Evolutionary Analysis of Tax Law: A Methodological Approach

Abstract

The present paper conceptualizes a methodology of an evolutionary tax law analysis from a critical rationalist perspective. This methodology has the following characteristics: We interpret tax rules as means to achieve tax goals. Means-end-statements have an ethical and an empirical dimension. The ethical dimension implies that tax goals and tax rules and their secondary effects must be compatible with the aims of market economy regulation. The empirical dimension includes the question if tax goals are realizable and if tax rules cause secondary effects. To answer this question, we need evolutionary hypotheses of tax effects. A quasi-nomological hypothesis regarding the evolutionary effects of taxation is as follows: “If taxation changes the rank order of the relevant decision-making options according to the actors’ subjectively rational decision criteria, they decide differently if they take taxes into account than they would if they did not”. From an evolutionary point of view, freedom of choice and equality before the law are the contributions of a market economy to the common good. In our opinion, equability of taxation is compatible with the market economy goals “freedom of choice” and “equality before the law”. Equability of taxation, however, implies in principle decreasing such decision-making effects of taxation which reduce the explicit tax payment burden (in relative terms). These decision-making effects are designated here as tax avoidance decisions. We need the evolutionary tax effects framework mentioned above in order to develop tax rules which decrease such tax effects. By way of contrast, tax rules that induce or accept tax avoidance decisions conflict with equability of taxation. Such rules are sometimes driven by social goals. Thus, we have to analyze such rules from an evolutionary perspective with regard to their justification, feasibility and proportionality.