Does the 'New Benefit Principle' (or the 'Partnership Theory') of Income Taxation Mandate an Income Tax at Both the Individual and Corporate Levels?

Abstract:     
Two distinguished legal academics have recently advanced a revised, and therefore new, or expanded, version of the benefit principle of tax fairness (hereinafter abbreviated EBP). One of them has invoked the EBP to justify an income tax over a consumption tax, and the other to justify double taxation of corporations and shareholders. Among the points I wish to make below are the following: (1) the EBP has no firm basis in ethics; (2) it is really an argument against those who are opposed to all taxes, but it is basically illiberal (in the political sense); (3) it cannot be implemented as a substantive tax fairness principle; (4) it tell us very little about what the tax system should look like, much less unequivocally favoring an income tax base or any personal tax base with progressive features; (5) its sibling, the partnership theory of income taxation, raises more issues than it answers and suffers from the same problems as the EBP; and, (6) it doesn't sufficiently justify double corporate-shareholder taxation in its classical form.

Working Paper Series