Welcome to the Roundtable, a forum for incisive commentary and analysis
on cases and developments in law and the legal system.
on cases and developments in law and the legal system.
By Saxon Bryant
Saxon Bryant is a sophomore at the University of Pennsylvania and associate editor of the Penn Undergraduate Law Journal
April 15th is national tax day, the deadline to submit all federal income tax forms. In the midst of hours of paperwork and tabulating assets and losses, many citizens are left to wonder during the process, “Do I have to pay my taxes?” What standing does the government have to mandate that everyone pay income taxes? Several people have made their grievances about federal taxes known over the centuries, but did any of them have merit?
One of the oldest objections to federal income tax, is that it is unconstitutional. On April 8th, 1895, the U.S. Supreme Court struck down the federal income tax of 1894 in Pollock v. Farmers Loan Trust Co. . The bill placed a flat tax of 2 percent on all income over $4,000 (roughly $90,000 today) and was America’s first peacetime national income tax.  The Revenue Act, also known as the Wilson-Gorman Tariff, was contested on the grounds that the Constitution requires direct taxes to be levied in proportion to each state’s population. Pollock's argument was based on Article I, Section 9, Clause 4 of the Constitution, which states that: “No Capitation, or other direct, Tax shall be laid, unless in Proportion to the Census or Enumeration herein before directed to be taken.”  The reference to the “Census or Enumeration” was a reference to Article I, Section 2, of the Constitution, which states, “Representatives and direct Taxes shall be apportioned among the several States which may be included within this Union, according to their respective Numbers, which shall be determined by adding to the whole Number of free Persons, including those bound to Service for a Term of Years, and excluding Indians not taxed, three fifths of all other Persons.”  The federal government had levied indirect taxes on various products — including carriages, whiskey, and other specific products — but Pollock raised the question of whether the income tax was a direct tax or an indirect tax. Charles Pollock, a stockholder in Farmers Loan Trust, sued the company to stop it from paying the income tax. And by a 5-4 split, the Court agreed with Pollack.
However, while there is an apportionment requirement in the Constitution for direct taxes, the Sixteenth Amendment clearly eliminated the requirement for all taxes on incomes. The Sixteenth Amendment, ratified in 1913, removed all doubt about apportionment by clearly stating that, “The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.”  Following the ratification of the Sixteenth Amendment, Congress enacted an unapportioned income tax, and the constitutionality of that tax was challenged, but the Supreme Court held unanimously in Brushaber v. Union Pacific R.R. Co. (1916) that the income tax was constitutional because “in express terms the Amendment provides that income taxes, from whatever source the income may be derived, shall not be subject to the regulation of apportionment.” 
Given the framework of the Sixteenth Amendment, a savvy tax protester may first try to argue that the amendment did not confer any additional power to tax wages or labor. Indeed, the court stated in Stanton v. Baltic Mining Co. (1916), “...the Sixteenth Amendment conferred no new power of taxation…”  However, this is a misinterpretation of the court’s intention. The Supreme Court noted in Bowers v. Kerbaugh-Empire Co. (1926) that, “Congress already had the power to tax all incomes” prior to the 16th Amendment.  There is nothing in the Constitution that says that wages or income from labor cannot be taxed, or that a tax on wages or income from labor is a “direct” tax. It has been the consistent opinion of the Supreme Court beginning with Hylton v. United States (1796)  and continuing with Springer v. United States (1880) , Veazie Bank v. Fenno (1869) , Commissioner v. Glenshaw Glass Co. (1955)  and other cases that the government has the general power to levy taxes on income. What the Court was referring to in Stanton was that the 16th Amendment did not provide for a novel form of tax that was neither apportioned or uniform, the two categories of taxes as conferred by the Constitution, but rather clarified that income taxes belong in the uniform camp.
Taxes are imposed on income, but what exactly constitutes income? A second argument is that wages, tips, and other compensation received for personal services are not income. After all, there is no taxable gain when a person “exchanges” their labor for money. Unfortunately, for federal income tax purposes, “gross income” means all income from whatever source derived and includes compensation for services.  Any income, from whatever source, is presumed to be income under section 61 of the Internal Revenue Code, unless the taxpayer can establish a specific exemption. Judge Lourie codified this position declaring that “gross income means all income from whatever source derived.” in Reese v. United States (1994). 
