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Comparing Capital Income and Wealth Taxes
Full text linkAs part of the Pepperdine Law Review Symposium The Impact of the 2017 Tax Act on Income and Wealth Inequality: Lessons for 2020 and Beyond, this Essay compares two reform directions to rebuild the progressive tax system: an improved capital income tax—which would eliminate the benefit from deferring gains until a sale—or a wealth tax. The Essay first introduces the concept of a “rate-equivalent” wealth or capital income tax as a way to assess reform alternatives consistently and to identify the assumptions as to how the reforms would be structured. For any chosen capital income tax (or wealth tax) reform, the rate-equivalent wealth tax (or capital income tax) is the tax yielding the same tax liability for a taxpayer earning a specified investment return rate. The Essay then illustrates how this concept can help illuminate the assumptions behind comparisons of wealth tax and capital income tax reforms in the literature. Some views in the literature suggest that policymakers should favor an improved capital income tax because the two reforms can have comparable economic effects, while a capital income tax is more desirable in other respects. The Essay surveys the literature evaluating three aspects of these reforms—their economic effects, administrability and avoidance opportunities, and constitutionality—and offers additional perspective on how in each area the distinctions between the two reforms are often narrower than they are sometimes assumed to be in the literature. In many cases the analysis of these reforms will also depend on the particular manner in which each reform is structured or the baseline against which the reform is measured. For this reason, policymakers should not reach categorical conclusions that one reform direction is intrinsically more desirable than the other. The Essay concludes by considering one respect in which an improved capital income tax or a wealth tax can unambiguously differ: as different measures for comparing taxpayers in a progressive tax system. This distinction, however, will depend on the normative choice as to how inequality should be measured and mitigated by the tax system. For example, the choice between a capital income tax and a wealth tax could have different consequences, depending upon whether one assumes that the progressive tax system should mitigate differences in utility, income, wealth, or a combination thereof
A Constitutional Wealth Tax
Full text linkPolicymakers and scholars are giving serious consideration to a federal wealth tax. Wealth taxation could address the harms from rising economic inequality, promote equality of social and economic opportunity, and raise the revenue needed to fund critical government programs. These reasons for taxing wealth may not matter, however, if a federal wealth tax is unconstitutional.
Scholars debate whether a tax on a wealth base (a “traditional wealth tax”) would be a “direct tax” subject to apportionment among the states by population. This Article argues, in contrast, that this possible constitutional restriction on a traditional wealth tax may not matter. If the Court struck down a traditional wealth tax, Congress could instead tax wealth by adjusting a taxpayer’s income tax liability on account of her wealth. This Article describes three general methods for making this adjustment (collectively, “Wealth Integration” methods). A taxpayer’s wealth could affect her taxable income base (the “Base Method”), the applicable rate schedule (the “Rate Method”), or the availability of credits against tax (the “Credit Method”).
Wealth Integration methods could replicate the economic effects of a traditional wealth tax but with an intrinsically different constitutional analysis. The Court could strike down Wealth Integration methods only by overruling settled prior precedent, invalidating many current features of the income tax, and fundamentally restricting Congress’s power to tax income under the Sixteenth Amendment.
Finally, the possibility that Congress could instead tax wealth through Wealth Integration methods provides a new argument why the Court should uphold a traditional wealth tax. Otherwise, the Court would have to choose between fundamentally restricting the Sixteenth Amendment—and jeopardizing the income tax as we know it—or distinguishing between economically similar taxes on the basis of their formal label while still allowing Congress to tax wealth and diminishing the effect of the apportionment requirement as a restraint on Congress’s taxing power
A Basic Needs Baseline for Distributional Analysis
No full textStudies of income inequality and the distributive effects of taxes and government spending drive debates over progressive fiscal reform and economic justice. These distributional studies provide vital information on inequality in market outcomes and how government policies mitigate these disparities.
Despite its critical importance, however, distributional analysis encounters inevitable and familiar limitations. These studies face practical challenges in measuring income and the distributional impacts of government policies. Distributional analysis also faces inherent complications in seeking to distinguish between the effects of the market and the government.
Even if distributional analysis could precisely measure income and the effects of government policies, these studies would still embed assumptions as to which measures of inequality matter. For example, the measure of market income used in distributional studies offers one possible measure of inequality. This measure, however, does not compare taxpayers’ disposable income available for discretionary consumption or savings, and therefore does not reflect accurately differences in household spending ability.
