What is income?

Table of Contents

What is Income, continued.

        For those of you just tuning in, the discussion/debate/argument has centered around what the definition of the word income is, and in which tax acts of Congress which definitions of the word is used.

        Mr. JG is a representative of a sort for the "other" side and has been gracious enough to take the time to debate and discuss the issue. For that I thank him. If it takes me time to present my case, I know it takes him time to present his case.

        While we differ greatly on the issue, I do believe we both have the common goal of proving the truth. Granted, even though we both have different truths and our own truths are what we want to come out, I think that the friction of the debate will grind at and wash away that which is not truth.

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The next three pages are three different Supreme Court cases that deal with the 1909 tax act. In all three of these cases, the Supreme Court makes a point proving that the definition of "income" as used in the 1909 tax act means "corporate income".

Each of the three pages end with the same statement

“INCOME, as used in the tax act of 1909 is the MEASURE of a CORPORATE tax, Therefore, INCOME must mean CORPORATE INCOME.”

This is correct, but only when the word income is used in that act and in the court cases referring to that act.

In regard to Merchants’ Loan & Trust Co. v. Smietanka, 255 U.S. 509 (1921), this act included persons other than corporations and that was clearly stated by the Supreme Court:

Assuming for the present that there was constitutional power to tax such a gain or profit as is here involved, are the terms of the statute comprehensive enough to include it?
Section 2(a) of the act of September 8, 1916 (39 Stat. 757), (40 Stat. 300, 307, 212), applicable to the case, defines the income of 'a taxable person' as including 'gains, profits, and income derived from ... sales, or dealings in property, whether real or personal, growing out of the ownership or use of or interest in real or personal property ... or gains or profits and income derived from any source whatever.'
Plainly the gain we are considering was derived from the sale of personal property, and, very certainly the comprehensive last clause 'gains or profits and income derived from any source whatever,' must also include it, if the trustee was a 'taxable person' within the meaning of the act when the assessment was made.
That the trustee was such a 'taxable person' is clear from section 1204(1)(c) of the act of October 3, 1917 (40 Stat. 331), which requires that--

'Trustees, executors ... and all persons, corporations, or associations, acting in any fiduciary capacity shall make and render a return of the income of the person, trust, or estate for whom or which they act, and be subject to all the provisions of this title which apply to individuals.'

And section 2(b) of the act of September 8, 1916, supra, specifically declares that the--

'income received by estates of deceased persons during the period of administration or settlement of the estate, ... or any kind of property held in trust, including such income accumulated in trust for the benefit of unborn or unascertained persons, or persons with contingent interests, and income held for [255 U.S. 509, 517] future distribution under the terms of the will or trust shall be likewise taxed, the tax in each instance, except when the income is returned for the purpose of the tax by the beneficiary, to be assessed to the executor, administrator, or trustee, as the case may be.'

Further, section 2(c) clearly shows that it was the purpose of Congress to tax gains, derived from such a sale as we have here, in the manner in which this fund was assessed, by providing that--

'For the purpose of ascertaining the gain derived from the sale or other disposition of property, real, personal, or mixed, acquired before March 1, 1913, the fair market price or value of such property as of March 1, 1913, shall be the basis for determining the amount of such gain derived.'

Thus, it is the plainly expressed purpose of the act of Congress to treat such a trustee as we have here as a 'taxable person' and for the purposes of the act to deal with the income received for others precisely as if the beneficiaries had received it in person.

The beneficiary is not a corporation and the taxable income of the trust is not limited to corporate income. This tax act was not limited to “corporate income” as you have used that term on the previous pages. Substituting a definition that is limited to corporate recipients gives an absurd result in the above quotation from the court.

Q50. Is the gain derived from capital, from labor, or from both combined, corporate gain?

It is correct only in so far as the word income is used in the 1909 tax act and in the court cases referring to that act; but is not correct as applied to the act of September 8, 1916 (39 Stat. 757).
The words corporate gain, or any language limiting income to that received by a corporation are not in the definition of income in Merchants’ Loan & Trust Co. v. Smietanka . On the contrary, the decision discusses the definition of income without any qualification as to what person or entity received the income. Changing it from a definition of income to a definition of “corporate income” is not using the actual words of the court.

Eisner v. Macomber, supra, a case arising under the same Income Tax Act of 1916 which is here involved, the definition of income which was applied was adopted from Stratton's Independence v. Howbert, supra, arising under the Corporation Excise Tax Act of 1909, with the addition that it should include 'profit gained through sale or conversion of capital assets,'

The word used by the court was income and does not imply and was not corporate income or "income".

Q59. Are the definitions quoted, (A gain derived from capital, from labor, or from both combined including profit gained through sale or conversion of capital assets) the "commonly understood meaning of the term" "income" when the Sixteenth Amendment was adopted in 1913?

Not when you change the word income to the term "income" (which you use to mean “corporate income”). The substitution of "income" (which you use to mean “corporate income”) for the word income is not supported by the actual language of the Supreme Court decision.

INCOME, as used in the tax act of 1909 is the MEASURE of a CORPORATE tax, Therefore, INCOME must mean CORPORATE INCOME.

The scope and limitations of the tax act of 1909 do not limit the definition of income. Only so far as the word income is used in the 1909 tax act and in the court cases referring to that act is the coined term "income" appropriate. In any other context, that is an addition to the words of the decision or the law.

Mr. G cites this from the first three pages of my web site. Each page is a different Supreme Court case. Each case did in fact address questions of the 1909 tax act. Thus, these three pages are used to nail down EXACTLY what the meaning of income was, as used in the 1909 tax act.

Each of the three pages end with the same statement

“INCOME, as used in the tax act of 1909 is the MEASURE of a CORPORATE tax, Therefore, INCOME must mean CORPORATE INCOME.”

This is correct, but only when the word income is used in that act and in the court cases referring to that act.

Mr. G correctly observes that the definition on those three pages is the definition of income as used in the 1909 tax act. That was my intent on those three pages; to definitively nail down what the 1909 tax act definition of income was. The 1909 tax act defines income as INCOME. I use red to indicate when income is corporate income, as opposed to when income is other or personal income.

Mr. G's logic contained in his statement is correct; The definition of income only applies where the definition of income applies. WHERE the definition applies is the topic as I see our argument.

Parts of Mr. G's post deleted (for now) to get to the meat of the matter.

Q50. Is the gain derived from capital, from labor, or from both combined, corporate gain?

