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Law, Culture, and Anthropology: On the Hopes and Limits of Comparative Tax

Published online by Cambridge University Press:  20 July 2015

Michael A. Livingston
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This article considers the use of cultural analysis by tax academics, particularly as it concerns comparative tax issues. While various authors have used the terms “culture” and “cultural” in tax scholarship, it is not clear that they have ascribed the same meanings to these terms, and their approaches have (with rare exceptions) not yet been systematic. In particular there is a division between those scholars who have used the term to indicate broad national characteristics, such as the American ambivalence toward wealth or the Italian tolerance for tax evasion, and those who have considered the beliefs and practices of tax professionals or administrators--what might better be called the tax anthropology or sociology of a given country or region. The author considers these issues in the context of two specific problems: the issue of progressivity and tax reform, and the narrower issue of statutory interpretation and tax shelter limitations. The author concludes that cross-cultural comparisons hold substantial promise in the tax field, but are likely to be most productive when focused on specific, well-defined problems and when the author is clear as to what definition of culture he or she is concerned with.

Type
Research Article
Information
Canadian Journal of Law & Jurisprudence , Volume 18 , Issue 1 , January 2005 , pp. 119 - 134
Copyright
Copyright © Canadian Journal of Law and Jurisprudence 2005

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References

The author would like to thank Mr. Noah Burton for outstanding research assistance.

1. LL.M. programs include those designed primarily for American students (e.g., NYU) and those primarily for foreigners (such as the Harvard international tax program), although there is substantial overlap between these categories.

2. See Ault, Hugh J., Comparative Income Taxation: A Structural Analysis (Boston: Kluwer Law International, 1997)Google Scholar; Thuronyi, Victor, Comparative Tax Law (New York: Kluwer Law International, 2003)Google Scholar; Tanzi, Vito, Taxation in an Integrating World (Washington, D.C.: Brookings Institution Press, 1995)Google Scholar. For an effort to apply “global” norms to taxation, albeit with a sensitivity to different cultures and political traditions, see Zolt, Eric M. & Bird, Richard M., Introduction to Tax Policy Design and Development: World Bank Course on Practical Issues of Tax Policy in Developing Countries, April 28-May 1, 2003. http://www1.worldbank.org/publicsector/coursedetails.cfm?ID=6 Google Scholar

3. One particular example is the tax treatment of marriage, divorce, and the family, an area in which U.S. law has often been at odds with that of other countries. See, e.g., Blumberg, Grace, “Sexism in the Code: A Comparative Study of Income Taxation of Working Wives and Mothers” (1972) 21 Buff. L. Rev. 49 Google Scholar; Oldman, Oliver & Temple, Ralph, “A Comparative Analysis of the Taxation of Married Persons” (1966) 12 Stan. L. Rev. 585 CrossRefGoogle Scholar; McIntyre, Michael J. & Oldman, Oliver, “Taxation of the Family in a Comprehensive and Simplified Income Tax” (1977) 90 Harv. L. Rev. 1573 CrossRefGoogle Scholar.

4. Merriam-Webster Online Dictionary (2004).

5. In distinguishing tax from general or even general legal culture, it may be necessary to draw certain arbitrary lines, since taxes are defined differently in various countries and many functions of the tax system in one country are performed by spending or social service agencies in another context. Even in the United States, the borderline between tax and nontax policy is not always clear. See, e.g., Daniel Shaviro, “Can Tax Cuts Increase the Size of Government?” in this issue of CJLJ (arguing that confusion over the relationship between tax and social welfare policy has led to inappropriate policy results). I believe that the concept of tax culture remains useful despite these limitations, but it is well to keep them in mind. More pithily, it might be said that the way that it draws lines between tax and nontax issues is a distinguishing feature of any particular tax culture.

6. See McCaffery, Edward J., “Tax’s Empire” (1996) 85 Geo. L.J. at 71.Google Scholar

7. See Kornhauser, Marjorie E., “The Morality of Money: American Attitudes Toward Wealth and the Income Tax” (1994) 70 Ind. L.J. 119 Google Scholar. William Blatt discusses American attitudes toward estate taxation in a similar vein. Blatt, William S., “Minority Discounts, Fair Market Value, and the Culture of Estate Taxation” (1997) 52 Tax L. Rev. 225.Google Scholar

8. See Livingston, Michael A., “Risky Business: Economics, Culture, and the Taxation of High-Risk Activities” (1993) 48 Tax L. Rev. 163 Google Scholar; Livingston, Michael A., “Reinventing Tax Scholarship: Lawyers, Economists, and the Role of the Legal Academy” (1998) 83 Cornell L. Rev. 365.Google Scholar

9. See Mumford, Ann, Taxing Culture (Aldershot, UK: Ashgate Publishers, 2002).Google Scholar Closely related is the large and growing volume of work on the psychology of taxation, including perceptions of the tax system and their effect on compliance (and noncompliance), although this work is “cultural” in only the most general sense. See, e.g., Lewis, Alan, “Perceptions of tax rates” (1978) 6 British Tax Rev. 358 Google Scholar; Hite, P.A. & Roberts, M.L., “An experimental investigation of taxpayer judgments on rate structure and the individual income tax system” (1991) 13 J. Am. Taxation Ass’n 47 Google Scholar; Baron, Jonathan & McCaffery, Edward J., “Masking Redistribution (or its Absence)”, Social Science Research Network (SSRN) research paper no. 528165 (July 2004).Google Scholar

10. See Bankman, Joseph, “The Business Purpose Doctrine and the Sociology of Tax” (2001) 54 SMU L. Rev. 149 Google Scholar; Clark, Robert C., “The Morphogenesis of Subchapter C: An Essay in Statutory Evolution and Reform” (1977) 87 Yale L.J. 90.CrossRefGoogle Scholar

11. (2004) 25 Cardozo L. Rev. 953.

12. Ibid. at 1014-18.

13. The marginal rate in each country is in excess of 50 percent when the effect of various social insurance, etc. taxes is considered. Italy has recently adopted a tax reform including a three-rate system (23, 33, and 39 percent) with a 4 percent surcharge on certain high income taxpayers.

14. Surcharges may result in higher rates in some cases.

15. This contradiction is memorialized in the famous quotation, variously attributed to Nehru and others, that “It takes a great deal of money to keep Gandhi-ji living in poverty.”

16. See supra notes 9 and 10.

17. Income Tax Act, sec. 245. See Duff, David G., Canadian Income Tax Law (Toronto, ON: Emond Montgomery Press, 2003) at 168 Google Scholar-83.