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[91WashLRev0515] Taxes and Ability to Pay in Municipal Bankruptcy

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dc.contributor.author Hunt, John Patrick
dc.date.accessioned 2016-06-14T14:49:23Z
dc.date.available 2016-06-14T14:49:23Z
dc.date.issued 2016-06
dc.identifier.citation 91 Wash. L. Rev. 515 (2016) en_US
dc.identifier.issn 0043-0617
dc.identifier.uri http://hdl.handle.net/1773.1/1586
dc.description Volume 91, Number 2, June 2016 en_US
dc.description.abstract John Patrick Hunt, Professor of Law and Martin Luther King, Jr. Research Scholar, University of California, Davis School of Law (King Hall). Abstract: Scholars and commentators have argued that municipalities can and should use bankruptcy to shed unwanted liabilities, particularly employee healthcare and pension commitments. Courts increasingly have agreed: Detroit’s approved bankruptcy plan cut pensions, and the bankruptcy court overseeing the bankruptcy of Stockton, California brought down barriers to pension-cutting. Both courts found their way around state provisions arguably protecting municipal pensions. Now that pension-cutting in bankruptcy has momentum, we can expect to hear arguments for using bankruptcy not just in cases like Detroit and Stockton where the municipality cannot meet all its obligations, but also in cases where residents or politicians come to regret municipal promises to workers. This Article presents the most sustained, straightforward, and comprehensive argument to date that existing law requires bankruptcy courts to provide relief only when municipalities are reasonably unable to meet their obligations. The legislative history of the municipal bankruptcy statutes consistently sounds this theme, and judicial precedents are in agreement. Congress did not provide a clear standard for courts to apply when looking at tax levels in municipal bankruptcy. Although the legislative history and case law provide some support for the proposition that municipalities should be required to tax at the level that maximizes revenue, the Article suggests a more moderate criterion: absent a compelling explanation, courts could require that a municipality tax at the top of its peer group as a condition of bankruptcy eligibility and plan confirmation. en_US
dc.language.iso en_US en_US
dc.publisher Seattle: Washington Law Review, University of Washington School of Law en_US
dc.subject Article en_US
dc.title [91WashLRev0515] Taxes and Ability to Pay in Municipal Bankruptcy en_US
dc.title.alternative Taxes and Ability to Pay in Municipal Bankruptcy en_US
dc.type Article en_US
dc.rights.holder Copyright 2016 by Washington Law Review Association. en_US

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