Justice in Taxation

JUSTICE IN TAXATION
Tyler A. LeFevre*†
“[I]t is the mark of an educated man to look for precision in each

class of things just so far as the nature of the subject
admits . . . .”1
—Aristotle
INTRODUCTION.......................................................................................... 764
A. Discourse in Taxation ...................................................................... 765
B. Complexity and Taxation................................................................. 766
I. CONTEMPORARY DISCOURSE IN TAXATION .......................................... 769
A. Contemporary Criteria of Tax Justice.............................................. 770
B. Critique of Contemporary Criteria of Tax Justice ........................... 771
II. THE MORAL GROUNDS OF POLITICS .................................................... 774
A. Deontological Theories of Justice ................................................... 774
B. Consequentialist Theories of Justice ................................................ 779
III. MORALITY AND TAXATION ................................................................. 781
A. Raising Revenue .............................................................................. 782
B. Redistribution of Wealth .................................................................. 783
C. Influencing Behavior ....................................................................... 784
D. Discourse and the Purposes of Taxation .......................................... 785
IV. SCIENCE AND TAXATION .................................................................... 788
A. Economics ....................................................................................... 788
1. Optimal Taxation Theory ............................................................. 788
2. Tax Incidence ............................................................................... 790
3. On Economic Models and Taxes.................................................. 792
B. Psychology ....................................................................................... 793
C. Sociology ......................................................................................... 793
D. Political Science and Political Economics ....................................... 794
CONCLUSION ............................................................................................. 796
* Associate, Grant Thornton LLP. The views and opinions expressed in this article are those
of the author and do not necessarily reflect the position of Grant Thornton LLP.
† I thank Walter C. White, Jr. for his helpful comments.
1. ARISTOTLE, NICOMACHEAN ETHICS, Book I 3 (W. D. Ross trans. 350 B.C.E).
764 Vermont Law Review [Vol. 41:763
INTRODUCTION
In Charles Dickens’s Great Expectations, Pip says, “there is nothing so

finely perceived and so finely felt, as injustice.”2 In context, Pip was talking
about the world of children, but a deep longing for justice is equally
ubiquitous in the world of adults.3 As N. T. Wright conveys it, “[a] sense of
justice comes with the kit of being human. We know about it, as we say, in
our bones.”4 Besides being the object of profound and universal yearning,
justice is also the chief purpose of the state.5 “Justice,” observed James
Madison, “is the end of government. It is the end of civil society. It ever has
been and ever will be pursued until it be obtained . . . .”6
Taxation and economic regulation, as subsidiary features of
government generally, also aim first and foremost at justice. Nevertheless,
economic justice eludes us. Not always perhaps, but too often, our social
and economic systems arbitrarily distribute wealth, power, comfort, and
status. Private interests of the powerful prevail over general interests. Our
societies honor the unscrupulous while reviling the virtuous. Despite the
long history of our less-than-just institutions and policies, “[n]ature still
obstinately refuses to co-operate by making the rich people innately
superior to the poor people.”7
Although there is no single reason for the persistence of economic
injustice in the world, a primary factor is tax and fiscal policy.8 Yet,
notwithstanding the political centrality of fiscal policy and economic
justice, deep disagreement about taxes persists around the world. Discourse
about taxes continues to produce disappointing economic policies that do
not improve economic fairness or happiness.9
2. CHARLES DICKENS, GREAT EXPECTATIONS 57 (Margaret Cardwell ed., 2008) (1861).

3. AMARTYA SEN, THE IDEA OF JUSTICE, AT vii (2009).
4. N.T. WRIGHT, SIMPLY CHRISTIAN: WHY CHRISTIANITY MAKES SENSE 4 (2006).
5. See JOHN RAWLS, A THEORY OF JUSTICE 3 (1971) (“Justice is the first virtue of social
institutions . . . .”).
6. THE FEDERALIST NO. 51, at 340 (Alexander Hamilton or James Madison)
(Sesquicentennial ,ed. 1937).
7. SIDNEY WEBB & BEATRICE WEBB, THE DECAY OF CAPITALIST CIVILISATION 39 (3d ed.
1923).
8. See THOMAS PIKETTY, THE ECONOMICS OF INEQUALITY 100 (Arthur Goldhammer trans.,
2015) (“The primary tool for pure redistribution is fiscal redistribution, which makes it possible to
correct inequality due to unequal initial endowments and market forces while preserving as much as
possible of the allocative role of the price system.”).
9. See generally Marjorie E. Kornhauser, Equality, Liberty, and a Fair Income Tax, 23
FORDHAM URB. L.J. 607, 607–08 (1995) (discussing tax policy discourse in the U.S. in relation to
American notions of distributive justice).
2017] Justice in Taxation 765
A. Discourse in Taxation
There are a handful of possible reasons tax discourse often fails to

build consensus around fiscal solutions to injustice. First, the structure of
our discourse may be dysfunctional. Our discourse about fiscal policies
takes place within a historical and theoretical scaffolding. John Maynard
Keynes said:
[T]he ideas of economists and . . . philosophers, both when they

are right and when they are wrong, are more powerful than is
commonly understood. Indeed the world is ruled by little else.
Practical men, who believe themselves to be quite exempt from
any intellectual influences, are usually the slaves of some defunct
economist . . . . [and] soon or late, it is ideas, not vested interests,
which are dangerous for good or evil.10
Our discourse, the medium by which we develop ideas affecting

justice, is deeply rooted in a historical context.11 Injustice may persist
because it is difficult to break out of the framework of ideas we have
inherited.12 In some cases, our inherited framework may render competing
ideas about taxes incommensurable or otherwise less amenable to
resolution. In addition, our approach to discussing questions and problems
in taxation may be less than optimal for achieving consensus and truth. The
scientific method is more effective in uncovering truth than less analytic
methods.13 For example, a controlled experiment isolating variables
provides more certainty than an uncontrolled experiment.14 Similarly, the
procedures according to which we discuss taxation and establish tax
policies may be flawed. Without an optimal method for discourse about
justice and taxation, injustice and poor tax policies will persist.
Second, economic injustice persists because our discourse has not yet
led to the required solutions. Even if the quality of discourse is good, the
social accumulation of knowledge and consensus building are slow, hard
processes. In some cases, discourse touching on justice and taxation is less
10. JOHN MAYNARD KEYNES, THE GENERAL THEORY OF EMPLOYMENT AND MONEY 383–84
(1936).
11. See Ruth Wodak, What CDA is About – A Summary of its History, Important Concepts and
its Development, in METHODS OF CRITICAL DISCOURSE ANALYSIS 1, 2–3 (Ruth Wodak & Michael
Meyer eds., 2001) (describing language and discourse as the medium through which social inequality is
expressed and legitimized).
12. See id. at 3 (explaining that the historical context of every discourse has a stabilizing and
naturalizing force, which appears to make opposing discourse break convention).
13. Tom Flanagan, The Scientific Method and Why It Matters, C2C JOURNAL (Jan. 21, 2013),
http://www.c2cjournal.ca/2013/01/the-scientific-method-and-why-it-matters.
14. Id.
frequent than what it ought to be. Yet, in other cases, the quality and
quantity of discourse is just right, but our only course of action is to wait.
We wait with the expectation that, eventually, we will achieve greater truth
and justice. Patience may be our only recourse.
Third, some economic injustice persists regardless of the quality,
quantity, or duration of our discourse. Justice sometimes fails because of
weaknesses in human nature or the destructive whims of Mother Nature.
Our human tools for pursuing economic justice are modest. Philosophy and
social scientific research are tentative and imperfect.15 Though philosophy
and science may uncover truth relevant to economic justice, there will
nonetheless, be room for reasonable disagreement. Without consensus as to
what economic justice requires, there will always be vacillating competition
between opposing ideas.
In this Article, I examine the first reason for economic injustice: the
quality and structure of our tax discourse in the media, public, academia,
and professional practice. This Article’s purpose is to demonstrate how
different fields of study—philosophy, law, accountancy, economics,
history, psychology, sociology, and the hard sciences—can more efficiently
bring about economic justice through taxation policy and practice. Let me
admit upfront that my discussion in this Article itself is imperfect. Like the
bad shot who is dignified for accepting a dual, I felt impelled to take on the
ambitious topic of this Article because I think it important and necessary. I
decided to write this Article because I perceive that our imperfect
discursive practice in taxation is among the significant impediments to
achieving economic justice. I am unaware of any previous effort to
encapsulate how different fields of study and how experts and lay citizens
do and ought to work together to advance knowledge and justice in
taxation.
B. Complexity and Taxation
As a domain of theoretical inquiry, taxation has proven remarkably

difficult to reason about effectively. Albert Einstein, whose name has
become synonymous with genius, reportedly told his tax advisor that taxes
are “[t]he hardest thing in the world to understand.”16 Although
considerable intellectual resources are poured into its study, taxation
15. See THOMAS PIKETTY, CAPITAL IN THE TWENTY-FIRST CENTURY 3 (Arthur Goldhammer
trans., Harvard University Press 2014) (2013) (“Social scientific research is and always will be tentative
and imperfect. It does not claim to transform economics, sociology, and history into exact sciences.
But . . . . [i]t can help to redefine terms of debate, unmask certain preconceived or fraudulent notions,
and subject all positions to constant critical scrutiny.”).
16. Lawrence Zelenak, Maybe Just a Little Bit Special, After All?, 63 DUKE L.J. 1897, 1907
(2014).
nevertheless lacks systematic theories that provide general guidance as to

how taxation does, can, and should function in society. Instead, normative
reasoning in taxation tends to proceed from fragmented maxims about
equity, efficiency, and administrability.17
People like simplicity. It purveys a sense of comfort and control.
Unfortunately, the truth about most things—especially important things—is
rarely simple. Taxation is no exception; its technical complexity makes it
difficult. Taxation is so intricate that, as the late economist David F.
Bradford wrote, it “can be understood (if at all) by only a tiny priesthood of
lawyers and accountants.”18 In the United States, as in many other nations,
the sheer magnitude of laws dealing with taxation is enormous. There are
thousands upon thousands of jargon-filled pages of statutes, regulations,
cases, and administrative rulings on federal and state income taxes,
employment taxes, sales taxes, property taxes, fees, penalties, and excise
taxes.19 In 1946, when the United States tax laws were less complicated,
Judge Learned Hand described tax law as a “meaningless procession” of
“cross-reference to cross-reference, exception upon exception—couched in
abstract terms that offer no handle to seize hold of . . . .”20 In many
countries, it takes years of devoted study to become familiar with a range of
tax laws. Moreover, knowing tax law means staying abreast of the frequent
legislation, administrative pronouncements, judicial opinions, and scholarly
writings.
Another reason taxation is complex is the interdisciplinary nature of
the subject. Tax theory is broadly informed by philosophy, economics,
history, psychology, sociology, political science, and the natural sciences.
Few experts, if any, can be fully literate in all of the specialisms in tax
policy. While division of labor is intrinsic to the study of taxation, it renders
taxation susceptible to the silo effect, i.e., inadequate cross-specialty
collaboration.21 Lee Shepherd, a passionate tax commentator, concisely
described the problem of overspecialization in taxation: “if you don’t have
generalists, you don’t have perspective.”22
17. DAVID F. BRADFORD, UNTANGLING THE INCOME TAX 266 (1986).

