Thursday, May 29, 2008

http://clerk.house.gov/legislative/rules110/rule12.html
Rules of The House of Representatives of The United States
RULE XII: RECEIPT AND REFERRAL OF MEASURES AND MATTERS
Messages
1. Messages received from the Senate, or from the President, shall be entered on the Journal and published in the Congressional Record of the proceedings of that day.
Referral 2. (a) The Speaker shall refer each bill, resolution, or other matter that relates to a subject listed under a standing committee named in clause 1 of rule X in accordance with the provisions of this clause.
(b) The Speaker shall refer matters under paragraph (a) in such manner as to ensure to the maximum extent feasible that each committee that has jurisdiction under clause 1 of rule X over the subject matter of a provision thereof may consider such provision and report to the House thereon. Precedents, rulings, or procedures in effect before the Ninety-Fourth Congress shall be applied to referrals under this clause only to the extent that they will contribute to the achievement of the objectives of this clause.
(c) In carrying out paragraphs (a) and (b) with respect to the referral of a matter, the Speaker-
(1) shall designate a committee of primary jurisdiction (except where he determines that extraordinary circumstances justify review by more than one committee as though primary);
(2) may refer the matter to one or more additional committees for consideration in sequence, either initially or after the matter has been reported by the committee of primary jurisdiction;
(3) may refer portions of the matter reflecting different subjects and jurisdictions to one or more additional committees;
(4) may refer the matter to a special, ad hoc committee appointed by the Speaker with the approval of the House, and including members of the committees of jurisdiction, for the specific purpose of considering that matter and reporting to the House thereon;
(5) may subject a referral to appropriate time limitations; and
(6) may make such other provision as may be considered appropriate.
(d) A bill for the payment or adjudication of a private claim against the Government may not be referred to a committee other than the Committee on Foreign Affairs or the Committee on the Judiciary, except by unanimous consent.
Petitions, memorials, and private bills 3. If a Member, Delegate, or Resident Commissioner has a petition, memorial, or private bill to present, he shall endorse his name, deliver it to the Clerk, and may specify the reference or disposition to be made thereof. Such petition, memorial, or private bill (except when judged by the Speaker to be obscene or insulting) shall be entered on the Journal with the name of the Member, Delegate, or Resident Commissioner presenting it and shall be printed in the Congressional Record.
4. A private bill or private resolution (including an omnibus claim or pension bill), or amendment thereto, may not be received or considered in the House if it authorizes or directs-
(a) the payment of money for property damages, for personal injuries or death for which suit may be instituted under the Tort Claims Procedure provided in title 28, United States Code, or for a pension (other than to carry out a provision of law or treaty stipulation);
(b) the construction of a bridge across a navigable stream; or
(c) the correction of a military or naval record.
Prohibition on commemorations 5.(a) A bill or resolution, or an amendment thereto, may not be introduced or considered in the House if it establishes or expresses a commemoration.
(b) In this clause the term ''commemoration'' means a remembrance, celebration, or recognition for any purpose through the designation of a specified period of time.
Excluded matters 6. A petition, memorial, bill, or resolution excluded under this rule shall be returned to the Member, Delegate, or Resident Commissioner from whom it was received. A petition or private bill that has been inappropriately referred may, by direction of the committee having possession of it, be properly referred in the manner originally presented. An erroneous reference of a petition or private bill under this clause does not confer jurisdiction on a committee to consider or report it.
Sponsorship 7.(a) Bills, memorials, petitions, and resolutions, endorsed with the names of Members, Delegates, or the Resident Commissioner introducing them, may be delivered to the Speaker to be referred. The titles and references of all bills, memorials, petitions, resolutions, and other documents referred under this rule shall be entered on the Journal and printed in the Congressional Record. An erroneous reference may be corrected by the House in accordance with rule X on any day immediately after the Pledge of Allegiance to the Flag by unanimous consent or motion. Such a motion shall be privileged if offered by direction of a committee to which the bill has been erroneously referred or by direction of a committee claiming jurisdiction and shall be decided without debate.
(b)(1) The primary sponsor of a public bill or public resolution may name cosponsors. The name of a cosponsor added after the initial printing of a bill or resolution shall appear in the next printing of the bill or resolution on the written request of the primary sponsor. Such a request may be submitted to the Speaker at any time until the last committee authorized to consider and report the bill or resolution reports it to the House or is discharged from its consideration.
(2) The name of a cosponsor of a bill or resolution may be deleted by unanimous consent. The Speaker may entertain such a request only by the Member, Delegate, or Resident Commissioner whose name is to be deleted or by the primary sponsor of the bill or resolution, and only until the last committee authorized to consider and report the bill or resolution reports it to the House or is discharged from its consideration. The Speaker may not entertain a request to delete the name of the primary sponsor of a bill or resolution. A deletion shall be indicated by date in the next printing of the bill or resolution.
(3) The addition or deletion of the name of a cosponsor of a bill or resolution shall be entered on the Journal and printed in the Congressional Record of that day.
(4) A bill or resolution shall be reprinted on the written request of the primary sponsor. Such a request may be submitted to the Speaker only when 20 or more cosponsors have been added since the last printing of the bill or resolution.
(5) When a bill or resolution is introduced ''by request,'' those words shall be entered on the Journal and printed in the Congressional Record.
Executive communications 8. Estimates of appropriations and all other communications from the executive departments intended for the consideration of any committees of the House shall be addressed to the Speaker for referral as provided in clause 2 of rule XIV.
<http://clerk.house.gov/legislative/rules110/rule1.html> Rule I <http://clerk.house.gov/legislative/rules110/rule2.html> Rule II <http://clerk.house.gov/legislative/rules110/rule3.html> Rule III <http://clerk.house.gov/legislative/rules110/rule4.html> Rule IX <http://clerk.house.gov/legislative/rules110/rule5.html> Rule V <http://clerk.house.gov/legislative/rules110/rule6.html> Rule VI <http://clerk.house.gov/legislative/rules110/rule7.html> Rule VII <http://clerk.house.gov/legislative/rules110/rule8.html> Rule VIII <http://clerk.house.gov/legislative/rules110/rule9.html> Rule IX <http://clerk.house.gov/legislative/rules110/rule10.html> Rule X <http://clerk.house.gov/legislative/rules110/rule11.html> Rule XI <http://clerk.house.gov/legislative/rules110/rule12.html> Rule XII <http://clerk.house.gov/legislative/rules110/rule13.html> Rule XIII <http://clerk.house.gov/legislative/rules110/rule14.html> Rule XIV <http://clerk.house.gov/legislative/rules110/rule15.html> Rule XV <http://clerk.house.gov/legislative/rules110/rule16.html> Rule XVI <http://clerk.house.gov/legislative/rules110/rule17.html> Rule XVII <http://clerk.house.gov/legislative/rules110/rule18.html> Rule XVIII <http://clerk.house.gov/legislative/rules110/rule19.html> Rule XIX <http://clerk.house.gov/legislative/rules110/rule20.html> Rule XX <http://clerk.house.gov/legislative/rules110/rule21.html> Rule XXI <http://clerk.house.gov/legislative/rules110/rule22.html> Rule XXII <http://clerk.house.gov/legislative/rules110/rule23.html> Rule XXIII <http://clerk.house.gov/legislative/rules110/rule24.html> Rule XXIV <http://clerk.house.gov/legislative/rules110/rule25.html> Rule XXV <http://clerk.house.gov/legislative/rules110/rule26.html> Rule XXVI <http://clerk.house.gov/legislative/rules110/rule27.html> Rule XXVII <http://clerk.house.gov/legislative/rules110/rule28.html> Rule XXVIII
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Sunday, May 4, 2008

