This presentation considers the aims of critical tax studies and offers three suggestions. First, critical tax papers too often fixate on taxes as both the problem and the solution. In many cases, in particular when progressivity is the aim, public spending is the better policy lever. Second, one should not concede that taxation imposes an inexorable tradeoff between efficiency and equity goals. This again understates the importance of the spending side of things. Taxes are a necessary cost of funding spending, and spending in turn, by reaching places where markets are incomplete, can have efficiency payoffs greater than the deadweight loss of taxation. That is, even a leaky bucket can extinguish a fire. To this end, recent research has pointed to the role of well-designed government spending in encouraging an “inclusive economy,” in which growth is both faster and more broadly shared than would otherwise be the case. Finally, the presentation urges that more work be done on the rhetoric of public finance economics. Both the structure and the vocabulary of standard presentations contained unexamined biases that color the outcomes of policy debates.
Law | Law and Economics | Tax Law
Date of this Version
Edward D. Kleinbard, "Critical Tax Thinking" (April 2019). University of Southern California Legal Studies Working Paper Series. Working Paper 288.