Tax in the Cathedral: Property Rules, Liability Rules, and Tax
Document Type
Article
Publication Date
2013
Keywords
property rule, liability rule, the cathedral, Calabresi, Melamed, law and economics, tax, taxation, tax status, IRS, tax law
Abstract
The distinction between property rules and liability rules has revolutionized our understanding of many areas of law. But scholars have long assumed that this distinction has no relevance to tax law. This assumption is flatly wrong. Tax law currently uses both property rules and liability rules, and the choice between them has real consequences. When a taxpayer violates a requirement for a favorable tax status, tax law either imposes additional tax proportionate to the harm (a liability rule) or imposes the draconian penalty of taking away the tax status entirely (a property rule). This recognition has three key implications. First, Congress can and should draw on the rich property and liability rule literature to draft better tax legislation and to reform the tax code. Second, novel variations on property and liability rules can be used to rethink the remedies given to the IRS. Third, tax law will enrich the literature on property and liability rules across many other areas of law.
Publication Citation
99 Virginia Law Review 1169 (2013).
Disciplines
Tax Law
Digital Commons Citation
Blair-Stanek, Andrew, "Tax in the Cathedral: Property Rules, Liability Rules, and Tax" (2013). Faculty Scholarship. 1394.
https://digitalcommons.law.umaryland.edu/fac_pubs/1394