The Story of Glenshaw Glass: Toward a Modern Concept of Gross Income

JOSEPH M. DODGE
Florida State University College of Law


TAX STORIES: AN IN-DEPTH LOOK AT TEN LEADING FEDERAL INCOME TAX CASES, Foundation Press, Forthcoming

Abstract:
This paper presents the story of Glenshaw Glass Company v. Commissioner, 348 U.S. 426 (1955), the leading case on gross income under the income tax. The paper examines prior doctrine (mainly, the attenuated legacy of Eisner v. Macomber), briefs, newspaper records, contemporaneous commentary, and current recollections of participants to illuminate how this case reached the Supreme Court, what strategies were pursued by counsel (for better or worse), and what choices the Supreme Court made in its resolution of this case. The Supreme Court's opinion in Glenshaw Glass is shown to be both sweeping and restrained. The doctrinal outcome is related to intellectual currents in play from the early days of the income tax to the present day in an effort to show why Glenshaw Glass, which was barely noticed at the time decided, has achieved its current high status. The doctrinal and institutional implications of Glenshaw Glass for current law and theory are also examined, giving due note to issues that were left unresolved. The basic thesis is that Glenshaw Glass completed the process of liberating income tax theory and doctrine from constraints imposed not only by other disciplines but also by traditional legal thinking, ushering in the "modern era" of an autonomous income tax.

The paper will be published as a chapter in a book to be entitled Tax Stories: An In-Depth Look at Ten Leading Federal Income Tax Cases (Foundation Press). Additional financial support for the project has been provided by the American Tax Policy Institute.


Accepted Paper Series


Contact Information for JOSEPH M. DODGE (Contact Author)


Email address for JOSEPH M. DODGE
Florida State University College of Law
425 W. Jefferson Street
Tallahassee , FL 32306
United States
850-644-4590 (Phone)

D.C. Circuit Holds § 104(a)(2) Unconstitutional Under 16th Amendment; Not All Receipts Constitute "Income" Under Glenshaw Glass

The D.C. Circuit held today, in Murphy v. United States, No. 03cv02414 (D.C. Cir. 8/22/06), that § 104(a)(2) is unconstitutional under the 16th Amendment as applied to a recovery for a non-physical personal injury (emotional distress and loss of reputation) unrelated to lost wages or earnings. Murphy received $70,000 from New York State for anxiety suffered and injury to her reputation as a result of being "blacklisted" after becoming a whistleblower against her employer (the New York Air National Guard):

Murphy argues that, being neither a gain nor an accession to wealth, her award is not income and § 104(a)(2) is therefore unconstitutional insofar as it would make the award taxable as income....In Murphy’s view, the Court thereby made clear that the recovery of compensatory damages for a “personal injury” -- of whatever type -- is analogous to a “return of capital” and therefore is not income under the IRC or the Sixteenth Amendment.