18. Id.
19. See generally Samuel A. Donaldson, The Easy Case Against Tax Simplification, 22 VA.
TAX. REV. 645, 647–85 (2003) (discussing the complexity of the U.S. tax system).
20. Welder v. United States, 329 F. Supp. 739, 741 (S.D. Tex. 1971) (quoting Learned Hand,
Thomas Walter Swan, 57 YALE L.J. 167, 169 (1947)).
21. See generally Steven Poole, The Silo Effect by Gillian Tett Review – A Subversive
Manifesto, GUARDIAN (Oct. 17, 2015, 4:30 PM), https://www.theguardian.com/books/2015/oct/17/the-
silo-effect-why-putting-everything-in-its-place-isnt-such-a-bright-idea-gillian-tett-review (explaining
that the “silo effect” is a result of specialized business units not adequately communicating).
22. Lynnley Browning, A Designer Handbag Amid the Briefcases on the Tax Beat, N.Y. TIMES
(Aug. 31, 2007), http://www.nytimes.com/2007/08/31/business/31tax.html.
Although complexity and specialisms in taxation cannot be eliminated,

a shared theoretical framework could keep the boundaries between the
involved specialties permeable. A common framework could keep all of the
specialists speaking the same basic language. While many domains of
inquiry play a role in the study of taxation, moral ideas about justice and
human welfare shape tax theory at the most basic level.23 Since moral
philosophy is at the foundation of justice, it should serve as the foundation
of taxation discourse.
Philosophy-free tax theory or practice does not exist; there is only tax
theory and practice conducted with insufficient attention to underlying
philosophical assumptions.24 Moral philosophy fixes the ends to which
taxation properly aims. Moral philosophy is the intellectual field most
promising for uniting the disparate schools of thought in taxation. We might
expect, then, that moral philosophy would have played an important role in
the development of tax theory and law.25 Yet our public and scholarly
discourse about taxation has “generated less sophisticated discussion, from
a moral point of view, than other public questions that have a moral
dimension.”26
In essence, tax theory is a higher-level application of moral
philosophy; it requires empirical and theoretical inputs from economics and
the sciences to come to useful conclusions. Questions of what fiscal policies
actually do and what proposed policies will do are inexorably intertwined
with questions of what justice demands of taxation, i.e., what fiscal policies
should do.27 Thus, while philosophy should serve as the structural skeleton
of good taxation theory, the social and natural sciences are the flesh and
blood. In taxation, philosophy is dead without science just as science is
dead without philosophy. Philosophy, economics, or any other single field
of study cannot have a monopoly on useful contributions to tax theory. A
living, meaningful tax theory requires uniting philosophy and science.
Philosophers and the general public are divided about “the good life,”
morality, and economic justice. While we all have an innate sense of
justice, defining its particular contours has been the subject of perpetual
23. LIAM MURPHY & THOMAS NAGEL, THE MYTH OF OWNERSHIP: TAXES AND JUSTICE 3
(2002).
24. See DANIEL C. DENNETT, INTUITION PUMPS AND OTHER TOOLS FOR THINKING 20 (2013)
(stating that, “[t]here is no such thing as philosophy-free science, just science that has been conducted
without any consideration of its underlying philosophical assumptions.”)
25. Daniel Halliday, Justice and Taxation, 8 PHIL. COMPASS 1111, 1111 (2013).
26. MURPHY & NAGEL, supra note 23, at 3–4.
27. See id. at 4 (describing the disconnect between philosophy, ethics, and public policy).
debate since the beginning of recorded history.28 As justice in taxation rests

on conceptions of moral philosophy, which is itself profoundly fractured, a
single theory of taxation is not possible until we achieve consensus on
normative morality. Discourse has and can build moral consensus. Moral
philosophy has produced a number of cogent and plausible moral theories
that are well-defined and pave the way for more precise dialogue.29
Although taxation theory cannot be more unified than the moral theory
and scientific evidence on which it is ultimately grounded, taxation theory
can be more organized than it is now. There cannot yet be one systematic
theory of taxation, but there can be systematic, well-defined, and competing
theories of taxation. And, if discourse in taxation transparently proceeds
from philosophical assumptions about morality, then cross-theory and
cross-specialty discourse in taxation can be more productive and justice
more attainable.
In addition, this Article will demonstrate how we can ground technical
arguments about specific features of our current tax laws in moral theory. It
will do so by showing how findings of science and reasoning operate within
the discursive structure of moral philosophy. Before getting to the central
contributions of this Article, I begin with a brief primer on contemporary
discourse in taxation.
I. CONTEMPORARY DISCOURSE IN TAXATION
The analytical search for justice in taxation has gone on for centuries,
but modern tax theory can be traced back to Adam Smith and the European
Age of Enlightenment.30 In his groundbreaking work, Wealth of Nations,
Adam Smith advances four maxims of prudent taxation that remain relevant
in tax theory today.31
First, Smith asserts, “[t]he subjects of every state ought to contribute
towards the support of the government, as nearly as possible, in proportion
to their respective abilities; that is, in proportion to the revenue which they
respectively enjoy under the protection of the state.”32 Second, Smith says
that taxes “ought to be certain, and not arbitrary,” and that, “[t]he time of
payment, the manner of payment, the quantity to be paid, ought all to be
28. See generally Wayne P. Pomerleau, Western Theories of Justice, INTERNET

ENCYCLOPEDIA PHIL., http://www.iep.utm.edu/justwest/ (last visited May 7, 2017) (noting that
philosophers have been defining justice throughout time).
29. See infra Part II (discussing the most developed moral philosophies of justice).
30. See Beverly I. Moran, Capitalism and the Tax System: A Search for Social Justice, 61
SMU L. REV. 337, 342 n.11 (2008) (discussing Adam Smith’s views on taxation).
31. Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations, in GREAT
BOOKS OF THE WESTERN WORLD 361–62 (Robert Maynard Hutchins ed., 1952).
32. Id. at 361.
clear and plain to the contributor, and to every other person.”33 Third
among Smith’s maxims is that “[e]very tax ought to be levied at the time, or
in the manner, in which it is most likely to be convenient for the contributor
to pay it.”34 Lastly, Adam Smith maintains that taxation should be as
efficient as possible. In his words, taxes “ought to be so contrived as both to
take out and to keep out of the pockets of the people as little as possible
over and above what it brings into the public treasury of the state.”35
A. Contemporary Criteria of Tax Justice
In evaluating taxes today, we continue to apply Adam Smith’s

maxims—equity, certainty, convenience, and efficiency—along with a few
additional principles developed since the publication of Wealth of
Nations.36 Today, justice in taxation is often discussed in terms of so-called
horizontal and vertical equity.37 Horizontal equity requires that like cases be
treated alike in taxation.38 For instance, if two citizens of the same taxing
jurisdiction have the same income and make similar relevant choices, they
should pay the same income tax. Or, if they consume the same amount of
the same goods, they should pay the same consumption taxes.
Vertical equity, on the other hand, requires that taxpayers who are
situated differently be treated differently to an appropriate degree.39
Although horizontal and vertical equity are two sides of the same coin,
33. Id. at 362.

34. Id.
35. Id.
36. See, e.g., JANE FRECKNALL-HUGHES, THE THEORY, PRINCIPLES AND MANAGEMENT OF
TAXATION: AN INTRODUCTION 25, 33 (2015) (discussing neutrality, correction, flexibility, simplicity,
fairness, accountability, and acceptable behavior as examples of additional principles developed in tax
theory); RICHARD MURPHY, A CODE OF CONDUCT FOR TAXATION 8 (2007),
http://visar.csustan.edu/aaba/CODE%20OF%20CONDUCT%20FOR%20TAXATION.pdf (discussing
new principles to replace Smith’s initial maxims in the Wealth of Nations); MURPHY & NAGEL, supra
note 23, at 12–39 (evaluating the underpinnings of modern tax policy); AM. INST. OF CERTIFIED PUB.
ACCOUNTANTS, GUIDING PRINCIPLES OF GOOD TAX POLICY: A FRAMEWORK FOR EVALUATING TAX
PROPOSALS 14 n.1 (2001), http://www.aicpa.org/InterestAreas/Tax/Resources/TaxLegislationPolicy/
Advocacy/DownloadableDocuments/Tax_Policy_Concept_Statement_No.1.doc (discussing the ten
principles used to review tax policy, specifically mentioning the influence of Adam Smith’s four
maxims as the foundation for the first four principles); SIMON MCKIE, TAX COMPETITION: LIBERATION
OR FLAMING LIBERTY? 50–51 (2000), http://www.mckieandco.com/Publications/Articles/Tax_
Competition_-_Liberation_or_a_Flaming_Liberty.pdf (advocating for the European Union to embrace
tax competition, and describing characteristics of effective tax competition and the harm resulting from
restricting competition).
37. Renée Judith Sobel, United States Taxation of Its Citizens Abroad: Incentive or Equity?, 38
VAND. L. REV. 101, 103 (1985).
38. Joseph M. Dodge, Theories of Tax Justice: Ruminations on the Benefit, Partnership, and
Ability-to-Pay Principles, 58 TAX L. REV. 399, 401 (2005).
39. Id.
vertical equity tends to be more contentious. There is broad disagreement

about what counts as relevant differences in how a person ought to be
taxed.40 In addition, people disagree as to what different treatment is
appropriate when there is a difference between taxpayers.41 Adam Smith, in
his first maxim, touched on the two differences considered relevant for the
purposes of vertical equity today: (1) benefit received, and (2) ability to
pay.42
B. Critique of Contemporary Criteria of Tax Justice
Liam Murphy and Thomas Nagel wrote a rather stinging critique of

contemporary criteria of tax justice in their book, The Myth of Ownership.43
Professors Murphy and Nagel point out two important concerns with the
benefit principle. The modern benefit principle generally likens taxation
and public expenditures to exchanges in a marketplace: the more a taxpayer
gets from the government, the more the taxpayer should pay in taxes.44
Measuring the benefit a person receives from the government, however, is
not without difficulty.
First, Professors Murphy and Nagel write, “[t]o come up with a
measure . . . of benefit (or burden) we need to ask, ‘Relative to what?’—we
need to settle on a baseline.”45 It makes little sense to use pretax welfare as
a baseline for measuring benefit because welfare before taxes is nonetheless
dependent on the government.46 The government, funded by taxes, affects
market outcomes.47 Whether a person makes a lot of money (in a “free”
market or otherwise) depends on policies and institutions. Rather, the
baseline from which to measure benefit received from government would
have to be some pre-government, Hobbesian state of nature.48 That state of
nature can be hard to imagine, but presumably, it would have lower and
40. See Sobel, supra note 37, at 109 (noting that vertical equity does not always take costs of
living into account, but that “wealthier” individuals must pay a larger share of their earnings as taxes
under vertical equity).
41. John Buck, The Equity of a Tax System, ECON. PERSPS. (Dec. 8, 2008),
http://econperspectives.blogspot.com/2008/12/equity-of-tax-system.html.
42. Smith, supra note 31, at 361–62.
43. MURPHY & NAGEL, supra note 23, 12 (lambasting traditional tax policy theorists for
neglecting to account for social values).
44. See id. at 16.
45. Id.
46. See id. at 16–17 (proposing a standard baseline measure without government benefits
included).
47. Id.
48. Id. at 16.
roughly equal welfare.49 Nevertheless, people often use pretax market

