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Wednesday, May 10, 2006
Why Doesn't Anyone Care About Tax Law
One thing that struck me about the American Law and Economics Association meetings(discussed earlier by Ethan) was the paucity of papers on tax. By my count, the conference included at least 5 sessions devoted to corporate and securities law, four devoted to contract law, three sessions devoted to intellectual property, and only one devoted to tax. Indeed, the conference had as many papers on the Sarbanes-Oxley Act (3) as on all of tax law. And even that one tax session was sparsely attended (though all three papers presented were quite interesting).
I have no idea why this is the case. Its hard to think of a more natural field for law and economics oriented research than tax-- good research in tax requires familiarity with both areas. Tax is also undeniably important-- tax revenues equal 25% of GDP in the United States, and that number is the second lowest of the thirty countries in the OECD. Moreover, its not like all questions in tax law have been settled. Tax law is constantly in flux, and never more so than during the current Bush presidency. And while tax is often considered dull, is it any duller than Sarbanes-Oxley?
While I don't know why tax is so spurned (and I welcome anyone's ideas), I am sure its not a good thing. There is too much at stake for tax law to be left fallow.
Posted by Yair Listokin on May 10, 2006 at 12:53 AM in Life of Law Schools | Permalink
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Comments
I would think that the sheer volume of tax code makes it more dull than Sarbox law. It doesn't take that long to read Sarbox and all associated case law.
Posted by: Adam Shostack | May 10, 2006 8:54:16 AM
Could the answer be that tax tends to be a distinct field with its own circuit of conferences and its own specialty journals, and thus not part of the mainstream of academia? I've always thought of it as a relatively hermetic niche, though I'm no expert.
I've always thought of bankruptcy as similar in this respect. It doesn't seem from your post like there was much interest in BK at ALEA, but that doesn't mean that BK is a moribund field, it just means that the major work is being done at BK-specific conferences rather than at events keyed toward generalists.
Posted by: Dave | May 10, 2006 11:28:50 AM
I agree with you and I'm saddened by the neglect as well. But I think Alasdair MacIntyre's reflections on the nature of generalizations in the social sciences (in Chapter 6 of After Virtue) may have something to do with it. MacIntyre focuses on the role of radical innovation in limiting the usefulness of such generalizations. A tax scholar may discover some fascinating and important lawlike generaizations about behavior under one aspect of the code, and then a tax practitioner might come in and think of an ingenious shelter or avoidance strategy that renders the law (and generalizations based on it) nugatory.
On the other hand, perhaps tax scholars could be the sentinels identifying such evasions and leadign to their exposure in the work of journalists like David Cay Johnston (who is reputed to have saved the US Government billions of dollars by exposing tax shelters).
Posted by: Frank Pasquale | May 10, 2006 11:38:21 AM
I agree with you and I'm saddened by the neglect as well. But I think Alasdair MacIntyre's reflections on the nature of generalizations in the social sciences (in Chapter 6 of After Virtue) may have something to do with it. MacIntyre focuses on the role of radical innovation in limiting the usefulness of such generalizations. A tax scholar may discover some fascinating and important lawlike generaizations about behavior under one aspect of the code, and then a tax practitioner might come in and think of an ingenious shelter or avoidance strategy that renders the law (and generalizations based on it) nugatory.
On the other hand, perhaps tax scholars could be the sentinels identifying such evasions and leadign to their exposure in the work of journalists like David Cay Johnston (who is reputed to have saved the US Government billions of dollars by exposing tax shelters).
Posted by: Frank Pasquale | May 10, 2006 11:38:22 AM
Might it have something to do with the fact that the econ related to tax, public finance, is much less sexy than the econ related to other branches of law? And I say this as someone who is about to spend a summer marinating in tax and budget policy.
Posted by: Isaac | May 10, 2006 12:06:35 PM
I think that bankruptcy is far better integrated into law and economics than tax. Many papers in corporate law or contracts at the conference discussed bankruptcy related matters and most of the leading bankruptcy scholars attended the conference. The same cannot be said for tax.
As for why, I agree that tax is a technical discipline, but in some ways technical makes it easier rather than harder to begin research in a discipline. Tax is probably a lot more modular than other areas. In other words, you can learn what you need to know about a sub-area of tax more quickly than you could for a sub-area of contract law or corporate law because almost every doctrine in contract law bears on another doctrine.
I also agree that public finance and tax is not exactly a hot area in econ and that law and econ responds to what is hot in economics. I think tax may be one of the areas where the law and econ types should be leading the way, however. Looking back on my days in labor and development economics, I am a bit stunned at how little attention we paid to tax compared to things like the minimum or unemployment insurance.
Posted by: Yair Listokin | May 10, 2006 12:41:29 PM
As one of the presenters at the ALEA panel on tax law, I can further your proposition by attesting that attendance at that panel was low.
However, many of the papers presented at the ALEA conference were really econometric in nature, with virtually no legal analysis needed. For example, Kate Litvak (School of Law University of Texas) presented a really superb paper entitled "The Effect of the Sarbanes-Oxley Act on Non-US Caompanies Listed in the U.S.", which beautifully analyzed the EFFECT of SOX with only cursory references to the SUBSTANCE of that law.
I believe the most serious obstacle to the production of more papers on "tax law and economics" is that most tax professors have no training in economics and even disdain it. Thus, there are few tax experts who can understand, let alone use, economics in their analyses. On the other hand, very few economists have any background in tax.
By the way, I am currently available to help solve that problem. My e-mail address is krtaxlaw@yahoo.com. Have paper, will travel.
Posted by: Kneave Riggall | May 10, 2006 3:11:13 PM
I suspect one reason why tax law was underrepresented at ALEA is network effects. I thought about attending ALEA, but decided against doing so once I saw that there would only be a handful of tax papers. Had there been more tax panels, there would likely have been more tax scholars in attendance at each speficic panel.
Of course, tax law is spurned in the wider academy, not just at ALEA. So my explanation above is not a complete answer.
Posted by: David Gamage | May 10, 2006 7:58:12 PM
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