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Home > Journals > Michigan Law Review > MLR > Volume 19 > Issue 2 (1920)

 

Abstract

Two important cases sustained objections to applications of the federal income tax. In each there was vigorous dissent. Evans v. Gore2 held that the constitutional provision that the federal judges shall receive "a compensation which shall not be diminished during their continuance in office" applies to diminution by inclusion of that compensation in the assessment of the general federal tax on net income. The case at bar involved a tax on the i918 compensation of a judge appointed in 1899. While not directly qualified by anything in the opinion, the decision would seem to have no application to judges appointed after the law taxing their income was first enacted. So also any increase in compensation should be subject to a tax on the books when the increase is accorded. There would be force in the argument that the increase might be accompanied by subjection to a tax on the total compensation, provided the net residue is greater than the salary before: the increase. The opinion of the court pointed out that the salary of the President is also protected from diminution and that the tax on the salary is a diminution thereof. This, too, should have no application to a president who assumes office after the income tax is in force. Unless, therefore, the offending provision in the income tax is formally repealed, it ought to be applicable to all future presidents and judges. It is somewhat surprising that the court should fail to point out this limit to the scope of the decision. Most of Mr. Justice Van Devanter's opinion is a recital of the history of the clause in question and a dissertation on the importance of the independence, of the judiciary. Nowhere does he directly refute the contention of the minority that this independence is not threatened by subjection to a burden that is borne equally by all citizens. He insists that taxation is diminution and that diminution of any kind is prohibited by the Constitution. The minority make two other points. One is that the salary had lost its identity before the assessment of the tax on total net income for the year. The other is that the Sixteenth Amendment, giving Congress power to tax income from whatever source derived, specifically authorizes the tax in question. The majority's answer to the latter contention is the one previously accepted by a majority of the court in the Stock Dividend Case, i. e., that the Sixteenth Amendment does not extend the federal taxing power to new subjects, but merely forbids looking at the source of income to ascertain whether a tax thereon is in substance a direct tax.

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