It is correct only in so far as the word income is used in the 1909 tax act and in the court cases referring to that act; but is not correct as applied to the act of September 8, 1916 (39 Stat. 757).

Is there any question as to what Mr. G is stating here?

Is this a correct parse of Mr. G's statement: 'The definition of the word income used in the 1909 tax act is NOT the correct definition of the word income used in the 1916 tax act'?

Mr. G cites Q50 above, and Mr. G cites Q59 later in his post (which I have snipped to focus on the meat of the matter). Here are a few of the questions that Mr. G did NOT address.

Merchants’ Loan & Trust Co. v. Smietanka, 255 U.S. 509 (1921)

In Hays v. Gauley Mountain Coal Co....
In United States v. Cleveland, Cincinnati, Chicago & St. Louis Railway Co....

It is obvious that these decisions in principle rule the case at bar if the word 'income' has the same meaning in the Income Tax Act of 1913 that it had in the Corporation Excise Tax Act of 1909, and that it has the same scope of meaning was in effect decided in Southern Pacific Co. v. Lowe, where it was assumed for the purposes of decision that there was no difference in its meaning as used in the act of 1909 and in the Income Tax Act of 1913.

Q51. Was it assumed by the Supreme Court that there was no difference in the meaning of the word "income" as used in the act of 1909 and the act of 1913?

Merchants’ Loan & Trust Co. v. Smietanka, 255 U.S. 509 (1921)

There can be no doubt that the word must be given the same meaning and content in the Income Tax Acts of 1916 and 1917 that it had in the act of 1913.

Q52. Must the word "income" be given the same meaning and content in the tax acts of 1913, 1916, and 1917?

Q53. Does the answer to Q51, along with the answer to Q52 mean the word "income" has the same meaning in the tax acts of 1909, 1913, 1916, and 1917?

Mr. G, please answer Q51, Q52, and Q53 with the appropriate yes or no.

Mr. Eastman says:

“Without the context (provided by the color in this case), that statement is just so much bafflegab. You will see this color coding again in this web site were necessary to bring clarity to such ambiguities that otherwise only confuse the uninitiated.”

The statutes and the decisions are worded with care and precision. There is no need to impose color-coding on the words. When the writers meant to qualify the word, they did.

By adding the red color the assertion is that the word income is to be read as “corporate income”, a.k.a. "income”. That may be the correct meaning when discussing a law that was limited in scope to corporate income, such as the tax act of 1909; but it may not always be correct meaning since even in those cases the word is also used as a general term not limited to certain recipients.

Substituting the contextual meaning for a word from one context to another is not reading the actual words of the law (or of the court case). By providing the context with the use of color, Mr. Eastman has superimposed what he deems to be the contextual meaning from one context to another. Error is introduced when the context of the tax act of 1909 is applied to the tax act of 1913 that does not have the same scope and limitations as the tax act of 1909.

Q51. Was it assumed by the Supreme Court that there was no difference in the meaning of the word "income" as used in the act of 1909 and the act of 1913?

Q52. Must the word "income" be given the same meaning and content in the tax acts of 1913, 1916, and 1917?

Q53. Does the answer to Q51, along with the answer to Q52 mean the word "income" has the same meaning in the tax acts of 1909, 1913, 1916, and 1917?

The answer to all of these questions is that the term "income" is not used in the act of 1913.

Substitution of the term “income" for the word income is adding contextual meaning not in the actual words of the act of 1913 and the cases ruling on the act of 1913.

Yes, the word income must be given the same meaning; but not your term "income", which has added meaning, as you use it.

It is not possible for us to have a meaningful discussion of the actual words when meaning is added with color-coding. The color-coded terms are not the actual words.

I asked three questions. The answer is either Yes or the answer is No.

Q51. Was it assumed by the Supreme Court that there was no difference in the meaning of the word "income" as used in the act of 1909 and the act of 1913?

Q52. Must the word "income" be given the same meaning and content in the tax acts of 1913, 1916, and 1917?

Q53. Does the answer to Q51, along with the answer to Q52 mean the word "income" has the same meaning in the tax acts of 1909, 1913, 1916, and 1917?

Your reply is a non-sequitur. Your belief will not let you answer Yes. You flat out contradict the Supreme Court if you answer No.

Here again is the context that applies to the questions.

Q51. Was it assumed by the Supreme Court that there was no difference in the meaning of the word "income" as used in the act of 1909 and the act of 1913?

Q52. Must the word "income" be given the same meaning and content in the tax acts of 1913, 1916, and 1917?

Q53. Does the answer to Q51, along with the answer to Q52 mean the word "income" has the same meaning in the tax acts of 1909, 1913, 1916, and 1917?

Mr. G, please answer Q51, Q52, and Q53 with the appropriate yes or no.

I should stop right here and wait until you give me a PROPER answer. By PROPER, I mean an unqualified yes or unqualified no.

(If you think this a "did you stop beating your wife?" question, the correct answer is NO if you never beat your wife. It's up to your lawyer to ask the question during cross or redirect, "Is the reason you had to answer no to that question because you never started beating your wife in the first place?") (Of course, if you actually are beating your wife, you can't answer either question honestly.)

You state:

By adding the red color the assertion is that the word income is to be read as “corporate income”, a.k.a. "income”. That may be the correct meaning when discussing a law that was limited in scope to corporate income, such as the tax act of 1909; but it may not always be correct meaning since even in those cases the word is also used as a general term not limited to certain recipients.

This statement is a sophism. (1. A plausible but fallacious argument. 2. Deceptive or fallacious argumentation.)

You correctly state my "assertion". Where I add the red highlight, "income" IS to be read as "corporate income". I base this upon reading the court cases themselves. I prove this beyond refute by questions up to and including Q42. (Questions which I asked you to answer.)

For you to then state........

That may be the correct meaning when discussing a law that was limited in scope to corporate income, such as the tax act of 1909...

Sophistry pure and simple. Let me help all to understand what the sophistry is:

That ["income" IS to be read as "corporate income"] may be the correct meaning when discussing a law that was limited in scope to corporate income, such as the tax act of 1909...

MAY? be correct???? Don't you think you are deserving of just a tiny bit of ridicule for this statement?

Now let us look at the second half of the statement:

... but it may not always be correct meaning since even in those cases the word is also used as a general term not limited to certain recipients.

and place the proper context within:

... but ["income" IS to be read as "corporate income"] may not always be correct meaning since even in those cases [a law that was limited in scope to corporate income] the word ["income"] is also used as a general term not limited to certain recipients.

