There are numerous areas of the law in which the victim of a wrongdoing has the right to obtain damages that compensate her for harm. When the wrongdoing also creates a benefit—either for the same victim or for a third party—a question arises as to whether the damages should be reduced to reflect that benefit. The law is unclear, and courts frequently act inconsistently. We argue that courts should deduct the benefit when it is not offset by another harm to a third party, and would not have existed but for the wrongdoing. We also argue that courts need to take into account the effect of deductions on victims’ and beneficiaries’ incentives to take care, and that measurement difficulties and other complex causal issues provide a basis for denying deductions in many cases.
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Reforming (and Saving) the IRS by Respecting the Public’s Right to Know
The current controversy involving possible political targeting by the IRS in administering the exempt organization (“EO”) tax laws is simply the latest in a long succession of similar allegations spanning at least five decades. This Article proposes to address the problem through increased transparency of the IRS’s administrative actions involving EOs. Greater transparency responds directly to the public’s frustration in not being able to monitor the agency and gain confidence that the laws are being applied in an even-handed manner.
Proposals to increase the transparency of government commonly confront some claimed governmental interest in secrecy, such as a national security or law enforcement concern. Transparency of the government’s tax decisions, however, encounters the further problem that it violates the privacy rights of taxpayers. This latter clash arises because the government’s tax administration decisions generally turn on the information it has extracted under compulsion from taxpayers. Thus, meaningful transparency of one (the government’s tax decisions) almost necessarily requires meaningful transparency of the other (taxpayer tax return information). Fortunately, Congress has long recognized good policy reasons to make public a substantial amount of EO tax return information. Thus, slight liberalizations of the existing disclosure rules for such information may allow sufficient government transparency to satisfy the public’s right to know in the precise area of the law that has generated the most controversy. Opening up more EO tax return information and IRS EO decision making to public scrutiny would tend to deter IRS misbehavior, reduce suspicions of such misconduct, and promote fuller communication both to establish any impropriety and avert false charges against the agency.
States as Interest Groups in the Administrative Process
A rising tide in federalism scholarship and political discourse accords unmitigated praise to the notion of partnership between states and federal agencies. This Article reveals a more complicated picture. It begins by analyzing the penetrating but usually invisible role of “state interest groups”—lobbying associations of state officials—in shaping federal regulation. These groups have become the core vehicle for state involvement in federal administration, but surprisingly, their pervasive and critical role is rarely noted in the legal literature.
The Article shows that the pathologies of state interest groups reflect broader, latent tensions within the emerging project of administrative federalism. To develop this claim, the Article disaggregates a trio of benefits thought to flow from state involvement in federal administration—protecting state power, enhancing agency expertise, and maintaining a democratically accountable process—and shows that these benefits are unlikely to coincide. Instead, mechanisms designed to pursue state power as an end in itself thrive at the expense of expertise and accountability. The project of affording states a voice in the federal regulatory process must therefore begin to take account of tradeoffs among key goals, not just benefits. The Article closes by sketching best practices to help agencies, courts, and states balance the competing goals of administrative federalism.