Published version: Reuven Avi-Yonah, Should U.S. Tax Law Be Constitutionalized? Centennial Reflections on Eisner v. Macomber (1920), 16 Duke Journal of Constitutional Law & Public Policy 65 (2021) Available at:


The US Supreme Court last decided a federal tax case on constitutional grounds in 1920, a century ago. The case was Eisner v. Macomber, and the issue was whether Congress had the power under the Sixteenth Amendment (authorizing an income tax, 1913) to include stock dividends in the tax base. The Court answered no because “income” in the Sixteenth Amendment meant “the gain derived from capital, from labor, or from both combined.” A stock dividend, since it did not increase the wealth of the shareholder, was not “income.” Macomber was never formally overruled, and it is sometime still cited by academics and practitioners for the proposition that the Constitution requires that income be “realized” to be subject to tax. However, in Glenshaw Glass, the Court held in the context of treble antitrust damages that the Macomber definition of income for constitutional purposes “was not meant to provide a touchstone to all future gross income questions” and that a better definition encompassed all “instances of undeniable accessions to wealth, clearly realized, and over which the taxpayers have complete dominion.” In the century that has passed since Macomber, the Court has never held that a federal tax statute was unconstitutional. This behavior of the Court constitutes a remarkable example of American tax exceptionalism, because in most other countries tax laws are subject to constitutional review and are frequently ruled unconstitutional. In what follows, we will first examine three examples of how tax law is constitutionalized in other countries (part 2). We will then look at some of the larger tax expenditures in the US and ask how they would fare under constitutional scrutiny (part 3). Finally, we will attempt to answer the question whether US tax law should be constitutionalized, and answer in a reluctant negative (part 4). But we will also urge Congress, which is equally charged with upholding constitutional values, to take horizontal equity more into consideration when evaluating tax expenditures.


Law and Economics | Public Law and Legal Theory | Tax Law

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