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Taxes versus Legal Rules as Instruments for Equity: A More Equitable View

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  • Sanchirico, Chris William

Abstract

Most law and economic analysis evaluates legal rules solely on basis of the efficiency criterion, the justification being that distributive goals are best accomplished through the tax code. Within the same framework used to formalize this justification, this paper shows that (1) even in the presence of an optimally redistributive tax, any concern for "equity" dictates that legal rules should deviate from efficient standards in a manner that redistributes toward the less well-off: (2) any showing that differences in taxable attributes such as income or wealth are the dominant components of overall inequality would go only to the direction of the proper equity adjustment to legal rules, not to the fact that some adjustment should be made; and (3) the role of equity adjustments to legal rules is not limited to correcting inequalities arising within the legal system but extends to correcting inequalities arising in other areas of the economy. Copyright 2000 by the University of Chicago.

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  • Sanchirico, Chris William, 2000. "Taxes versus Legal Rules as Instruments for Equity: A More Equitable View," The Journal of Legal Studies, University of Chicago Press, vol. 29(2), pages 797-820, June.
    • Handle: RePEc:ucp:jlstud:v:29:y:2000:i:2:p:797-820
    DOI: 10.1086/468094
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    Cited by:

    1. Ganuza Juan-Jose & Gomez Fernando, 2006. "Caution, Children Crossing: Heterogeneity of Victim's Cost of Care and the Negligence Rule," Review of Law & Economics, De Gruyter, vol. 1(3), pages 365-397, January.
    2. Garoupa, Nuno & Stephen, Frank, 2003. "A Note on Optimal Law Enforcement with Legal Aid," CEPR Discussion Papers 4113, C.E.P.R. Discussion Papers.
    3. Hackney, James Jr., 2003. "Law and neoclassical economics theory: a critical history of the distribution/efficiency debate," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 32(4), pages 361-390, September.
    4. Steven Shavell, 2003. "Economic Analysis of Welfare Economics, Morality and the Law," NBER Working Papers 9700, National Bureau of Economic Research, Inc.
    5. Guy Davidov, 2007. "The (changing?) idea of labour law," International Labour Review, International Labour Organization, vol. 146(3-4), pages 311-320, September.
    6. Olof Johansson-Stenman, 2005. "Distributional Weights in Cost-Benefit Analysis—Should We Forget about Them?," Land Economics, University of Wisconsin Press, vol. 81(3).
    7. Barriola, Illan & Deffains, Bruno & Musy, Olivier, 2023. "Law and inequality: A comparative approach to the distributive implications of legal systems," International Review of Law and Economics, Elsevier, vol. 75(C).
    8. Andrew F. Daughety & Jennifer F. Reinganum, 2003. "Found Money? Split-Award Statutes and Settlement of Punitive Damages Cases," American Law and Economics Review, American Law and Economics Association, vol. 5(1), pages 134-164.
    9. Blumkin, Tomer & Margalioth, Yoram, 2008. "On terror, drugs and racial profiling," International Review of Law and Economics, Elsevier, vol. 28(3), pages 194-203, September.
    10. Lee Kangoh, 2016. "Risk Aversion, the Hand Rule, and Comparison between Strict Liability and the Negligence Rule," Review of Law & Economics, De Gruyter, vol. 12(2), pages 261-274, July.
    11. Blumkin, Tomer & Margalioth, Yoram & Sadka, Efraim, 2007. "Anti-discrimination rules versus income taxation in the pursuit of horizontal equity," Journal of Public Economics, Elsevier, vol. 91(5-6), pages 1167-1176, June.
    12. Juan José Ganuza & Fernando Gómez, 2003. "Optimal negligence rule under limited liability," Economics Working Papers 759, Department of Economics and Business, Universitat Pompeu Fabra, revised May 2004.
    13. Cass R. Sunstein, 2015. "Unhelpful Abstractions and the Standard View," Econ Journal Watch, Econ Journal Watch, vol. 12(1), pages 68-71, January.
    14. Thomas J. Miceli, 2014. "Economic Models of Law," Working papers 2014-13, University of Connecticut, Department of Economics.

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