Making Impossible Tax Reform Possible
Susannah Camic Tahk
University of Wisconsin Law School
August 16, 2013
Fordham Law Review, Vol. 81, No. 5, 2013
Univ. of Wisconsin Legal Studies Research Paper No. 1232
The United States has long struggled to reform its federal income tax code. Despite enthusiastic and widespread bipartisan support for tax reform laws that would eliminate special-interest loopholes, the legislative process has been paralyzed when it comes to passing these laws. This Article proposes a solution to this seemingly intractable federal tax lawmaking paralysis. This paralysis arises because tax reform spreads its benefits among broad groups while concentrating its costs on narrow ones. Political science theory accurately predicts that laws with this cost-benefit allocation will fail. However, federal lawmakers can overcome tax lawmaking paralysis by distributing tax reform's costs and benefits differently. In particular, the federal government can do this by following the examples of states that have successfully escaped tax lawmaking paralysis by earmarking taxes for specific purposes. This Article examines the phenomenon of earmarking and examines several instances of earmarked state taxes. In so doing, this Article argues that earmarking tax revenues for particular purposes offers an opportunity for lawmakers to permanently reform the tax code at last.
Number of Pages in PDF File: 47
Keywords: tax, tax policy, tax reform, earmarked taxes
Date posted: August 18, 2013 ; Last revised: March 23, 2014
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