Populism and Taxation

Abstract

This Article explores the presence of populism in the field of law, specifically focusing on U.S. federal taxation. While discussions on populism typically revolve around politics, this Article highlights its occurrence in tax law. This includes the use of populist rhetoric in tax discussions as well as the inclusion of populistic code sections in the federal tax system, resulting in substantial tax expenditures that are often overlooked. These populistic elements go beyond the behavioral preferences or biases of political players. The problem with populism in tax law is multi-faceted. First, it oversimplifies the discussion, preventing a comprehensive understanding of the real issues and viable solutions. The complexities inherent in tax-related matters cannot be adequately addressed through populist statements alone; a more thorough analysis is required to find effective solutions. A detailed examination of this concern reveals a substantial body of evidence demonstrating how misconceptions shaped by populism influence voter preferences regarding tax policy. These misconceptions also impact politicians, leading to campaign promises and initiatives related to tax policies. Furthermore, interest groups can exploit this confusion to advance their agendas, which poses a significant risk. Overall, this Article argues that the presence of populism in tax law is problematic due to its oversimplification of complex issues, influence on voter preferences and political decisions, and susceptibility to manipulation by interest groups. This Article recommends incorporating a mandatory step in the legislative process to empower the committee responsible for discussing bills. This step would equip the committee with better tools to effectively perform their duties. Additionally, this Article recommends that the economic implications of proposed legislation be made publicly accessible. Further, this Article suggests the implementation of an additional review process after a fixed term and prioritization of discussions on tax policy around its primary objective: generating tax revenue. This shift in focus will result in more economically grounded, evidence-based, and efficient tax law discussions. In summary, these recommendations aim to improve the legislative process, encourage media scrutiny, and foster economically driven tax policy discussions while ensuring the temporary nature of certain tax measures unless they prove effective or gain broad bipartisan support.

Keywords: Tax, Tax Policy, Populism, Mortgage Interest Deduction, American Opportunity Tax Credit, Estate Tax, Earned Income Tax Credit, EITC, Tax Expenditure, Tax Earmarking, PAYGO