A final potential defence against paying taxes is that the Sixteenth Amendment was never ratified at all. This argument was put forward by Thomas in 1986. A tax protester, Thomas asserted that only four states had officially ratified the Sixteenth amendment, and therefore the amendment was null and void. Due to various states receiving copies of the Sixteenth Amendment which contained errors of diction, capitalization, punctuation, and spelling, only four documents repeat the language of the Sixteenth Amendment exactly as Congress approved it. Many of the instruments neglected to capitalize “States,” and some capitalized other words instead. The instrument from Illinois had “remuneration” in place of “enumeration”; the instrument from Missouri substituted “levy” for “lay”; the instrument from Washington had “income” not “incomes”; others made similar blunders.  Because the states did not approve exactly the same text, the amendment should not have gone into effect.
While the letter of the law can be more important than the spirit of the law occasionally, in this case Judge Easterbrook wrote in United States v. Thomas (1986), “If a legislative document is authenticated in regular form by the appropriate officials, the court treats that document as properly adopted. The principle is equally applicable to constitutional amendments.”  Previous constitutional amendments had even worse typographical errors yet retain their validity, and the objections raised by Thomas were relatively inconsequential given the 73 year acceptance of the amendment. The 7th circuit of appeals had reached a similar verdict the nearly identical case of United States v. Foster (1986). 
People have tried hundreds of arguments in court to get out of paying taxes, but none have managed to stand. Going one step further, the IRS maintains a list of “frivolous” tax arguments which have been made illegal to use in courts nationwide and can result in being charged a fine up to $5,000.  It seems that until some new loophole in the tax code is found, April 15th is — and shall remain — national tax day.
 Pollock v. Farmers' Loan & Trust Co., 157 U.S. 429 (1895). https://supreme.justia.com/cases/federal/us/157/429/case.html
 Pollack, Sheldon. "Origins of the Modern Income Tax, 1894–1913." The Tax Lawyer 66, no. 2 (2013): 295-330. http://udel.edu/~pollack/Downloaded SDP articles, etc/academic articles/Origins of the Modern Income Tax in Tax Lawyer Winter 2013.pdf.
 U.S. Constitution. Article I, Sec. 4. https://www.archives.gov/founding-docs/constitution-transcript
 U.S. Constitution. Article I, Sec. 2.
 U.S. Constitution. Amendment XVI
 Brushaber v. Union Pacific R. Co., 240 U.S. 1 (1916). https://supreme.justia.com/cases/federal/us/240/1/case.html
 Stanton v. Baltic Mining Co., 240 U.S. 103 (1916). https://supreme.justia.com/cases/federal/us/240/103/case.html
 Bowers v. Kerbaugh-Empire Co., 271 U.S. 170 (1926). https://supreme.justia.com/cases/federal/us/271/170/case.html
 Hylton v. United States, 3 U.S. 171 (1796). https://supreme.justia.com/cases/federal/us/3/171/case.html
 Springer v. United States, 102 U.S. 586 (1880). https://supreme.justia.com/cases/federal/us/102/586/case.html
 Veazie Bank v. Fenno, 75 U.S. 533 (1869). https://supreme.justia.com/cases/federal/us/75/533/case.html
 Commissioner v. Glenshaw Glass Co., 348 U.S. 426 (1955). https://supreme.justia.com/cases/federal/us/348/426/case.html
 26 U.S. Code § 61.
 Reese v. United States, 24 F.3d 228 (1994) https://casetext.com/case/reese-v-us-3
 Benson, Bill, and M. J. Beckman. “The Law That Never Was: The Fraud of the 16th Amendment and Personal Income Tax” Constitutional Research Assoc., 1985.
 United States v. Thomas, 788 F.2d 1250 (1986). https://casetext.com/case/us-v-thomas-106
 United States v. Foster, 789 F.2d 457 (1986). https://casetext.com/case/united-states-v-foster-10
 "The Truth About Frivolous Tax Arguments Introduction | Internal Revenue Service." https://www.irs.gov/privacy-disclosure/the-truth-about-frivolous-tax-arguments-introduction.
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