Redistribution Through Discriminatory Taxes: A Contractarian Explanation of the Role of the Courts

Abstract

What role should courts serve regarding wealth redistribution through tax provisions? Perhaps they should base decisions on efficiency grounds, protecting society from the transactions costs and other wealth reductions associated with rent seeking. Perhaps they should protect those chosen to bear the burden of discriminatory treatment regardless of social costs, out of fairness concerns for equal treatment. At a minimum, however, the courts should prohibit taxes that would be unanimously condemned ex ante. In this Article, we show, primarily with cases treating progressive taxation, discriminatory property taxes, and taxes on businesses, that the courts have chosen only this third minimalist function.