Tax Commitment Devices

Posted: 9 Feb 2015 Last revised: 2 Dec 2019

See all articles by Jonathan H. Choi

Jonathan H. Choi

University of Minnesota Law School

Date Written: February 8, 2015


Every line of the Internal Revenue Code is continually vulnerable to revision or repeal. With each new session of Congress, rates may rise or fall, transactions may become taxable or tax-free, and incentive programs may be extended or repealed. The resulting uncertainty harms taxpayers, who find it difficult to plan their future business affairs. It frustrates government by making its incentive programs less effective. For example, firms may decline to invest in research facilities because they cannot rely on a tax credit that might soon expire. And it provides fodder for political rent-seeking, as legislators can demand money or votes in exchange for supporting a soon-to-expire tax break. This was recently seen in the furor over bonus depreciation, a purportedly temporary provision that has been the subject of furious lobbying and frequent renewal.

This paper proposes commitment devices as an antidote to tax uncertainty. I analyze the economic and democratic costs of tax uncertainty, and why even a perfectly altruistic and rational legislature might benefit from credible policy commitment. I also describe the most practicable tax commitment devices within the bounds of current law, and I consider how those devices can improve current provisions for bonus depreciation and the R&D credit.

Keywords: Tax, Taxation, Legislation, Commitment Devices

JEL Classification: K34

Suggested Citation

Choi, Jonathan H., Tax Commitment Devices (February 8, 2015). 15 Journal of Business & Securities Law 1 (2015), Available at SSRN:

Jonathan H. Choi (Contact Author)

University of Minnesota Law School ( email )

229 19th Avenue South
Minneapolis, MN 55455
United States

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