outcomes as the baseline to measure the benefit a person receives to
determine that person’s proper tax liability.50
Second, the benefit principle provides guidance on public
expenditures.51 Even if we could perfectly measure the benefit each
taxpayer received from the government, it would not put to rest all of the
questions of justice in taxation. Measuring benefit does not indicate how
much revenue should be raised or how to spend the revenue. Does justice
require that revenue be raised for protecting the environment? For assisting
people with mental or physical disabilities?52 These and other questions
about public expenditures, regardless of the amount of benefit received by
each taxpayer, involve questions of justice left untouched by the benefit
principle.53
Arguably, the “quasi-exchange” take on tax justice “cannot apply with
any reasonable precision, because the beneficiaries of government activities
are often indirect and diffuse,” and because “some government programs
produce ‘negative’ transfers that harm everybody or some individuals or
groups relative to others.”54 Some proponents of the benefit principle
attempt to avoid the difficulty of measuring welfare by “postulating that the
measure of a person’s benefit from government is none other than his or her
financial (as opposed to psychic) well-being.”55 Yet, this formulation of the
benefit principle is vulnerable to the criticism that monetary advantage is an
unsatisfactory proxy for the true benefit received from the government.
Cash flows or wealth, after all, are only factors in overall well-being.56
In addition to the benefit principle, another difference relevant to
vertical equity is taxpayers’ relative ability to pay.57 The ability-to-pay
principle asserts that the level of taxation ought to correspond to the ability
49. See id. at 17 (recognizing current human unsustainability without government programs
and direction).
50. See id. at 19 (assuming the pretax baseline is one of the market outcomes untouched by
government).
51. Id. at 18.
52. Id.
53. See Dodge, supra note 38, at 432–33 (arguing that, because the poor benefit from
government expenditures, “it would be difficult for new benefit principle proponents convincingly to
derive a progressive tax system from the principle itself”).
54. Id. at 405.
55. Id. at 406.
56. See DEREK BOK, THE POLITICS OF HAPPINESS: WHAT GOVERNMENT CAN LEARN FROM
THE RESEARCH ON WELL-BEING 139 (2010) (noting that growth in gross domestic product (GDP) has
not resulted in happier Americans); JOSEPH E. STIGLITZ ET AL., MISMEASURING OUR LIVES: WHY GDP
DOESN’T ADD UP 56, 61 (2010) (noting that the “[q]uality of life is a broader concept than economic
production and living standards. It includes a full range of factors that influences what we value in
living, reaching beyond its material side.”).
57. Stephen Utz, Ability to Pay, 23 WHITTIER L. REV. 867, 867–69 (2002).
of each taxpayer to contribute to state revenue.58 What, however, is meant

by “ability to pay”? Some tax experts view the ability-to-pay principle as
requiring taxation based on endowment, or native potential to command
resources, rather than wealth, income, or cash flow.59 An endowment tax,
were it practicable, would tax a highly capable person who decided to teach
in primary school at a higher rate than a less capable person who also
teaches in primary school.60 The highly capable person could have become
a wealthy surgeon had he or she so wished. The idea of endowment taxation
may be unworkable because of the difficulty in observing the potential
ability to command resources. However, many understand that taxation
ought to conform to endowment taxation as closely as possible given the
administrative limitations.61 In these second-best ability-to-pay theories,
wealth, income, or cash flow are frequently used as proxies for natural
endowment.62 However, income is a result of both ability and effort. Thus,
income taxes distort taxpayer decisions regarding effort.
As with the benefit principle, Professors Murphy and Nagel criticize
the ability-to-pay principle for ignoring public expenditures and
government structures.63 The ability-to-pay approach views taxation as a
“common disaster” from an a priori just situation.64 The disaster should be
shared according to principles of “equal-sacrifice” or “from each according
to his ability, to each according to his needs.”65 Unless we presume that the
present economic market works perfectly, and that all market outcomes are
therefore inherently just, it does not make sense to evaluate taxes without
considering the present market distribution of resources and power.66
People viscerally hate taxes. What they rationally hate, however, is the
present combination of taxes and public expenditures—not just taxes. Taxes
and government work together; they work either towards or away from
justice and human welfare.
Professors Murphy and Nagel argue that the traditional criteria of tax
justice are inadequate because they are alienated from holistic theories of
justice.67 Justice in taxation cannot be logically divided from justice
generally. Tax theory has to look beyond tax to achieve the proper moral
58. Id.
59. See, e.g., David Hasen, Liberalism and Ability Taxation, 85 TEX. L. REV. 1057, 1059
(2007) (explaining endowment tax); MURPHY & NAGEL, supra note 23, at 20 (defining endowment tax).
60. MURPHY & NAGEL, supra note 23, at 21–22.
61. Id. at 20.
62. Id. at 20–21.
63. Id. at 23–26.
64. Id.
65. Id. at 23–24.
66. See id. at 27–28 (arguing that few believe market outcomes are presumptively just).
67. Id.
ends. The tax questions having the biggest impact on justice and human
welfare frequently involve conflicts between the benefit-received principle,
the ability-to-pay principle, certainty, convenience, consistency, and
efficiency. How are these conflicts to be rationally settled? How do we
determine the right combination of tradeoffs to maximize justice? Without a
tax theory situated in moral theory, many arguments proceeding from
traditional criteria of good tax policy are incommensurable and
interminable. The traditional criteria are inappropriate proxies for the true
ends of justice. Rather than using shorthand substitutes for what justice
demands of taxation, justice requires a more sophisticated tax dialogue.
II. THE MORAL GROUNDS OF POLITICS
Moral philosophy is concerned with the nature of right and wrong,

good and bad, justice and injustice.68 Normative moral theory seeks a
comprehensive standard to judge conduct and institutions.69 In brief, this
section will provide a high-level overview of the two most developed moral
theories:70 deontological and consequentialist theories. Each theory is often
defined in opposition to the other. Deontological theories are duty-based,
holding that a certain moral act is intrinsically good or bad regardless of the
consequences of such act.71 Consequentialist theories, on the other hand,
understand acts to be good or bad based on their outcomes or
consequences.72 For consequentialists generally, the only intrinsically good
thing is some form of happiness, flourishing, satisfaction, or pleasure.73
A. Deontological Theories of Justice
In the West, divine command theory undergirded politics for

centuries.74 Behavior, laws, and policies were just and legitimate to the
68. Judith F. Daar, Selective Reduction of Multiple Pregnancy: Lifeboat Ethics in the Womb,
25 U.C. DAVIS L. REV. 773, 823 (1992).
69. Matthias Kettner, Discourse Ethics and Health Care Ethics Committees, in 4 ANNUAL
REVIEW OF LAW AND ETHICS 249, 259 n.24 (B. Sharon Byrd et al. eds., 1996).
70. Other prominent schools of moral thought include virtue ethics and care ethics. Not all
theories fit nicely into these categories and there is a good deal of work that tries to reconcile the
differences between the categories. See Erin Talati, When a Spoonful of Sugar Doesn’t Help the
Medicine Go Down: Informed Consent, Mental Illness, and Moral Agency, 6 IND. HEALTH L. REV. 171,
197–98 (2009) (discussing moral theories beyond deontology and utilitarianism, e.g., communitarian
ethics and the feminist ethic of care theory).
71. Douglas W. Vick, Deontological Dicta, 65 MOD. L. REV. 279, 284 (2002).
72. Chad J. Doellinger, A New Theory of Trademarks, 111 PENN STATE L. REV. 823, 836 n.73
(2007).
73. Germain Grisez, Against Consequentialism, 23 AM. J. JURIS. 21, 22 (1978).
74. Michael W. Austin, Divine Command Theory, INTERNET ENCYCLOPEDIA PHIL.,
http://www.iep.utm.edu/divine-c/ (last visited May 7, 2017).
extent that they aligned with God’s will.75 On this theory, a ruler’s
legitimacy rested on the idea that God had elected him or her to be a ruler
through birthright.76 In 1689, John Locke published Two Treatises of
Government to refute this theory of the divine right of kings on religious
and philosophical grounds.77 Locke proposed a deontological theory of
legitimate government based on the concept of a social contract.78
For John Locke, “all men are naturally in” a state of perfect freedom
and “also a state of equality.”79 He wrote:
[B]ecause we are all equal and independent, no-one ought to

harm anyone else in his life, health, liberty, or possessions. This
is because we are all the work of one omnipotent and infinitely
wise maker . . . we are all the property of him who made us . . .
we have the same abilities, and share in one common nature, so
there can’t be any rank-ordering that would authorize some of us
to destroy others, as if we were made to be used by one another,
as the lower kinds of creatures are made to be used by us.80
Consequently, political legitimacy comes not from any divine

patriarchy of kings, but through the voluntary consent of equal and free
individuals. In Locke’s account of justice, any coercive taking of life,
liberty, or possessions, without at least tacit consent of the governed, is
illegitimate and immoral because it infringes upon the natural state of
equality and freedom ordained by God.81 Consent is central to Locke’s
theory of economic justice.
Applying his theory to taxes in particular, Locke said:
It is true that governments need a great deal of money for their

support, and it is appropriate that each person who enjoys his
share of the protection should pay his proportion of the cost. But
it must be with his consent, i.e. the consent of the majority, given
either directly by themselves or through representatives they have
chosen; for if anyone claims a power to impose taxes on the
people by his own authority and without such consent of the
75. Id.
76. Id.
77. Id.
78. JOHN LOCKE, SECOND TREATISE OF GOVERNMENT ¶ 5 (Jonathan Bennett ed., 2008).
79. Id. ¶ 4.
80. Id. at ¶ 6 (emphasis omitted).
81. Id.
people, he is invading the fundamental law of property and

subverting the purpose of government . . . .82
Just as God has property rights in the universe because it is of His

workmanship, so too humans, who are made in His image, obtain rights
over property they come to own through their workmanship.83 In Locke’s
workmanship model of property rights, a person gains dominion over
property by mixing his or her labor with it.84 Our freedom as apprentice
Gods is subject to the constraints put upon us by God, who made and has
dominion over us.85 Under this view, taxes must be levied in accordance to
the social contract to be just, even if they do provide benefits to citizens.
Locke’s theory is comprehensive and, at first blush, intuitive. Many of
us like to think that we have absolute rights and liberties. We like to believe
that we deserve to do with our property as we choose because, dang it, we
worked hard for it.
Despite its virtues, John Locke’s theory is anchored in a specific
reading of Christian theology, which does not appeal to everyone. In large
part, other duty-based theories such as Marxism, libertarianism, and liberal
egalitarianism attempt to salvage parts of Locke’s theory apart from its
theological moorings.
Marxism’s central idea is the abolition of private control of productive
resources.86 Marxism criticizes capitalists for coercing more value from
workers than what they pay in wages.87 According to Marxism, the owners
of the means of production in capitalist economies exploit workers by
pocketing a portion of their workmanship.88 As Ian Shapiro points out: “It is
a Lockean idea of individual rights, rooted in workmanship and violated
under capitalism, that gives the Marxian critique its moral force.”89 Yet,
Marxism does not appeal to religion to justify the workmanship model of
property rights.90 Marxists apparently advance no justification for workers’
82. Id. ¶ 140.

