The Story of Gregory: How are Tax Avoidance Cases Decided?
Tel Aviv University - School of Law
BUSINESS TAX STORIES, Foundation Press, 2005
This chapter presents the story of Gregory v. Helvering, 293 U.S. 465 (1935), the leading case in defining tax avoidance and one of the most cited tax cases ever. Using unpublished judicial memoranda, briefs, newspaper reports and other sources, the chapter reconstructs the history of the case in the lower courts and in the Supreme Court. It describes the legal, economic, political and cultural factors that influenced the decision. More specifically, the chapter shows that tax avoidance was a major political issue in the middle 1930s, when public opinion was captivated by scandalous revelations about the tax avoidance and tax evasion schemes of a group of leading industrialists and bankers. These scandals, the chapter argues, were one of the major factors influencing the decision of both the Second Circuit and the Supreme Court. The chapter ends with brief discussion of the impact of the case and its continuing importance today.
This paper will be published as a chapter in a book entitled Business Tax Stories, to be published by Foundation Press later this year (2005).
Date posted: April 2, 2005
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