Can a non-corporate person be a recipient of corporate gains, profits, and income?

Can a natural person receive corporate gains, profits, and income?

Can a natural person receive dividends?

div·i·dend n. 2.a. A share of profits received by a stockholder...
American Heritage Electronic Dictionary

By providing the context with the use of color, Mr. Eastman has superimposed what he deems to be the contextual meaning from one context to another.
.
.
.
Yes, the word income must be given the same meaning; but not your term "income", which has added meaning, as you use it.

In view of your target of attack, I'm going to reword, ever so slightly, the original context and ask you those three questions again.

Merchants’ Loan & Trust Co. v. Smietanka, 255 U.S. 509 (1921)

In Hays v. Gauley Mountain Coal Co....
In United States v. Cleveland, Cincinnati, Chicago & St. Louis Railway Co....

It is obvious that these decisions in principle rule the case at bar if the word 'income' [whatever that meaning is] has the same meaning [whatever that meaning is] in the Income Tax Act of 1913 that it had in the Corporation Excise Tax Act of 1909, and that [income, whatever that meaning is] has the same scope of meaning [whatever that meaning is, that] was in effect decided in Southern Pacific Co. v. Lowe, where it was assumed for the purposes of decision that there was no difference in its meaning [whatever that meaning is] as used in the act of 1909 and in the Income Tax Act of 1913.

Q51. Was it assumed by the Supreme Court that there was no difference in the meaning of the word "income" [whatever that meaning is] as used in the act of 1909 and the act of 1913?

Merchants’ Loan & Trust Co. v. Smietanka, 255 U.S. 509 (1921)

There can be no doubt that the word [income, whatever that meaning is] must be given the same meaning [whatever that meaning is] and content [whatever that content is] in the Income Tax Acts of 1916 and 1917 that it had in the act of 1913.

Q52. Must the word "income" [whatever that meaning is] be given the same meaning [whatever that meaning is] and content [whatever that content is] in the tax acts of 1913, 1916, and 1917?

Q53. Does the answer to Q51, along with the answer to Q52 mean the word "income" [whatever that meaning is] has the same meaning [whatever that meaning is] in the tax acts of 1909, 1913, 1916, and 1917?

Mr. G, please answer Q51, Q52, and Q53 with the appropriate yes or no.

Yes, the word income must be given the same meaning; but not your term "income", which has added meaning, as you use it.

You are basically stating I have done the "adding" of meaning. This is a logical mis-statement. I'll assume it was not deliberate, since I can see myself making the same mistake. What you mean to say is that I am "constricting" or "limiting" the meaning.

Let us take a moment to consider that a legal "term" is a custom defined word. Once a word is custom defined into a term, the dictionary definition no longer applies. Ask Ed Senter about the meaning of "Cows graze grass". Context.

In the case of "INCOME":

We have the generic belief: "everything that comes in";
We have the dictionary defined meaning: "1. The amount of money or its equivalent received during a period of time in exchange for labor or services, from the sale of goods or property, or as profit from financial investments. 2. The act of coming in; entrance;
We have the sub category: Corporate Income;
We have the sub category: (natural) Personal Income;
Last, and MOST important, we have legally defined "income".

What that legal definition of "income" is, is what we are arguing. The Supreme Court is VERY, VERY CLEAR on the point that:

Merchants’ Loan & Trust Co. v. Smietanka, 255 U.S. 509 (1921)

It is obvious that these decisions in principle rule the case at bar if the word 'income' [whatever that meaning is] has the same meaning [whatever that meaning is] in the Income Tax Act of 1913 that it had in the Corporation Excise Tax Act of 1909, and that [income, whatever that meaning is] has the same scope of meaning [whatever that meaning is, that] was in effect decided in Southern Pacific Co. v. Lowe, where it was assumed for the purposes of decision that there was no difference in its meaning [whatever that meaning is] as used in the act of 1909 and in the Income Tax Act of 1913.

There can be no doubt that the word [income, whatever that meaning is] must be given the same meaning [whatever that meaning is] and content [whatever that content is] in the Income Tax Acts of 1916 and 1917 that it had in the act of 1913.

When to this we add that in Eisner v. Macomber, supra, a case arising under the same Income Tax Act of 1916 which is here involved, the definition of 'income' [whatever that meaning is] which was applied was adopted from Stratton's Independence v. Howbert, supra, arising under the Corporation Excise Tax Act of 1909, with the addition that it should include 'profit gained through sale or conversion of capital assets,' there would seem to be no room to doubt that the word [income, whatever that meaning is] must be given the same meaning [whatever that meaning is] in all of the Income Tax Acts of Congress that was given to it in the Corporation Excise Tax Act, [of 1909] and that what that meaning [whatever that meaning is] is has now become definitely settled by decisions of this Court.

There is a very good reason why income "must be given the same meaning [whatever that meaning is] in all of the Income Tax Acts of Congress.

The Sixteenth Amendment is the ONLY place where the word "INCOME" [whatever that meaning is] is used in the Constitution. Nevertheless, the word "INCOME" [whatever that meaning is] IS USED in the Constitution.

Eisner v. Macomber, 252 U.S. 189 (1920)

[I]t becomes essential to distinguish between what is and what is not 'INCOME,' as the term is there used, and to apply the distinction, as cases arise, according to truth and substance, without regard to form.

Congress cannot by any definition it may adopt conclude the matter, since it cannot by legislation alter the Constitution, from which alone it derives its power to legislate, and within whose limitations alone that power can be lawfully exercised.

Thus, the meaning of the word "INCOME" [whatever that meaning is], is a CONSTITUTIONALLY DEFINED term, and Congress "cannot by legislation alter" the term INCOME's meaning, [whatever that meaning is].

Merchants’ Loan & Trust Co. v. Smietanka, 255 U.S. 509 (1921)

In determining the definition of the word 'income' thus arrived at, this Court has consistently refused to enter into the refinements of lexicographers or economists, and has approved, in the definitions quoted, what it believed to be the commonly understood meaning of the term which must have been in the minds of the people when they adopted the Sixteenth Amendment to the Constitution. Doyle v. Mitchell Brothers Co.; Eisner v. Macomber.

What "commonly understood meaning of the term" INCOME would have "been in the minds of the people when they adopted the Sixteenth Amendment"?

