Simple Rules and the Political Economy of Income Taxation: The Strengths of a Uniform Expense Rule

European Journal of Law and Economics

17 Pages Posted: 22 May 2020 Last revised: 4 Nov 2022

See all articles by Charles Delmotte

Charles Delmotte

Michigan State University College of Law; NYU School of Law

Date Written: April 24, 2020


The complexity of the U.S. income tax system emerged in part from the differentiated fiscal treatment of specific investments and various sorts of business expenditures that, as Richard Wagner says, creates “a tax code so large that no one can read it and which creates nearly a unique tax liability for each taxpayer.” While tax scholarship documents the costs of complexity, current scholarship lacks a normative legal theory that could inspire an alternative to this practice of targeted credits and deduction rules. This paper builds on Epstein’s general Simple Rules framework to develop a radical simplification of income tax: the operationalization of a uniform expense rule, i.e., the application of a single deduction scheme across all expenses and investments. With regard to the trade-off between targeted rules and this general approach, this paper investigates the nature of a uniform expense rule and reveals its strengths with respect to political economy. First, a stable and universal expense rule would narrow the scope of politicians’ ability to concentrate benefits on special-interest groups and would limit rent-seeking. The abolition of deviating rules for investments would restrict the scope of tax optimization, meaning that individual and corporate tax liabilities would be more determined by the ability to pay them. The same policy would save companies and government millions of dollars that they currently spend on tax compliance and administration of the tax system, respectively. Last, a deduction rule that applies across all businesses and industries would be less price distortive and thus would enhance the quality of the price signal.

Keywords: Tax Expenditures, Tax Complexity, Tax Efficiency, Tax Reform, Tax Law and Economics, Political Economy

JEL Classification: K00, K34

Suggested Citation

Delmotte, Charles, Simple Rules and the Political Economy of Income Taxation: The Strengths of a Uniform Expense Rule (April 24, 2020). European Journal of Law and Economics , Available at SSRN: or

Charles Delmotte (Contact Author)

Michigan State University College of Law ( email )

East Lansing
United States

NYU School of Law ( email )

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New York, NY 10003-711
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