Technology, Markets, and the Income Tax Frontier

17 Pages Posted: 21 Dec 2023 Last revised: 3 Jan 2024

See all articles by Andrew T. Hayashi

Andrew T. Hayashi

University of Virginia School of Law

Date Written: December 21, 2023

Abstract

Income tax law and policy are fundamentally intertwined with private markets—causal effects run in both directions. The vitality of public markets can be stifled or invigorated by the way that they are taxed. The power to tax is the power to destroy. In turn, the computation and collection of income taxes depends upon the valuation and liquidity provided by markets. Moreover, the economic properties of tax rules are contingent upon the underlying market structures. Changes to these structures induced by technological innovation can alter the efficiency and equity properties of the prevailing income tax rules. In this Article, I explain how innovations associated with the digital transformation of business will—as an unintended consequence—reduce the administrative barriers to taxing income and improve the economic tradeoffs, thereby making it both feasible and desirable to push outward the frontier of the income tax’s domain.

Keywords: platforms, markets, tax policy

Suggested Citation

Hayashi, Andrew T., Technology, Markets, and the Income Tax Frontier (December 21, 2023). Virginia Public Law and Legal Theory Research Paper No. 2023-83, Virginia Law and Economics Research Paper No. 2023-23, Available at SSRN: https://ssrn.com/abstract=4672254

Andrew T. Hayashi (Contact Author)

University of Virginia School of Law ( email )

580 Massie Road
Charlottesville, VA 22903
United States

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