94 Pages Posted: 18 Aug 2005
Although people with disabilities make up some 20% of the American population, scholars have largely ignored U.S. tax provisions of particular relevance to them. This article undertakes the first such systematic study. In the process, it reexamines disability theory, tax theory, and the mechanical structure of the individual income tax system. Disability theory has changed dramatically over the past century, to the point that many tax rules important to people with disabilities are no longer justified by modern disability theory. Standard tax theory turns out to be inadequate to deal with the problems of people with disabilities because, consistent with its utilitarian origins, it generally assumes that taxpayers are identical except with respect to income; as a result, it lacks capacity to deal with other individual differences in ability to pay. The failure of theory to deal adequately with ability to pay, in turn, has placed serious strains on the mechanical structure of the individual income tax system as a whole, which has become increasingly incoherent. This article analyzes existing tax provisions of particular relevance to people with disabilities using an ability-to-pay approach to individual income taxation and a human variation paradigm of disability rights, justifying or reframing some and recommending repeal of others. Among other issues, it explores the general welfare doctrine and a dramatic expansion of the medical expense deduction, neither of which has received sufficient scholarly attention elsewhere. Ultimately, the article suggests, if the individual income tax system as a whole were to be reframed in terms of ability to pay, the mechanical complexity of that system could be rationalized and significantly reduced.
JEL Classification: H24, I38, J14
Suggested Citation: Suggested Citation
Seto, Theodore P. and Buhai, Sande, Tax and Disability: Ability to Pay and the Taxation of Difference. University of Pennsylvania Law Review, Vol. 154, p. 1053, 2006; Loyola-LA Legal Studies Paper No. 2005-15. Available at SSRN: https://ssrn.com/abstract=784692