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Taxing America

KAREN B. BROWN
MARY LOUISE FELLOWS
Copyright Date: 1996
Published by: NYU Press
Pages: 374
https://www.jstor.org/stable/j.ctt9qgg21
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  • Book Info
    Taxing America
    Book Description:

    In the winter of 1996, Steve Forbes--publisher, heir, and presidential candidate--captured the American imagination with his proposal for a flat tax. But while Mr. Forbes claimed that such a tax would level the economic playing field by eliminating countless loopholes and miles of red tape, his actual proposal betrayed such claims to fairness by overtaxing workers and undertaxing financial capital. In the face of recent proposals for dramatic and far-reaching tax reform, Taxing America takes a critical look at the way the federal government collects its revenue and exposes the bias at the heart of a system which claims to be objective and fair. Contrary to traditional tax scholarship, these writers argue that an awareness of disability discrimination, economic exploitation, heterosexism, sexism and racism is crucial to any analysis of tax policy. Gathering together essays whose topics range from federal housing policy to environmental clean-up costs to tax treaty policy making, Karen B. Brown and Mary Louise Fellows present a philosophy that is as simple as it is radical: economic arrangements contribute significantly to the creation of social hierarchies and the perpetuation of discrimination. Given this reality, Brown and Fellows maintain that the goal of the federal tax law should be social justice and the disruption of discriminatory and exploitative practices.

    eISBN: 978-0-8147-2501-6
    Subjects: Law

Table of Contents

  1. Front Matter
    (pp. i-iv)
  2. Table of Contents
    (pp. v-vi)
  3. PREFACE
    (pp. vii-x)
    KAREN B. BROWN and MARY LOUISE FELLOWS
  4. INTRODUCTION
    (pp. 1-22)
    KAREN B. BROWN and MARY LOUISE FELLOWS

    We find ourselves in a political moment when the clamor for tax reform has, once again, reached a high pitch. Yet, although questions about how the tax law can contribute to a strong economy abound, what has been entirely lost in the discussion is the role of tax law as a gatekeeper to the American Dream.

    Most recently, the current fascination with tax reform was best embodied by the 1996 presidential candidacy of Steven Forbes, publisher ofForbesmagazine, multimillionaire, and son of Malcolm S. Forbes. On the basis of little more than a flat tax mantra and his personal...

  5. PART I. EXPANDING THE TAX DISCOURSE:: NEW WAYS TO THINK ABOUT WEALTH, INCOME, RACE, AND GENDER
    • 1 Fiction in Tax
      (pp. 25-44)
      LILY KAHNG

      Legal fictions have long made us uneasy.¹ Jeremy Bentham, perhaps legal fiction’s most vociferous critic, described it as a “syphilis, which runs in every vein, and carries into every part of the system the principle of rottenness.”² What is a legal fiction? Although scholars have disagreed over its precise definition, generally speaking, a legal fiction is a false statement of fact or a false factual construct used to serve a legal end. For example, in medieval times, English common-law courts had jurisdiction only over causes of action arising within England. However, a court could acquire jurisdiction over a foreign cause...

    • 2 The Marriage Bonus/Penalty in Black and White
      (pp. 45-57)
      DOROTHY A. BROWN

      A marriage penalty occurs whenever a couple pays higher federal income taxes as a result of their marriage than they would pay if they remained single and filed individual returns. A marriage bonus occurs whenever a couple pays lower federal income taxes as a result of marriage than they would pay if they remained single and filed individual returns. Marriage penalties are the greatest where there are two wage earners; marriage bonuses are the greatest where there is only one wage earner. Although numerous articles have been written about the marriage penalty, this essay provides a different perspective.¹

      Here I...

    • 3 Taxation and Human Capital
      (pp. 58-79)
      JENNIFER J. S. BROOKS

      This essay explores how to measure and tax income from human capital. Human capital income is thought to include the value of leisure, services performed for oneself, choice, and opportunity, as well as cash income from wages. In our current tax system, wages are taxable when received. The other values, sometimes referred to as psychic income, are set aside in conventional applications of income theory as too murky, too difficult, and too impractical to measure and to include in real-life taxable income.¹ The question of the tax treatment of human capital income has new relevance as Congress debates switching from...