Wouldn't the commonly understood meaning of the term INCOME be the meaning when the Amendment was adopted?

When the Sixteenth amendment was adopted, wouldn't the commonly understood meaning of the term INCOME be the same meaning as when the Sixteenth Amendment was drafted (written)?

When do you think the Sixteenth Amendment was adopted? Written?

Constitution of the United States of America
via uscode.house.gov

PROPOSAL AND RATIFICATION

The sixteenth amendment to the Constitution of the United States was proposed to the legislatures of the several States by the Sixty-first Congress on the 12th of July, 1909, and was declared, in a proclamation of the Secretary of State, dated the 25th of February, 1913, to have been ratified by 36 of the 48 States.

Maybe in 1909?

And the meaning of that word "income" in 1909 is discussed in detail in the Supreme Court Cases of:

which cover the "Corporate Excise Tax Act" of...

"1909".

Error is introduced when the context of the tax act of 1909 is applied to the tax act of 1913 that does not have the same scope and limitations as the tax act of 1909.

You are not arguing against my statements. You are arguing against the Supreme Court's statements.

Merchants’ Loan & Trust Co. v. Smietanka, 255 U.S. 509 (1921)

It is obvious that these decisions in principle rule the case at bar if the word 'income' has the same meaning in the Income Tax Act of 1913 that it had in the Corporation Excise Tax Act of 1909, ...

... there would seem to be no room to doubt that the word must be given the same meaning in all of the Income Tax Acts of Congress that was given to it in the Corporation Excise Tax Act, [of 1909]...

It's a Constitutional thing.

COMMISSIONER v. GLENSHAW GLASS CO., 348 U.S. 426 (1955) at footnote 11:

"In discussing 61 (a) of the 1954 Code, the House Report states:

"This section corresponds to section 22 (a) of the 1939 Code. While the language in existing section 22 (a) has been simplified, the all-inclusive nature of statutory gross income has not been affected thereby.

Section 61 (a) is as broad in scope as section 22 (a).

"Section 61 (a) provides that gross income includes `all income from whatever source derived.' This definition is based upon the 16th Amendment and the word `income' is used in its constitutional sense." H. R. Rep. No. 1337, supra, note 10, at A18. A virtually identical statement appears in S. Rep. No. 1622, supra, note 10, at 168."

Editorial note: Because of formatting problems in the files Mr. G and myself are using to communicate, some of his words did not get to me and thus did not get posted. Those paragraphs will be put where they belong with an ampersand (&) to denote the addition to this post.

The answer to Q51, Q52, and Q53 when using [whatever that meaning is] is yes.
Yes, the word income must be given the same meaning; but not your term "income", which has added meaning, as you use it. (or subtracted meaning if you prefer, although common usage is to call it added even when a limitation or restriction is added).

But, that meaning is not limited to certain recipients. It is clear that the word income, as used by the Supreme Court, is not limited to corporate income.
&

Merchants’ Loan & Trust Co. v. Smietanka, 255 U.S. 509 (1921)

That the trustee was such a 'taxable person' is clear from section 1204(1)(c) of the act of October 3, 1917 (40 Stat. 331), which requires that--

/&
(Bold highlight mine. Ed.)

Substituting “corporate income” into the sentence instead of income gives:

'Trustees, executors ... and all persons, corporations, or associations, acting in any fiduciary capacity shall make and render a return of the corporate income of the person, trust, or estate for whom or which they act, and be subject to all the provisions of this title which apply to individuals.' which includes the nonsensical phrase “corporate income of the person, trust, or estate”.

(Bold highlight mine. Ed.)

As the Supreme Court said in Stratton's Independence v. Howbert: 'Income may be defined as the gain derived from capital, from labor, or from both combined.' This is an occurrence of the usage of the word income in a general sense, not limited to the scope of a particular statute. A word may be used in a decision in some instances to refer to income as it is used in the statute and also be used in the decision in a more general sense. To impose the limited meaning to all the occurrences of the word is not correctly reading the actual words.

&

/&

If the definition of income is constitutionally defined, then it is not possible that it is a legal term. The definition used in the Constitution is the common meaning at that time (unless you have a version of the Constitution with a glossary). There is no evidence that the word income as used in the Constitution was limited to only corporate recipients.

&

/&

A dictionary of that time could be a good indicator of the commonly understood meaning.

“6. That which comes in to a person as payment for labor or services rendered in some office, or as gains from land, business, the investment of capital, etc.; receipts or emoluments regularly accruing, either in a given time, or, when unqualified, annually; the annual receipts of a person or corporation; revenue: as income of five thousand; his income has been much reduced; the income from the business is small.”

From the Century Dictionary, 1889-1909. A Classical Dictionary of the Vulgar Tongue, 3rd Edition; Grose, Captain Francis; Century Dictionary Online Lookup for 'income' at http://www.leoyan.com/century-dictionary.com/index.html

Editorial note: The actual Century Dictionary definition referred to is found here.

Income as used in the Constitution is that which comes in to a person as payment for labor or services rendered, or as gains from land, business, the investment of capital, etc. and the Supreme Court has approved, in the definitions quoted, what it believed to be the commonly understood meaning of the term which must have been in the minds of the people when they adopted the Sixteenth Amendment to the Constitution.

Previously I said that you are correct (and I am willing to stipulate) that the meaning of income according to the Supreme Court at that time was “gain derived from capital, from labor, or from both combined, including profit gained through sale or conversion of capital.” There is nothing in that definition to limit the meaning of income to only corporate income; just as there is nothing in the Constitution to limit the meaning, and nothing in the commonly understood meaning of the term in 1909.

The answer to Q51, Q52, and Q53 when using [whatever that meaning is] is yes. Yes, the word income must be given the same meaning;......

Just so we understand what those questions are, that you have given a qualified yes to:

Q51. Was it assumed by the Supreme Court that there was no difference in the meaning of the word "income" [whatever that meaning is] as used in the act of 1909 and the act of 1913?

Q52. Must the word "income" [whatever that meaning is] be given the same meaning [whatever that meaning is] and content [whatever that content is] in the tax acts of 1913, 1916, and 1917?

Quote:

[whatever that meaning is] is yes.
"Yes, the word income must be given the same meaning;......"

Paraphrase:

The answer to Q51, Q52, and Q53 when using [whatever that meaning is] is yes. Yes, the word income must be given the same meaning;...... [in the tax acts of 1909, 1913, 1916, and 1917]

Quite obviously, we differ on "whatever that meaning [of "income"] is".

