Tax credit

“ For what it is worth, lawmakers usually draft tax-credit provisions the way they do—i.e., the way they drafted §36B—because the mechanics of the credit require it. Many Americans move to new States in the middle of the year. Mentioning state Exchanges in the definition of "coverage month"—rather than (as the Court proposes) in the provisions concerning taxpayers’ eligibility for the credit—accounts for taxpayers who live in a State with a state Exchange for a part of the year, but a State with a federal Exchange for the rest of the year. ”

“ Is the stock issued for loans made to the government of the United States liable to be taxed by states and corporations?
Congress has power 'to borrow money on the credit of the United States.' The stock it issues is the evidence of a debt created by the exercise of this power. The tax in question is a tax upon the contract subsisting between the government and the individual. It bears directly upon that contract, while subsisting and in full force. The power operates upon the contract the instant it is framed, and must imply a right to affect that contract. ”

“ I recommend therefore that, effective January 1, 1948, a cost of living tax credit be extended to our people consisting of a credit of $40 to each individual taxpayer and an additional credit of $40 for each dependent. ”

“ The President’s Proposal Would Expand the Earned Income Tax Credit to Provide Tax Relief for 6.4 Million Hard-pressed Working Families. The average increase for families with three or more children is $544 and some married couples with three or more children could see as much as an additional $1,155 tax credit. ”

“ Coordination with credit allowed against united states income taxes.— No credit shall be allowed against United States income taxes for any taxable year under section 36A of the Internal Revenue Code of 1986 (as added by this section) to any person— (A) to whom a credit is allowed against taxes imposed by the possession by reason of the amendments made by this section for such taxable year, or (B) who is eligible for a payment under a plan described in paragraph (1) (B) with respect to such taxable year. ”

“ If the taxpayer has made contributions to an unemployment fund under a state law, he may credit such contributions against the federal tax, provided, however, that the total credit allowed to any taxpayer shall not exceed 90 per centum of the tax against which it is credited, and provided also that the state law shall have been certified to the Secretary of the Treasury by the Social Security Board as satisfying certain minimum criteria. ”

“ Assume in the above example that the deficit in accumulated earnings and profits is $20,000 for income tax purposes, but the deficit in accumulated earnings and profits on the corporation's books by reason of a prior capitalization of surplus in the course of a nontaxable reorganization amounts to $250,000. In this case, although the State law would probably prohibit payment of any dividends, the credit allowed under the amendment to section 26 (c) is limited to $20,000, which is the deficit in accumulated earnings and profits for income tax purposes. ”

“ Whatever may be the wise rule-looking at the necessity in a commercial country for its prosperity that its public credit should never be impaired-as to the taxability of the public securities, it is settled that any tax levied upon them cannot be withheld from the interest payable thereon. ”

“ The similar treatment accorded by the statutes to credit against an overdue tax, and to payment of it; the prohibition of credit of an overpayment of one year against a barred deficiency for another; and the requirement that payment of a barred deficiency shall be refunded, are controlling evidences of the congressional purpose by the enactment of sections 607 and 609 to require refund to the taxpayer of an overpayment, even though he has failed to pay taxes for other periods, whenever their collection is barred by limitation. ”

“ The petitioner points out that the Revenue Act of 1936 introduced a new policy,-to tax undistributed earnings in order to prevent a taxpayer from accumulating untaxed surplus by forcing the payment of dividends which become taxable in the hands of the distributee. ”

“ Therefore, if a deduction for 100% of the repayments were allowed, every time money is received and later repaid the taxpayer would make a profit equivalent to the taxes on 27 1/2% of the amount refunded. In other situations when the taxes on a receipt do not equal the tax benefits of a repayment, either the taxpayer or the Government may, depending on circumstances, be the beneficiary. Here, the taxpayer always wins and the Government always loses. We cannot believe that Congress would have intended such an inequitable result. ”

“ Board of Assessors, 121 La. 116, 46 So. 122, where open accounts arising on the sale of merchandise were the subject of the assessment, the court said: 'There can be no serious question but that the legislature has provided that credits due upon open accounts arising out of business done in this state by nonresidents shall be taxed. . . . The state imposes this tax because of her need of the revenue to be derived from it; she extends to the business the protection of her laws, and seeks to make the business bear its just proportion of the burden of taxation. ”

“ The taxation thus imposed, nominally upon credits, having resulted in the double taxation of money, the additional tax must be paid by some one. And here all experience, as well as all settled theories of finance, concur that it is not the lender who pays, but the borrower. The borrower is the consumer; the interest that he pays to the lender is the prime cost of the delay for which he has contracted. If the Government, by the imposition of additional taxes, increase the cost, the borrower, being the consumer, must pay for it. ”

“ This arrangement is but part of the general plan evident in the Internal Revenue Code of providing separate treatment for the income, profits, estate and gift taxes, as distinct from the miscellaneous taxes and the excise, import and temporary taxes. We would be doing unwarranted violence to this clear demarcation were we to read the word 'overpayment' so as to place certain types of income tax refund claims within the scope of § 3313, a section that has always been divorced from the income tax portion of the revenue laws. ”