83. Id. ¶ 26–27.
84. Id.
85. Id. ¶ 25.
86. See, e.g., KARL MARX & FREDERICK ENGELS, THE COMMUNIST MANIFESTO 14–15, 24
(Frederick Engels ed., 3d ed. 1954); G.A. COHEN, HISTORY, LABOUR, AND FREEDOM: THEMES FROM
MARX 298 (1988).
87. WILL KYMLICKA, CONTEMPORARY POLITICAL PHILOSOPHY: AN INTRODUCTION 177 (2d
ed. 2002).
88. MARX & ENGELS, supra note 86, at 14–15.
89. IAN SHAPIRO, THE MORAL FOUNDATIONS OF POLITICS 104 (2012).
90. In fact, Karl Marx described religion as “the opium of the people.” KARL MARX, CRITIQUE
OF HEGEL’S ‘PHILOSOPHY OF RIGHT’ 131 (Joseph O’Malley ed., Annette Jolin & Joseph O’Malley
trans., 1970).
rights to all property produced by their labor.91 Instead, “the Marxian idea
of exploitation takes the workmanship ideal, and with it the idea of self-
ownership, for granted.”92
Alternatively, and along the lines of John Locke, libertarians support a
strong deontological right to private property. In Anarchy, State, and
Utopia, Robert Nozick provided perhaps the most prominent justification of
libertarian justice.93 Drawing from Immanuel Kant’s moral philosophy,
Nozick bases his theory on the egalitarian idea that “individuals are ends
and not merely means; they may not be sacrificed or used for the achieving
of other ends without their consent.”94 As a result, Nozick reasons, people
have a moral right to any resources that they acquire through consensual,
market exchanges.95 Libertarianism thus adopts a version of the
workmanship model of property rights: we have a right to validly earned
pretax income or wealth. Consequently, government redistribution of
resources, by taxes or otherwise, represents an unjust taking. The taking is
unjust, except when the government protects against and compensates for
crimes and breaches of contract, e.g., violations of consent. In stark contrast
to Marx, Nozick believes that exchanges are consensual even if “facts of
nature,” like poverty, disability, or other disadvantages, severely limit a
person’s options.96 This philosophy of libertarianism finds no inherent
injustice in a society where people born poor and disadvantaged have to
work for people born wealthy and advantaged in exchange for meager
wages. This is true even if the poor and disadvantaged work harder and are
more talented than the wealthy and advantaged.
It is unclear whether liberal egalitarian theories, which are also
founded on Kantian moral ideas and social contract, are more consistent
with moral ends of equality and liberty than are libertarian conceptions of
justice.97 John Rawls puts forth the most prominent liberal egalitarian moral
theory. Instead of using a historical social contract like Locke, Rawls bases
his theory of justice on a hypothetical social contract.98 For Rawls, an
institution, law, or policy is just if it would be agreed to by hypothetically
reasonable persons behind a hypothetical veil of ignorance. That veil of
91. Certain neo-Marxists do ground their theories of exploitation in egalitarian views of

distributive fairness; but this approach leaves behind “all that was distinctive about the original Marxist
approach to exploitation.” KYMLICKA, supra note 87, at 183–84.
92. SHAPIRO, supra note 89, at 104.
93. ROBERT NOZICK, ANARCHY, STATE, AND UTOPIA 149 (1974).
94. Id. at 31 (emphasis added).
95. Id. at 262.
96. Id.
97. See MICHAEL J. SANDEL, JUSTICE: WHAT’S THE RIGHT THING TO DO? 138–39 (2010)
(describing Kant’s ideals of justice and social contract).
98. JOHN RAWLS, JUSTICE AS FAIRNESS: A RESTATEMENT 16–17 (Erin Kelly ed., 2001).
ignorance prevents them from knowing anything about their own

preferences, commitments, status, “race and ethnic group, sex, or various
native endowments such as strength and intelligence.”99 The purpose of this
thought experiment is to ensure free and equal participants make logical
and impartial moral decisions.100
In this “original position” behind a veil of ignorance, Rawls argues that
participants would choose a political constitution that embodies two
principles of justice, which he states in order of priority:101
[First,] [e]ach person has the same indefeasible claim to a fully

adequate scheme of equal basic liberties, which scheme is
compatible with the same scheme of liberties for all . . . [Second,
any] [s]ocial and economic inequalities are to satisfy two
conditions: first, they are to be attached to offices and positions
open to all under conditions of fair equality of opportunity; and
second, they are to be to the greatest benefit of the least-
advantaged members of society (the difference principle). 102
Unlike Marxism or libertarianism, Rawlsian liberalism does not

embrace a workmanship model of property rights.103 In application, Rawls’s
theory is highly egalitarian, treating preferences, talents, opportunities, and
resources as morally irrelevant to fairly distribute resources.104 According to
the difference principle, only inequalities that benefit the worst-off person
in society are legitimate.105
Despite his disagreements with Rawls, Nozick praised Rawls’s theory
as a “systematic work in political and moral philosophy which has not seen
its like since the writings of John Stuart Mill . . . .”106 He goes on to say
that, “it is impossible to finish [Rawls’s] book without a new and inspiring
vision of what a moral theory may attempt to do and unite; of how beautiful
a whole theory can be.”107 Nevertheless, Rawls’s theory has been roundly
99. Id. at 15. See also RAWLS, supra note 5, at 118 (introducing the original position and the
veil of ignorance).
100. RAWLS, supra note 98, at 41.
101. Id. at 42.
102. Id. at 42–43.
103. Id. at 135–36.
104. Henry Richardson, John Rawls (1920-2002), INTERNET ENCYCLOPEDIA PHIL.,
http://www.iep.utm.edu/rawls/ (last visited May 7, 2017).
105. RAWLS, supra note 98, at 42–43.
106. NOZICK, supra note 93, at 183.
107. Id.
criticized.108 Even if we accept the usefulness of Rawls’s original position,

it is doubtful that Rawls’s rational actors in the original position would
actually choose Rawls’s political system. John Harsanyi, for example,
argues that Rawls’s difference principle is irrationally risk-averse.109
According to Harsanyi, actors in an original position would likely select
some form of utilitarianism over the difference principle. Utilitarianism
maximizes overall or average well-being, whereas the difference principle
allows inequalities only when the worst-off person benefits.110
All of these deontological theories of justice are based on an
assumption of moral equality among individuals. Locke and Rawls, in their
contract-based theories of justice, make explicit claims about the basis for
moral equality.111 Locke relies on theology to explain equality. Rawls holds
that people’s equality is based on the minimum moral powers of having a
basic conception of good and a sense of justice.112 But is this assumption of
moral equality correct? Do all people share any morally relevant feature
that would justify treating everyone as moral equals? Perhaps our moral
statuses are not equal or static. Perhaps our moral and political systems
should account for moral inequality, moral progression, and moral
regression, as does the philosophy of Aristotle. If, on average, we have
roughly equal moral capacities, that may justify a procedural
presumption—a burden of proof—in favor of equality. However, it might
not justify a substantive basis for moral equality.
B. Consequentialist Theories of Justice
The other major category of moral theories is consequentialism, which

holds that behaviors, laws, and policies are either right or wrong; just or
unjust; or better or worse, solely on the basis of their consequences.113 The
108. See MICHAEL J. SANDEL, LIBERALISM AND THE LIMITS OF JUSTICE 15–19 (1982)
(explaining why the primacy of justice claim is “intuitively appealing” yet simultaneously
“problematic”).
109. John Harsanyi, Can the Maximin Principle Serve as a Basis for Morality? A Critique of
John Rawls’s Theory, 69 AM. POL. SCI. REV. 594, 595–96 (1975).
110. See id. at 596 (arguing that the maximin principle leads to highly irrational decisions in
everyday life and comparing the maximin principle with utilitarian ethics).
111. See Samuel Freeman, Frontiers of Justice: The Capabilities Approach vs.
Contractarianism, 85 TEX. L. REV. 385, 400 (2006) (reviewing MARTHA C. NUSSBAUM, FRONTIERS OF
JUSTICE: DISABILITIES, NATIONALITY, SPECIES MEMBERSHIP (2006)) (showing that Rawls’s ideal of
moral equality comes in the shape of a well-ordered society); Joan C. Callahan & Dorothy E. Roberts, A
Feminist Social Justice Approach to Reproduction-Assisting Technologies: A Case Study on the Limits
of Liberal Theory, 84 KY. L.J. 1197, 1201 (1996) (citing the Lockean belief that each person has the
right to have “as much as good” as any other).
112. RAWLS, supra note 98, at 20.
113. STEVE MCCARTNEY & RICK PARENT, ETHICS IN LAW ENFORCEMENT 13 (2015),
http://opentextbc.ca/ethicsinlawenforcement (last visited May 7, 2017).
most prevalent version of consequentialism is utilitarianism, which holds

that some form of utility (happiness or pleasure) is the only good in itself,
and, conversely, that some form of disutility (unhappiness or displeasure) is
the only bad in itself.114
The first analytical utilitarian, Jeremy Bentham, propounded a
hedonistic view of utility, claiming that, as a matter of scientific law, people
always pursue pleasure and avoid pain.115 For Bentham, the sort of
happiness people maximize is a contemporaneous sensation of
gratification.116 Bentham devised the beginnings of a “felicific calculus” to
quantify utility and determine the morality of a given act.117 His algorithm
for utility considered the intensity, duration, certainty, remoteness, purity,
fecundity, and the extent of a given act’s effect on other people. An
alternative take on utilitarianism includes within the definition of utility
mental states other than a contemporaneous sensation of pleasure, like a
sense of meaning or a sense of achievement.118
Another version of utilitarianism aims to maximize the satisfaction of
preferences or hypothetical preferences that a person would have were he or
she perfectly rational and informed.119 Yet, this view provides no
mechanism for aggregating utility.120 Whereas Bentham’s felicific calculus
could, in theory, distinguish between good, better, and best courses of
action, preference-satisfaction utilitarianism cannot arbitrate between
preferences––even if utility is limited to informed and rational preferences.
As Will Kymlicka puts it, “How do we weigh career accomplishment
against romantic love, if there is no single overarching value like happiness
to measure them by?”121 Utilitarianism is most often criticized because it
could lead to results that are intuitively repugnant to many.122 For example,
a utilitarian would theoretically condone murder, theft, or slavery if it could
114. See Jonathan Glover, Introduction to UTILITARIANISM AND ITS CRITICS 1, 1–3 (Jonathan
Glover & Helen McInnis eds., 1990) (explaining the appeal of utilitarianism).
115. JEREMY BENTHAM, AN INTRODUCTION TO THE PRINCIPLES OF MORALS AND LEGISLATION
11–12 (J.H. Burns & H.L.A. Hart eds., 1982).
116. Wesley C. Mitchell, Bentham’s Felicific Calculus, 33 POL. SCI. Q. 161, 163–64 (1918).
117. Id. at 164–65.
118. KYMLICKA, supra note 87, at 14.
119. Id.
120. Id. at 17.
121. Id.
122. See Peter J. Hammond, The Economics of Justice and the Criterion of Wealth
Maximization, 91 YALE L.J. 1493, 1495 (1982) (reviewing RICHARD POSNER, THE ECONOMICS OF
JUSTICE (1981)) (stating that, “wealth maximization often leads to conclusions that many of us would
regard as totally unethical”).
be conclusively shown that such murder, theft, or slavery increased overall

utility.123
A number of other important moral theories exist, including virtue-
based, care-based, role-based, situational, and religious theories of ethics.124
Each normative theory of morality proposes a different view of justice and
the good life. As a result, each theory has different implications for the
structure of institutions, politics, and laws. Since arguments about taxation
implicitly or explicitly start with moral philosophy, the strength or
applicability of an argument varies with how well moral philosophy
justifies it.
Next, this Article examines the specific relationship between moral
theory and taxation, and how that relationship should inform discourse on
taxation.
III. MORALITY AND TAXATION
Normative debate in taxation is only productive if intellectual rivals