According to Murphy, the Supreme Court read the concept of “human capital” into the IRC in Glenshaw Glass.... In Murphy’s view, the Court thereby made clear that the recovery of compensatory damages for a “personal injury” -- of whatever type -- is analogous to a “return of capital” and therefore is not income under the IRC or the Sixteenth Amendment.....

Noting that the power of the Congress to tax income “extends broadly to all economic gains,” ... the Government next maintains that compensatory damages “plainly constitute economic gain, for the taxpayer unquestionably has more money after receiving the damages than she had prior to receipt of the award.”...

At the outset, we reject the Government’s breathtakingly expansive claim of congressional power under the Sixteenth Amendment -- upon which it founds the more far-reaching arguments it advances here. The Sixteenth Amendment simply does not authorize the Congress to tax as “incomes” every sort of revenue a taxpayer may receive. As the Supreme Court noted long ago, the “Congress cannot make a thing income which is not so in fact.”...

In sum, every indication is that damages received solely in compensation for a personal injury are not income within the meaning of that term in the Sixteenth Amendment. First, as compensation for the loss of a personal attribute, such as wellbeing or a good reputation, the damages are not received in lieu of income. Second, the framers of the Sixteenth Amendment would not have understood compensation for a personal injury -- including a nonphysical injury -- to be income. Therefore, we hold § 104(a)(2) unconstitutional insofar as it permits the taxation of an award of damages for mental distress and loss of reputation.

Albert Einstein may have been correct that “[t]he hardest thing in the world to understand is the income tax,” The Macmillan Book of Business and Economic Quotations 195 (Michael Jackman ed., 1984), but it is not hard to understand that not all receipts of money are income. Murphy’s compensatory award in particular was not received “in lieu of” something normally taxed as income; nor is it within the meaning of the term “incomes” as used in the Sixteenth Amendment. Therefore, insofar as § 104(a)(2) permits the taxation of compensation for a personal injury, which compensation is unrelated to lost wages or earnings, that provision is unconstitutional.

For more on the definition of income in Glenshaw Glass, see Joseph Dodge, The Story of Glenshaw Glass: Toward a Modern Concept of Gross Income, in Tax Stories (Foundation Press, 2003).

Steve Bank (UCLA) offers these perceptive comments on Murphy:

This is an odd application of original intent or even original meaning analysis (assuming you agree that either is relevant). The court acknowledges that there were a number of revenue acts before Congress even addressed damage recoveries, thus providing at least five years of separation from the ratification of the Sixteenth Amendment to any opinion on this issue. Five years is not long, but the onset of World War I in the intervening years, plus the dramatic increase in the top marginal rates from 6% in 1913 to 65% in 1918, radically changed the landscape under which the issue was considered. That renders the 1918 view of the situation hardly the final word on what was the commonly understood meaning in 1913, prior to World War I. Even then, the opinion was from the Attorney General and not from Congress or any committee of Congress. More importantly, during this period, the definition of income was far from settled. The income tax was only five years old and Congress was borrowing from economic definitions, legal definitions, and popular definitions. The economic understanding of the term “income” at the time was arguably evenly split between those advocating an accretion tax notion of income (e.g., Haig) and those advocating a consumption tax notion of income (e.g., Fisher). The latter would not have supported a tax on capital gains, although the Supreme Court held that it was permissible in a 1921 decision. As I have argued in the context of tax-free reorganizations, the provisions adopted in 1918 were an attempt to compromise between these conflicting definitions of income so as to assure a proper revenue to pay for war expenses while still maintaining the appearance of fairness and responding to heavy lobbying from business and the wealthy. The notion of taxing people who recovered damages during this war period may have violated our sense of fair play when war profiteers were seeking to avoid paying tax on their bounty.

Under the Murphy Court’s analysis, it is not clear whether stock dividends should be taxable (since Treasury held them to be so soon after the 16th amendment was ratified in 1913) or not (since the Supreme Court held their taxation to be unconstitutional – in the only instance in which a tax statute was struck down as unconstitutional – in 1920 in Eisner v. Macomber). There are many other examples, including examples of Treasury flip-flopping on its own positions. The law was in flux in part for the very reason that there had been no “commonly understood” definition of income for tax purposes at the time the 16th amendment was ratified.

(Hat Tip: Jon Forman, Michael Graetz, Brant Hellwig & Joshua Klein.)

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