Document Type

Working Paper

Repository Date



tax policy, fiscal policy, war, Supreme Court, deference, emergency, Supreme Court bias, wartime economics, taxation, history of taxation

Subject Categories

Law | Law and Politics | Taxation | Tax Law


This paper seeks to identify and explain the effects of major wars on U.S. Supreme Court decision-making in the context of taxation. At first cut, one might ask why we should even expect to observe a correlation between military activities and judicial fiscal policy. After all, the justices have no authority whatsoever to adopt funding laws intended to relieve the budgetary pressures that tend to emerge in times international crisis. The Court, however, is able to contribute to the wartime revenueraising efforts indirectly by adopting a pro-government stance in the cases it decides in wartime periods. As the probability of a government win increases, the expected revenue to the federal fisc also increases.

Relying on Supreme Court tax decisions issued between the years 1909 and 2000, this paper identifies a strong and positive correlation between major wartime activity and the probability that the government will prevail. This pro-government bias appears to operate through the judicial belief that Congress and the President are better suited to address national emergencies. This perceived imbalance of expertise, however, does not lead the Court to adopt a strategy of total deference, but rather a restricted form that involves accommodation only on issues that Congress and the President have signaled are important to the on-going war activities. These findings are robust and rule out the possibility that the Court is motivated by short-term irrational exuberance for federal policymakers associated with the so-called "rally-effect" that emerges when Americans feel threatened by forces abroad.