Excepts from the dissent in [ 253 U.S. Page 267], previously posted, and comments
- "The tax on net incomes is a tax on the balance of a mutual account in
which there always are some and may be many items on both sides. It
seems to me that it cannot be affected by an inquiry into the source
from which the items more or less remotely are derived."
"Money held in trust loses its identity by being mingled with the
general funds of the owner. I see no reason why the same should not be
true of a salary. But I do not think that the result could be avoided by
keeping the salary distinct. I think that the moment the salary is
received, whether kept distinct or not, it becomes part of the general
income of the owner, and is mingled with the rest, in theory of law, as
an item in the mutual account with the United States."
"By that Amendment Congress is given power to "collect taxes on incomes,
from whatever source derived." It is true that it goes on "without
apportionment among the several States, and without regard to any census
or enumeration," and this shows the particular difficulty that led to
it. But the only cause of that difficulty was an attempt to trace income
to its source, and it seems to me that the Amendment was intended to put
an end to the cause and not merely to obviate a single result. I do not
see how judges can claim an abatement of their income tax on the ground
that an item in their gross income is salary, when the power is given
expressly to tax incomes from whatever source derived."
"The decisions heretofore reached by this Court seem to me to justify my
conclusion. In Peck & Co. v. Lowe, 247 U.S. 165, a tax was levied by
Congress upon the income of the plaintiff corporation. More than
two-thirds of the income were derived from exports and the Constitution
in terms prohibits any tax on articles exported from any State. By
construction it had been held to create "a freedom from any tax which
directly burdens the exportation," Fairbank v. United States , 181 U.S.
283, 293. The prohibition was unequivocal and express, not merely an
inference as in the present case. Yet it was held unanimously that the
tax was valid. "It is not laid on income from exportation . . . in a
discriminative way, but just as it is laid on other income. . . . There
is no discrimination. At most, exportation is affected only indirectly
and remotely. The tax is levied . . . after the recipient of the income
is free to use it as he chooses. Thus what in taxed -- the net income --
is as far removed from exportation as are articles intended for export
before the exportation begins." 247 U.S. 174, 175. All this applies with
even greater force when, as I have observed, the Constitution has no
words that forbid a tax. In United States Glue Co. v. Oak Creek, 247
U.S. 321, 329, the same principle was affirmed as to interstate commerce
and it was said that if there was no discrimination against such
commerce the tax constituted one of the ordinary burdens of government
from which parties were not exempted because they happened to be engaged
in commerce among the States."
I think these views of the dissent prevail now.
"I think that the moment the salary is received, whether kept distinct
or not, it becomes part of the general income of the owner, and is
mingled with the rest, in theory of law, as an item in the mutual
account with the United States."
I can see how a government officer or employee could be said to have a
"mutual account with the United States", but how can that be said of an
employee of a private corporation or an employee of a sole proprietor.
Judicial verbicide has destroyed our Constitution.
"I do not see how judges can claim an abatement of their income tax on
the ground that an item in their gross income is salary, when the power
is given expressly to tax incomes from whatever source derived."
Well, there you have the origin of the nefarious phrase "gross income"
which Congress adopted in later tax law.