Law Commons^™

Distributional Arguments, In Reverse, Alex Raskolnikov

Faculty Scholarship

This Article contends that the government should consider – rather than ignore – distributional consequences both in the design of legal rules and during legal transitions. This does not mean that the distributional effect of every legal rule should be measured and taken into account in the rule’s design. But if the likely distributional effects are unintended, large, and objectionable, if the efficiency of the legal rule is doubtful, if the compensating tax-and-transfer adjustment is not forthcoming (or has not occurred), policymakers should take distribution into account. One way of doing so is to choose among several alternative legal rules …

Broadening Consumer Law: Competition, Protection, And Distribution, Rory Van Loo

Faculty Scholarship

Policymakers and scholars have in distributional conversations traditionally ignored consumer laws, defined as the set of consumer protection, antitrust, and entry barrier laws that govern consumer transactions. Consumer law is overlooked partly because tax law is cast as the most efficient way to redistribute. Another obstacle is that consumer law research speaks to microeconomic and siloed contexts—deceptive fees by Wells Fargo or a proposed merger between Comcast and Time Warner Cable. Even removing millions of dollars of deceptive credit card fees across the nation seems trivial compared to the trillion-dollar growth in income inequality that has sparked concern in recent …

The Law And Economics Of Redistribution, Matthew Dimick

Journal Articles

Should legal rules be used to redistribute income? Or should income taxation be the exclusive means for reducing income inequality? This article reviews the legal scholarship on this question. First, it traces how the most widely cited argument in favor of using taxes exclusively--Kaplow & Shavell's (1994) double-distortion argument--evolved from previous debates about whether legal rules could even be redistributive and whether law and economics should be concerned exclusively with efficiency or with distribution as well. Next, it surveys the responses to the double-distortion argument. These responses appear to have had only limited success in challenging the sturdy reputation of …

Models Of Other-Regarding Preferences And Redistribution, Matthew Dimick, David Rueda, Daniel Stegmueller

Journal Articles

Despite the increasing popularity of comparative work on other-regarding preferences, the implications of different models of altruism are not always fully understood. This article analyzes different theoretical approaches to altruism and explores what empirical conclusions we should draw from them, paying particular attention to models of redistribution preferences where inequality explicitly triggers other-regarding motives for redistribution. While the main contribution of this article is to clarify the conclusions of these models, we also illustrate the importance of their distinct implications by analyzing Western European data to compare among them. We draw on individual-level data from the European Social Survey fielded …

Corporate Governance As Privately-Ordered Public Policy: A Proposal, Lynn A. Stout, Sergio Alberto Gramitto Ricci

Faculty Works

In this Article, we show how our society can use corporate governance shifts to address, if not entirely resolve, a number of currently pressing social and economic problems. These problems include: rising income inequality; demographic disparities in wealth and equity ownership; increasing poverty and income insecurity; a need for greater innovation and investment in solving problems like disease and climate change; the “externalization” of many costs of corporate activity onto third parties such as customers, employees, creditors, and the broader society; the corrosive influence of corporate money in politics; and discontent and loss of trust in the capitalist system among …

Antitrust Policy And Inequality Of Wealth, Herbert J. Hovenkamp

All Faculty Scholarship

Why would anyone want to use antitrust law as a wealth distribution device when far more explicit statutory tools are available for that purpose? One feature of antitrust is its open-textured, nonspecific statutes that are interpreted by judges. As a result, using antitrust to redistribute wealth may be a way of invoking the judicial process without having to go to Congress or a state legislature that is likely to be unsympathetic. Of course, a corollary is that someone attempting to use antitrust law to redistribute wealth will have to rely on the existing antitrust statutes rather than obtaining a new …

Framing Middle-Class Insecurity: Tax And The Ideology Of Unequal Economic Growth, Martha T. Mccluskey

Journal Articles

Prevailing tax discourse rationalizes growing economic inequality. Using the example of state and local economic development “subsidy wars,” this article explores how conventional tax ideas present unequal sacrifice and risk as a public responsibility, driven by economic fact rather than unjust politics.

Over the last several decades, one contributing cause of inequality has been the escalating tax and spending incentives offered by local governments to attract private business investment. This competition operates to favor wealthy corporations over small businesses, without producing broad or lasting economic gains to communities, and it erodes resources for public education, infrastructure, social services, health care, …

Capital's Offense: Law's Entrenchment Of Inequality, Frank A. Pasquale

Faculty Scholarship

Reviewing Thomas Piketty, Capital in the Twenty-First Century (Harvard University Press, 2014)

Piketty’s Capital in the Twenty-First Century is a rare scholarly achievement. It weaves together description and prescription, facts and values, economics, politics, and history, with an assured and graceful touch. So clear is Piketty’s reasoning, and so compelling the enormous data apparatus he brings to bear, that few can doubt he has fundamentally altered our appreciation of the scope, duration, and intensity of inequality. This review explains Piketty’s analysis and its relevance to law and social theory, drawing lessons for the re-emerging field of political economy.

