Revenue law

“ The revenue acts command the citizen, where required by law or regulations, to pay the tax, to make a return, to keep records, and to supply information for computation, assessment, or collection of the tax. He whose conduct is defined as criminal is one who 'willfully' fails to pay the tax, to make a return, to keep the required records, or to supply the needed information. ”

“ That every regulation of commerce; every law relative to excises, stamps, the post-office, the imposing of taxes, and their collection; the creation of courts and offices; in fine, every law for the Union, if enforced by any pecuniary sanctions, as they would tend to bring money into the Continental treasury, might, and no doubt would, be considered a revenue act. ”

“ Sect. 2 of the act provides 'that there shall be no other remedy, in any case of the collection of revenue, or attempt to collect revenue illegally, or attempt to collect revenue in funds only receivable by said officer under the law, the same being other or different funds than such as the tax-payer may tender, or claim the right to pay, than that above provided; and no writ for the prevention of the collection of any revenue claimed, or to hinder or delay the collection of the same, shall in any wise issue, either injunction, supersedeas, prohibition, or any other writ or process whatever ”

“ Because of a previously-existing deficit, petitioner corporation was prohibited by state law [1] from distributing as dividends its profits earned in 1936. Notwithstanding this state prohibition, the Commissioner held respondent liable under the 1936 Revenue Act [2] for surtax on undistributed profits. ”

“ The term 'trade or business' includes the performance of the functions of a public office.' This amendment, added by the Revenue Act of 1934, § 48, 48 Stat. 680, 696, was merely 'declaratory of existing law'. ”

“ A federal revenue act applicable throughout the nation fixes liability on the decedent taxpayer under Section 42 if the dividend is 'accrued.' The meaning of that word in this section should be uniform unless Congress has shown an intention to permit its meaning to be varied by state law. ”

“ There the people heard the list of fines levied in the courts; of tolls in the market, or taxes taken at the gates or in the harbour; of the “maltodes,” or sums paid on commodities for sale; of the “scot” levied on the property of individuals; of the “lyvelode” or livelihood, an income tax on rates or profits earned. They learned what means the corporation had taken of increasing the common revenue ”

“ A fortiori do they warrant a tax on sales which is not intended to discriminate against or to discourage them, but simply to collect a revenue for the benefit of the whole community in a convenient way. ”

“ The fact that its measure is gross revenue is consistent with a tax on the privilege of doing a volume of business which would yield that revenue, just as the Legislature indicated. But we have declined to regard mere gross receipts as a sound measure of going-concern value in a practical world of commerce, where values depend on profitableness of a business, not merely its volume. ”

“ Congress intended that profits and losses arising from the everyday operation of a business be considered as ordinary income or loss rather than capital gain or loss. The preferential treatment provided by § 117 applies to transactions in property which are not the normal source of business income. It was intended 'to relieve the taxpayer from * * * excessive tax burdens on gains resulting from a conversion of capital investments, and to remove the deterrent effect of those burdens on such conversions.' Burnet v. ”

“ Let the gentleman from New York classify the claims as he pleases, can he tell the extent of the demands? May they not amount to five million or ten million of dollars? And if to either sum, can we with propriety dispense with the internal taxes? It appears from the report of the Secretary of the Treasury that the whole of the revenue for the year 1803 and 1804 will be wanted. If, then, these claims shall be allowed, and shall produce an increase of the public debt, the fund derived from the internal revenue will be required.
It is cruel to decide at once against the claims of our merchants. ”

“ The ordinance in each case is sought to be sustained as a system of non-discriminatory taxation of various businesses, professions, and vocations, including the distribution of books for which contributions are asked, for the sole purpose of raising revenue. ”

“ The national aversion to borrowing is courted by one, and its aversion to a land tax, by the other. Our system of revenue, they truly say, is at present composed of duties and loans, and they propose to exchange it for a system of excises. They ought in justice to have said for one of excises and loans; for two bad modes of providing revenue, instead of the best which can probably be devised. I summon all experience to testify, whether the mode of obtaining revenue by excises, has diminished or extended the mode of obtaining it by loans. ”

“ Justice Story has well said that the practical construction of the constitution and the history of the origin of the constitutional provision in question prove that revenue bills are those that levy taxes, in the strict sense of the word, and are not bills for other purposes which may incidentally create revenue. ”

“ We were forced to adopt the system of levying a special penalty tax on the corporation itself, which has been exceedingly difficult to enforce in the courts and is nothing like as effective as if we could ignore the corporation and tax the shareholders direct upon his undistributed earnings in the profits of the corporation.'↑ The Revenue Act of 1864, 13 Stat. ”

“ The Revenue Act of 1921 defines gross income as including gains, profits, and income derived by the taxpayer from any source whatever, and provides that in computing net income of a corporation 'all interest paid or accrued within the taxable year on its indebtedness' is deductible from such gross income. Treasury regulations promulgated under authority of the statute state that if bonds are issued by a corporation at a premium the net amount of such premium is gain or income which should be amortized over the life of the bonds. ”

“ In the cases we are considering, the corporation parts not with a farthing of its own property. Whatever sum it pays to the government is the property of another. Whether the tax is 5 per cent. on the dividend or interest, or whether it be 50 per cent., the corporation is neither richer nor poorer. Whatever it thus pays to the government, it by law withholds from the creditor. If no tax exists, it pays 7 per cent., or whatever be its rate of interest, to its creditor in one unbroken sum. If there be a tax, it pays exactly the same sum to its creditors, less 5 per cent. ”

