Linda Sugin (Fordham) presents Why Endowment Taxation is Unjust at Penn today as part of its Tax Policy Workshop Series.  Here is the abstract:

Legal thinkers seem increasingly drawn to the ideal of endowment taxation as a model for designing an actual tax system. On the surface, endowment taxation is appealing – taxing the highly endowed more fully without respect to their chosen allocation of wage work and leisure. This paper argues that endowment taxation is problematic for liberal egalitarians because it fails to fulfill the equality norm that motivates their approach. The debate about endowment taxation has taken an unfortunate turn by focusing on beachcombers, a paradigm that implicitly rejects the central project of liberal egalitarian political theory – how to allocate the benefits and burdens of social cooperation. This article shifts the paradigm to volunteers, homemakers, and low-wage workers, who significantly contribute to the social product, and allow us to consider what individuals in a community owe each other and what the sovereign owes all individuals.

The article starts by revealing the hidden norms in the standard lump-sum taxation model that underlies the endowment tax ideal. It analyzes the bias in favor of market over non-market work, and examines the meaning of “leisure” that is often used in the tax policy literature to encompass below-market work, non-market work, and pure recreation. Then, it challenges the use of endowment as an “ideal” against which other tax systems may be evaluated by explaining how it presents theoretical as well as practical problems of definition that undermine it. Turning more specifically to the work of John Rawls and Ronald Dworkin, the article argues that the proponents of endowment taxation have misunderstood the nature of liberty and equality essential to the liberal egalitarian project, and explains why an endowment tax is inconsistent with the liberal understanding of those principles, particularly the principle of equal opportunity. It then queries why the debate about equality in taxation has focused on human endowment rather than financial endowment, which is a much clearer source of inequality. The final part of the paper considers the welfarist case for endowment taxation and finds it lacking in ways not previously identified.