TITLE:
Evolutionary Analysis of Tax Law: A Methodological Approach
AUTHORS:
Ute Schmiel
KEYWORDS:
Equability of Taxation, Economic Analysis of Tax Law, Evolutionary Hypotheses of Tax Effects
JOURNAL NAME:
Modern Economy,
Vol.7 No.4,
April
12,
2016
ABSTRACT: The present paper
conceptualizes a methodology of an evolutionary tax law analysis from a critical
rationalist perspective. This methodology has the following characteristics: We
interpret tax rules as means to achieve tax goals. Means-end-statements have an
ethical and an empirical dimension. The ethical dimension implies that tax
goals and tax rules and their secondary effects must be compatible with the
aims of market economy regulation. The empirical dimension includes the
question if tax goals are realizable and if tax rules cause secondary effects.
To answer this question, we need evolutionary hypotheses of tax effects. A
quasi-nomological hypothesis regarding the evolutionary effects of taxation is
as follows: “If taxation changes the rank order of the relevant decision-making
options according to the actors’ subjectively rational decision criteria, they
decide differently if they take taxes into account than they would if they did
not”. From an evolutionary point of view, freedom of choice and equality before
the law are the contributions of a market economy to the common good. In our
opinion, equability of taxation is compatible with the market economy goals
“freedom of choice” and “equality before the law”. Equability of taxation,
however, implies in principle decreasing such decision-making effects of
taxation which reduce the explicit tax payment burden (in relative terms).
These decision-making effects are designated here as tax avoidance decisions.
We need the evolutionary tax effects framework mentioned above in order to
develop tax rules which decrease such tax effects. By way of contrast, tax
rules that induce or accept tax avoidance decisions conflict with equability of
taxation. Such rules are sometimes driven by social goals. Thus, we have to
analyze such rules from an evolutionary perspective with regard to their
justification, feasibility and proportionality.