argue from a shared belief about the proper ends of taxation. Without a
lowest common denominator as to the just ends of taxation, debates over
important taxation topics are mismatched from the get-go. The opposing
sides may present evidence, but the evidence will not be responsive to the
moral underpinnings of the other side’s position and will, therefore, be
unpersuasive.
Ultimately, moral philosophy provides the outermost limits of what
taxation may legitimately aim to do. Policymakers draft tax rules to achieve
various purposes. As Professors Murphy and Nagel point out, the tax
system “is among the conditions that create a set of property holdings,
whose legitimacy can be assessed only by evaluating the justice of the
123. See id. (identifying one of the criticisms of the utilitarian happiness-maximizing principle
as “the indeterminacy of any measure of utility and the consequent vagueness of its ethical
recommendations”).
124. See e.g., Joseph Grcic, Virtue Theory, Relativism and Survival, 3 INT’L J. SOC. SCI. &
HUMAN. 416, 416 (2013) (grounding moral values in personality structures and intentions); Lawrence A.
Blum, Gilligan & Kohlberg: Implications for Moral Theory, 98 ETHICS 472, 473 (1988) (describing care
and responsibility within interpersonal relationships as a separate element of morality); Gerald J.
Postema, Moral Responsibility in Professional Ethics, 55 N.Y.U. L. REV. 63, 65 (1980) (confining the
moral universe of a decision to the range of practical considerations appropriate for an individual’s
role); Marinus H. van IJzendoorn et al., In Defence of Situational Morality: Genetic, Dispositional and
Situational Determinants of Children’s Donating to Charity, 39 J. MORAL EDUC. 1, 17 (2010) (showing
that cognitive moral judgments take place in situation-specific settings); Paul Ramsey, Kant’s Moral
Theology or A Religious Ethics?, in THE ROOTS OF ETHICS: SCIENCE, RELIGION, & VALUES 139, 154
(Daniel Callahan & H. Tristram Englehardt, Jr. eds., 1981) (separating religious ethics from theories of
natural morality).
whole system, taxes included.”125 Understanding theories of justice and the

good life allows us to evaluate taxation holistically as it is situated in the
whole social and economic system.
The primary purposes of taxes are to: (1) raise revenue; (2) redistribute
resources; and (3) influence behavior.126 Although other economic and
social factors are at play, moral reasoning dictates whether these purposes
of taxation are legitimate in a given situation. Moral reasoning also
provides guidance as to how conflicts between these purposes of taxation
ought to be resolved.
A. Raising Revenue
Levying taxes to raise revenue for public expenditures is the least

controversial aim of taxation.127 However, beyond the minimum of using
taxes to fund national defense, courts, police, and emergency services, there
is much disagreement.128 Disagreement exists over how much ought to be
spent. Not only that, but policymakers disagree broadly over whether and
how much government should spend on healthcare, education,
transportation, environmental protection, commercial regulation, poverty
relief, disability assistance, foreign diplomacy, scientific research, and
support of humanities and the arts. Determining the right level of public
expenditure is important because public expenditures affect what sorts of
lives people live.129 Governments can raise revenue through different kinds
of taxes as well as fees, penalties, borrowing, and investments.130 Moral
theories not only govern the permissible levels of expenditure, but also
provide a framework for how to pay for such expenditures.
Of the main moral theories, libertarianism––with its particular
workmanship model of property rights––is the most hostile to raising
revenue for government expenditures through taxes.131 Nonetheless, even
libertarians generally approve of using taxes to maintain institutions that
enforce and protect individuals’ property and contractual rights.132 Public
goods, such as national defense, necessarily benefit everyone, and free
riders cannot be practically excluded.133 Yet, whether a good is public or
125. MURPHY & NAGEL, supra note 23, at 37 (emphasis omitted).

126. Reuven S. Avi-Yonah, The Three Goals of Taxation, 60 TAX L. REV. 1, 3 (2006).
127. MURPHY & NAGEL, supra note 23, at 5, 46.
128. Id. at 5.
129. Id. at 41.
130. Id. at 6.
131. See Edward Feser, Taxation, Forced Labor, and Theft, 5 INDEP. REV. 219, 220 (2000)
(defending Robert Nozick’s claim that only the “minimal state” can be morally justified).
132. Id.
133. MURPHY & NAGEL, supra note 23, at 5, 46.
not is irrelevant to liberal egalitarians and utilitarians, who reject the

workmanship model of property rights altogether.134 In determining
whether a government expenditure and its related tax are desirable, a
Rawlsian liberal, for example, will first ask whether the tax (combined with
correlating government expenditures) benefits the worst-off person in
society.135 Whereas a utilitarian would ask whether the tax and associated
expenditures improve overall well-being.136
B. Redistribution of Wealth
The second common purpose of taxation is to redistribute wealth––and

concomitantly, power.137 Libertarian theories generally oppose the
redistribution of wealth or power through taxes because they believe market
outcomes are (or can be) presumptively just.138 However, libertarians may
support redistribution to compensate a person for past infringement of his
or her property or contract rights.139 Liberal egalitarians, on the other hand,
generally support broad redistribution consistent with their view of human
equality––regardless of talent or effort.140 Utilitarians will support
redistribution of wealth and power, so long as it increases overall well-
being.141 According to the economic principle of diminishing marginal
utility, the gain of one dollar may improve a poor person’s well-being in
terms of happiness and freedom more than the loss of the same dollar
would decrease a wealthy person’s happiness and freedom.142 A utilitarian
would also support redistribution, if greater economic equality would
eventually result in a more stable economy or social environment conducive
to well-being.143
134. BENTHAM, supra note 115, at 12.

135. See, e.g., MURPHY & NAGEL, supra note 23, at 54 (discussing Rawls’s difference
principle); RAWLS, supra note 98, at 64 (accepting only those inequalities in wealth and income which
are harnessed to benefit the “least advantaged”).
136. See MURPHY & NAGEL, supra note 23, at 23 (outlining moral utilitarianism’s concern with
aggregate welfare).
137. Avi-Yonah, supra note 126, at 3.
138. Frank J. Garcia, Trade and Justice: Linking the Trade Linkage Debates, 19 U. PA. J. INT’L
ECON. L. 391, 417 n.109 (1998).
139. See id. at 419 (stating that, “a libertarian might limit a state’s duty . . . to attempts to
encourage policies . . . that favor individual rights and the protection of private property”).
140. Id. at 402 n.49.
141. Jan G. Laitos, The New Retroactivity Causation Standard, 51 ALA. L. REV. 1123, 1134–35
(2000).
142. Mark S. Stein, Diminishing Marginal Utility of Income and Progressive Taxation: A
Critique of The Uneasy Case, 12 N. ILL. U. L. REV. 373, 374 (1992).
143. See JOSEPH E. STIGLITZ, THE PRICE OF INEQUALITY: HOW TODAY’S DIVIDED SOCIETY
ENDANGERS OUR FUTURE 134 (2013) (stating that, “redistribution could both reduce inequality and
increase efficiency”).
The government can achieve a more equal distribution of resources

through taxes as well as through other means, such as rent control, public
education, or public healthcare.144 For moral theories that accept the validity
of economic redistribution, using progressive taxes rather than other
methods of redistribution makes sense if taxes better achieve a moral
theory’s ideal of justice when compared to such other methods.
C. Influencing Behavior
The third and perhaps most controversial purpose of taxation is to

influence taxpayer behavior. People often change their behavior to
minimize their tax liability whether or not a tax is designed to influence
behavior.145 However, sometimes governments impose taxes with the
express purpose of either encouraging socially beneficial behavior or
discouraging socially harmful behavior.146 For example, Berkeley,
California, recently introduced a tax of one cent per ounce of specified
sugary drinks to discourage behavior that causes obesity, tooth decay,
diabetes, and other health problems.147 On its face, a tax may provide
monetary incentives for collectively beneficial behavior. However, taxes
may also define, for better or worse, the purpose and function of public
institutions by shaping social psychology. As with wealth redistribution,
government can influence behavior through taxes, as well as through
statutes, institutions, and policies.148
Philosophical libertarians, who tend to favor the absence of obstacles
to choices over the affirmative capacity to make choices, may disapprove of
all or much of government paternalism.149 On the other hand, liberals’
144. See Ilan Benshalom, How to Redistribute? A Critical Examination of Mechanisms to

Promote Global Wealth Redistribution, 64 UNIV. TORONTO L.J. 317, 326–29 (2014) (proposing to apply
a redistributive tax system internationally); Louis Kaplow, Taxation and Redistribution: Some
Clarifications, 60 TAX L. REV. 57, 71 (2007) (discussing the redistributive impact of publicly financed
goods and services); Daphna Lewinsohn-Zamir, In Defense of Redistribution Through Private Law, 91
MINN. L. REV. 326, 327 (2006) (analyzing private law redistribution systems with behavioral
mechanisms).
145. BERNARD SALANIÉ, THE ECONOMICS OF TAXATION 13 (2d ed. 2011).
146. See Allison Aubrey, How Did Berkeley Pass a Soda Tax? Bloomberg’s Cash Didn’t Hurt,
NPR (Nov. 5, 2014, 5:50 PM), http://www.npr.org/sections/thesalt/2014/11/05/361793296/how-
did-berkeley-pass-a-soda-tax-bloombergs-cash-didnt-hurt?utm_medium=RSS&utm_campaign=us (an
example of a tax used to encourage socially beneficial behavior).
147. See id. (providing an example of a tax with the purpose of influencing behavior to improve
public health).
148. See generally RICHARD H. THALER & CASS R. SUNSTEIN, NUDGE: IMPROVING DECISIONS
ABOUT HEALTH, WEALTH, AND HAPPINESS 83–102 (Penguin Books rev. ed. 2009) (discussing different
mechanisms that influence individual decision-making).
149. Professors Thaler and Sunstein propose a theory called “Libertarian Paternalism,” in which
people generally “should be free to do what they like—and to opt out of undesirable arrangements if
expansive view of freedom embraces not only the lack of obstacles to

making choices, but also the availability of choices in the first place. As a
result, Rawlsian liberals will likely have no principled objection to using
some taxes to influence some behavior, so long as it is, in practice,
consistent with the liberal’s egalitarian views. Utilitarians, likewise, have
no problem, from a moral perspective, with the use of taxes to influence
behavior, so long as it improves utility in actuality.
D. Discourse and the Purposes of Taxation
The purposes of taxation, whether to raise revenue, redistribute wealth,

or influence behavior, are often relevant to disputes within tax policy and
practice. Some tax experts prefer to see themselves as objective “numbers
people,” who stick to the hard data and who transcend the intellectual
messiness of philosophy. While moral philosophy and reasoning are
important for tax policy, addressing these concerns often proves impractical
or unnecessary. Two such situations come immediately to mind.
First, there may be moral consensus about what role taxation should
play in a given context. Even with moral consensus, factual disagreement
often prevents headway in tax policy or tax interpretation. Assume, for
example, that the citizens of Lilliput agreed that justice demanded some
redistribution of wealth to the working poor. The citizens of Lilliput may
nonetheless disagree as to how well different tax and economic proposals
would accomplish that purpose. The Little-Endian party may argue that an
earned income tax credit is the best way to redistribute income to the
working poor because it puts money directly into their pockets—the benefit
is one-to-one. The opposing Big-Endian party may disagree because they
believe that the earned income tax credit would decrease demand for labor
and allow companies to reap the benefit of the tax credit by lowering
wages. In this case, the Little-Endians and the Big-Endians share a view of
economic justice, but disagree on the tax incidence of an earned income tax
credit. The disagreement is a factual one about who benefits from an earned
income tax credit.
A second reason for overlooking the moral grounds of a tax argument
arises in tax controversies. For example, an attorney may strategically
they want to do so,” while government is nonetheless permitted “to influence choices in a way that will
make choosers better off, as judged by themselves.” Id. at 5. When it comes to behavior-influencing
taxes, uncertainty is often an issue because it is difficult to predict and measure the effectiveness of such
taxes. The more behavior-influencing taxes there are, the less salient each tax is in the minds of
taxpayers, which may weaken the impact of all behavior-influencing taxes. See Gary M. Lucas, Jr.,
Paternalism and Psychic Taxes: The Government’s Use of Negative Emotions to Save Us from
Ourselves, 22 S. CAL. INTERDISC. L.J. 227, 266 (2013) (providing that a “change in perspective may be
due to a change in the salience of relevant aspects of the decision”).
sidestep a tax policy’s underlying moral considerations because the

