The Taking/Taxing Taxonomy

Abstract

Takings jurisprudence is engaged in a constant paradox. It is conventionally portrayed as chaotic and muddy, and yet attempts by the judiciary to create some sense of order in it by delineating the field into distinctive categories that each have a different set of rules are often criticized as analytically incoherent or normatively indefensible.

This Article offers an innovative approach to the taxonomic enterprise in takings law, by examining what is probably its starkest and most entrenched division: that between taking and taxing. American courts have been nearly unanimous in refusing to scrutinize the power to tax, viewing this form of government action as falling outside the scope of the Takings Clause. Critics have argued that the presence of government coercion, loss of private value, and potential imbalances in burden sharing mandate that the two instances be conceptually synchronized and subject to similar doctrinal tests.

The main thesis of this Article is that this dichotomy, and other types of legal line drawing in property, should be assessed not on the basis of a pointblank analysis of allegedly-comparable specific instances, but rather on a broader view of the foundational principles of American property law and of the way in which takings taxonomies mesh with the broader social and jurisprudential understanding of what “property” is.

Identifying American property law as conforming to two fundamental principles-formalism of rights and strong market propensity-but at the same time as devoid of a constitutional undertaking to protect privately-held value against potential losses as a self-standing strand in the property bundle, this Article explains why prevailing forms of taxation do seem to be disparate from other forms of governmental interventions with private property. Focusing attention on property taxation, this Article shows why taxation is considered a lesser-evil type of government coercion, how the taking/taxing dichotomy better addresses the public-private interplay in property law, and why taxation is often viewed as actually empowering property rights and private control of assets.

Keywords: property, takings, tax, due process, judicial review, public law, private law, land, intellectual property, corporation

JEL Classification: D4, E62, H2, H71, K11, K34, N2, P1, P2