The university …

Lost At Sea, Daniela Caruso

Faculty Scholarship

A reflection on the existential loss experienced by many young persons in the aftermath of the Euro-zone crisis (often referred to as ‘the lost generation’) must also acknowledge, for the record and for reasons of relative salience, those who have recently drowned in the waters of southern Europe in their quest for a better future. This essay proposes to reconsider, for a moment, the relation between the obstacles that third country nationals (TNCs) encounter at our external frontiers and the increasing permeability of internal EU borders. Normally, one thinks of the two as structurally opposed: within its boundaries, the EU …

Retreat From Progressive Taxation In The Swedish Welfare State: Does Immigration Matter?, Henry Ordower

All Faculty Scholarship

This paper questions whether late twentieth century immigration patterns may have contributed to retreat from progressive taxation in Sweden (and elsewhere). The paper applies critical methodology to ask whether the societal generosity reflected in development of Sweden’s welfare state yielded to greater parsimony as Sweden opened its borders to ethnically and racially diverse groups of immigrants. The paper explores whether Sweden’s loss of societal homogeneity facilitated the development of a political climate in which protecting traditional Scandinavian-owned capital from taxation became acceptable. Social science literature already has detected various unintentional ethnic and gender biases in delivery of welfare services and …

Unseating Privilege: Rawls, Equality Of Opportunity, And Wealth Transfer Taxation, Jennifer Bird-Pollan

Law Faculty Scholarly Articles

This Article is the second in a series that examines the estate tax from a particular philosophical position in order to demonstrate the relevance and importance of the wealth transfer taxes to that position. In this Article, I explore Rawlsian equality of opportunity, a philosophical position that is at the heart of much American thought. Equality of opportunity requires not only ensuring that sufficient opportunities are available to the least well-off members of society but also that opportunities are not available to other members merely because of their wealth or other arbitrary advantages. Therefore, an income tax alone, even one …

Death, Taxes, And Property (Rights): Nozick, Libertarianism, And The Estate Tax, Jennifer Bird-Pollan

Law Faculty Scholarly Articles

The primary purpose of this Article is to dispute the moral claims to post-death property rights made by libertarians when they argue against the estate tax. As I will show later in this Article, my argument does not necessarily entail enacting an estate tax, nor does it require a particular level of tax. I am merely trying to demonstrate that those who argue that the estate tax is an immoral violation of the private property rights of the deceased are mistaken. This is not to say that the estate of the deceased should necessarily pass to the government. It is …

The Political Economy Of Taxation: A Critical Review Of A Classic, Nancy Staudt

Faculty Working Papers

This book review reexamines Henry Simons famous contribution to the tax policy literature, "Personal Income Taxation: The Definition of Income as Problem in Fiscal Policy" (1938). It argues that while Professor Simons was concerned with tax fairness and the redistribution of income, he adopted a definition of income that worked to undermine the interests of many of the poor individuals in society that he sought to support.

Just Talking With The Furniture, Emily A. Hartigan

Faculty Articles

The current social and political situation of the United States is post-modern, post-colonial, post-critical, and post-secular. It is located in a two-party system in which the substantive values of the population are radically fragmented. As such, American social and political culture needs new prospects for conversation, both about and constituting justice, which can cross the vast differences between its members. It is time to enter a discourse on substantive justice in a way that uses the imagined unity of modernist thought as a way station for something both old and new.

Things Fall Apart: The Illegitimacy Of Property Rights In The Context Of Past Theft, Bernadette Atuahene

All Faculty Scholarship

In many states, past property theft is a volatile political issue that threatens to destabilize nascent democracies. How does a state avoid instability when past property theft causes a significant number of people to believe that the property distribution is illegitimate? To explore this question, I first define legitimacy relying on an empirical understanding of the concept. Second, I establish the relationship between inequality, illegitimate property distribution, and instability. Third, I describe the three ways a state can achieve stability when faced with an illegitimate property distribution: by using its coercive powers, by attempting to change people’s beliefs about the …

Who's Afraid Of Redistribution? An Analysis Of The Earned Income Tax Credit, Jennifer Bird-Pollan

