Distributive justice plays a starring role in many fundamental tax policy debates, from the marginal rate structure to the choice of base to the propriety of wealth transfer taxes. In contrast, current tax scholarship on the charitable tax subsidies generally either ignores or explicitly disavows distributive justice concerns. Instead, it focuses on the efficiency and pluralism-enhancing advantages of having charities provide public goods instead of or in addition to the government. While identifying these advantages is a necessary and important contribution to our understanding of charitable giving policy, avoidance of distributive justice concerns ignores the very purpose of charity: voluntary redistribution. After all, it's called the charitable deduction, not the public goods deduction. As a result, the current body of work on the charitable tax subsidies is incomplete: it purposely under-theorizes what is "good" for society in order to avoid making value judgments about which projects should be subsidized. Although this sounds appealing, completely avoiding such judgments is both impossible and counterproductive. Current scholarship thus excessively under-theorizes the good, creating confusion about the charitable tax subsidies in both theory and practice.
As an antidote to increasing inequality, policymakers and academics frequently call for heavier taxes on the wealthy. As this chapter shows, using the tax system to fight inequality requires careful consideration of both normative and practical concerns. Certain goals (for example, the concern that wealth concentrations harm the political and economic systems) suggest taxing wealth itself via an annual wealth tax as an ideal solution. Not only would such a tax be hobbled by administrative and valuation concerns, however; it is likely unconstitutional. The optimal second-best solution would be to tax capital gains at death, thereby closing the loophole that allows untaxed appreciation at death forever to escape taxation. In contrast, other goals (such as equality of opportunity) counsel taxing wealth transfers as an ideal matter. Best reflecting that goal is an accessions tax that taxes transferees on the cumulative amount of gifts and bequests received. One unintended consequence of wealth transfer taxes, however, is that they likely spur families to engage in greater consumption, much of which may exacerbate inequality of opportunity. This consequence means that taxation must also be coupled with greater leveling up efforts that provide children born to less financially advantaged families with opportunities to develop their talents and abilities.
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