Paul Caron's Tax Prof Blog has a posting by Greg Germain analyzing the taxpayer's reply brief in Murphy, the vacated emotional distress damages case that held the inclusion of emotional distress damages unconstitutional which will be re-heard by the court on April 23.
Two significant points show the difficulty of constructing briefs to argue cases correctly. Litigators beware--you can almost give your case away if you do not think through your argument thoroughly in order not to concede a point that you ought by rights to win.
First, the government conceded in its brief that the 16th amendment definition of income was what was intended to be captured in the 1986 statutory provision in section 61. Of course many rigid interpreters of constitutions and statutes think they can find meaning in the elusive concept of "intent" of those who frame a provision, leading to a warped notion of what language is based on a frozen concept that is undiscoverable by future generations and unrealistic as an assessment of the meaning for the enacting generation. For linguists, it is a legal fiction that fails to comprehend the creativity embedded in current linguistic use--in a sense, all text is pregnant with future meanings at the time that it is enacted. As Germain notes,
Other than the narrow definition of “income” first used in pre-16th Amendment cases and adopted in Macomber, which definition the Supreme Court later in Glenshaw Glass rejected as a touchstone, there is no factual basis for the speculations about the 16th Amendment enactors’ intent. However, by focusing on the silent 1913 enactors’ imagined understandings of “income,” the parties have allowed the Court to paint on a blank canvas. TaxProf Blog.
The Supreme Court has not been blind to the need to understand the income tax statutes in light of Congressional intent at the time each provision has been enacted, rather than fixed to some early (and conceptually poor) "intent" regarding the concept of income traceable, with varying degrees of success, to the various drafters of the Constitution.
The entire Supreme Court, including the three strict constructionists (Justices Scalia, Thomas and Rehnquist), have recognized both the primacy of congressional intent, and that Congress’s intent would be thwarted if the meaning of ambiguous terms in a statute were fixed at enactment. Id.
Germain also critiques Murphy's response to the argument from the Article I taxing power.
Murphy’s concluding attempt to address the constitutional Article I issue was both short and weak. Murphy asserted that the only constitutional question concerns the scope of the 16th Amendment, because Congress only sought to tax the award under the 16th Amendment. This argument ignores the clear rule of constitutional law that requires the Court to “search the Constitution to ascertain whether or not the power is conferred,” regardless of the stated basis for enactment. Id. (citations omitted).
Let's hope the court recognizes that our understanding of income has indeed grown more sophisticated as we have moved from an early industrial economy to a mature, financial and technological economy. There was no clear view about damages at the time the 16th Amendment was passed, and it would be foolish to expect that there would have been. But the very vagueness of the language suggests that it was clearly intended to reach broadly--then and in the future. It would be a shame for the court to provide fuel for the many tax nuts who claim they don't have to pay tax based on their twisted understanding of some enactor's words.