    • 4 How Government Tax and Housing Policies Have Racially Segregated America
      (pp. 80-116)
      JOHN A. POWELL

      Because the spatial location and form of housing are important indicators of individual and collective access to social, economic, and political resources, the prevalence of racial segregation in the metropolitan United States and the patterns of home ownership tied to it are extremely problematic. Based upon its location and form, housing becomes “much more than shelter: it provides social status, access to jobs, education and other services, a framework for the conduct of household work, and a way of structuring economic, social and political relationships.”¹ The location of one’s housing signifies access to or denial of resources and social, political,...

  6. PART II. CHALLENGING TAX TRADITIONS:: THE BIAS OF THE INVESTMENT/CONSUMPTION DICHOTOMY
    • 5 Acknowledging Workers in Definitions of Consumption and Investment: The Case of Health Care
      (pp. 119-145)
      GWEN THAYER HANDELMAN

      The income tax is billed as advantaging wage earners in various ways, from redistributing wealth through progressive rates to conferring government largesse in the form of tax subsidies. Heading the list of tax subsidies is the nontaxation of employer-paid health benefits, which the Joint Committee on Taxation identifies as the largest federal “subsidy” provided in the form of forgone tax revenue. These advantages are illusory.

      The distribution of the tax burden ultimately is a function of the definition of terms. The income tax incorporates conceptions of income grounded not in the experiences of working people but in unrealistic assumptions of...

    • 6 Shifting from an Income Tax to a Consumption Tax: Effects on Expenditures for Education
      (pp. 146-169)
      CHARLOTTE CRANE

      The existing income tax system relies heavily upon an appearance of objectivity and upon its potential for economic neutrality. Neither would be possible if the tax law did not limit itself to values that normally are subject to market transactions and if it did not adhere to an internal logic that requires that all previously taxed investments be allowed as offsets to income derived from market activities. Concerns about economic neutrality, however, have led to calls to transform the income tax base to tax only consumption. Many proponents of the consumption base have observed that the income tax could identify...

    • 7 Consumption in Business/Investment at Home: Environmental Cleanup Costs versus Disability Access Costs
      (pp. 170-194)
      DENISE D. J. ROY

      A recent Internal Revenue Service (IRS) ruling exposes the inadequacies of the personal/business dichotomy that is a mainstay in traditional tax analysis. On June 2,1994, the IRS ruled that expenses of removing PCB-contaminated soil from a taxpayer’s property and backfilling with uncontaminated soil may be currently deducted.¹ The public ruling ended a controversy that began when the IRS ruled privately that the cleanup costs should be capitalized.² Stunned by the capitalization ruling, taxpayers reacted swiftly and unanimously in arguing that capitalization (1) does not clearly reflect income and (2) would discourage cleanup efforts in contravention of U.S. environmental policy.³ They...

  7. PART III. RETHINKING DEVELOPMENT:: OLD PRACTICES, OLD RULES, NEW WORLD
    • 8 Economic Development: Taxes, Sovereignty, and the Global Economy
      (pp. 197-213)
      BEVERLY I. MORAN

      This essay assesses the present state of the American use of local government tax incentives as economic development tools. In particular I focus on the use of government-provided tax incentives to relocating businesses because I believe that these incentives portend serious future conflicts among sovereignty, taxation, and economic development.

      I have chosen to look at local, rather than federal or state, tax incentives for a number of reasons. First, I started my tax career in local government as a general counsel to a New York City board that granted tax exemptions. At the time tax incentives seemed the wave of...