No methodology can offer an objectively correct way to perform distributive analysis. Because of their limitations, however, current distributional studies can understate inequality of household budgets. They can also overstate the distributive effects of government benefits to lower income individuals and understate benefits at the top of the distribution.
This Article introduces a new approach which yields a different assessment of income inequality and the effects of government policies. This method first deducts costs individuals incur for basic needs from the baseline of market income to construct what this Article terms a “basic needs baseline”. The method then assesses the distributive effects of explicit taxes and government spending from this new baseline. In effect, this methodology treats expenses for basic needs as implicit taxes or burdens from government inaction, when the government does not provide for them, rather than as affirmative benefits when the government does provide for them.
A basic needs baseline does not offer a “solution” to the measurement challenges and inherent limitations in distributional analysis. It does , however, offers a different — and valuable — measure of economic inequality and the effects of government policies. This method mo re accurately reflects the reality of differences in household budgets and redresses the imbalances in distributional analysis resulting from its unavoidable limitations
The Constitutional Limits to the Taxing Power
Full text linkThe modern U.S. Supreme Court has elevated the apportionment requirement for direct taxes into the most important constitutional limitation to Congress’s taxing power. The U.S. Constitution requires that any “direct tax” must be apportioned among the states by population, which is impracticable or impossible for a tax today. The modern interpretative approach focuses on the formal categorization of the tax base, as either a “direct tax” or not. This approach could bar Congress from enacting certain taxes—such as a federal wealth tax or possibly even capital income tax reforms—simply through their formal labeling as direct taxes.
This interpretation inflates apportionment’s role in the Constitution and misreads the text. It breeds inconsistency and uncertainty in the tax law, and it shields the rich from the taxing power. As evidenced in the recent case Moore v. United States, it now casts a shadow over even Congress’s ability to tax capital income. The Court should return to its longstanding narrow interpretation of apportionment, which recognized that it was never meant to obstruct the taxing power in this way. This approach looked to the function and consequences of apportionment when interpreting the constitutional text and avoided a formalist interpretation that would unduly restrain the taxing power.
Returning to a narrow interpretation of apportionment would not leave Congress with unfettered taxing powers. This Article introduces a new and competing theory of how the Constitution limits Congress’s taxing power through other doctrines and provisions. The Article synthesizes these limitations to articulate a set of principles that operate together to constrain the taxing power in accordance with substantive constitutional values. These principles look to the legislative process, the identity of the taxpayers, the basis for taxation, and the severity of the tax burden when determining limits to the taxing power, rather than to the formal labeling of the tax base.
This Article’s understanding of how the Constitution limits Congress’s taxing power offers an alternative to the Court’s current path that places too much weight on apportionment as a bar to the taxing power. This alternative would ensure the democratic basis of tax legislation while also maintaining essential constitutional safeguards necessary to prevent Congress’s abuse of this broad power
A Basic Needs Baseline for Distributional Analysis
Full text linkStudies of income inequality and the distributive effects of taxes and government spending drive debates over progressive fiscal reform and economic justice. These distributional studies provide vital information on inequality in market outcomes and how government policies mitigate these disparities.
Despite its critical importance, however, distributional analysis encounters inevitable and familiar limitations. These studies face practical challenges in measuring income and the distributional impacts of government policies. Distributional analysis also faces inherent complications in seeking to distinguish between the effects of the market and the government.
Even if distributional analysis could precisely measure income and the effects of government policies, these studies would still embed assumptions as to which measures of inequality matter. For example, the measure of market income used in distributional studies offers one possible measure of inequality. This measure, however, does not compare taxpayers’ disposable income available for discretionary consumption or savings, and therefore does not reflect accurately differences in household spending ability.
No methodology can offer an objectively correct way to perform distributive analysis. Because of their limitations, however, current distributional studies can understate inequality of household budgets. They can also overstate the distributive effects of government benefits to lower income individuals and understate benefits at the top of the distribution.
This Article introduces a new approach which yields a different assessment of income inequality and the effects of government policies. This method first deducts costs individuals incur for basic needs from the baseline of market income to construct what this Article terms a “basic needs baseline”. The method then assesses the distributive effects of explicit taxes and government spending from this new baseline. In effect, this methodology treats expenses for basic needs as implicit taxes or burdens from government inaction, when the government does not provide for them, rather than as affirmative benefits when the government does provide for them.
