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Florida Tax Review

Abstract

We believe that neither lawlessness nor incompetence explains the apparent inconsistency between the breadth of the Glenshaw Glass definition and the narrower interpretation adopted by the courts and the IRS. We subscribe, rather, to a third explanation: that the rulings of the courts and the IRS reflect a widespread uncertainty and disagreement about what counts as the kind of "accession to wealth" that should be taxed—that is, widespread uncertainty and disagreement about what the language in the Internal Revenue Code and Glenshaw Glass means.

Our thesis is that what explains the inconsistency and the uncertainty and disagreement is that economics—at least Haig-Simons economics—is not everything. Although the Glenshaw Glass definition of income is largely consistent with the Haig-Simons definition, and thus with economics, it fails to take into account other values that count for the people who are subject to the tax and must buy into it, at least to some degree, for the tax to be administrable.

The IRS, the agency charged with administering the tax law, sometimes understands this. While the IRS rarely acknowledges these noneconomic values explicitly—perhaps for fear of unmooring tax from economics and being left rudderless on a turbulent sea—it does give itself some slack, taking into account competing, non-economic values, and finding no income when Glenshaw Glass could be read to suggest otherwise. And in those instances when the IRS misunderstands the competing values, courts or Congress provide the slack, rebuffing the IRS without explicitly recognizing the departure from strict economic values and thereby retaining an anchor to prevent excessive drift.

The task before us in this Article, therefore, is to demonstrate that we can make theoretical sense of what is actually treated as income by taking into account both economic and noneconomic values.

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