Friday, August 20, 2004

Richard Kovach (Akron) has published A Seldom Considered Aspect of Tax Fairness and Simplification:The Need for a Coherent Policy Perspective on the Many and Varied Dollar Limitations Contained in the Internal Revenue Code, 1 Pittsburgh Tax Rev. 1 (2003). Here is the Introduction:

Dollar limitations abound in the Internal Revenue Code (Code). They fundamentally define the familiar rate brackets of § 1 and control a wide variety of tax obligations and advantages that contribute greatly to the complexity of the Code all the way into its highest-numbered sections. Many dollar limitations refer to a particular level of income, usually adjusted gross income, and determine the extent to which particular tax features operate, as in the case of credits, loss recognitions, special tax statutes, or many kinds of deductions.

As individual provisions containing dollar limitations find their way into the Code, the precise points at which they separate taxpayers who will experience a corresponding benefit or detriment result, in part, from computations relating to direct revenue effects. Consequently, one explanation for the astounding range and variety of dollar limitations in the Code rests on the observation that our collection of federal tax statutes did not evolve within a short time under a uniform political climate and stable set of fiscal circumstances.

The haphazard evolution of the Code into a massive conglomeration of disparate provisions containing designated dollar limitations suggests the need for a policy overhaul directed both toward simplification and other systemic goals to coordinate the incidental implications, social and economic, of predicating important tax benefits and detriments upon fixed dollar attainments. This article will elaborate upon some of the policy implications of many existing dollar limitations in the Code and discuss how a more cohesive perspective on the collective effect of dollar limitations could help strengthen our federal taxation system.