A Twentieth Century U.S. Intellectual History of Haig-Simons Income Taxation

• In Event: Tax Theory

Abstract

I am writing a book to be entitled "Five Great (But Flawed) Tax and Fiscal Policy Ideas That Still Matter Today." This article is the first of the five intended substantive chapters, entitled "Haig-Simons Income Taxation." It discusses Henry Simons' classic book Personal Income Taxation, the reasons for its mainly rapturous reception in the U.S. tax academic community in the era after World War II, and the reasons for its subsequent decline as an accepted benchmark as (1) social circumstances changed and (2) the academic enterprise advanced.

For academic tax lawyers as little as forty years ago, and leading public finance economists as little as sixty years ago, the Haig-Simons income definition was often treated as a canonical touchstone for making tax policy choices. Administrative considerations aside, it was widely believed that, to decide how X should be treated by the tax system, the main question one needed to answer was simply "What is the correct Haig-Simons treatment of X?" Today, by contrast, and for good reason, Haig-Simons is merely one item in the toolkit that may prove useful as an input to a full analysis. Reviewing the reasons for and process of this change is both interesting for its own sake, and relevant to how we should think about tax policy issues today.

Author

• Daniel Shaviro, NYU Law School