considerations contradict his or her clients’ interests. Still, disregarding
moral considerations in tax litigation may expose a weak argument since
the legitimacy of taxation ultimately depends on morality. Though there are
other reasons to downplay moral considerations in tax arguments, we better
serve truth and justice by uncovering the moral foundations of taxation to
make moral assumptions and underpinnings obvious. To what extent
reasoning can achieve truth or consensus about justice is controversial.150
Morality, justice, and human well-being are rather confusing concepts.
Consider this illustration from Amartya Sen: imagine you have to decide
which of three children—Anne, Bob, and Carla—should get a particular
flute. Anne claims the flute because she is the only one who can play it.151
Bob argues that he deserves the flute because he is poor and he has nothing
to his name, while the other children are rather wealthy.152 Lastly, Carla
argues that she deserves the flute because she made the flute herself.153
Professor Sen rightly concludes: “Theorists of different persuasions . . .
may each take the view that there is a straightforward just resolution staring
at us here, and there is no difficulty in spotting it. But almost certainly they
would respectively see totally different resolutions as being obviously
right.”154
Nevertheless, moral philosophy and reasoning may be our only
recourse. Perhaps, with time and quality discourse, we could arrive at some
consensus as to who should get the flute––or, at least, who should not get
the flute. The same notion applies to taxation. Often, arguments about
taxation are essentially moral arguments. For example, a libertarian and a
liberal egalitarian may disagree about tax rates regardless of the effect of
tax rates on labor participation, international competitiveness, business
efficiency, government efficiency, or economic equality.
Even very detailed and narrow tax disputes often rest on reasoning
about morality. For example, the question of whether a sale by a foreign
person of an interest in a partnership with a business in the United States
ought to be taxable by the United States is currently in litigation before the
United States Tax Court.155 Practitioners reach different conclusions on this
150. SEN, supra note 3, at xvii.

151. Id. at 13.
152. Id.
153. Id.
154. Id.
155. See, e.g., Jim Fuller & David Forst, US Inbound: Sale of Partnership Interest, INTERNAT’L
TAX REV. (Oct. 29, 2015), http://www.internationaltaxreview.com/Article/3501686/US-Inbound-Sale-
of-partnership-interest.html (discussing the subject of litigation in Grecian Magnesite Mining, Industrial
& Shipping Co. SA v. Commissioner, T.C. No. 19215-12, a case pending before the U.S. Tax Court);
Rev. Rul. 91-32, 1991-1 C.B. 107, *2 (1991) (stating that a nonresident alien’s income derived from an
issue: the language of relevant tax law and foreign tax law of partnership
interests lead to one conclusion, while the United States’ general tax policy
preventing asset appreciation from escaping taxation leads to another
conclusion. Without other evidence of legislative intent, a judge may
assume Congress intended whichever policy is more favorable. Presently, it
is often taboo for a technical memorandum, judicial opinion, or tax
authority ruling to deal with issues of justice. Yet, if these practitioners’
conception of the issue as a tug-of-war between internal coherency of the
income tax, on the one hand, and, certainty of taxpayers as to their tax
liability, on the other, is correct, then the only way of prioritizing the two
values—coherency and certainty—may be to dig down into the moral
foundations of taxation. Commonly, the only way to arbitrate between
competing canons of good tax policy is by resorting to moral philosophy
about justice, the good life, and the good society. This is especially true of
the most consequential tax questions.
Reasoning about justice generally––and taxation specifically––takes
the form of analyzing shared, but incomplete, information with the goal of
growing the currently limited consensus about the truth in taxation.156 But
neither laypersons nor tax experts should leave it to professional
philosophers to decide the pressing questions in taxation. Certainly,
philosophers contribute to vetting, elucidating, and proposing moral and
political ideals. However, philosophers have proven largely unwilling or
unable to bridge the gap between moral ideals and real-world tax policy and
law.157 Since accountants, lawyers, and economists understand the complex
tax system best, they have an important role in defining practical tax
applications of normative theories concerning proper conduct and the good
life. In order to promote justice and human well-being, tax experts need to
become morally sophisticated.
interest in a partnership with a United States trade or business “will be sourced in the United States”);
DEP’T OF TREASURY, GENERAL EXPLANATIONS OF THE ADMINISTRATION’S FISCAL YEAR 2016
REVENUE PROPOSALS 26–27 (2015), https://www.treasury.gov/resource-center/tax-policy/Documents/
General-Explanations-FY2016.pdf (suggesting a change in foreign tax credit limitation rules in order to
prevent double taxation on dual capacity taxpayers in regards to foreign levies); N.Y. STATE BAR ASS’N,
TAX SECTION, REPORT ON GUIDANCE IMPLEMENTING REVENUE RULING 91-32, at 1 (2014) (responding
“to a request from the Department of the Treasury . . . for comments relating to the current project at
Treasury and the Internal Revenue Service . . . to issue guidance under Section 864 implementing
Revenue Ruling 91-32”) (footnote omitted).
156. See Lee Smolin, Science and Democracy, TED (Feb. 2003), https://www.ted.com/
talks/lee_smolin_on_science_and_democracy?language=en (describing the scientific method as an
argumentative, consensus-building ethic).
157. See supra Part III.A–III.C (discussing moral differences between philosophies regarding
elements of taxation).
IV. SCIENCE AND TAXATION
Moral theories generally cannot provide useful conclusions about

specific tax policies without input from the social and natural sciences.
Although morality may justify the good purposes of taxation, the method to
achieve the purposes requires analysis of context, facts, and circumstances.
As new information in economics, psychology, sociology, and law becomes
available, the normative conclusions about taxation generated by moral
theories may change or become more precise.
A. Economics
Of all the scientific fields with findings relevant to the application of

moral theories to taxation, inputs from economics are perhaps the most
significant. Economics has put forth significant intellectual resources into
studying taxation, so much so that tax theory is sometimes thought of—
mistakenly, I think—as entirely a subfield of economics.158 Still, economics
provides indispensable insight into how taxes (and other social
arrangements) affect the size and division of the economic pie. Among the
specialisms in public economics, two of the most important for tax theory
are optimal taxation theory and tax incidence.159 Optimal taxation theory
analyzes how taxes affect the size of the economic pie.160 Tax incidence, on
the other hand, studies the effect of taxes on the way the economic pie is
divided.161
1. Optimal Taxation Theory
For each of the important theories of justice, having a bigger economic

pie is generally preferable to having a smaller one, all other things being
equal. Efficiency is conventionally the purview of economics, and optimal
tax theory studies the efficiency implications of tax systems. Taxes may
cause deadweight losses in taxpayer well-being by distorting their
economic decisions. For example, in 1696, England enacted a “window
tax,” which taxed people on the basis of how many windows they had on
their homes.162 Some people reacted by bricking up their windows to pay
158. See FRECKNALL-HUGHES, supra note 36, at 2 (describing taxation as an interdisciplinary

field studied under accounting, law, or economics).
159. STEPHEN SMITH, TAXATION: A VERY SHORT INTRODUCTION 32, 57 (2015).
160. See id. at 57 (describing the focus of optimal taxation on achieving a balance between
revenue-raising and fairness in tax burdens).
161. See id. at 32 (defining incidence as who is liable to pay or bears the burden of paying
taxes).
162. Id. at 51.
lower taxes.163 These people would have preferred windows, but the tax
artificially distorted their decisions.164 Similarly, taxes on labor
disincentivize labor, while consumption taxes disincentivize consumption.
Normatively, optimal taxation theory addresses the question of “how
best to raise revenues in a distorted economy.”165 Optimal tax theory deals
with efficiency rather than equity. Further, optimal tax theory asserts that
tax policies should seek to minimize deadweight loss subject to certain
constraints, such as considerations of justice.166 Optimal tax theory would
recommend a lump-sum tax in a perfectly competitive market without
equity constraints.167 A lump-sum tax is the most efficient tax because it
distorts taxpayers’ choices the least.168
Unfortunately, applying optimal tax theory is more difficult than
simply adopting a lump-sum tax. The real-world market contains
imperfections, including justice and equity constraints.
In a 2009 article, Gregory Mankiw, Matthew Weinzierl, and Danny
Yagan summarized eight high-level conclusions of optimal tax theory:
1) Optimal marginal tax rate schedules depend on the distribution

of ability; 2) The optimal marginal tax schedule could decline at
high incomes; 3) A flat tax, with a universal lump-sum transfer,
could be close to optimal; 4) The optimal extent of redistribution
rises with wage inequality; 5) Taxes should depend on personal
characteristics as well as income; 6) Only final goods ought to be
taxed, and typically they ought to be taxed uniformly; 7) Capital
income ought to be untaxed, at least in expectation; and 8) In
163. Id.
164. Id.
165. ROBIN BOADWAY, FROM OPTIMAL TAX THEORY TO TAX POLICY: RETROSPECTIVE AND
PROSPECTIVE VIEWS 7 (2012).
166. N. Gregory Mankiw et al., Optimal Taxation in Theory and Practice, 23 J. ECON. PERSPS.
147, 148 (2009).
167. Id. at 149. A lump-sum tax is a uniform tax of a fixed amount. If, for example, a country
imposed a tax of $1,000 on every person once every other year, that would be a lump-sum tax. See id.
(stating that, “this tax falls equally on the rich and poor”).
168. That a lump-sum tax maximizes utility in a perfectly competitive market rests on the
assumption that a perfectly competitive market is maximally efficient. Given a number of stated
assumptions, the First Fundamental Theorem of Welfare Economics posits that a perfectly competitive
market results in the maximum amount of economic output possible. See Kenneth J. Arrow, An
Extension of the Basic Theorems of Classical Welfare Economics, in PROCEEDINGS OF THE SECOND
BERKELEY SYMPOSIUM ON MATHEMATICAL STATISTICS AND PROBABILITY 507, 507–10 (Jerzy Neyman
ed., 1951). See also Mankiw et al., supra note 166, at 149, 158 (demonstrating that lump-sum tax
schedules produce near optimal results while least distorting buyer and worker incentives). In essence,
the theorem is a mathematical confirmation of Adam Smith’s “invisible hand” hypothesis. MASSIMO
FLORIO, APPLIED WELFARE ECONOMICS: COST-BENEFIT ANALYSIS OF PROJECTS AND POLICIES 40
(2014).
stochastic, dynamic economies, optimal tax policy requires

increased sophistication.169
The ability-to-pay principle underpins many of the lessons in optimal

tax theory. Taxes on ability-to-pay do not distort taxpayer decisions, and
thus do not cause economic deadweight loss.170 Yet, the ability-to-pay
principle does not square with every theory of justice. For instance, it fails
to account for the effect of public expenditures, and may rest on cursory
estimates of human psychology. Each of these limitations poses a hurdle to
optimal taxation theory’s ability to provide specific policy predictions and
recommendations.
2. Tax Incidence
Scholarly work on tax incidence is concerned with measuring and

predicting the unseen distributional effects of taxes.171 Taxes cause not one,
but a series of economic effects. While the first distributional effect of a tax
is the most obvious—taxpayers lose money—the subsequent and more
inscrutable effects may be equally or more consequential. According to the
classical French economist, Frédéric Bastiat, “Here is the whole difference
between a good and bad economist: the latter only minds the visible effect,
while the former accounts for both the effect that can be seen and those that
must be predicted.”172 The taxpayers on whom tax law imposes liability
may ultimately not be burdened by the tax. Economic forces may ensure
that a given taxpayer can pass on some or all of the cost of the tax to
others.173
With regard to tax justice, statutory incidence is often unhelpful.174
While a statute may require one person to pay a tax, its ultimate effect of
the tax on absolute wealth, relative wealth, or well-being may not be
apparent on the face of the tax statute. Ideally, measures of tax incidence
would measure the effect of taxes on each individual’s wealth or utility. A
person-by-person measure of tax incidence would provide the most
169. Mankiw et al., supra note 166, at 147 (emphasis omitted).