Now, since:

Merchants’ Loan & Trust Co. v. Smietanka, 255 U.S. 509 (1921)

... there would seem to be no room to doubt that the word must be given the same meaning in all of the Income Tax Acts of Congress that was given to it in the Corporation Excise Tax Act, [of 1909]...

Then the ONLY meaning the word can have ABSOLUTELY MUST BE THE SAME meaning [whatever that meaning is], "in all of the Income Tax Acts of Congress that was given to it in the Corporation Excise Tax Act".

And you have agreed:

The answer to Q51, Q52, and Q53 when using [whatever that meaning is] is yes. Yes, the word income must be given the same meaning;......

So the meaning of income, [whatever that meaning is], is the meaning given in the tax act of 1909.

Stratton’s Independence, LTD. v. Howbert, 231 U.S. 399 (1913)

This action was brought in the district court of the United States by Stratton's Independence, Limited, a British corporation carrying on mining operations in the state of Colorado upon mining lands owned by itself, to recover certain moneys paid under protest for taxes assessed and levied for the years 1909 and 1910 under the provisions of the corporation tax act, being 38 of the act of August 5, 1909.

Q19. Is this court case in regard to the corporation tax act of 1909, section 38?

Q20. Is Stratton's Independence a corporation?

Q21. Is the cited question of law (II), a question in regard to the word "income" within the meaning of the 1909 tax act of Congress?

Q31. Does the Stratton's Supreme Court decision answer the second question (II) yes; The proceeds of ores mined by a corporation are income within the meaning of the 1909 corporate tax act?

Stratton’s Independence, LTD. v. Howbert, 231 U.S. 399 (1913)

'II. Are the proceeds of ores mined by a corporation from its own premises income within the meaning of the aforementioned act of Congress?
...

It seems to us that the first two questions certified must be answered in the affirmative principally for two reasons. First, because mining corporations are within the general description of 38, which comprises 'every corporation, joint stock company, or association organized for profit, and having a capital stock represented by shares , . . . and engaged in business in any state or territory of the United States;'

Q32. Is a reason the proceeds (money from the sale) of ores mined are income within the meaning of the 1909 tax act because the ores are being mined and sold by a corporation that is within the description of section 38 of the tax act of 1909?

Q33. Does this mean that if the corporation was NOT within the description of section 38 of the tax act of 1909, proceeds (money from the sale) of any product of such a corporation would NOT be within the definition of "income" in the tax act of 1909?

Q34. If a Natural Person is NOT within the description of section 38 of the tax act of 1909, then is it likewise a fact that proceeds of any action going to such a Natural Person would NOT be within the definition of "income" in the tax act of 1909?

Please answer the preceding questions clearly and concisely with the appropriate YES or NO as the case may be.

But, that meaning is not limited to certain recipients. It is clear that the word income, as used by the Supreme Court, is not limited to corporate income.

You would be correct except for one little detail.

div·i·dend n. 2.a. A share of profits received by a stockholder...
American Heritage Electronic Dictionary

A dividend is paid out of corporate profits. A dividend is corporate gain. If a natural person is a shareholder or stockholder, such a natural person receives corporate income.

Substituting “corporate income” into the sentence instead of income gives:

Corporate income is corporate profits, corporate gains, and other corporate incomes. And I repeat myself to make sure it is noticed: A dividend is paid out of corporate profits. A dividend is corporate gain. If a natural person is a shareholder or stockholder, such a natural person receives corporate income.

As the Supreme Court said in Stratton's Independence v. Howbert: 'Income may be defined as the gain derived from capital, from labor, or from both combined.' This is an occurrence of the usage of the word income in a general sense, not limited to the scope of a particular statute. A word may be used in a decision in some instances to refer to income as it is used in the statute and also be used in the decision in a more general sense. To impose the limited meaning to all the occurrences of the word is not correctly reading the actual words.

Here is the context you neglected:

Stratton’s Independence, LTD. v. Howbert, 231 U.S. 399 (1913)

And, however the operation shall be described, the transaction is indubitably 'business' within the fair meaning of the act of 1909; and the gains derived from that business; for 'income' may be defined as the gain derived from capital, from labor, or from both combined, and here we have combined operations of capital and labor.

Per the act of 1909 only a corporatation or quasi-corporation does "business". It is that "business" that DERIVES gain from capital and labor, thus it is only a corporation that derives gain from capital, from labor, or from both combined.

"[A]nd here we have combined operations of capital and labor" which is refering to Stratton's Independence which is a British corporation.

Doyle recognized this and stated it:

Doyle v. Mitchell Bros. Co., 247 U.S. 179 (1918)

Whatever difficulty there may be about a precise and scientific definition of 'income,' it imports, as used here, something entirely distinct from principal or capital either as a subject of taxation or as a measure of the tax; conveying rather the idea of gain or increase arising from corporate activities. As was said in Stratton's Independence v. Howbert: 'Income may be defined as the gain derived from capital, from labor, or from both combined.'

Flint recognized this and stated it:

Flint v. Stone Tracy Co., 220 U.S. 107 (1911)

Within the category of indirect taxation, as we shall have further occasion to show, is embraced a tax upon business done in a corporate capacity, which is the subject-matter of the tax imposed in the act under consideration. The Pollock Case construed the tax there levied as direct, because it was imposed upon property simply because of its ownership. In the present case the tax is not payable unless there be a carrying on or doing of business in the designated capacity, and this is made the occasion for the tax, measured by the standard prescribed. The difference between the acts is not merely nominal, but rests upon substantial differences between the mere ownership of property and the actual doing of business in a certain way.

If the definition of income is constitutionally defined, then it is not possible that it is a legal term. The definition used in the Constitution is the common meaning at that time (unless you have a version of the Constitution with a glossary). There is no evidence that the word income as used in the Constitution was limited to only corporate recipients.

This is going to be fun.

If the definition of income is constitutionally defined, then it is not possible that it is a legal term.
Fundamental law

The definition used in the Constitution is the common meaning at that time (unless you have a version of the Constitution with a glossary). There is no evidence that the word income as used in the Constitution was limited to only corporate recipients.

A dictionary of that time could be a good indicator of the commonly understood meaning.

