Tax Tuesday: Direct Taxes

I have for a long time wondered what exactly a “direct” tax was. After all, it seems pretty central to the Constitutional power to tax. Reading through Chemerinski last night, I found the answer. The Supreme Court has long held that a direct tax is a tax on property (although the distinction between direct and indirect is no longer relevent due to the 16th Amendment). An income tax is not a direct tax. Article I Section 9 Clause 4 of the Constitution provides that no capitation (head tax (e.g. everyone has to pay $100 per year)) or other direct tax shall be lawful unless in proportion to the census. But if an income tax is not a direct tax, then the power to tax laid out in Article I, Section 8, Clause 1 is unrestricted. And this means that Congress's power to tax incomes does not derive from the 16th Amendment.

And, in fact, prior to the ratification of the 16th amendment, Congress did impose income taxes (and other indirect taxes). And the Supreme Court upheld these taxes. The first income tax in the United States was enacted during the Civil War.

So what’s the deal with the 16th Amendment? If we can already tax income without regard to apportionment, then what does the 16th Amendment do for us?

Well, in Pollock v. Farmers’ Loan and Trust Co., (1985) the Court held an income tax unconstitutional. But the income tax was declared unconstitutional only because the statute taxed not only labor income, but also income from property. Thus the property tax portion of the law was a direct tax. In addition, it was not apportioned according to the census. Conclusion: unconstitutional under Article I, Section 9, Clause 4. The labor income portion of the tax was not unconstitutional.

So it seems to me that what the 16th Amendment really does is allow taxation on gains from property (e.g. capital gains, rental income, etc.).

What I really want to hit home about this is that tax protestors who claim that a tax on labor income is unconstitutional, because either the 16th Amendment was not properly ratified or that the Constitution does not authorize a tax on labor income, are so clearly wrong that it boggles the mind. A brief look at Article I of the Constitution should clear a lot of things up.

Some News

For those who weren't at the halloween party last night, I again wore my french maid costume. I will not post a photo because last year when I did post a photo, I received numerous comments, both via blog and face-to-face, that seeing the photo made people sick to their stomachs. If you are someone who has not seen the photo, and you have a strong stomach, feel free to look through my October 2005 archives.

Another thing that people not at the party may not have heard is that next spring, Nell and I will be leaving the midwest for the pacific northwest. It was a very bitter-sweet decision, because I have made some very good friends here and have no real desire to leave them. But such is life. I left a few great friends back in Colorado to come to the midwest for law school, and as difficult as that was, it was the right decision.

But regardless, there is still a lot of time between now and graduation. A lot more finals, a lot more lunches, and a lot more boring FedJur lectures.

Morality Monday (Tuesday)

This is a long post, but everything after this sentence is the proposed stem cell amendment in Missouri; vote for or against in the comments.

Be it resolved by the people of the state of Missouri that the Constitution be amended:

One new section is adopted by adding one new section to be known as section 38(d) of Article III to read as follows:

Section 38(d). 1. This section shall be known as the “ Missouri Stem Cell Research and Cures Initiative.”

2. To ensure that Missouri patients have access to stem cell therapies and cures, that Missouri researchers can conduct stem cell research in the state, and that all such research is conducted safely and ethically, any stem cell research permitted under federal law may be conducted in Missouri, and any stem cell therapies and cures permitted under federal law may be provided to patients in Missouri, subject to the requirements of federal law and only the following additional limitations and requirements:

(1) No person may clone or attempt to clone a human being.

(2) No human blastocyst may be produced by fertilization solely for the purpose of stem cell research.

(3) No stem cells may be taken from a human blastocyst more than fourteen days after cell division begins; provided, however, that time during which a blastocyst is frozen does not count against the fourteen-day limit.

(4) No person may, for valuable consideration, purchase or sell human blastocysts or eggs for stem cell research or stem cell therapies and cures.

(5) Human blastocysts and eggs obtained for stem cell research or stem cell therapies and cures must have been donated with voluntary and informed consent, documented in writing.

(6) Human embryonic stem cell research may be conducted only by persons that, within 180 days of the effective date of this section or otherwise prior to commencement of such research, whichever is later, have

(a) provided oversight responsibility and approval authority for such research to an embryonic stem cell research oversight committee whose membership includes representatives of the public and medical and scientific experts;

(b) adopted ethical standards for such research that comply with the requirements of this section; and

(c) obtained a determination from an Institutional Review Board that the research complies with all applicable federal statutes and regulations that the Institutional Review Board is responsible for administering.