Law Faculty Scholarly Articles

In the 2008 Presidential campaign, the American public was reminded time and again of the differences in the economic policies of the nominees: John McCain would cut taxes, and Barack Obama would raise them, although only on those earning over $250,000. In the final days of the campaign, the McCain camp accused Obama of proposing “redistribution,” and the Obama camp quickly denied that description. So why do presidential candidates run so quickly from the r-word? McCain’s senior policy advisor equated redistribution with socialism, but redistribution, in the form of the federal income tax system, is a central tenet of American …

Property Outlaws, Eduardo M. Peñalver, Sonia K. Katyal

Cornell Law Faculty Publications

Most people do not hold those who intentionally flout property laws in particularly high regard. The overridingly negative view of the property lawbreaker as a wrong-doer comports with the nearly sacrosanct status of property rights within our characteristically individualist, capitalist, political culture. This dim view of property lawbreakers is also shared to a large degree by property theorists, many of whom regard property rights as a fixed constellation of allocative entitlements that collectively produce stability and order through ownership. In this Article, we seek to rehabilitate, at least to a degree, the maligned character of the intentional property lawbreaker, and …

Contract Law And Distribution In The Age Of Welfare Reform, Daniela Caruso

Faculty Scholarship

This Article tracks the ongoing adaptation of U.S. contract law to the 1990s’ contraction of the welfare state. Some courts strive to compensate for the shortage of welfare services and to pursue redistributive goals. This Article provides examples of this trend and then analyzes the non-linear relation between doctrines, judicial redistribution, and welfare politics in both case law and scholarship. Finally, this Article discusses the role of socially sensitive judicial discourse in light of contemporary welfare politics and explains its continuing importance.

Consumer Law As Tax Alternative, Rory Van Loo

Faculty Scholarship

Policymakers and scholars have in distributional conversations traditionally ignored consumer laws. Tax law dominates distributional conversations partly because legal rules are seen as less efficient and partly because consumer law research speaks to narrow and siloed contexts. Even millions of dollars in reduced credit card fees seem trivial compared to the trillion-dollar growth in income inequality that has sparked concern in recent decades. This Article is the first to synthesize the fragmented studies quantifying inefficiently higher consumer prices across diverse markets — called overcharge. These studies indicate that laws reducing overcharge could make a substantial reduction in inequality. Moreover, this …

Redistributing Optimally: Of Tax Rules, Legal Rules, And Insurance, Kyle D. Logue, Ronen Avraham

Articles

From the beginning of the law and economics movement, normative legal economists have focused almost exclusively on evaluating the efficiency of alternative legal rules. The distributional consequences of legal rules, therefore, have largely been ignored. It is tempting to conclude that legal economists are hostile or indifferent to concerns of distributional fairness. In fact, however, the discipline of economics has a great deal to say about distributional policy. The normative branch of economics, known as welfare economics, has always been deeply concerned with distributional issues. It is not that welfare economists purport to know a priori the "right" or "optimal" …

Efficiency And Social Citizenship: Challenging The Neoliberal Attack On The Welfare State, Martha T. Mccluskey

Journal Articles

In the face of rising economic inequality and shrinking welfare protections, some scholars recently have revived interest in T.H. Marshall's theory of "social citizenship." That theory places economic rights alongside political and civil rights as fundamental to public well-being. But this social citizenship ideal stands against the prevailing neoliberal ("free market") ideology, which asserts that state abstention from economic protection generates societal well-being. Using the examples of AFDC and workers' compensation in the 1990s, I analyze how arguments about economic efficiency have worked to characterize social welfare programs as producers of public vice rather than public virtue. A close examination …

Mr. Dooley And Mr. Gallup: Public Opinion And Constitutional Change In The 1930s, Barry Cushman

Journal Articles

Scholars interested in the development of political and constitutional culture during the 1930s sometimes draw inferences about popular preferences on various issues of social and economic policy from the results of presidential and congressional elections. A review of contemporary public opinion polls taken by George Gallup for the American Institute of Public Opinion and by Elmo Roper for the Fortune Magazine survey offers a more granular understanding of popular views on the public policy issues of the day. This article canvasses all of the public opinion polls taken by Gallup and Roper between 1935, when they began publishing their results, …

Redistribution Under A Partially Privatized Social Security System, Kathryn L. Moore

Law Faculty Scholarly Articles

Once viewed as a radical recommendation, proposals to privatize Social Security abound. Moreover, proposals to privatize partially Social Security are beginning to receive serious consideration. Accordingly, this Article will address the likely effect of partial privatization on Social Security's ability to redistribute income. For the purposes of this Article, privatization will refer to proposals that involve individuals directing their own pre-funded individual accounts and bearing the risk of investing in the private market and not to proposals that involve the federal government investing in the private market and bearing the risk. This Article will treat proposals that "add" a defined …