Monday, January 26, 2009

The Tax Canon -- Andrews '72 (Part 1)

And now back to Vic Fleischer's tax canon. This week I'll be talking about William D. Andrews, Personal Deductions in an Ideal Income Tax, 86 Harv. L. Rev. 309 (1972). Andrews, like everyone else whose work I've read as part of this project, seems to be a titan of his field. He wrote a widely used casebook (though not the one that my introductory tax course used) and a number of well regarded and oft-cited scholarly articles.

When Andrews retired from Harvard in 2007, former student Edward McCaffery said "There is much to admire about Bill’s scholarship, but what I best know and love Bill from are three articles published in the Harvard Law Review, in 1972, 1974 and 1975—known to cognoscenti simply as Andrews 72, 74 and 75." [Note that I'll be coming back to Andrews '74 in awhile as it is also included in the tax canon.]

For a peek at the substance of the 72 article, McCaffery goes on to say:

Much of income tax theory in the 20th century was dominated by the
so-called Haig-Simons definition of income, which holds essentially that Income
equals Consumption plus Savings (I = C + S)—that all money or wealth (income) is
either spent (consumption) or not (savings). Many have written about the income
side of that equation: the importance of finding and taxing “all income, from
whatever source derived.” The simple genius of Bill Andrews was to look to the
right-hand, or uses side. What we are taxing—in an income tax—is consumption
plus savings. This change of perspective effected a Copernican revolution in our
thinking about tax. Andrews 72 pointed out that, while the arguments for source
neutrality are compelling, those for use neutrality are far less so—just maybe,
“we” do not want to tax all consumption, like medical expenses or charitable
contributions, equally.
So that's what we can look forward to: another very important work from another very important guy. If I seem less than excited, it may be because this article is substantially longer than the previous ones. On the up-side, if the most difficult math consists of I = C + S then this should be a cake-walk compared to Mirrlees '71.

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