170. See id. (noting that taxes do not implicate individual choices and do not distort incentives).
171. SMITH, supra note 159, at 41.
172. SALANIÉ, supra note 145, at 41.
173. SMITH, supra note 159, at 32.
174. See Gilbert E. Metcalf, Paying for Greenhouse Gas Reductions: What Role for Fairness?,
15 LEWIS & CLARK L. REV. 393, 399 (2011) (arguing the economic burden of a tax is “determined by
the economic laws of supply and demand”). In cases of “sin taxes,” however, it may be the case that
statutory incidence has the psychological effect of dissuading people from engaging in some socially
harmful conduct, even if the economic incidence is not fully borne by the sinner. Rachel E. Morse, Note,
Resisting the Path of Least Resistance: Why the Texas “Pole Tax” and the New Class of Modern Sin
Taxes Are Bad Policy, 29 B.C. THIRD WORLD L.J. 189, 191–92 (2009).
accurate input for applying theories of justice to taxation. However,

empirically measuring tax incidence person-by-person is an overwhelming
task.
To simplify empirical studies of tax incidence, economists gauge the
effects of a tax on large groups, such as employers and employees; sellers
and buyers; residents and foreigners; or rich and poor.175 Economists
typically demonstrate tax incidence using a partial equilibrium model,
which sections off a portion of the economy and measures the distributional
effects of taxes within that portion.176 A partial equilibrium model for tax
incidence may, for example, feature a single tax and two goods, measuring
the distributional effect of the tax on one good relative to the other.177
Measuring tax incidence with a general equilibrium model (i.e., the entire
economy) is more difficult. There is no control group because the model
tests the entire economy for change.178 When conditions are right, we can
draw rather reliable conclusions from these models about a tax’s
distributional effect. However, the partial equilibrium models may be
unable to provide reliable results in certain situations.
In large part, the economic incidence of a tax depends on price
elasticity of supply and price elasticity of demand, rather than who is
required to pay the tax.179 Generally, groups that respond the least to price
changes bear the larger burden of a tax. For example, when demand is
inelastic relative to supply, the tax incidence of an ad valorem tax will fall
more on buyers; but when the demand is elastic relative to supply, then
sellers will bear the larger share of the tax burden. The incidence of income
taxes or payroll taxes will depend, in large part, on the elasticity of the
supply and demand curves for labor.
While experts agree on the importance of price elasticity in analyzing
tax incidence, they disagree about the incidence of specific taxes, such as
property taxes, capital gains taxes, and corporate taxes.180 Tax incidence
study must account for various difficult-to-gauge factors, resulting in
empirical uncertainty. Economic models may make problematic
175. See Presentation, Raj Chetty & Gregory A. Bruich, Harvard University Public Economics
Lectures, Part 2: Incidence of Taxation 7 (Fall 2012), http://rajchetty.com/chettyfiles/public_
economics_lectures.pdf (stating that tax incidence studies analyze the tax change effects on aggregate
groups).
176. See id. at 8–12 (discussing the setup for a partial equilibrium model that focuses on two
goods).
177. Id. at 9.
178. See id. at 89 (stating that the general equilibrium model analyzes all prices to identify the
full incidence of taxes).
179. See id. at 17 (providing a formula for tax incidence that relies on price elasticity).
180. STEPHEN ENTIN, HERITAGE CTR. FOR DATA ANALYSIS, TAX INCIDENCE, TAX BURDEN,
AND TAX SHIFTING: WHO REALLY PAYS THE TAX? 4–5, 22–23 (Nov. 5, 2004), http://www.heritage.org/
taxes/report/tax-incidence-tax-burden-and-tax-shifting-who-really-pays-the-tax.
assumptions, leading to disagreement––not on moral grounds––but on the

input being plugged into a given moral theory. For example, many models
of tax incidence assume that taxpayers rationally consider taxes as if they
were prices.181 However, people may pay less attention to taxes than they
do prices—taxes may be less salient than prices.182 People may disagree on
moral grounds about the importance of tax salience in evaluating a tax,
even if they agree on how salient a tax actually is. Conversely, people who
agree on the moral importance of tax salience may disagree about the
salience of a given tax on empirical grounds.
3. On Economic Models and Taxes
Economists’ tools of the trade are stylized mathematical models.183 In

order to make predictions and explain social phenomena, economists make
new models or use existing models in conjunction with new information.184
The usefulness of a model is highly dependent on context. Economic
models “do not have a particular ideological bent,” although politicians,
talking heads, and economists may use them out of context for ideological
ends.185 When the evidence embedded in models is not overstated for
persuasive effect, models can be very useful in “show[ing] how specific
mechanisms work by isolating them from other, confounding effects,” and
showing how particular causes “work their effects through [a] system.”186
Economic models can be powerful tools for normatively assessing tax
policy. However, this is true only when their underlying assumptions and
contextual contingencies are adequately communicated in order to ensure a
quality discourse. Additionally, economic models provide important data to
support moral theories when policymakers create tax policies, even though
the data may continually evolve as new models or new information become
available to economists.
181. Raj Chetty et al., Salience and Taxation: Theory and Evidence, 99 AMER. ECON. REV.
1145, 1145 (2009).
182. See id. at 1165 (explaining why consumers care more about prices than taxes related to
saliency).
183. DANI RODRIK, ECONOMICS RULES: THE RIGHTS AND WRONGS OF THE DISMAL SCIENCE 9
(2015).
184. Id. at 10.
185. Id. at 6.
186. Id. at 12. Mathematics in economics serves two primary purposes. “First, math ensures that
the elements of a model—the assumptions, behavioral mechanisms, and main results—are stated clearly
and are transparent.” Id. at 31. “The second virtue of mathematics is that it ensures the internal
consistency of a model—simply put, that the conclusions follow from the assumptions.” Id. at 32.
B. Psychology
In many cases, the accuracy of economic models of taxation depends

on the accuracy of the models’ assumptions about the nature of human
well-being, motivation, decision-making, and agency. Psychology and
cognitive science continue to advance our knowledge about the workings of
the mind: how we make decisions;187 how we are systematically biased;188
how we develop virtues and overcome vices;189 and what are the causes of
happiness.190
In tax theory, utilitarians value insights from psychology and cognitive
science because their policy choices in taxation aim precisely at
maximizing some sort of happiness or well-being.191 For a utilitarian, social
justice is social well-being.192 To the extent consistent with their respective
theories of rights, liberal egalitarian and libertarian theories also support
maximizing well-being. Psychology and cognitive science play important
roles in predicting and measuring taxes that aim to influence behavior; they
provide guidance on how taxes affect people, and can help counteract
irrational choices.
C. Sociology
“Sociology is the [scientific] study of social life, social change, and the
social causes and consequences of human behavior.”193 It focuses on social
organization, institutions, and behavior.194 Many moral theories, especially
liberal egalitarian ones, are concerned with economic inequalities drawn
187. See, e.g., BEN R. NEWELL ET AL., STRAIGHT CHOICES: THE PSYCHOLOGY OF DECISION
MAKING 13, 15–16 (2d ed. 2015) (arguing that the way information is provided can influence
decisions); BARRY SCHWARTZ, THE PARADOX OF CHOICE: WHY MORE IS LESS 48–51 (2004)
(explaining how experienced utility, expected utility, and remembered utility shape an individual’s
choices).
188. See DANIEL KAHNEMAN, THINKING FAST AND SLOW 3–5 (2011) (describing systematic
errors as predictably recurring biases).
189. See CHRISTIAN B. MILLER, CHARACTER AND MORAL PSYCHOLOGY, at xi–xii (2014)
(discussing the theory of “Mixed Traits” and how robust character traits can give rise to morally relevant
thoughts).
190. See MARTIN E.P. SELIGMAN, FLOURISH: A VISIONARY NEW UNDERSTANDING OF
HAPPINESS AND WELL-BEING 13–15 (2011) (discussing the inadequacies of authentic happiness theory
and emphasizing the construct of well-being as the focal topic of positive psychology).
191. See MURPHY & NAGEL, supra note 23, at 51–52 (recognizing utilitarianism’s need for a
metric for comparing the total good of policy outcomes).
192. See id. at 51 (defining the utilitarian theory of social justice).
193. JEANNE H. BALLANTINE & KEITH A. ROBERTS, OUR SOCIAL WORLD: INTRODUCTION TO
SOCIOLOGY 6 (3d ed. 2011).
194. Id.
along demographic lines––which are morally irrelevant.195 In Rawlsian

liberalism, for example, everyone deserves equal resources, except to the
extent that policies resulting in unequal resources benefit the worst-off
person in society.196 Liberal egalitarianism, along with other theories of
justice, are suspicious of differences in wealth and opportunity among
persons, except as they serve “the general good.”197 In this school of
thought, only effort and, maybe, talent are the factors that can justify
unequal wealth or opportunity. For utilitarians, any characteristic aside
from one’s capacity for well-being is generally irrelevant.198
In addition to discerning taxation’s effect on economic equality,
sociology also has theoretical tools for measuring taxes’ influences on
social institutions, norms, and expectations.199 For example, an excise tax
not only raises the cost for engaging in some behavior, but also
communicates collective disapproval of the behavior, the awareness of
which might influence an individual’s decision-making process.200
Sociology helps to understand the true negative or positive externalities of
behavior, and how taxes do or can affect such externalities. In other words,
sociology has tools for isolating the effects of taxes on social behavior and
organization to help policymakers understand the actual effectiveness of
their taxes in achieving their intended purposes.201
D. Political Science and Political Economics
In most countries, taxes are the product of competitive electoral

politics, whereby social decisions are made according to individual voting
preferences.202 Democratic systems differ in the kinds of information that
they use and the kinds of information that they ignore. For example, a
195. RAWLS, supra note 98, at 64 (defining personal liberty and the principle of reciprocity as
the only relevant moral concerns).
196. MURPHY & NAGEL, supra note 23, at 54.
197. See id. (explaining Rawls’s view that arbitrary inequalities between individuals are unjust
unless they can be made to serve some non-arbitrary purpose). DÉCLARATION DES DROITS DE
L'HOMME ET DU CITOYEN, ART. I, ASSEMBLÉE NATIONALE CONSTITUANTE 26-08-1789 (Fr.),
translated at The Avalon Proj., Declaration of the Rights of Man, YALE L. SCH. (2008),
http://Avalon.law.yale.edu/18th_century/rightsof.asp.
198. MURPHY & NAGEL, supra note 23, at 23.
199. Elizabeth R. Carter, New Life for the Death Tax Debate, 90 DENV. U. L. REV. 175, 181, 189
(2012).
200. Excise Tax, IRS, https://www.irs.gov/businesses/small-businesses-self-employed/excise-
tax (last updated July 19, 2006). See JOHN. R. SEARLE, MAKING THE SOCIAL WORLD: THE STRUCTURE
OF HUMAN CIVILIZATION 5 (2010) (discussing the philosophy of society and institutions).
201. Carter, supra note 199, at 182.
202. See Amartya Sen, Arrow and the Impossibility Theorem, in THE ARROW IMPOSSIBILITY
THEOREM 21, 21 (Eric Maskin & Amartya Sen eds., 2014) (relating public decisions to individual
preferences).
majority-rule democratic system, without restrictions on campaign finance,

pays attention to voters’ preferences and wealth. But, the system also
ignores other factors, such as experience, intelligence, character, or
intensity of preferences.203 Not only do different democratic systems have
different informational biases, but also democratic decision-making
processes inherently have difficulty ordering policy alternatives rationally.
Moreover, we live in an era where taxpayers are global, but tax authorities
are not. In crafting tax policy, we have to account not only for political
dynamics within our respective borders, but also international pressures
from competition for foreign-owned capital.204
Over six decades ago, Kenneth Arrow advanced the impossibility
theorem in his doctoral dissertation.205 In essence, the theorem states that
when voters have a choice between three or more policy alternatives, no
system of voting can aggregate the preferences of the voters into a rational
collective ranking of alternatives from most to lease preferable.206 The
theorem challenges the idea that majority rule prevents arbitrary outcomes
or domination by a strategically placed minority.207 Social choice theory
and democratic theory analyze collective decision-making processes, and
how such decision-making can result in collective choices better derived
from truth and reason.208 Developments in social choice theory and
democratic theory should factor into tax theory because taxes are a product
of collective decision-making. Tax policy changes only as fast and in ways
that can prevail within the political structure.209
United States President Ulysses S. Grant predicted: “[A]t some future
day, the nations of the earth will agree upon some sort of congress, which
will take cognizance of international questions of difficulty, and whose
decisions will be as binding as the decision of our Supreme Court is binding
on us.”210 As of yet, however, there is no such global authority in the arena
of taxation. Within the scope of its sovereignty, each country is free to
203. Id. at 47.

