature of a tax system can only be said to be neutral ceteris paribus, because it is virtually impossible to know in detail how economic behavior will in fact respond to a tax measure. In contrast, average levels of information about how the tax law works provide reasonably firm evidence of transparency. Given these and other conceptual differences, I will argue here that, while the current debate fails to distinguish transparency and tax neutrality adequately, a fruitful approach to fiscal transparency may be implicit in it. Section II surveys the simultaneous emergence of the industrial revolution, popular democracy, and income taxation in Europe and elsewhere, explaining how the very advantages that favored income as a tax base also created technical difficulties that soon resulted in nontransparent tax design. Section III briefly describes recent political debates in France, the United States, and elsewhere over tax subsidies for social policy ends. Section IV explains how United States experts and politicians have cast doubt on the foundations of the “tax expenditure” analysis of these subsidies. Section V analyzes other reasons for a growing interest in fiscal transparency and argues that talk of tax neutrality in the context of tax expenditure analysis should be replaced with a better focused understanding of fiscal transparency based on the ability of the public to understand complex tax measures. Section VI concludes that transparency provides a better analytical tool for some, but not all, fiscal analysis that now employs the rhetoric of tax neutrality

A Personal Report on Methodological Developments in US Law

A survey of contemporary legal research in the United States must to some extent be personal and impressionistic. No one can see the entire landscape or has the expertise to evaluate everything in it. The pitfall of myopia is heightened by the enormous variety of current methods and results, the need to mention and evaluate areas of specialty in which things are going well or poorly, and publication biases that should not influence content but inevitably do. The already huge variety of books, journals, and commercial guides to particular legal subjects has been overshadowed by an uncountable array of electronically circulated working papers, blogs, symposia, and conference proceedings. With that disclaimer, what follows is my own view of what legal scholarship in the USA is like at the present moment

Tax Neutrality

Is tax neutrality an illusion? My honored friend Pierre Beltrame and his distinguished co-author Lucien Mehl once wrote: “[L]orsque le taux de l’impôt s’éléve, qu’il devient progressif, et que d’importantes masses monétaires sont redistribuées, le fait financier ne peut être neutre, stricto sensu, à l’égard, ni de l’ensemble de l’économie, ne de la répartition de revenu national” (Pierre Beltrame & Lucien Mehl, Techniques, Politiques et Institutions Fiscales Comparées, Presses Universitaires de France, Paris, 2d ed., 1997, p. 314). As they also observed, however, relative judgments of neutrality, judgments that purport to deal the neutrality of isolated elements of a tax system, do seem possible (op. cit., pages 314-315). Tax experts generally discuss tax neutrality today as if the distinction between absolute and relative neutrality were not of great importance. For example, they regard neutrality in the taxation of enterprises – the like treatment of formally different but economically similar juridical entities – as desirable, regardless of other non-neutral elements the tax system as a whole may embrace (op. cit., pages 380-386. The main purpose of this article is to explore the grounds for both these views – the impossibility of absolute neutrality and the possibility of ascertaining the relative neutrality of a tax measure

Designing the Tax Treatment of Litigation-Related Costs

Defendants often deduct for income tax purposes their litigation-related costs, such as attorney fees and payments to settle claims or satisfy judgments. The result is often a large gap between the sticker price of settlements or judgments and their after-tax cost—what defendants really pay out of pocket. The problem: For every dollar that a defendant avoids in tax liability by, for example, deducting the damage awards it pays, the civil justice system falls that much short of its corrective-justice or optimal-deterrence goals in that case. For this reason, the entire civil justice system should care about this question: How should income tax law treat litigation-related costs? This Article identifies the critical tax-design choices that must be faced but that prior commentary has largely ignored: How to attribute litigation-related costs to an income-producing activity; whether to treat liability insurer payments made on a defendant’s behalf as income to that defendant; whether to coordinate the tax treatment of a payor’s damages payments with the tax treatment of those receipts to the payee; and whether litigation-related costs should be treated as capital expenditures. Then, the Article offers a new default rule for settlement agreements: Unless a settlement agreement expressly indicates otherwise, a settling defendant promises not to seek an allowable tax deduction for litigation-related costs. In so doing, this Article reveals the issues that lawyers, judges, and scholars must no longer ignore when they argue over how an income tax system could or should treat litigation-related costs

Horizontal equity in the U.S. tax and transfer system

We analyze the distributive justice of the combined burden of income taxes, social security taxes and public transfers on employee households in the United States on the federal level and in six member states. To investigate whether the treatment of families by the aggregate tax and transfer system can be regarded as “fair”, we compare the equivalent incomes of eight different household types. Using the concepts of horizontal equity and system-inherent equivalence scales, we find evidence for a privileged treatment of families with children and a low market income due to the earned income tax credit (EIC), the child tax credit and the supplemental nutrition assistance program (SNAP). If employment taxes are interpreted as taxes in the proper sense, we obtain a favorable treatment of family households and especially married couples for middle-sized market incomes. For high market incomes, we observe a decreasing privilege for all family types. Regarding state tax and transfer systems, temporary aid for needy families (TANF) substantially increases the observed privilege for low-income families compared to singles, while the analyzed state income taxes are generally in line with the federal tax scheme. Overall, our results imply a significant contradiction in value judgments within the U.S. tax and transfer system

Le concept hartien d’obligation juridique Stephen

H. L. A. Hart’s well known attempt to show that a legal system need not satisfy moral standards to be such, and thereby to disprove the alleged thesis of natural lawyers that a wicked law is no law at all, apparently assumes the fact-value dichotomy in its most radical formulation. As part of his project, Hart advanced a putatively value-neutral analysis of legal obligation that holds distinct attraction even for those who question Hart’s broader project. My paper argues that a less extreme view of the fact-value dichotomy would have excused Hart from defending his view of legal obligation in its most ambitious form, and that the resulting, less radical view of legal obligation is not only plausible but also compatible with non-positivist views of law