Henry M. Ordower (St. Louis) is the General Rapporteur, and Tracey A. Kaye (Seton Hall) and Stephen W. Mazza (Kansas) are the U.S. Rapporteurs, on Intersections of Tax and Constitutional Law:  Restricting the Legislative Power to Tax, to be presented today at the 17th Quadrennial Congress of the International Academy of Comparative Law in Utrecht, The Netherlands.  Here is the Conclusion of the Report:

Despite the often technical nature of tax legislation in all jurisdictions, broad constitutional principles frequently compete with revenue raising efficiencies, both at parliamentary and judicial levels, to limit the discretion of the law making authority. One may conclude that tax legislation writers are not constitutionally unfettered. They must remain mindful at least of constitutional principles as they prepare tax proposals. The constitution in each reporting jurisdiction plays a tax role.

For a variety of reasons, including lack of authority to conduct judicial review, courts of general jurisdiction in Australia, Israel, the Netherlands, and the United States tend to defer to the law makers on constitutional compliance issues when they address tax matters. Specialized constitutional courts appear to scrutinize tax legislation for constitutional compliance, but no court in the reporting jurisdictions, whether or not specialized, seems to require more than a rational basis for the taxing structure to withstand constitutional challenge.

While decisions differ from jurisdiction to jurisdiction, all conclude that progressive income taxes are acceptable, and, in some cases, a constitutionally mandated, tax model. At the same time, however, the courts do not object to the fundamental regressivity of the value added taxes that provide a substantial proportion of governmental revenues, often because on an ability to pay basis, the consumer must pay the tax – indicating an ability to pay – in order to consume.

Tax planning to minimize one’s tax burden is permissible everywhere. Most countries use there tax systems to accomplish both revenue raising and non-revenue objectives. Special tax regimes encourage specific business activities, yet courts defer to legislatures in most cases on such matters, even though the tax will violate the principle of equality in distribution of tax burdens.