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December 06, 2021 The Tax Lawyer

The Role of Professional Organizations in Practice and Policy: How Lawyers Overtook Accountants and Economists in the Early 20th Century Tax Field

Vol. 75, No. 1 - Fall 2021

by Mindy Herzfeld


Tax policy and practice are inherently interdisciplinary, involving the close collaboration of lawyers, accountants, and economists. But the presence and strength of the legal profession in a field that was from its start dominated by accountants and economists was not pre-ordained. To no small degree, selfconscious action by the organized profession and effective engagement by its professional associations allowed tax attorneys to establish dominance in an area in which they saw a lucrative future. The American Bar Association (ABA) Tax Committee played an important role in helping to propel lawyers from their poor starting position in the newly created field of federal income tax after the passage of the 16th Amendment to a position of strength in a lucrative practice area with the ability to shape the development of policy.

The story of how tax attorneys came to dominate the fields of tax policy and sophisticated tax practice for much of the 20th century is a success story of strong professional organizations. This Article illustrates how the organization of attorneys focusing on taxation into a specialized group within bar associations has played an important role in making lawyers the central players in tax policy and tax practice in the United States over the 20th century. It places some of the contemporary challenges facing the legal profession in the tax area and questions over its interaction with other disciplines in historical perspective by tracing the early history of the specialization of tax lawyers within professional associations. These associations laid the groundwork for the creation of a tax bar with its own self-identity and ethical guidelines. This Article explores the role played by the bar associations, in particular the ABA, in developing and promoting the practice of tax law among attorneys and the prestige of lawyers as tax practitioners and developers of tax policy. 

As part of the effort to map out the expansion of the professional associations of tax attorneys, the Article first sets out the historical background of the growth of professional organizations in the United States. It then examines the development of the U.S. federal income tax law during its first decades, along with the role economists played in that development, followed by a study of the role of the accounting profession in tax practice during this time. An exploration of the role played by a number of prominent attorneys in tax policy and tax practice and of the Association of the Bar of the City of New York sets the stage for consideration of the formation and development of the ABA Tax Committee in the 1920s. The history of the organization and activities of the ABA Tax Committee demonstrates how it became so effective in propelling attorneys to a position of significant influence within the worlds of tax legislation, tax policy, and tax practice.

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