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A Taxonomy for Tax Loopholes

57 Pages Posted: 8 May 2017 Last revised: 28 May 2017

Heather M. Field

University of California Hastings College of the Law

Date Written: May 5, 2017

Abstract

Democrats, Republicans, media commentators and even academics denounce “tax loopholes.” Speakers may think that they are talking about the same things, but this article demonstrates that people have widely divergent views about what tax loopholes are. Thus, people criticizing loopholes often talk past each other and engage in the tax equivalent of schoolyard name-calling. The response to this problem is not, however, to try to define the concept of “tax loopholes” with precision. Such an endeavor is pointless. Instead, this article provides a taxonomy for translating the rhetoric of “tax loopholes” into meaningful tax policy discourse. This taxonomy posits that any reference to a “tax loophole” should be understood in two dimensions — the tax policy objection and the target of the criticism. Using numerous examples from the popular/political discourse and the academic literature, this article catalogs alternatives on each dimension. Categorizing any purported “tax loophole” using this taxonomy provides a more productive framing of whatever critique is implied by any use of the “loophole” label, thereby enabling the elevation of the quality of the conversation about the individual tax preference. This taxonomy may be particularly useful now, as our political leaders embark on efforts to reform the tax law, because the taxonomy can help us better understand and advance the debate that will certainly surround those reform efforts.

In addition, the taxonomy can be used in the aggregate to provide insight into how groups of people perceive the tax system. As an example, this article applies the taxonomy to media references to tax loopholes (from CNN, Fox, the Wall Street Journal and the New York Times) during the eighteen months preceding the 2016 presidential election, thereby revealing how narratives about tax loopholes varied by media source and ideological perspective.

Keywords: tax, tax law, loopholes, rhetoric, tax policy, tax reform, political discourse

JEL Classification: H2, H20, K34

Suggested Citation

Field, Heather M., A Taxonomy for Tax Loopholes (May 5, 2017). 55 Houston Law Review __, 2018 Forthcoming; UC Hastings Research Paper No. 244. Available at SSRN: https://ssrn.com/abstract=2963441

Heather Field (Contact Author)

University of California Hastings College of the Law ( email )

200 McAllister Street
San Francisco, CA 94102
United States

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