The James Hausman Tax Law & Policy Workshop
Presents
Ajay Mehrotra
Northwestern University Pritzker School of Law
Economic Expertise, Democratic Constraints, and the Historical Irony of U.S. Tax Policy: Thomas S. Adams and the Beginnings of the Value-Added Tax
Wednesday, March 13, 2019
12:30 - 2:00
Solarium (room FA2), Falconer Hall
84 Queen's Park
When one examines how modern nation-states generate public revenue, the United States quickly emerges as a striking outlier compared to other advanced industrialized countries. Even a cursory review of statistics from the Organization for Economic Cooperation and Development (OECD) shows that the United States is out of step with the rest of the developed world in the amount, and the way, it raises tax revenue. One reason for this apparent American tax exceptionalism is the absence of a U.S. national consumption tax. Whereas nearly all other OECD countries have a national consumption tax, frequently in the form of a value-added tax (VAT), the United States remains one of the few countries without a consumption tax at the federal level. This project explores how and why the United States has historically rejected national consumption taxes. Nearly all developed countries, and many in the developing world, have some type of a national consumption tax, frequently in the form of a value-added tax (VAT). The United States is an exception. This project focuses on the fundamental question: why no VAT in the United States? To address this overall research question, this project explores three key historical periods. The first is the 1920s, when tax theorists in the United States and Germany first began to formulate and propose crude forms of value-added taxes. The second critical period is the decades of the mid-twentieth century. During the 1940s, the United States once again seriously considered but rejected national consumption taxes aimed at raising revenue for World War II. Similarly, after the war, during the U.S. occupation of Japan, American economic experts designed and implemented a proto-VAT for Japan. The third crucial period is the 1970s and ‘80s. During these decades, American lawmakers considered and even supported a U.S. VAT, but eventually withdrew their support or were ousted from political office. At the same time, other developed countries, such as Japan, Australia, and Canada, began to move towards a national VAT. By focusing on these three key historical periods from a comparative perspective, this project seeks to study how and why the U.S. has failed to adopt national consumption taxes, such as the VAT.
Ajay K. Mehrotra is the Executive Director and a Research Professor at the American Bar Foundation (ABF), a Chicago-based, independent, non-profit research institute that focuses on the empirical and interdisciplinary study of law, legal institutions, and legal processes. He is also a Professor of Law at the Northwestern University Pritzker School of Law, and an Affiliated Professor of History at Northwestern University.
His scholarship and teaching focus on legal history and tax law. More generally, his research explores law and political economy in historical and comparative perspective, with a particular focus on tax law and policy. He is the author of Making the Modern American Fiscal State: Law, Politics and the Rise of Progressive Taxation, 1877-1929 (New York: Cambridge University Press, 2013), which received the 2014 best book award from the U.S. Society for Intellectual History. He is the co-editor (with Isaac William Martin and Monica Prasad) of The New Fiscal Sociology: Taxation in Comparative and Historical Perspective (New York: Cambridge University Press, 2009). His writings have also appeared in student-edited law reviews and interdisciplinary, peer-reviewed journals including Law & Social Inquiry, Law & History Review, and Law & Society Review. His scholarship, teaching, and programmatic efforts have been supported by grants and fellowships from the American Academy of Arts & Sciences, the AccessLex Institute, the National Endowment for the Humanities, the National Science Foundation, the William Nelson Cromwell Foundation, and the Social Science Research Council.
Before joining the ABF and Northwestern, Mehrotra taught American legal history, federal income tax, taxation of business entities, and tax policy at the Indiana University Maurer School of Law. He also co-taught strategic tax planning at the Indiana University Kelley School of Business. He was also an adjunct professor of history at Indiana University and an Affiliated Faculty member of the Lin & Vincent Ostrom Workshop on Political Theory & Policy Analysis. Prior to his time at Indiana University he was a Doctoral Fellow at the ABF. After law school and before he embarked on his academic career, Mehrotra was an Associate in the Structured Finance department of the New York offices of J.P. Morgan.
Mehrotra received his B.A. in Economics from the University of Michigan, his J.D. from Georgetown, and his Ph.D. in American History from the University of Chicago.
For additional workshop information, please contact Events at events.law@utoronto.ca
