The subject matter of taxation provides something of a quandary for law and economics: it simultaneously offers a field of scholarship in which analysts share an equally enthusiastic embrace of efficiency as an organising principle but, in doing so, demonstrates the insufficiency of efficiency alone as a normative (and empirical) criterion. This article explores this dilemma by focusing on a somewhat obscure and, as yet unsuccessful campaign to remove the Australian luxury car tax. The campaign selectively overplays the efficiency problems of the tax as narrow and distorting while downplaying or ignoring other theoretical and empirical evidence in favour of its fairness and efficiency. In doing so, it repeats many of the mistakes for which the law and economics movement has been criticised, and thereby offers some insight into the limitations of a law and economics approach to the analysis of tax laws.
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