From Each According to His Ability?: An Analysis of Endowment Taxation and Potential Earnings
52 Pages Posted: 27 Aug 2019 Last revised: 28 Aug 2019
Date Written: February 14, 2018
This Article analyzes and critiques “ability taxation”, which taxes a person's "potential earnings." Despite this regime’s longstanding favor as a theoretical ideal for fair and efficient taxation among economists, certain philosophers and tax law scholars, little effort has been made to analyze what “potential earnings” means. This Article explores competing understandings of this notion. In so doing, it unearths a tension at the core of the ability tax program, involving a fundamental misalignment between the metaphysics and economics of ability taxation. It thus concludes that once we correctly understand its requirements we should reject the ability tax as unduly burdensome and unfair. This Article’s argument therefore constitutes a pressing challenge to the orthodoxy in public finance economics, as well as to the growing cadre of endowment tax partisans among political philosophers and scholars of tax law.
Keywords: endowment tax, ability tax, tax policy, tax law, law and philosophy, political philosophy, public finance, distributive justice
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