204. See generally Reuven S. Avi-Yonah, Globalization, Tax Competition, and the Fiscal Crisis
of the Welfare State, 113 HARV. L. REV. 1573, 1576 (2000) (discussing problems international tax
competition forces onto welfare state systems).
205. Sen, supra note 202, at 21 n.3.
206. See also KENNETH J. ARROW, SOCIAL CHOICE AND INDIVIDUAL VALUES 98–100 (1951).
See also Sen, supra note 202, at 23–24 (explaining the General Possibility Theorem).
207. See Sen, supra note 202, at 24 (discussing the results of the social welfare function).
208. Amartya Sen, The Informational Basis of Social Choice, in THE ARROW IMPOSSIBILITY
THEOREM 47, 47 (Eric Maskin & Amartya Sen eds., 2014).
209. Game theory may help to formulate a winning strategy in tax policymaking.
210. Ulysses S. Grant, Speech to the Members of the Midland International Arbitration Union
(Oct. 16, 1877), in 28 THE PAPERS OF ULYSSES S. GRANT, 1876–1878, at 290–91 (John Y. Simon ed.,
2005).
enact whatever taxes it wishes.211 As long as there is disharmony between

the taxation systems of countries, there will always be international
opportunities for tax planning and tax evasion. The pressures of
international tax competition constrain countries’ abilities to reform taxes to
match their moral theories of justice and the best information available
from science and reasoning. One role of game theory in taxation would be
to help understand what a winning strategy would be in the game of
international tax competition or, alternatively, to overcome international tax
competition.
CONCLUSION
Specialisms in taxation are, for the foreseeable future, probably both

good and unavoidable. Nonetheless, taxation is inherently interdisciplinary
and economic justice “is too important an issue to be left to economists,
sociologists, historians, and philosophers.”212 In this Article, I have
attempted to map out in broad strokes the value of effectual collaboration
between experts and the lay public, and between various specialisms in
taxation discourse. Then, in an effort to demonstrate how the various
specialisms in tax could be reconciled with the interdisciplinary
perspective, I attempted to summarize how specialisms fit within the
framework of moral philosophy.
If we can agree that the chief ends of government are justice and the
good life, then the innermost framework of taxation theory must be moral
philosophy. Taxation is a feature of government and, as such, also aims first
and foremost at justice and the good life. Moral philosophy is best situated
to analyze the legitimacy of the purposes behind tax policy. After all, if tax
discourse develops solely within the field of economics, the underlying
moral assumptions of tax policy may be at odds with those of the public.
Greater moral transparency in public arguments will likely effectively
improve tax discourse. At a minimum, moral transparency requires some
awareness of: (1) one’s own moral system; (2) the potential range of
plausible or prevalent moral systems of one’s audience; and (3) how to
evaluate the relevant tax issue from the perspective of those various moral
systems.
211. Arguably, however, the growing global network of tax treaties, most of which conform
closely to the model conventions promulgated by the OECD, is approaching a supranational norm.
Yariv Brauner, What the BEPS?, 16 FLA. TAX. REV. 55, 61–62 (2014). See generally REUVEN S. AVI-
YONAH, INTERNATIONAL TAX AS INTERNATIONAL LAW: AN ANALYSIS OF THE INTERNATIONAL TAX
REGIME 3 (2007) (arguing that international tax law is part of international law even if it differs in some
respects from generally applicable international law).
212. PIKETTY, supra note 15, at 2.
As moral considerations fix the legitimate purposes of taxation,

evaluating a tax question or proposal through the lens of morality generally
requires inputs from the social and natural sciences. Yet, whose role is it to
bridge the gaps between moral philosophy, science, and the practice of tax
law and policymaking? And whose role is it to bridge the gap between
experts and the public? No single field has or can have a unique claim to
these roles. Even though the invitation to gain broad perspective in taxation
must extend to everyone, the onus falls especially on scholars and
practitioners to communicate learned consensus and arguments in ways that
are accessible to experts in other fields and to the public.
Perhaps the humanities also have a role to play here. Although this
Article focuses on abstract discourse about taxation, literature and art help
to keep us, individually and collectively, properly concerned with
injustice.213 The suffering produced by injustice is visible on a daily basis.
Yet, paradoxically, such suffering seems all too easy to neglect or ignore.
Arbitrary and perverse inequality are often central themes in works of
literature and art, which may help us to confront the emotional and
intellectual challenges injustice poses for each and all of us. I find
Gwendolyn Brooks’ “The Kitchenette Building,” particularly moving:
We are things of dry hours and the involuntary plan,

Grayed in, and gray. “Dream” makes a giddy sound, not strong
Like “rent,” “feeding a wife,” “satisfying a man.”
But could a dream send up through onion fumes
Its white and violet, fight with fried potatoes
And yesterday’s garbage ripening in the hall,
Flutter, or sing an aria down these rooms
Even if we were willing to let it in,
Had time to warm it, keep it very clean,
Anticipate a message, let it begin?
We wonder. But not well! not for a minute!
Since Number Five is out of the bathroom now,
We think of lukewarm water, hope to get in it.214
In these few words, the abstract idea or memory of poverty becomes

somewhat more concrete. Perhaps some other work of literature, theatre,
213. See Julianne Chiaet, Novel Finding: Reading Literary Fiction Improves Empathy, SCI. AM.
(Oct. 4, 2013), https://www.scientificamerican.com/article/novel-finding-reading-literary-fiction-
improves-empathy/ (discussing research into the value of literary fiction, which expands the capacity for
an individual to empathize).
214. Gwendolyn Brooks, Kitchenette Building, POETRY FOUNDATION,
https://www.poetryfoundation.org/resources/learning/core-poems/detail/43308 (last visited May 7,
2017). Aria means an elaborate song for one voice with orchestral accompaniment, appearing most often
in opera (“aria” means “air” in Italian). Aria, AM. HERITAGE DICTIONARY (3d ed. 1992).
painting, dance, sculpture, film, music, or photography, has evoked stirring

emotions in you––making the ephemeral concerns of injustice tangible and
motivating. If we have in the past felt moved to address injustice, can we
feel so again? In the face of others’ injustice can we, like Walt Whitman,
say in empathy, “I am the man, I suffer’d, I was there.”215 This Article has
attempted to demonstrate that precision in our general discourse on taxation
can improve our ability to approach justice. We should shift from
organizing our tax discourse around disconnected maxims of tax justice and
toward a tax discourse more rooted in moral philosophy. After all, justice
and the good life—the chief subjects of moral philosophy—are the
principal ends of taxation.
215. Walt Whitman, Song of Myself, POETRY FOUNDATION (1892),

https://www.poetryfoundation.org/poems-and-poets/poems/detail/45477 (last visited May 7, 2017).

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JUSTICE IN TAXATION

“[I]t is the mark of an educated man to look for precision in each

In Charles Dickens’s Great Expectations, Pip says, “there is nothing so

2. CHARLES DICKENS, GREAT EXPECTATIONS 57 (Margaret Cardwell ed., 2008) (1861).

There are a handful of possible reasons tax discourse often fails to

[T]he ideas of economists and . . . philosophers, both when they

Our discourse, the medium by which we develop ideas affecting

B. Complexity and Taxation

As a domain of theoretical inquiry, taxation has proven remarkably

nevertheless lacks systematic theories that provide general guidance as to

17. DAVID F. BRADFORD, UNTANGLING THE INCOME TAX 266 (1986).

Although complexity and specialisms in taxation cannot be eliminated,

debate since the beginning of recorded history.28 As justice in taxation rests

I. CONTEMPORARY DISCOURSE IN TAXATION

28. See generally Wayne P. Pomerleau, Western Theories of Justice, INTERNET

A. Contemporary Criteria of Tax Justice

In evaluating taxes today, we continue to apply Adam Smith’s

33. Id. at 362.

vertical equity tends to be more contentious. There is broad disagreement

B. Critique of Contemporary Criteria of Tax Justice

Liam Murphy and Thomas Nagel wrote a rather stinging critique of

roughly equal welfare.49 Nevertheless, people often use pretax market

of each taxpayer to contribute to state revenue.58 What, however, is meant

II. THE MORAL GROUNDS OF POLITICS

Moral philosophy is concerned with the nature of right and wrong,

A. Deontological Theories of Justice

In the West, divine command theory undergirded politics for

[B]ecause we are all equal and independent, no-one ought to

Consequently, political legitimacy comes not from any divine

It is true that governments need a great deal of money for their

people, he is invading the fundamental law of property and

Just as God has property rights in the universe because it is of His

82. Id. ¶ 140.

91. Certain neo-Marxists do ground their theories of exploitation in egalitarian views of

ignorance prevents them from knowing anything about their own

[First,] [e]ach person has the same indefeasible claim to a fully

Unlike Marxism or libertarianism, Rawlsian liberalism does not

criticized.108 Even if we accept the usefulness of Rawls’s original position,

B. Consequentialist Theories of Justice

The other major category of moral theories is consequentialism, which

most prevalent version of consequentialism is utilitarianism, which holds

be conclusively shown that such murder, theft, or slavery increased overall

III. MORALITY AND TAXATION

Normative debate in taxation is only productive if intellectual rivals

whole system, taxes included.”125 Understanding theories of justice and the

Levying taxes to raise revenue for public expenditures is the least

125. MURPHY & NAGEL, supra note 23, at 37 (emphasis omitted).

not is irrelevant to liberal egalitarians and utilitarians, who reject the

The second common purpose of taxation is to redistribute wealth––and

134. BENTHAM, supra note 115, at 12.

The government can achieve a more equal distribution of resources

The third and perhaps most controversial purpose of taxation is to

144. See Ilan Benshalom, How to Redistribute? A Critical Examination of Mechanisms to

expansive view of freedom embraces not only the lack of obstacles to

D. Discourse and the Purposes of Taxation

The purposes of taxation, whether to raise revenue, redistribute wealth,

sidestep a tax policy’s underlying moral considerations because the

150. SEN, supra note 3, at xvii.

IV. SCIENCE AND TAXATION