Kaplow and Shavell and the Priority of Income Taxation and Transfer

44 Pages Posted: 4 Jan 2018 Last revised: 30 Dec 2022

See all articles by David Blankfein-Tabachnick

David Blankfein-Tabachnick

Michigan State University College of Law; University of Michigan

Kevin A. Kordana

University of Virginia School of Law

Date Written: 2017


This Article rejects a central claim of taxation and private law theory, namely, Kaplow and Shavell’s prominent thesis that egalitarian social goals are most efficiently achieved through income taxation and transfer, as opposed to egalitarian alterations in private law rules. Kaplow and Shavell compare the efficiency of rules of tort to rules of tax and transfer in meeting egalitarian goals, concluding that taxation and transfer is always more efficient than other private law legal rules. We argue that Kaplow and Shavell reach this conclusion only through inattention to the body of private law that informs the very basis of their discussion: underlying property entitlements. This Article contends that Kaplow and Shavell’s comparison of rules of taxation to rules of tort fails to take proper account of the powerful role that (re)assigning underlying property entitlements plays in achieving egalitarian goals, even at the level of formal theory. We conclude that, contrary to Kaplow and Shavell’s prominent claim, as a matter of efficiency, the rules of income taxation and transfer are not always preferable to alterations in the initial assignment of property entitlements in achieving distributive or egalitarian goals.

Keywords: Taxation, Income Taxation, Tax, Private Law, Kaplow, Shavell, Kaplow and Shavell, Rawls, Distribution, Tort, Contract, Property, Optimal Taxation, Law and Economics, Entitlements, Consent, Equality, Egalitarianism, Wealth Maximization, Double Distortion, Basic Structure, Legal Rules, Fairness

Suggested Citation

Blankfein-Tabachnick, David and Kordana, Kevin A., Kaplow and Shavell and the Priority of Income Taxation and Transfer (2017). Hastings Law Journal, Vol. 69, No. 1, 2017, Available at SSRN: https://ssrn.com/abstract=3095724

David Blankfein-Tabachnick (Contact Author)

Michigan State University College of Law ( email )

648 N Shaw Ln
East Lansing, MI 48824
United States

HOME PAGE: http://www.law.msu.edu/faculty_staff/profile.php?prof=924

University of Michigan ( email )

United States

Kevin A. Kordana

University of Virginia School of Law ( email )

580 Massie Road
Charlottesville, VA 22903
United States
804-924-3680 (Phone)
804-924-7536 (Fax)

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