TAX BENEFITS AND TAX JUSTICE: IS THERE A MARKET SOLUTION?

Abstract

Federal tax law is not considered a symbol of justice. It is a labyrinth of complex rules and statutory obfuscation. Taxpayers are often caught in its web of arcane rules with no apparent recourse. The uncertainty of the tax law makes the planning of one’s economic affairs a difficult situation at best. In many cases the tax law forces an inequitable result on taxpayers. There is a feeling among many that justice, as they would define it, is not being served. In this article we explore how, in one particular case at least, taxpayers can actually purchase certain tax benefits from other taxpayers to alleviate some of the injustice that they feel the law directs at them. We look at the potential transfer of dependency exemptions and its concomitant tax credits as an example of how a limited market between certain individuals can be used to realize economic gains from trade between these individuals.