Eisner v. Macomber, 252 U.S. 189 (1920)

After examining dictionaries in common use (Bouv. L. D.; Standard Dict.; Webster's Internat. Dict.; Century Dict.), we find little to add to the succinct definition adopted in two cases arising under the Corporation Tax Act of 1909 (Stratton's Independence v. Howbert; Doyle v. Mitchell Bros. Co.), 'Income may be defined as the gain derived from capital, from labor, or from both combined,' provided it be understood to include profit gained through a sale or conversion of capital assets, to which it was applied in the Doyle Case.

There is nothing in that definition to limit the meaning of income to only corporate income; just as there is nothing in the Constitution to limit the meaning, and nothing in the commonly understood meaning of the term in 1909.

Q19. Is this court case in regard to the corporation tax act of 1909, section 38?

Q20. Is Stratton's Independence a corporation?

Q21. Is the cited question of law (II), a question in regard to the word "income" within the meaning of the 1909 tax act of Congress?

Q31. Does the Stratton's Supreme Court decision answer the second question (II) yes; The proceeds of ores mined by a corporation are income within the meaning of the 1909 corporate tax act?

Q32. Is a reason the proceeds (money from the sale) of ores mined are income within the meaning of the 1909 tax act because the ores are being mined and sold by a corporation that is within the description of section 38 of the tax act of 1909?

Q33. Does this mean that if the corporation was NOT within the description of section 38 of the tax act of 1909, proceeds (money from the sale) of any product of such a corporation would NOT be within the definition of "income" in the tax act of 1909?

Q34. If a Natural Person is NOT within the description of section 38 of the tax act of 1909, then is it likewise a fact that proceeds of any action going to such a Natural Person would NOT be within the definition of "income" in the tax act of 1909?

Please answer the preceding numbered questions clearly and concisely with the appropriate YES or NO as the case may be.

au·to·mo·bile n. A self-propelled passenger vehicle that usually has four wheels and an internal-combustion engine, used for land transport. Also called motorcar.
American Heritage Electronic Dictionary

"That usually has four wheels". So what that means is that NOT always does an automobile have four wheels.

auto- or aut- pref. 1. Self; same: autogamy. 2. Automatic: autopilot.
[Greek, from autos, self.]

mo·bile adj. 1. Capable of moving...
meu…-. To push away. (MOB), MOBILE,
from Latin movēre, to move.
American Heritage Electronic Dictionary

Thus an automobile CAN be a motorcycle.

Or am I asking the question using the word in a specific sense? The context sets the sense. The context might have been a gesture indicating a car in my driveway. If I was a Chevy aficionado and I point to a 19XX Chevy X automobile, and stated 'a 19XX Chevy X automobile is the ONLY automobile to own', wouldn't that be giving that generic word autombile the specific meaning of "19XX Chevy X automobile".

The Context that sets the meaning of "income" as "income" IS the 1909 tax act. So to state my previous sentence in this paragraph concisely: The Context that sets the meaning of "income" as "corporate income" IS the 1909 tax act.

The entire string of cases I have posted ALL point back to the 1909 tax act for the operating definition of "income" ("corporate income" or "income").

Regardless of your attempt at sophistry regarding generic meanings and intents, you have agreed:
.

The answer to Q51, Q52, and Q53 when using [whatever that meaning is] is yes. Yes, the word income must be given the same meaning;......

Q51. Was it assumed by the Supreme Court that there was no difference in the meaning of the word "income" [whatever that meaning is] as used in the act of 1909 and the act of 1913?

Q52. Must the word "income" [whatever that meaning is] be given the same meaning [whatever that meaning is] and content [whatever that content is] in the tax acts of 1913, 1916, and 1917?

Q53. Does the answer to Q51, along with the answer to Q52 mean the word "income" [whatever that meaning is] has the same meaning [whatever that meaning is] in the tax acts of 1909, 1913, 1916, and 1917?

Since the tax act of 1909 is THE source of the meaning [whatever that meaning is] of the word "income", we can dispense with any and all dialog that does not deal with the tax act of 1909 and what it tells us about the word income.

Thus, Please answer each yes/no question with a yes/no answer that is found on this page and the two pages that follow. There are 42 questions numbered Q1 to Q42.

Editorial note: I have interlaced and added queston 19 and 20 that was not in the original post from Mr. G. I have formatted the questions that Mr. G has posted to pull the margins in.

Q19. Is this court case in regard to the corporation tax act of 1909, section 38?

Q19. Yes

Q20. Is Stratton's Independence a corporation?

Q20. Yes

Q21. Is the cited question of law (II), a question in regard to the word "income" within the meaning of the 1909 tax act of Congress?

Q21. The actual question is whether the proceeds are income within the meaning of the 1909 tax act of Congress, but yes it may be deemed “a question in regard to the word income”.

Q31. Does the Stratton's Supreme Court decision answer the second question (II) yes; The proceeds of ores mined by a corporation are income within the meaning of the 1909 corporate tax act?

Q31. Yes

Q32. A reason? Not sure as I have not read that tax act. What does the language Congress put in the statute have to do with the definition of income?

Q33. Does this mean that if the corporation was NOT within the description of section 38 of the tax act of 1909, proceeds (money from the sale) of any product of such a corporation would NOT be within the definition of "income" in the tax act of 1909?

Q33. Not sure as I have not read section 38 of that tax act; but my guess is that income is not defined in that act. (Remember, Congress cannot define income?)

Q34. If a Natural Person is NOT within the description of section 38 of the tax act of 1909, then is it likewise a fact that proceeds of any action going to such a Natural Person would NOT be within the definition of "income" in the tax act of 1909?

Q34. Not sure as I have not read section 38 of that tax act; but my guess is that income is not defined in that act. (Remember, Congress cannot define income?)

Please answer the preceding questions clearly and concisely with the appropriate YES or NO as the case may be.

Done.

Are you saying that since the monies were received by the corporation and later paid to the shareholder that makes it corporate income? If so, then wages paid to employees of the corporation would be corporate income by the same logic. Are the receipts of the corporation paid to the employees distinguishable from the receipts of the corporation paid to shareholders as dividends?

There are two parts (separated by the ;) to this compound sentence. The second clause is not dependent on the first clause.
1= And, however the operation shall be described, the transaction is indubitably 'business' within the fair meaning of the act of 1909; and the gains derived from that business
2= for 'income' may be defined as the gain derived from capital, from labor, or from both combined, and here we have combined operations of capital and labor.”

There is no restriction in that sentence on the definition of income to only corporate recipients. There is a scope and limitation as to what is subject to the tax act of 1909 in the first clause. This is a distinction that you do not appear to recognize.

