Kelsen, the Principle of Exclusion of Contradictions, and General Anti-Avoidance Rules in Tax Law

Abstract

Kelsen’s huge opus contains little on taxation law. Nevertheless, several of his remarkable insights shed light on certain oddities of income tax law. General anti-avoidance rules, or “GAARs”, are an example.

GAARs are generally thought to be necessary; at least, many countries have enacted them in recent decades. But GAARs are subject to extensive criticism for vagueness. The reason is that GAARs override transactions that other parts of tax law permit, but it is difficult to determine which transactions GAARs apply to. Kelsen’s discussion of the logical Principle of Exclusion of Contradictions sheds light why this is so and on the fundamental nature of GAARs, which are an unusual form of law by any criterion.

Keywords: income tax, general anti-avoidance rule, Kelsen, principle of exclusion of contradictions, rule of law

JEL Classification: K00, K10, K34