Farris Lecture with Adam Hofri-Winogradow: Equity has No Place Here: Should Equitable Remedies be Available to Reverse Failed Tax Planning?

Adam Hofri-Winogradow will explore an odd use of equity: the granting of equitable remedies to assist authors of tax minimization plans where their plans result in unexpected tax liabilities. Canadian law has in the current century first taken a strikingly liberal approach to granting rescission and rectification to reverse the tax results of failed, mistake-based tax planning, and later switched to an approach far more restrictive than those under UK and US law. He believes the current Canadian approach to be both too permissive and not permissive enough: given the importance of the tax-and-transfer system for providing equalizing redistribution, and the regressive redistributive effects of tax planning, state-funded courts should in general not grant equitable remedies to authors of tax minimization schemes that have met with unexpected tax burdens as a result of tax mistakes. He recognizes, however, that tax mistakes can lead to devastating results for taxpayers, and that such mistakes are to be expected given the complexity of our tax law and our acceptance of tax law changes operating retroactively. He therefore suggests that courts retain a power to grant rescission or rectification, as necessary, to eliminate mistake-based tax planning that will reduce a human taxpayer to insolvency if not eliminated, where such elimination is not realistically available in other ways.