A basic needs baseline does not offer a “solution” to the measurement challenges and inherent limitations in distributional analysis. It does , however, offers a different — and valuable — measure of economic inequality and the effects of government policies. This method mo re accurately reflects the reality of differences in household budgets and redresses the imbalances in distributional analysis resulting from its unavoidable limitations
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A Basic Needs Baseline for Distributional Analysis
No full textStudies of income inequality and the distributive effects of taxes and government spending drive debates over progressive fiscal reform and economic justice. These distributional studies provide vital information on inequality in market outcomes and how government policies mitigate these disparities.
Despite its critical importance, however, distributional analysis encounters inevitable and familiar limitations. These studies face practical challenges in measuring income and the distributional impacts of government policies. Distributional analysis also faces inherent complications in seeking to distinguish between the effects of the market and the government.
Even if distributional analysis could precisely measure income and the effects of government policies, these studies would still embed assumptions as to which measures of inequality matter. For example, the measure of market income used in distributional studies offers one possible measure of inequality. This measure, however, does not compare taxpayers’ disposable income available for discretionary consumption or savings, and therefore does not reflect accurately differences in household spending ability.
No methodology can offer an objectively correct way to perform distributive analysis. Because of their limitations, however, current distributional studies can understate inequality of household budgets. They can also overstate the distributive effects of government benefits to lower income individuals and understate benefits at the top of the distribution.
This Article introduces a new approach which yields a different assessment of income inequality and the effects of government policies. This method first deducts costs individuals incur for basic needs from the baseline of market income to construct what this Article terms a “basic needs baseline”. The method then assesses the distributive effects of explicit taxes and government spending from this new baseline. In effect, this methodology treats expenses for basic needs as implicit taxes or burdens from government inaction, when the government does not provide for them, rather than as affirmative benefits when the government does provide for them.
A basic needs baseline does not offer a “solution” to the measurement challenges and inherent limitations in distributional analysis. It does , however, offers a different — and valuable — measure of economic inequality and the effects of government policies. This method mo re accurately reflects the reality of differences in household budgets and redresses the imbalances in distributional analysis resulting from its unavoidable limitations
Going Beyond Counting First Authors in Author Co-citation Analysis
Full text linkThe present study examines one of the fundamental aspects of author co-citation analysis (ACA) - the way co-citation
counts are defined. Co-citation counting provides the data on which all subsequent statistical analyses and mappings
are based, and we compare ACA results based on two different types of co-citation counting - the traditional type that
only counts the first one among a cited work's authors on the one hand and a non-traditional type that takes into
account the first 5 authors of a cited work on the other hand. Results indicate that the picture produced through this non-traditional author co-citation counting contains more coherent author groups and is therefore considerably clearer. However, this picture represents fewer specialties in the research field being studied than that produced through the traditional first-author co-citation counting when the same number of top-ranked authors is selected and analyzed. Reasons for these effects are discussed
Variations on the Author
Full text link“Variations on the Author” discusses two of Eduardo Coutinho’s recent films (Um Dia na Vida, from 2010, and Últimas Conversas, posthumously released in 2015) and their contribution to the general question of documentary authorship. The director’s filmography is characterized by a consistent yet self-effacing form of authorial self-inscription: Coutinho often features as an interviewer that rather than express opinions propels discourses; an interviewer that is good at listening. This mode of self-inscription characterizes him as an author who is not expressive but who is nonetheless markedly present on the screen. In Um Dia na Vida, however, Coutinho is completely absent form the image, while Últimas Conversas, on the contrary, includes a confessional prologue that moves the director from the margins to the center of his films. This article examines the ways in which these works stand out in the filmography of a director who offers new insights into the notion of cinematic authorship
Appropriate Similarity Measures for Author Cocitation Analysis
Full text linkWe provide a number of new insights into the methodological discussion about author cocitation analysis. We first argue that the use of the Pearson correlation for measuring the similarity between authors’ cocitation profiles is not very satisfactory. We then discuss what kind of similarity measures may be used as an alternative to the Pearson correlation. We consider three similarity measures in particular. One is the well-known cosine. The other two similarity measures have not been used before in the bibliometric literature. Finally, we show by means of an example that our findings have a high practical relevance.information science;Pearson correlation;cosine;similarity measure;author cocitation analysis
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