Tax policy colloquium session on probability of tax positions' correctness

Yesterday at the NYU Tax Policy Colloquium, Sarah Lawsky presented her paper, "Probably? Understanding Tax Law's Uncertainty."

One thing I'll say for Sarah, she definitely came in with some flair. A key feature of the paper that she came to NYU to present is its criticizing moi (of all people), in this case for a hypothetical in a paper of mine discussing tax penalties, in which I suggest that a taxpayer taking ten positions, each 90 percent likely to correct, might on average have one incorrect position. As she rightly notes, the example treats as a frequentist or objective probability something that in practice we probably need to construe in subjective probability terms, concerning degrees of belief by the person who judges it as 90 percent.

I didn't see, when writing my paper, or when reading her paper, or in the discussion yesterday, how (correctly) recasting the probability I invoked in my hypothetical as subjective rather than frequentist does anything to change significantly my analysis or conclusions. I would say the modification makes my conclusions (supporting no-fault penalties) even stronger, given how taxpayers can exploit (and how the government can use) uncertainty about uncertainty. But this was an early draft of her paper and I am hoping she will develop a really interesting analysis of how thinking in subjectivist terms matters to compliance and penalty issues.

The most deflating thing about it all was having one's nose rubbed in the brute fact of the passage of time. Time was that I and others in my age cohort (law professors such as Bankman, Griffith, Kaplow, Fried, Strnad, McCaffery, and Weisbach) were the young pups criticizing the work of the prior generation, and sometimes meeting a rough reception. Now we're the establishment (as Sarah crisply, and I would say irrefutably, informed me) and thus can expect similar treatment from younger persons of spirit. I believe we'll be a lot nicer about it, however. But then again let's not revisit the dead past, or revive disputes that by this point have been so fully resolved that they tend to show up, if at all, purely as schtick.