New Article on Distinction Between Taking and Taxing

November 2nd, 2009

From SSRN, The Taking/Taxing Taxonomy (H/T Legal Theory Blog_

Takings jurisprudence is engaged in a constant paradox. It is conventionally portrayed as chaotic and “muddy,” and yet attempts by the judiciary to create some sense of order in it by delineating this field into distinctive categories that apply to each a different set of rules are often criticized as analytically incoherent or normatively indefensible.

This Essay offers an innovative approach to the taxonomic enterprise in takings law, by examining what is probably its starkest and most entrenched division: that between taking and taxing. American courts have been nearly unanimous in refusing to scrutinize the power to tax, viewing this form of government action as falling outside the scope of the Takings Clause. Critics have argued that the presence of government coercion, loss of private value, and potential imbalances in burden sharing mandate that the two instances be conceptually synchronized and subject to similar doctrinal tests.

The main thesis of the Essay is that this dichotomy, and other types of legal line-drawing in property, should be assessed not on the basis of a “pointblank” analysis of allegedly-comparable specific instances, but rather on a broader view of the foundational principles of American property law and of the way in which takings taxonomies mesh with the broader social and jurisprudential understanding of what “property” is.

Identifying American property law as conforming to two fundamental principles-formalism of rights and strong market propensity-but at the same time as devoid of a constitutional undertaking to protect privately-held value against potential losses as a self-standing “strand” in the property bundle, the Essay explains why prevailing forms of taxation do seem to be disparate from other forms of governmental interventions with private property. Focusing attention on property taxation, the Essay shows why taxation is considered a “lesser evil” type of government coercion, how the taking/taxing dichotomy better addresses the public-private interplay in property law, and why taxation is often viewed as actually empowering property rights and private control of assets.


Perhaps more interesting, to me at least, than the discussion between taking and taxing, is the concepts of taxonomy’s in general. Professor Solum plucks these paragraphs:

T he enterprise of legal taxonomy need not be understood as necessarily yielding to formalist or positivist conceptions of law, one in which law purports to be capable of dividing the legal world into neat distinctive categories that simply reflect “objective” legal reality.201 Taxonomies and legal categories are analytically and jurisprudentially essential to maintaining a reasonable level of clarity and certainty in organizing the world around us, developing legal expectations, and understanding the normative and policy considerations with respect to different actors, resources, and legal relationships. And yet, no legal taxonomy can be portrayed as wholly detached from the institutional and normative foundations that stand at its basis.202 Even the allegedly most basic distinctions in law, such as between private and public law, are not “natural” in the sense that these must follow a single formula or that they run across different legal systems irrespective of the governing normative and institutional principles in each one of them. The challenge that a legal system thus faces is to find the appropriate balance between the essentiality of creating a comprehensive taxonomy of legal orderings, while at the same time avoiding the pitfalls of enshrining legal categories as inherently superior to the underlying institutional and normative tenets of the legal system as a whole.

Property law faces particularly intriguing challenges in creating and maintaining such a workable division. As a field of law which sets up the ways in which society orders resources and human relationships around them, property is typified by the fact that entitlements and obligations in regard to resources regularly implicate numerous parties not only as a matter of abstract analysis, but also in social and economic practice.204 Thus, although property is so laden with values and constant moral, political, and societal inquiries,205 excessive ad hocery aimed at attaining resource-specific efficiency, justice, or some other underlying normative goal comes with its own high price tag, since it undermines the broad and relatively straightforward signals that property should send about its core attributes to the large numbers of legal actors implicated by its rules.

One more note is in place here about the nature of legal taxonomy, particularly in property law. A point that is often overlooked in the jurisprudential debate over the enterprise of legal taxonomy is that the link between the number of legal categories and the simplicity of the legal system is not straightforward. The question is not only how many different types of legal categories we have, and how easy it is for us to classify a particular event or situation as falling within a specific category, but also what is the type of legal norm that applies to each category, i.e., whether the norm is designed as a clear- cut “rule” that sets out a straightforward, relatively rigid decree, or rather as a “standard,” a broadly phrased provision that requires further, later stage crystallization.207 This means that even what might seem at first glance to be a very orderly division of the world into legal categories can turn out to be quite different if each legal category is governed by a broad and vague standard that may more than offset the alleged tidiness of having carved- out distinctive categories for different types of disputes. This is an issue of tremendous importance in takings law, within which the different categories can be governed by either “per se” rules or by highly complicated and “muddy” standards, mostly in the case of regulatory interventions with property. It is thus essential to realize that “taxonomy” is not synonymous with “simplicity” or “rigidity.”