Libertarianism and the Charitable Tax Subsidies

72 Pages Posted: 28 Apr 2015 Last revised: 11 Feb 2016

Miranda Perry Fleischer

University of San Diego School of Law

Date Written: April 27, 2015

Abstract

Tax scholarship is largely silent about the interaction between libertarian principles and the structure of our tax system. If all taxation is indeed slavery, as Nozick suggested, why bother analyzing libertarianism for insights into our tax system? This dismissal, however, ignores the diversity of libertarian thought. To that end, this Article mines the nuances of libertarian theory for insights into one feature of our tax system: the charitable tax subsidies.

One strand of libertarianism suggests that the charitable tax subsidies are in and of themselves illegitimate. Yet several other understandings of libertarianism see a role for the state to engage in a varying amount of redistribution or to provide varying amounts of public goods. One reading of minimal state libertarianism, for example, suggests that only charities that help the very poor should be subsidized, while another implies that only organizations assisting individuals who have been harmed by past injustices should be subsidized. A strict reading of classical liberalism suggests that groups providing public goods should be subsidized regardless of whether they assist the poor, but would likely narrow the definition of what counts as a public good suffering from market failure. Only a more lenient interpretation of classical liberalism that conceives of a vibrant nonprofit sector as a public good in and of itself and an expansive reading of left-libertarianism support something akin to our current structure, in which elite cultural institutions such as the opera are subsidized even if they provide no free or discounted services to the poor.

Keywords: tax policy, libertarianism, non-profit law, charitable giving, political philosophy, inequality

JEL Classification: H20, K34, L30, L31

Suggested Citation

Fleischer, Miranda Perry, Libertarianism and the Charitable Tax Subsidies (April 27, 2015). Boston College Law Review, Vol. 56, September 2015; San Diego Legal Studies Paper No. 15-189. Available at SSRN: https://ssrn.com/abstract=2599675

Miranda Perry Fleischer (Contact Author)

University of San Diego School of Law ( email )

5998 Alcala Park
San Diego, CA 92110-2492
United States
(619) 260-2319 (Phone)

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