Taxing Identity

Joel Slemrod

No 34476, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Taxation based on identity has a long, often sordid history, and persists to this day, usually with some subtlety. It is a relatively tame cousin of the blatant, violent, and genocidal policies that have targeted people of certain religions, races, and genders for millennia. It is, nevertheless, an issue to be confronted rather than ignored by public finance economists. This is especially true because the concept of identity played a prominent role in the US presidential election of 2024, and is likely to be at least an undercurrent to the policy debates beginning in 2025, including those concerning tax policy. Tax based on identity is difficult, although not impossible, to justify within standard optimal tax analysis, because in that framework the policy objective is usually framed as being anonymous (impartial) and eschews basing policy on disparate preferences. The most promising justification seems to be if, for example, race is systematically correlated with the failure of income to represent ability to pay. It then acts as a tag that can help achieve the desired allocation of tax burden at minimal efficiency cost. For unjustified identity-based tax policy, analysis can help to spot its existence and quantify its social welfare cost.

JEL-codes: H20 (search for similar items in EconPapers)
Date: 2025-11
New Economics Papers: this item is included in nep-pbe and nep-pub
Note: PE
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Forthcoming: Taxing Identity , Joel Slemrod. in Tax Policy and the Economy, Volume 40 , Jones and Moffitt. 2025

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