(7) All stem cell research and all stem cell therapies and cures must be conducted and provided in accordance with state and local laws of general applicability, including but not limited to laws concerning scientific and medical practices and patient safety and privacy, to the extent that any such laws do not (i) prevent, restrict, obstruct, or discourage any stem cell research or stem cell therapies and cures that are permitted by the provisions of this section other than this subdivision (7) to be conducted or provided, or (ii) create disincentives for any person to engage in or otherwise associate with such research or therapies and cures.

3. Any person who knowingly and willfully violates in this state subdivision (1) of subsection 2 of this section commits a crime and shall be punished by imprisonment for a period of up to fifteen years or by the imposition of a fine of up to two hundred fifty thousand dollars, or by both. Any person who knowingly and willfully violates in this state subdivisions (2) or (3) of subsection 2 of this section commits a crime and shall be punished by imprisonment for a period of up to ten years or by the imposition of a fine of up to one hundred thousand dollars, or by both. A civil action may be brought against any person who knowingly and willfully violates in this state any of subdivisions (1) through (6) of subsection 2 of this section, and the state in such action shall be entitled to a judgment recovering a civil penalty of up to fifty thousand dollars per violation, requiring disgorgement of any financial profit derived from such violation, and/or enjoining any further such violation. The attorney general shall have the exclusive right to bring a civil action for such violation. Venue for such action shall be the county in which the alleged violation occurred.

4. Each institution, hospital, other entity, or other person conducting human embryonic stem cell research in the state shall (i) prepare an annual report stating the nature of the human embryonic stem cells used in, and the purpose of, the research conducted during the prior calendar year, and certifying compliance with subdivision (6) of subsection 2 of this section; and (ii) no later than June 30 of the subsequent year, make such report available to the public and inform the Secretary of State how the public may obtain copies of or otherwise gain access to the report. The report shall not contain private or confidential medical, scientific, or other information. Individuals conducting research at an institution, hospital, or other entity that prepares and makes available a report pursuant to this subsection 4 concerning such research are not required to prepare and make available a separate report concerning that same research. A civil action may be brought against any institution, hospital, other entity, or other person that fails to prepare or make available the report or inform the Secretary of State how the public may obtain copies of or otherwise gain access to the report, and the state in such action shall be entitled as its sole remedy to an affirmative injunction requiring such institution, hospital, other entity, or other person to prepare and make available the report or inform the Secretary of State how the public may obtain or otherwise gain access to the report. The attorney general shall have the exclusive right to bring a civil action for such violation.

5. To ensure that no governmental body or official arbitrarily restricts funds designated for purposes other than stem cell research or stem cell therapies and cures as a means of inhibiting lawful stem cell research or stem cell therapies and cures, no state or local governmental body or official shall eliminate, reduce, deny, or withhold any public funds provided or eligible to be provided to a person that (i) lawfully conducts stem cell research or provides stem cell therapies and cures, allows for such research or therapies and cures to be conducted or provided on its premises, or is otherwise associated with such research or therapies and cures, but (ii) receives or is eligible to receive such public funds for purposes other than such stem cell-related activities, on account of, or otherwise for the purpose of creating disincentives for any person to engage in or otherwise associate with, or preventing, restricting, obstructing, or discouraging, such stem cell-related activities.

6. As used in this section, the following terms have the following meanings:

(1) “Blastocyst” means a small mass of cells that results from cell division, caused either by fertilization or somatic cell nuclear transfer, that has not been implanted in a uterus.

(2) “Clone or attempt to clone a human being” means to implant in a uterus or attempt to implant in a uterus anything other than the product of fertilization of an egg of a human female by a sperm of a human male for the purpose of initiating a pregnancy that could result in the creation of a human fetus, or the birth of a human being.

(3) “Donated” means donated for use in connection either with scientific or medical research or with medical treatment.

(4) “Fertilization” means the process whereby an egg of a human female and the sperm of a human male form a zygote (i.e., fertilized egg).

