Line Drawing, Doctrine, and Efficiency in the Tax Law

University of Chicago Law School, John M. Olin Law & Economics Working Paper No. 62

83 Pages Posted: 11 Jul 1998  

David A. Weisbach

University of Chicago - Law School; Center for Robust Decisionmaking on Climate & Energy Policy (RDCEP)

Date Written: November 1998

Abstract

This paper examines how lines should be drawn between similar activities within the tax law. Line drawing is a pervasive and enduring problem in the tax law. For example, the tax law draws distinctions between selling and holding, debt and equity, and between independent contractors and employees. Existing scholarship does not address this line drawing problem in any comprehensive way, and traditional tax norms, such as the Haig Simons definition of income, fail in this context. This paper suggests (i) that the problem can be analyzed comprehensively by drawing lines where it is most efficient to do so; and (ii) efficiency is the appropriate method of analysis. The paper then uses optimal tax models to develop the intuitions for efficient line drawing and discusses several applications.

JEL Classification: K34

Suggested Citation

Weisbach, David A., Line Drawing, Doctrine, and Efficiency in the Tax Law (November 1998). University of Chicago Law School, John M. Olin Law & Economics Working Paper No. 62. Available at SSRN: https://ssrn.com/abstract=106728 or http://dx.doi.org/10.2139/ssrn.106728

David Weisbach (Contact Author)

University of Chicago - Law School ( email )

1111 E. 60th St.
Chicago, IL 60637
United States
773-702-3342 (Phone)
773-702-0730 (Fax)

Center for Robust Decisionmaking on Climate & Energy Policy (RDCEP) ( email )

5735 S. Ellis Street
Chicago, IL 60637
United States

Paper statistics

Downloads
462
Rank
48,858
Abstract Views
3,196