The US Legislative and Regulatory Approach to Tax Avoidance

Abstract:     
This essay, in a volume honoring the distinguished British tax scholar John Tiley, examines statutory and regulatory developments that are changing American anti-avoidance law. After a look at the nature of tax shelters, the essay discusses several statutory and regulatory methods of dealing with them: statutes or regulations aimed at particular problems of abuse; "outcomes-oriented" legislation intended to deal with wider patterns of behavior; codification of an "economic substance" or other general anti-avoidance doctrine; imposition of anti-abuse doctrines through regulations; disclosure of potentially abusive transactions; and creation of national standards that govern tax professionals' advice. The essay concludes that no one method will by itself bring abusive behavior to acceptable levels, even temporarily. Flexibility is going to work better than rigidity in attacking shelters, and a combination of methods will work better than a single one.

Keywords: John Tiley, Tax, Tax Shelters, Tax Avoidance, Tax Attorneys, Professional Ethics - National Standard

JEL Classification: K34, K40

Accepted Paper Series