(5) “Human embryonic stem cell research,” also referred to as “early stem cell research,” means any scientific or medical research involving human stem cells derived from in vitro fertilization blastocysts or from somatic cell nuclear transfer. For purposes of this section, human embryonic stem cell research does not include stem cell clinical trials.

(6) “In vitro fertilization” means fertilization of an egg with a sperm outside the body.

(7) “Institutional Review Board” means a specially constituted review board established and operating in accordance with federal law as set forth in 42 U.S.C. 289, 45 C.F.R. Part 46, and any other applicable federal statutes and regulations, as amended from time to time.

(8) “Permitted under federal law” means, as it relates to stem cell research and stem cell therapies and cures, any such research, therapies, and cures that are not prohibited under federal law from being conducted or provided, regardless of whether federal funds are made available for such activities.

(9) “Person” means any natural person, corporation, association, partnership, public or private institution, or other legal entity.

(10) “Private or confidential medical, scientific, or other information” means any private or confidential patient, medical, or personnel records or matters, intellectual property or work product, whether patentable or not and including but not limited to any scientific or technological innovations in which an entity or person involved in the research has a proprietary interest, prepublication scientific working papers, research, or data, and any other matter excepted from disclosure under Chapter 610, RSMo, as amended from time to time.

(11) “Solely for the purpose of stem cell research” means producing human blastocysts using in vitro fertilization exclusively for stem cell research, but does not include producing any number of human blastocysts for the purpose of treating human infertility.

(12) “Sperm” means mature spermatozoa or precursor cells such as spermatids and spermatocytes.

(13) “Stem cell” means a cell that can divide multiple times and give rise to specialized cells in the body, and includes but is not limited to the stem cells generally referred to as (i) adult stem cells that are found in some body tissues (including but not limited to adult stem cells derived from adult body tissues and from discarded umbilical cords and placentas), and (ii) embryonic stem cells (including but not limited to stem cells derived from in vitro fertilization blastocysts and from cell reprogramming techniques such as somatic cell nuclear transfer).

(14) “Stem cell clinical trials” means federally regulated clinical trials involving stem cells and human subjects designed to develop, or assess or test the efficacy or safety of, medical treatments.

(15) “Stem cell research” means any scientific or medical research involving stem cells. For purposes of this section, stem cell research does not include stem cell clinical trials.

(16) “Stem cell therapies and cures” means any medical treatment that involves or otherwise derives from the use of stem cells, and that is used to treat or cure any disease or injury. For purposes of this section, stem cell therapies and cures does include stem cell clinical trials.

(17) “Valuable consideration” means financial gain or advantage, but does not include reimbursement for reasonable costs incurred in connection with the removal, processing, disposal, preservation, quality control, storage, transfer, or donation of human eggs, sperm, or blastocysts, including lost wages of the donor. Valuable consideration also does not include the consideration paid to a donor of human eggs or sperm by a fertilization clinic or sperm bank, as well as any other consideration expressly allowed by federal law.

7. The provisions of this section and of all state and local laws, regulations, rules, charters, ordinances, and other governmental actions shall be construed in favor of the conduct of stem cell research and the provision of stem cell therapies and cures. No state or local law, regulation, rule, charter, ordinance, or other governmental action shall (i) prevent, restrict, obstruct, or discourage any stem cell research or stem cell therapies and cures that are permitted by this section to be conducted or provided, or (ii) create disincentives for any person to engage in or otherwise associate with such research or therapies and cures.

8. The provisions of this section are self-executing. All of the provisions of this section are severable. If any provision of this section is found by a court of competent jurisdiction to be unconstitutional or unconstitutionally enacted, the remaining provisions of this section shall be and remain valid.

In my defense

I only rarely directly respond to a comment in a previous post with a whole new post, but Squishy Burrito left me no choice. OK, so you had a baby and still managed to post on your blog. But I'm a busy guy! For instance, on Wednesday I woke up at 8 a.m. to take Nell in to work, and didn't even settle in for my first nap until 8:45! And I only took one nap! After that, I had to go into school for my one wednesday class. Then home for dinner and television. And my shows aren't over until 8 p.m. At his point in the day, I have not had a free moment to post on the blog for a full 12 hours! And no I have to do homework till 10. Then, bed time.

In addition to my rigorous schedule, I just haven't been able to figure out anything to post about. Anytime something interesting pops into my head, I am away from my computer. And then when I get to the computer, I can't figure out why I ever thought that thing was interesting.