Read the actual words you cited:

Flint v. Stone Tracy Co., 220 U.S. 107 (1911)

“Within the category of indirect taxation, as we shall have further occasion to show, is embraced a tax upon business done in a corporate capacity, which is the subject-matter of the tax imposed in the act under consideration. The Pollock Case construed the tax there levied as direct, because it was imposed upon property simply because of its ownership. In the present case the tax is not payable unless there be a carrying on or doing of business in the designated capacity, and this is made the occasion for the tax, measured by the standard prescribed. The difference between the acts is not merely nominal, but rests upon substantial differences between the mere ownership of property and the actual doing of business in a certain way.”

Since the tax act of 1909 is THE source of the meaning [whatever that meaning is] of the word "income",

Previously I said that you are correct (and I am willing to stipulate) that the meaning of income according to the Supreme Court at that time was “gain derived from capital, from labor, or from both combined, including profit gained through sale or conversion of capital.”

The entire string of cases I have posted ALL point back to the 1909 tax act for the operating definition of "income" ("corporate income" or "income").

You confuse the use of the term income as it applies when discussing the tax act of 1909 and the use of the word income as defined by the Supreme Court, which found little to add after examining dictionaries (including the Century Dictionary cited above) in common use at that time. There is nothing in the Supreme Court definition to limit the meaning of income to only corporate income; just as there is nothing in the Constitution to limit the meaning.

Are you now saying Congress did define income in the tax act of 1909?

A chronological history lesson is required at this time.

In the Pollock case (there are actually two Supreme Court case decisions published re: Pollock) the Supreme Court ruled that a tax on "income" from real property and personal property was a direct tax. The tax in question was a tax upon "income" from real and personal property of a .... yep, a CORPORATION.

To work around that limitation, Congress statutorily defined income in the CORPORATE tax act of 1909. At the time of enacting the tax act of 1909, the word "income" was NOT part of the Constitution and Congress was free to screw around with meanings and definitions of the word income just like any other statutorily defined word/term.

That definition of the word income in the tax act of 1909 was defined as corporate income (income).

Proof follows in the form of the words of section 38 of the tax act of 1909 and the commentary of the Supreme Court on the words of section 38.

1. Is this case about a corporation and section 38 of the tax act of 1909?

Flint v. Stone Tracy Co., 220 U.S. 107 (1911)

In order to have in mind some of the more salient features of the statute, with a view to its interpretation, a part of the first paragraph is here set out, as follows:

'Sec. 38. That every corporation, joint stock company, or association organized for profit and having a capital stock represented by shares, and every insurance company now or hereafter organized under the laws of the United States or of any state or territory of the United States, or under the acts of Congress applicable to Alaska or the District of Columbia, or now or hereafter organized under the laws of any foreign country, and engaged in business in any state or territory of the United States or in Alaska or in the District of Columbia, shall be subject to pay annually a special excise tax with respect to the carrying on or doing business by such corporation, joint stock company or association, or insurance company equivalent to one per centum upon the entire net income over and above five thousand dollars, received by it from all sources during such year, exclusive of amounts received by it as dividends upon stock of other corporations, joint stock companies or associations, or insurance companies subject to the tax hereby imposed; or, if organized under the laws of any foreign country, upon the amount of net income over and above five thousand dollars received by it from business transacted and capital invested within the United States and its territories, Alaska and the District of Columbia, during such year, exclusive of amounts so received by it as dividends upon stock of other corporations, joint stock companies or associations, or insurance companies subject to the tax hereby imposed.'

2. Are the entities "organized for profit" and "having capital stock represented by shares" one of the entities this tax applies to?

3. Since Person could mean Corporate (or quasi-corporate) person or Natural person, does this section identify who the "taxable persons" are?

4. It has been held that excise tax and privilege tax are synonomous. Is this tax a "special excise tax"?

5. Is this "special excise tax" a tax upon the taxable corporate (and quasi-corporate) persons listed in section 38?

6. Is this "special excise tax" a tax with respect to the carrying on or doing business by such taxable corporate (and quasi-corporate) persons?

After citing section 38 of the 1909 tax act, the Supreme Court stated:

Flint v. Stone Tracy Co., 220 U.S. 107 (1911)

A reading of this portion of the statute shows the purpose and design of Congress in its enactment and the subject-matter of its operation. It is at once apparent that its terms embrace corporations and joint stock companies or associations which are organized for profit, and have a capital stock represented by shares. Such joint stock companies, while differing somewhat from corporations, have many of their attributes and enjoy many of their privileges.

7. Does the Supreme Court tell us that the taxable corporate persons have corporate privileges?

Flint v. Stone Tracy Co., 220 U.S. 107 (1911)

While the mere declaration contained in a statute that it shall be regarded as a tax of a particular character does not make it such if it is apparent that it cannot be so designated consistently with the meaning and effect of the act, nevertheless the declaration of the lawmaking power is entitled to much weight, and in this statute the intention is expressly declared to impose a special excise tax with respect to the carrying on or doing business by such corporation, joint stock company or association, or company. It is therefore apparent, giving all the words of the statute effect, that the tax is imposed not upon the franchises of the corporation, irrespective of their use in business, nor upon the property of the corporation, but upon the doing of corporate or insurance business, and with respect to the carrying on thereof, in a sum equivalent to 1 per centum upon the entire net income over and above $5,000 received from all sources during the year; that is, when imposed in this manner it is a tax upon the doing of business, with the advantages which inhere in the peculiarities of corporate or joint stock organization of the character described.

8. Is the intention of section 38 of the tax act of 1909 to impose a tax on the doing of business in the corporate form?

9. Does the Supreme Court again mention there are advantages (privileges) of doing business in the corporate form?

Flint v. Stone Tracy Co., 220 U.S. 107 (1911)

As the latter organizations share many benefits of corporate organization, it may be described generally as a tax upon the doing of business in a corporate capacity. In the case of the insurance companies, the tax is imposed upon the transaction of such business by companies organized under the laws of the United States or any state or territory, as heretofore stated.

10. Does the Supreme Court now plainly state that the tax is upon the doing of (corporate) business in the corporate capacity?

Flint v. Stone Tracy Co., 220 U.S. 107 (1911)

This tax, it is expressly stated, is to be equivalent to 1 per centum of the entire net income over and above $5,000 received from all sources during the year,-this is the measure of the tax explicitly adopted by the statute. The income is not limited to such as is received from property used in the business, strictly speaking, but is expressly declared to be upon the entire net income above $5,000 from all sources, excluding the amounts received as dividends on stock in other corporations, joint stock companies or associations, or insurance companies also subject to the tax.