“ The statute of the State expressly forbids a higher rate of taxation.
This last proviso does not refer to corporations of any kind, but refers to private individuals-citizens of the State. The tax on bank shares is not to exceed the rate assessed upon other moneyed capital in the hands of such persons.
We submit that the words 'moneyed capital' refer only to such moneyed capital as is liable to assessment. They do not refer to bonds of the United States owned by individuals, for they are not moneyed capital liable to assessment. No assessment at all is to be made on such property. ”

“ Corporations are allowed to make certain deductions from gross income, including amounts paid for personal services of officers and employes and other ordinary expenses paid out of income in the maintenance and operation of business and property, including a reasonable allowance for depreciation, losses not compensated for by insurance or otherwise, taxes, etc. These need not be further mentioned, beyond saying that the intent and necessary effect of the act is to tax not gross receipts but net income ”

“ It may be said that the government may fulfil this principle by paying the interest with one hand, and taking back the amount of the tax with the other. But to this the answer is, that, to comply truly with the rule, the tax must be upon all the money of the community, not upon the particular portion of it which is paid to the public creditors, and it ought besides to be so regulated as not to include a lien of the tax upon the fund. The creditor should be no otherwise acted upon than as every other possessor of money ”

“ The tax was not eo nomine on the notes, but was expressed to be on 'credits, money loaned, bills receivable,' etc., and its amount was ascertained by computing the sum of the face value of all the notes held by the company at the time of the assessment.
The purpose of the taxing law was said to be to lay the burden of taxation equally upon those who do business within the state. ”

“ On the 25th of that month, the legislature passed an act providing that from the interest payable out of the treasury on bonds of the State, whether funded or unfunded, there should be retained a tax equal in amount to fifty cents on the one hundred dollars of their market value, on the first day in April of each year, and made it the duty of every officer of the Commonwealth, charged with the collection of taxes, to deduct from the matured coupons which might be tendered to him in payment of taxes, or other dues to the State, such tax as was then or might thereafter be imposed on the bonds. ”

“ This may occur when he has made such use or disposition of his power to receive or control the income as to procure in its place other satisfactions which are of economic worth. The question here is, whether because one who in fact receives payment for services or interest payments is taxable only on his receipt of the payments, he can escape all tax by giving away his right to income in advance of payment. If the taxpayer procures payment directly to his creditors of the items of interest or earnings due him, see Old Colony Trust Co. ”

“ It requires a return to be made to the assessor of the district or his assistant, 'of the amount of income, and profits, and taxes as aforesaid . . . on or before the tenth day of the month following that in which any dividends or sums of money became due or payable as aforesaid,' and the act of July 13th, 1866, section eleven, requires the payment of the tax on or before the last day of the month. Under these provisions it as the obvious duty of corporations to return the dividends and sums of money due by them, and to pay the tax to which they are liable within the periods designated. ”

“ A credit balance on a system accounting redounded to the benefit of the client in that it was available to him for future use. In order to implement his tax planning techniques Margolis or his employees engaged in so-called 'money movements.' A typical 'money movement' consisted of borrowing money from one system entity and paying it to another. A 'money movement' is described by the following pattern: periodically, after an accumulation of 'transactions requests' submitted by Margolis or his employees was collated, a series of proposed transactions was plotted on a spread sheet. ”

“ That tax is to be returned by, and collected from, the corporation as his agent and instrument.
A tax is understood to be a charge, a pecuniary burden, for the support of government. Of all burdens imposed upon mankind that of grinding taxation is the most cruel. It is not taxation that government should take from one the profits and gains of another. That is taxation which compels one to pay for the support of the government from his own gains and of his own property. ”

“ The adoption of the taxing act, as recommended by the commission, may therefore be taken, as appellant contends, to evidence a definite and specific legislative purpose to levy a new type of franchise tax, measured by corporate net income, including the tax exempt income from federal and state bonds. ”

“ The contract refers only to Federal taxes, existing or future, on 'material', 'articles' or 'supplies.' And additional compensation is provided to offset only Federal taxes of the type of sales taxes and processing taxes, 'applicable directly upon production, manufacture, or sale' and actually paid on supplies delivered to the Government. Since a tax on payrolls, or on the relationship of employment, is not-but in fact is distinct from the type of tax 'on' articles represented by sales taxes and processing taxes, respondent is not entitled to the additional compensation which it seeks. ”

“ 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 creditor, less 5 per cent. ”

“ The term 'net income,' as herein used, means the gross income less the deductions allowed.' (No deduction, however, is allowed for interest received from federal, state, municipal or other tax-exempt bonds.) The foregoing is so plain that comment or elucidation would seem unnecessary. The bare recital of the facts, in our opinion, shows how unreasonable it is to hold that the aim and purpose of the legislation was not, by indirection, to impose a tax upon income derived from tax-exempt securities which, constitutionally, could not be imposed directly. ”

“ It was levied only upon that part of their gains, or the interest due from them, which had become payable to, and, therefore, income of their shareholders and bondholders. Those persons have paid taxes upon the full income of six entire years under the act of 1864. The judgments in these cases compel them to pay a tax upon their income for six years and a half, when all other persons whose income was derived from interest or dividends in other companies were relieved at the expiration of six years. In my judgment, the act of Congress warrants no such injustice. ”