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Making Impossible Tax Reform Possible

47 Pages Posted: 18 Aug 2013 Last revised: 23 Mar 2014

Susannah Camic Tahk

University of Wisconsin Law School

Date Written: August 16, 2013

Abstract

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.

Keywords: tax, tax policy, tax reform, earmarked taxes

Suggested Citation

Tahk, Susannah Camic, Making Impossible Tax Reform Possible (August 16, 2013). Fordham Law Review, Vol. 81, No. 5, 2013; Univ. of Wisconsin Legal Studies Research Paper No. 1232. Available at SSRN: https://ssrn.com/abstract=2311389

Susannah Camic Tahk (Contact Author)

University of Wisconsin Law School ( email )

975 Bascom Mall
Madison, WI 53706
United States

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