Law Commons^™

Resolving The Paradox Of The Consideration Doctrine: The Implications Of Inefficient Signaling And Of Anti-Commodification Norms

David Gamage

This paper addresses one of the central problems of contract law, a puzzle that has troubled generations of contracts scholars: Why do we only enforce promises backed by consideration? Or, how can we justify insisting on the bargain context, but not requiring that the bargains be adequate? The lack of a theoretical solution to this puzzle has plagued the application of the consideration doctrine in courts of law.

We resolve this paradox through two innovations. First, using a game theory model based on asymmetric information, we dispute the common wisdom that the law should honor parties’ intentions as articulated at …

Commodification And Contract Formation: Placing The Consideration Doctrine On Stronger Foundations

David Gamage

Under the traditional consideration doctrine, a promise is only legally enforceable if it is made in exchange for something of value. This doctrine lies at the heart of contract law, yet it lacks a sound theoretical justification – a fact that has confounded generations of scholars and created a mess of case law. This paper argues that the failure of traditional justifications for the doctrine comes from two mistaken assumptions. First, previous scholars have assumed that anyone can back a promise with nominal consideration if they wish to do so. We show how social norms against commodification limit the availability …

A Better Direction For California's Climate Change Policy, David Gamage, Mark Gergen

David Gamage

No abstract provided.

Why The Affordable Care Act Authorizes Tax Credits On The Federal Exchanges, David Gamage, Darien Shanske

David Gamage

This Essay refutes Adler’s and Cannon’s argument that the Affordable Care Act (“Obamacare”) does not authorize premium tax credits for insurance policies purchased from the federal healthcare Exchanges. Adler’s and Cannon’s argument is the basis of challenges in a number of ongoing lawsuits, including Oklahoma ex rel. Pruitt v. Sebelius and Halbig v. Sebelius. This Essay conducts a textual analysis of the Affordable Care Act and concludes that the text clearly authorizes premium tax credits for insurance policies purchased from the federal healthcare Exchanges.

On November 7th, 2014, the U.S. Supreme Court agreed to hear the appeal of the King …

How To Avoid Another Shutdown, David Gamage, David Louk

David Gamage

No abstract provided.

A Potential Game Changer In E-Commerce Taxation, David Gamage, Andrew Haile, Darien Shanske

David Gamage

In this essay, we evaluate recent legislative proposals for Congress to authorize state taxation of e-commerce. We argue that these proposals contain a potential game-changing innovation — the requirement that states provide remote sellers with “adequate software” for calculating use tax due within the state. Properly implemented, we explain how this innovation could force states to internalize the compliance costs of levying tax collection obligations on remote sellers, thereby incentivizing the states to simplify their sales and use tax statutes and resolving concerns about states overburdening interstate commerce.

The Case For A State-Level Debt-Financing Authority, David Gamage, Darien Shanske

David Gamage

In this essay, we argue for the adoption of state-level debt-financing authorities as part of a broader package for reforming local government borrowing.

Vendor Compensation As An Approach For State ‘Amazon’ Laws: Part 2, David Gamage, Devin Heckman

David Gamage

In this essay, the second of a two-part series, we propose an approach for the U.S. states to tax interstate e-commerce. If the states adequately compensate remote e-commerce vendors for all tax compliance costs, we argue that the states can constitutionally impose use tax collection obligations on the remote vendors in a manner compatible with the Quill framework.

Vendor Compensation As An Approach For State ‘Amazon’ Laws: Part 1, David Gamage, Devin Heckman

David Gamage

In this Essay, the first of a two-part series, we analyze the approaches U.S. states have been using in their attempts to tax interstate e-commerce. We argue that these existing approaches are unlikely to be effective. In our companion Essay, the second in the series, we outline a novel approach that states might employ in order to more effectively tax interstate e-commerce – based on adequately compensating remote vendors for all tax compliance costs. But before we can argue for our new approach, we must first survey the current constitutional and statutory landscape.

The Saga Of State ‘Amazon’ Laws: Reflections On The Colorado Decision, David Gamage, Darien Shanske

David Gamage

We analyze the Colorado district court’s decision in Direct Marketing Association v. Huber – a decision that permanently enjoined Colorado’s "Amazon" law. Had it not been enjoined, the Colorado law would have mandated information reporting by remote e-commerce vendors so that Colorado could levy its sales and use tax on the e-commerce purchases made by Colorado residents. We evaluate the applicability of the Tax (Anti-)Injunction Act and whether the Colorado statute and regulations should be reviewed as a tax or as a regulation. We also suggest alternative approaches that state legislatures might use in order to levy taxes on remote …

The Supreme Court's Health Care Decision And The Problem With Relyng On The Taxing Power, David Gamage

David Gamage

No abstract provided.

Conversations: David Gamage, David Gamage

David Gamage

Tax Analysts' Matthew Dalton recently spoke with David Gamage of the University of California Berkeley School of Law about his recent stint working at Treasury and the unexpected tax consequences of healthcare reform.

