Faculty of Law University of Toronto
The James Hausman Tax Law and Policy Workshop Series
presents
Charlotte Crane
Northwestern University Law School
Honoring Expectations about Taxes: Are Roth IRAs Different?
Friday, September 19, 2008
12:30 – 2:00
Dining Room –Flavelle House
78 Queen’s Park
The US Congress has created a situation in which, after 2010, there may be an enormous number of taxpayers holding an enormous amount of wealth the return on which they will claim should be permanently exempt from tax. This paper examines the policy choices available to Congress should it come to regret having allowed the creation of these tax-prepaid accounts It focuses first on the general nature of traditional retirement accounts, and the ways in which Congress has and could be expected in the future to alter the terms of these accounts. It concludes that Congress should feel free to change the tax treatment and other terms of these accounts in ways that might significantly affect the value of existing accounts, just as it feels free to change the tax treatment of any other asset or investment position. It then considers whether there is anything different about the tax pre-paid IRAs, especially those that are converted traditional IRAs. It concludes that although the claims of the holders of these accounts are qualitatively different from the holders of other tax-preferred investments, they should not be viewed as sufficiently different to render such accounts immune from any change. Nevertheless, the potential power of these claims suggests that Congress should avoid creating them in the first place.
Note to University of Toronto Law School Hausman Tax Law and Policy Workshop Participants : My apologies for presenting a topic that may on the surface seem to be so strictly limited to US practices and politics. I hope that the comparison of the expectations imbedded in various tax-preferred savings devices with other tax-sensitive investment is interesting and generalizable. And even it isn’t, you may find the issues discussed here closer to you than you realize, given the proposals in the last Canadian budget to provide for tax-prepaid retirement accounts.
BIO: Charlotte Crane is an expert in the area of tax law. Her primary research focuses on the problems of defining broad-based taxes and the mechanisms through which these rules evolve, and in the history of various tax institutions, especially in the era of the Early Republic.
A light lunch will be served.
For more workshop information, please contact Nadia Gulezko at n.gulezko@utoronto.ca