    • 9 Transforming the Unilateralist into the Internationalist: New Tax Treaty Policy toward Developing Countries
      (pp. 214-232)
      KAREN B. BROWN

      The U.S. international tax system of the 1990s is a relic¹ that largely reflects policy concerns of the early 1960s during President John F. Kennedy’s tenure. The international tax rules generated during that period remain effective today. Those rules were designed to combat international tax avoidance or evasion at a time when U.S. enterprises were the primary players in the world economy. International tax policy at that time reflected serious concerns for the U.S. fisc. Given that U.S. businesses held a significant piece of worldwide wealth, the government mostly aimed to deter cross-border transactions that threatened to lower tax revenues...

    • 10 The Future of Deferral: Taxing the Income of U.S. Multinationals
      (pp. 233-250)
      LABRENDA GARRETT-NELSON

      The U.S. international tax regime can be explained by reference to four goals: efficiency, competitiveness, compatibility with international tax norms, and preservation of the U.S. income tax base.Efficiencygenerally refers to the policy of minimizing tax considerations in investment decisions. In this regard U.S. tax rules tend to favorcapital export neutralityor the imposition of an equivalent U.S. tax burden on income wherever it is earned. The general U.S. policy of taxing citizens and domestic firms on their worldwide income is intended to promote capital export neutrality.

      Capital export neutrality is sometimes at odds with the goal of...

  8. PART IV. IMPLEMENTING SUBSIDIES:: TAX RELIEF FOR SAVERS AND FOR WORKERS
    • 11 The American Dream Savings Account: Is It a Dream or a Nightmare?
      (pp. 253-276)
      REGINA T. JEFFERSON

      The general rule of federal income taxation is to tax all income as it is earned. However, since the establishment of the income tax in 1913, there have been exceptions to the general rule. Accordingly, income derived from certain sources and allocations of income to certain expenditures historically have received favorable tax treatment.¹ Typically, these exceptions attempt to encourage behavior that is believed to benefit not only individual taxpayers but also society as a whole.²

      All taxpayers, including America’s least wealthy taxpayers, subsidize the preferential tax treatment of these social programs. Everyone pays higher tax rates on the portions of...

    • 12 Simplification for Low-Income Taxpayers: Some Options
      (pp. 277-296)
      JONATHAN BARRY FORMAN

      What can be done to simplify the federal tax system for low-income individuals? Some of the more promising alternatives include statutory and regulatory changes that could both reduce the number of low-income individuals required to file tax returns and simplify the return-filing process for those low-income individuals who must file returns.

      According to the Census Bureau, more than thirty-six million Americans live in poverty.¹ The principal federal taxes affecting these low-income individuals are the individual income tax and the Social Security taxes. Once the earned income credit is taken into account, relatively few low-income individuals actually have a net federal...

    • 13 The Uncertain Fate of the Earned Income Tax Credit Program
      (pp. 297-321)
      GEORGE K. YIN

      A largely unknown element of the federal safety net for many years, the earned income tax credit (EITC) program has suddenly burst onto the scene as a highly controversial part of the nation’s tax and transfer systems. Rarely a day goes by without the president, a leader in Congress, or some other important national figure or group voicing objection to or support for one or more possible changes to the program. The partisan division regarding the program seems as stark and unyielding as that concerning Medicare, Medicaid, or other major aspects of the federal budget. In this essay I discuss...

    • 14 Welfare Reform, the Child Care Dilemma, and the Tax Code: Family Values, the Wage Labor Market, and the Race- and Class-Based Double Standard
      (pp. 322-346)
      MARY L. HEEN

      Although federal work requirements have been imposed on welfare recipients for nearly thirty years, recent welfare reform proposals emphasize more stringent time limits on benefits without work and impose such requirements on mothers with younger children.¹ The shift in the welfare paradigm toward mandatory wage work for mothers with young children has not been accompanied, however, by universal child care. Historically, federal welfare and labor policies have impeded women’s access to the wage labor market through the lack of affordable child care.² Tax policies have contributed to the problem.³ Efforts to improve women’s access to the wage labor market have...

  9. CONTRIBUTORS
    (pp. 347-352)
  10. INDEX
    (pp. 353-364)
  11. Back Matter
    (pp. 365-365)