On Tax Increase Limitations: Part Ii — Evasion And Transcendence, David Gamage, Darien Shanske

David Gamage

In this essay, the second of a series, we continue our evaluation of state Tax Increase Limitations (TILs) – special rules that limit state legislatures’ ability to raise taxes, such as by requiring supermajority votes. We analyze two strategies whereby majority parties can evade TILs to the extent they so desire. We further argue that these strategies have some positive normative features. The strategies designed to evade TILs may ultimately lead toward a more effective means for controlling the size of state government than TILs themselves are able to provide.

On Tax Increase Limitations: Part I - A Costly Incoherence, David Gamage, Darien Shanske

David Gamage

In this essay, the first of a series, we explore the theoretical implications of one particular type of fiscal limitation on state legislatures - namely, special rules limiting tax increases. In this first essay we will explore the analytic soundness of these tax increase limitations (TILs). In future essays in this series we will analyze some of the consequences of TILs and in particular how they can be 'evaded.' We will argue over the course of this series of essays that because there is no meaningful content to the term 'tax increase' as it is used in TILs, legislative majorities …

The Case For Reducing The Market Salience Of Taxation, David Gamage, Darien Shanske

David Gamage

This paper considers a narrow but important question that has arisen in the literature on tax salience. Contrary to the predictions of neoclassical economic theory, a number of studies have demonstrated that, in response to certain presentations of tax prices, consumers do not always fully factor tax costs into their market decisions. This result indicates that policy makers could opt for tax price presentation techniques that would reduce the market salience of taxation, thereby likely also reducing the deadweight loss otherwise caused by taxpayers distorting their behavior to avoid taxation. Assuming that these experimental results are sound, and bracketing the …

O Que É Pior, Flutuações Fiscais Ou Flutuações De Gastos? (In Portuguese) (Which Is Worse, Tax Fluctuations Or Spending Fluctuations?) (In English), David Gamage

David Gamage

The English version of this paper can be found at http://ssrn.com/abstract=1622502.

O aspecto normativo central da teoria de alocacao de riscos e o principio da dispersao dos riscos: mantendo-se constantes as demais variaveis, riscos dispersos sao menos prejudiciais do que os riscos concentrados e uma maneira de alcancar essa dispersao e atraves do ajustamento das taxas dos impostos. Entretanto, nem todos os ajustes de taxas de impostos dispersam riscos eficientemente: uma maior dispersao de risco e alcancada pelo ajuste das taxas de impostos de base ampla, pois a flutuacao das axas de um imposto estrito estaria a cargo apenas de …

Minimizing The Harm Of State Fiscal Volatility, David Gamage, Jeremy Bearer-Friend

David Gamage

This report’s primary concern is how U.S. state governments should respond to the fiscal volatility created by their balanced budget constraints. Applying the principles of risk allocation theory to this recurring problem, we conclude that states should primarily adjust the rates of broad-based taxes as their economies cycle, rather than fluctuating public spending.

Taxation: Law, Planning, And Policy, David Gamage, Michael Livingston

David Gamage

This is a sample version of the Introduction, Table of Contents, Background and Basic Themes section, and first chapter, from the second edition of the casebook "Taxation: Law, Planning, and Policy". This sample is posted with the permission of LexisNexis publishing for review purposes by students and instructors.

Managing Fiscal Volatility By Redefining ‘Tax Cuts’ And ‘Tax Hikes’, David Gamage, Jeremy Bearer-Friend

David Gamage

This report analyzes how states should cope with fiscal volatility at the level of institutional-design policy. We propose that states reconsider how they define terms like ‘‘tax cuts’’ and ‘‘tax hikes.’’ By adopting a new baseline for defining those terms, states can increase the likelihood of using tax rate adjustments to cope with fiscal volatility rather than more harmful spending fluctuations.

Which Is Worse, Tax Fluctuations Or Spending Fluctuations?, David Gamage

David Gamage

Employing a risk-allocation approach, this paper analyzes the extent to which a government subject to balanced-budget constraints should fluctuate tax or spending policies in response to economic volatility.

Coping Through California's Budget Crises In Light Of Proposition 13 And California's Fiscal Constitution, David Gamage

David Gamage

This chapter reflects on the ways in which California's fiscal constitution exacerbates the state's budget crises. Without institutional reform, California will likely experience repeated waves of increasingly severe budget crises throughout the coming decades. As such, this chapter presents and analyzes a number of alternatives for reforming California's fiscal constitution so as to ameliorate the dynamics currently leading to repeated harmful budget crises.

Managing California's Fiscal Roller Coaster, David Gamage

David Gamage

This article analyzes the causes of California's budget crises and prescribes institutional mechanisms for improving California's budgetary management.

Taxing Political Donations: The Case For Corrective Taxes In Campaign Finance, David Gamage

David Gamage

Command-and-control regulations are generally thought to be inferior to incentive-based alternatives. This essay proposes an incentive-based approach for regulating campaign finance. In place of our current regime of contribution ceilings, the essay calls for a graduated system of contribution taxes. Rather than capping the size of political donations at a specified dollar level, we should tax donations based on a schedule of graduated rates - the larger the size of a contribution, the higher the level of taxation.

Contribution taxes generate two primary advantages over contribution ceilings. First, contribution taxes preserve more total surplus. This surplus can be shared by …