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Excepts from the dissent in [ 253 U.S. Page 267], previously posted, and comments

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    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
    Message 1 of 1 , Jun 9, 2006
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      "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.
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