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Wednesday, February 8, 2023

Clean & Glogower: When Ought to Means Matter? The Case Of Tax Compliance

Joshua D. Clean (UC-Irvine; Google Scholar) & Ari D. Glogower (Northwestern; Google Scholar), When Ought to Means Matter? The Case of Tax Compliance, 42 Va. Tax Rev. __ (2023):

Virginia Tax Review (2021)When ought to policymakers incorporate people’ financial means, reminiscent of wealth and earnings, into the design of authorized guidelines? Two rules in authorized concept sometimes favor uniform authorized guidelines, which don’t differ primarily based on particular person traits. First, below the “double distortion” precept within the legislation and economics literature, means-based changes to authorized guidelines needs to be reserved for the tax system alone. Second, theories of the rule of legislation additionally favor typically relevant authorized guidelines, quite than these focused to sure people or teams.

Due to its core distributive perform, the progressive tax system represents a outstanding exception to those rules favoring uniform authorized guidelines, and explicitly accounts for people’ financial means when figuring out tax liabilities.

This text considers the next query: when are means-based changes to the tax compliance guidelines justified? Tax compliance guidelines govern the enforcement and administration of the tax legislation. For instance, the tax compliance guidelines present for info reporting necessities, statutes of limitations, and penalties for noncompliance. As we now have argued in prior work, income- or wealth-based changes to those guidelines may allow them to deal with the challenges of high-end noncompliance extra successfully by counteracting the tax avoidance alternatives out there to high-end taxpayers.

This text argues that the tax compliance guidelines signify a novel class of authorized guidelines on account of their position in implementing the substantive tax guidelines and their core distributive perform. Because of this, means-based changes ought to due to this fact be topic to a distinct evaluation below the rules favoring uniform authorized guidelines. As we argue, the evaluation of means-based changes ought to rely critically on their design and performance within the tax system. Underneath the double distortion precept, means-based changes could be warranted when essential to implement the redistributive perform of the tax and switch system, which is the perfect situs for redistribution inside this precept. Underneath sure conceptions of the rule of legislation’s generality precept, these changes could be equally crucial when they’re designed to account for benefits that high-end taxpayers get pleasure from below typically relevant tax compliance guidelines.


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