Gamage — Volume 62, Issue 1

Gamage responds to Osofsky's scholarly work on tax frictions and law-economics methodology, advocating for integrating tax screening mechanisms with economics analysis of detailed tax rules. Meaningful law and economics analysis of tax rules is notoriously difficult because scholars have had limited success connecting theoretical public finance and tax literature to actual detailed rules occupying tax lawyers' and officials' time. Osofsky's paper presents a path toward more useful law-economics analysis by arguing that tax frictions should incorporate screening concerns. Gamage argues that tax frictions might be designed to impose higher differential costs on tax planners and lower costs on non-tax planners, creating frictions that deter wasteful tax planning while minimizing costs on regular business transactions. The article contends that combining tax screening and tax frictions methodologies offers a path toward law-economics methodology capable of analyzing how detailed tax rules should account for distributional considerations. Gamage emphasizes that tax law is inherently about distribution, and that recent empirical literature on tax gaming suggests taxation has effects beyond reducing work effort. By designing frictions that differentially impose greater costs on sophisticated tax planners, rules can achieve more equitable distribution at lower efficiency costs, suggesting legislative changes to tax preferences.

Topics: Tax Law · Legal Theory

Keywords: tax frictions · tax planning · screening mechanisms · tax law design · distributional concerns · tax gaming · law and economics · tax policy reform