(Tax) law & economics: conceptual limits

Abstract

Although the literature devoted to the correlational study of Law and Economics abounds, there is significant theoretical-conceptual divergence between the traditional Law & Economics doctrine and the specific Tax Law & Economics doctrine. Such distinct approach operates (and derives) from both its analytical-theoretical tools and also relates to the corresponding impact on the design of the concrete regulatory systems. Thus, the construction of an optimal theory of Fiscal Law presupposes the internalization of idiosyncratic elements to this sub-discipline, not studied in the standard perspective of law-applied econometrics (“Law & Economics”). To this extent, we highlight as unique points to this domain of knowledge: a) its dissuasive inability, as taxpayers can always respond to the excessive/mitigated tax curve by modulating their personal behavior: working more/less, saving more/less, buying or selling more/less; b) the particular (and complex) redistribution problem, idiosyncratic to the domain of Tax Law & Economics: while traditional “Law and Economics” policies prioritizes the pure principle of maximizing efficiency, an optimal tax policy must be both efficient and harmonious to the contributory capacity and the distributive rationality of resources in society; and finally (c) the very discrepancy between real and ideal: while it is plausible for ordinary studies of Law and Economics to bring an approximation between the ideal system and portions of the system found in practice, such a connection is profoundly divergent in optimal tax policies. The consequence of this conceptual blurring is clear: without a minimum approximate framework, theories can (as they do) freely speculate: is it the best policy to tax (or not) capital gains, and at higher (or lower) rates than current ones? Should corporate income taxation be increased (or reduced)? Should the adoption of taxation on territorial (and/or universal) bases be preferred (or deprecated)? Such questions are not resolved by the typical legal interpretation undertaken by thoroughbred jurists; but at the same time they are not simply unbound by the pure postulate of maximizing economic efficiency. Based on the correct conceptual apprehension of the study in the field of Tax Law & Economics, we seek to investigate how to prospect approaches aimed at inflecting an optimal tax point, either at domestic level or internationally.