Paul L. Caron

Wednesday, April 17, 2024

Moore v. United States And The Original Public Meaning Of 'Taxes On Incomes'

Jonathan Grossberg (Thomson Reuters), Kerry Inger (Auburn; Google Scholar) & Carneil Wilson (Dentons Sirote, Birmingham, AL), Moore v. United States and The Original Public Meaning of "Taxes on Incomes", 43 ABA Tax Times __ (2024):

Aba-tax-timesThe concept of a “tax on income” at the time of the adoption of the Sixteenth Amendment is best understood not from a selective dictionary definition that ignores the lack of reference to realization even when that term (or related terms) is defined in the same dictionary nor from a careful selection of phrases from a treatise but rather from a full public understanding of the term as used by those who professionally studied or practiced taxation. In particular, the misguided reliance on Macomber as establishing a universal realization requirement for all taxable income fails to read either the case or related cases accurately. 

This article has demonstrated—by reviewing a wider array of dictionary, treatise, case law, contemporary state tax laws, scholarship, and concurrent newspaper and congressional discussion—that there was in fact no publicly understood consensus that realization was an inherent requirement of an income tax during the years leading up to, immediately before, and immediately following the adoption of the Sixteenth Amendment. Instead, many contemporary scholars described it as desirable that an income tax be based on accrual methods and include in its base sources of unrealized income, especially as a means of addressing the large accumulations of wealth and wealth disparity that provided a strong rationale underlying the passage of the amendment. The government was correct in stating that “tax scholars have long agreed” that income taxes include both realization and accrual basis taxes, as should be expected from the breadth of the amendment’s language making constitution a “tax on incomes, from whatever source derived.” If the Supreme Court were to use the appropriately cabined Macomber to create a judicial realization requirement for current and future income tax laws, it would be deeply unsettling to the framework established by the Sixteenth Amendment and create chaos for the administration of the income tax laws.

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