Interpreting Tax Statutes: Should Judges Fight Tax Avoidance?

Abstract

Under our criminal law, if I shoot someone at midnight on 31 December 2017, with the malicious intention of killing him without just cause or excuse, and he dies a second after midnight on 2 January 2019 of the gunshot wounds I inflicted on him, I’m not guilty of his homicide. See section 314 of the Criminal Code. Tax avoidance is legal only in like sense in which my gunshot victim’s ill-advised delay in dying excuses me from a murder charge. What I’ve done is not noble. Neither is tax avoidance. “The avoidance of tax may be lawful but it is not … a virtue.” The common law has over several centuries developed guides to statutory interpretation. These guides or rules are usually referred to as canons of statutory construction or canons of statutory interpretation. Given their complexity and detail, tax statutes may indeed be a special breed of legislation as asserted by tax lawyers. Even so, tax statutes ought to be amenable to all canons of statutory interpretation. But the received professional wisdom, zealously buoyed by the tax-avoidance industry, is that most of the canons are not suitable for construing this putatively elite category of legislation. Indeed, going by authority and precedent, the Strict Constructionist Approach and the Literal Rule appear to be the only permissible guides to construing tax statutes. But must we be obsessed with precedent?