So in conclusion, the explanation for my paucity of posts is: too lazy, low self-esteem, and writer's block.

By the way, I looked at some picture of Lster. Very cute. And the pictures of Mster and Lster together... Awesomely Cute!

I didn't think it would happen

But the Colorado Buffaloes won a game. Of course, I didn't see the game as it was not televised here. And despite the fact that we opened the season with a loss to a I-AA team, dammit, I'm proud of the Buffs. It's easy to hang your head and blame circumstance. But to pick it up and beat Texas Tech, that means something. Given, Texas Tech is no Georgia or Texas or Oklahoma or even Notre Dame, but it is a step up from Montana State. Here's ESPN's take on the game. Apparently, the students rushed the field. Times they are a'changin.

I was there in 2001 when we beat the Huskers 62-36. I rushed the field and it felt great. That was a rivalry.

I was in Boulder that same year when the Buffs beat Texas in the Big 12 Championship game. Frow and Ryan and I went cruising on the Hill, revelling with pedestrians, to celebrate.

But a midseason win against a mediocre Texas Tech? I mean, I'm happy we won a game this year, but rushing the field? I don't think so.

Dr. Miracles, Episode 3

It's new, it's funny, and it is wildly inappropriate. Viewer discretion is advised.

Latter Day Saints and Tax Evasion

Apropos of many discussions I've had with Arfanser, here is an empirical article on tax evasion and the Mormon church. I haven't read it all yet, but it is on my to-do list.

Conlcusion: "The study also found that Mormons are significantly more opposed to tax evasion than are non-Mormons, regardless of the issue.

Murphy Update

This isn't my most timely post, but the IRS has filed a motion for rehearing in the D.C. Circuit in the Murphy case. Here's a link to the brief. I haven't read the whole thing yet, but what I have read is good. Note the Circuit court judges on the panel decision were Ginsburg (who wrote the opinion), Brown, and Rogers. Ginsburg was appointed in 1986 and actually clerked for one of my favorite Supreme Court justices, Thurgood Marshall. Rogers was appointed in 1994 following a career in corporate, government, and criminal law. She also had an LLM from U Virginia. Janice Rogers Brown, of course, will be remembered from her very contentious appointment in 2005 to the court. Interestingly, she also has an LLM from Virginia. These brief backgrounds of the judges are of no real importance, but ever since I began reading "The Brethren" by Bob Woodward et al. last week, I have become a little more interested in the backstories of judges.

Bunny in a Box

Awake? Awake.

There was a time when being awake at one in the morning was par for the course, nothing unusual. Frow and I were just getting started on our all-night philosophy jams that would go until four or five. Then I would get up, walk all the way across campus, and fall asleep in Roman History.

But I'm not a freshman any more. I like sleep. I like it a lot. I like my nice firm mattress; I like my comfy blankets; I like (most of all) curling up with Nell*.

Yet I am awake. Sitting on the couch, watching the TVGuide Channel's scroll of late-night crap. Yeah, like I'm going to watch Danny Deutch. Try again CNBC!

The thing is, I barely slept at all last night. I seriously slept for maybe two hours in toto. And that's coming from a guy who enjoys sleep.

When I was in high school, I took a psychology class. One of the few things I remember is that the teacher said that if we couldn't sleep, we should grab a pen and paper and write down our thoughts in a flow-of-consciousness style. I don't think I'm willing to be quite so revealing, but I thought a blog post might be somewhat therapeutic.

But now that I've said that, I can't think of anything to write. And I'm still not tired. Um............... So... Pretty awesome weather today. 1031 transactions turn out to be bigger business than one might expect. My favorite subsection of the Code: 751(b). The longest subsection of the code: 401(a). My least favorite Code subsection: 1(h). Please feel free to submit your own favorite and least favorite section, subsection, or subchapter of the Code. Makes for interesting chitchat.

OK. I think you have all had enough.



*As a side note (I have told one or two people this but I think it bears telling to everyone) when I come home after ten or ten thirty at night due to studying at school and I climb into bed, Nell is inevitably asleep. Despite her unconsciousness, she will role onto her side as soon as I get into bed into to have me spoon with her. I find it quite adorable. If she reads this and finds it too revealing, I may have to take it down, so read it while you can!