From Each According to His Ability: An Analysis of Endowment Taxation and Potential Earnings

69 Pages Posted: 14 Feb 2018  

Erick Sam

Duke University, Philosophy Department; Yale Law School

Date Written: February 10, 2018


This article is a theoretical analysis of endowment (or ability) taxation, which is a tax on a person's "potential earnings." Potential earnings are typically defined as the maximum income a person could earn or could have earned over a given time period. This scheme of taxation, which has long enjoyed favor among economists, has recently gained significant support from tax law scholars as well, and is therefore due for an in depth critical analysis.

Part I is a novel survey of the relevant academic legal literature. In Part II, I explore a number of important distinctions between different forms of endowment taxation, which have not previously been articulated or received the attention and careful analysis that they demand. In constructing this taxonomy, I illuminate the full range of instruments at an endowment tax theorist’s disposal. I then attempt to decide between these competing alternatives. Finding none of the options wholly satisfactory, I conclude that there are several sources of tension at the very core of the endowment tax program that undermine its appeal and lead to insoluble difficulties, even as a matter of ideal theory.

Up to this point, no one has taken a thorough look at certain fundamental design issues in the construction of an endowment tax. My article takes that hard look, and concludes that the endowment tax (at least in its purest forms) cannot survive such scrutiny.

Keywords: endowment tax, ability tax, tax policy, tax law

Suggested Citation

Sam, Erick, From Each According to His Ability: An Analysis of Endowment Taxation and Potential Earnings (February 10, 2018). Available at SSRN: or

Erick Sam (Contact Author)

Duke University, Philosophy Department ( email )

Durham, NC
United States

Yale Law School ( email )

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