“ Independently, however, of the general impolicy of taxes on the necessaries of life, this doctrine overlooks the fact that revenue is received only on the quantity imported, but that the tax is paid on the entire quantity consumed. To make the public pay much, that the treasury may receive a little, is no eligible mode of obtaining a revenue. In the case of manufactured articles the doctrine involves a palpable inconsistency. The object of the duty as a means of revenue is inconsistent with its affording, even incidentally, any protection. ”

“ But to recognize the increment in value as affecting earnings and profits would no more harmonize with the taxless character of the transaction than to treat a realized gain as doing so. The same policy which carries over the transferor's basis for purposes of the corporation's income tax, § 113 (a) (8) , requires carrying it over for determining the taxability of its distributions as the Commissioner's regulation directs: gains and losses are to be brought into earnings and profits at the time and 'to the extent' that they are recognized under § 112. ”

“ Whether the classification could be justified if the statute were other than a revenue measure is a question, therefore, with which we are not now concerned. The pertinent and only question is whether between a store constituting one of a series under unified management, supervision, or ownership, and a store under single and distinct management, supervision, or ownership, there are such differences as to justify putting them in separate categories with the object of imposing, for the sole purpose of revenue, a larger tax in respect of one than in respect of the other. ”

“ But the third section of the act of the third of March, 1865, requires collectors to pay daily into the treasury the gross amount of all duties, taxes, and revenue received or collected in virtue of the internal revenue acts, without any abatement or deduction on account of salary, compensation, fees, costs, charges, expenses, or claims of any description whatever. ”

“ Because an activity may be a trade or business even if the taxpayer intended to show losses on its income tax forms under a permissible accounting method, the Court endorses an improper conception of profit motivation. ”

“ Prior to 1934, as now, personal holding companies were liable for the regular corporation income taxes under Title I of the Revenue Acts and they, like all other corporations, were subject to additional tax upon an accumulation of profits where there was present a purpose of avoiding surtaxes upon shareholders. ”

“ Letters are the primordia rerum of the commercial world. To tax them at all, is condemned by those who are best acquainted with the operations of finances. Surely, then, cent. per cent. will hardly [379] be deemed too slight a burden, and yet that—nay, more than that—the new plan will yield.
“But the country will never consent to adjudge this great cause on points of revenue. ”

“ The answer to this objection is, that the property of every person and corporation is by the law valued separately in the first instance; and the only effect of the action of the State board of equalization is to so adjust the assessment that each person or corporation shall pay a tax in proportion to the value of his or its property. ”

“ An includable element of the 'invested capital' is the 'accumulated earnings and profits as of the beginning of such taxable year.' § 718. It thus appears that by this method Congress intended, with minor exceptions not here relevant, to impose the excess profits tax on all annual net income in excess of 8% of a corporation's working capital, including its accumulated profits. ”

“ The object of taxation is in general to provide the state with an adequate revenue, but in all cases the indirect effects are important, and sometimes provision of revenue is considered of secondary importance. ”

“ The source of revenue to Dens shall be the initiation fees, fines, and a per capita tax, whenever the Grand Cyclops shall deem such tax necessary and indispensable to the interests and objects of the Order.
Sec. 7. All the revenue obtained in the manner aforesaid, shall be for the exclusive benefit of the Order, and shall be appropriated to the dissemination of the same and to the creation of a fund to meet any disbursement that it may become necessary to make to accomplish the objects of the Order and to secure the protection of the same. ”

“ With a return to specie payments, our current expenses must fall from thirty to forty per cent, and we can well afford to resign any premium on gold we now enjoy.
TAXES ON PRODUCTION.
The Revenue Commission enlighten us on this point. In their very able and luminous Report they say:—
"The diffuseness of the present revenue system of the United States is doubtless one of its greatest imperfections, and under it the exemption of any article from taxation is the exception rather than the rule. ”

“ Instead of leaping from this premise to the conclusion that there was no sale or exchange, the Government might more profitably have broken the transaction into components and attempted to distinguish between the interest which respondents retained and the interest which they exchanged. The worth of a business depends upon its ability to produce income over time. What respondents gave up was not the entire business, but only their interest in the business' ability to produce income in excess of that which was necessary to pay them off under the terms of the transaction. ”

“ And on the same principle a note given for a wager on the future amount of a branch of the public revenue is declared void; because it interests an individual in diminishing the production of the revenue. ”

“ The national banks and trust companies in their returns to the federal government and to the state under the 12 1/2 per cent. income tax law are allowed certain deductions of income from specified types of securities in addition to the expense of conducting their business, bad debts, losses, etc. ”

“ In other countries, even at the present time, there is a large public domain yielding revenue. Local authorities also largely own property from which a revenue is obtained. But as a rule, and in spite of what has often been the practice in the past, and of exceptions which may still exist in some countries, a government obtains the money required for its expenses by means of taxation. ”

“ Indeed, under this law these corporations have one advantage over other taxpayers. Returns made to tax receivers are overlooked by the grand juries, and a system is provided for increasing the valuation of a taxpayer's property when he undervalues it. ”

“ There is now, but one tax, and each man is made to pay according to the value of his property, or his business, or his labour. A land-holder, a stock-holder and the one who has houses and bonds and mortgages, pays so much per cent, on the advance of his property, and for his annual receipts—the merchant, with a fluctuating capital, pays so much on his book account of sales—the mechanic and labourer, so much on their yearly receipts, for we have no sales on credit now—that demoralizing practice has been abolished for upwards of a century. ”