11. Is this tax upon the "entire net income" over the threshhold amount?

12. Is the "entire net income" to include (generic) income from all sources?

13. As of this court case in 1911, was the Sixteenth Amendment allegedly ratified? (No, because it wasn't ratified until February 25th, 1913. (see proof in prior post above, link to Constitution)

14. Since the Sixteenth had not been ratified, was the decision in the Pollock case in full force and effect?

Flint v. Stone Tracy Co., 220 U.S. 107 (1911)

In other words, the tax is imposed upon the doing of business of the character described, and the measure of the tax is to be income, with the deduction stated, received not only from property used in business, but from every source. This view of the measure of the tax is strengthened when we note that as to organizations under the laws of foreign countries, the amount of net income over and above $5,000 includes that received from business transacted and capital invested in the United States, the territories, Alaska, and the District of Columbia.

15. Is the tax upon doing business of the character described?

16. Did the Supreme Court describe the character thus: "it may be described generally as a tax upon the doing of business in a corporate capacity"

17. Is the measure of the tax to be income?

18. Does it stand to reason, that if income is a measure of doing business in a corporate capacity, such income MUST be corporate income?

19. Is the measure of the tax to be income?

20. Does this measure of tax include income that the Pollock decision has stated must be taxed by the rule of apportionment, since a tax on such income is a direct tax?

(If I have to examine Pollock for you, you will find that even there the issue was corporate income.)

Flint v. Stone Tracy Co., 220 U.S. 107 (1911)

The act now under consideration does not impose direct taxation upon property solely because of its ownership, but the tax is within the class which Congress is authorized to lay and collect under article 1, 8, clause 1 of the Constitution, and described generally as taxes, duties, imposts, and excises, upon which the limitation is that they shall be uniform throughout the United States.

Within the category of indirect taxation, as we shall have further occasion to show, is embraced a tax upon business done in a corporate capacity, which is the subject-matter of the tax imposed in the act under consideration. The Pollock Case construed the tax there levied as direct, because it was imposed upon property simply because of its ownership. In the present case the tax is not payable unless there be a carrying on or doing of business in the designated capacity, and this is made the occasion for the tax, measured by the standard prescribed. The difference between the acts is not merely nominal, but rests upon substantial differences between the mere ownership of property and the actual doing of business in a certain way.

21. Is the tax upon "business done in a corporate capacity"?

22. Is a tax upon "business done in a corporate capacity" the "subject-matter of the tax imposed in the act under consideration"?

23. Is the "act under consideration" section 38 of the tax act of 1909? (see question 1 above).

24. Is this tax act of 1909 a tax upon "the actual doing of business in a certain way"?

25. Is this "doing of business in a certain way" the "business done in a corporate capacity"?

Flint v. Stone Tracy Co., 220 U.S. 107 (1911)

The tax under consideration, as we have construed the statute, may be described as an excise upon the particular privilege of doing business in a corporate capacity, i. e., with the advantages which arise from corporate or quasi corporate organization; or, when applied to insurance companies, for doing the business of such companies. As was said in the Thomas Case, supra, the requirement to pay such taxes involves the exercise of privileges, and the element of absolute and unavoidable demand is lacking. If business is not done in the manner described in the statute, no tax is payable.

26. Does the Supreme Court again tell us that an excise tax is upon a particular privilege?

27. Is the privilege as the Supreme Court has construed the statute (section 38), the "doing business in a corporate capacity"?

28. Does the requirement to pay excise taxes "involve the exercise of privileges"?

29. Would such a statement as this apply to ALL excise (privilege) taxes?

30. Is "the element of absolute and unavoidable demand" a requirement for a tax to be an excise tax?

31. Is "the element of absolute and unavoidable demand is lacking" another way of saying that if you can't avoid the tax in your everyday affairs of life, such a tax is NOT an excise (privilege) tax?

Flint v. Stone Tracy Co., 220 U.S. 107 (1911)

The thing taxed is not the mere dealing in merchandise, in which the actual transactions may be the same, whether conducted by individuals or corporations, but the tax is laid upon the privileges which exist in conducting business with the advantages which inhere in the corporate capacity of those taxed, and which are not enjoyed by private firms or individuals.

32. Is the Supreme Court stating that even when the transactions are the same, an individual is not conducting business in the corporate capacity?

33. Is the Supreme Court stating that the tax is upon corporate privilege?

Flint v. Stone Tracy Co., 220 U.S. 107 (1911)

These advantages are obvious, and have led to the formation of such companies in nearly all branches of trade. The continuity of the business, without interruption by death or dissolution, the transfer of property interests by the disposition of shares of stock, the advantages of business controlled and managed by corporate directors, the general absence of individual liability, these and other things inhere in the advantages of business thus conducted, which do not exist when the same business is conducted by private individuals or partnerships.

34. Does the Supreme Court in the passage above list some of the advantages (privileges) of doing business in the corporate capacity?

Flint v. Stone Tracy Co., 220 U.S. 107 (1911)

It is this distinctive privilege which is the subject of taxation, not the mere buying or selling or handling of goods, which may be the same, whether done by corporations or individuals.

35. Does this tax act differentiate between the doing of corporate business (business) and private business (business)?

The Flint case has defined the difference between business and business. One returns corporate income, the other returns private or personal income. One is (excise) taxable as a privilege, the other IS NOT, because the other happens by RIGHT. (That substantiation of a right will be made as this debate progresses.)

Now let us examine the next case.

36. Is the Stratton's case in regard to section 38 of the 1909 tax act?

37. Is Stratton's Independence Ltd. a corporation?

Stratton’s Independence, LTD. v. Howbert, 231 U.S. 399 (1913)

The resulting judgment having been removed by writ of error to the circuit court of appeals, that court certifies that the following questions of law are presented to it, the decision of which is indispensable to a determination of the cause, and upon which it therefore desires the instruction of this court:

      'I. Does 38 of the act of Congress entitled, 'An Act to Provide Revenue, Equalize Duties, and Encourage the Industries of the United States, and for Other Purposes,' approved August 5, 1909 (36 Stat. at L. p. 11, chap. 6, U. S. Comp. Stat. Supp. 1911, p. 741), apply to mining corporations?

      'II. Are the proceeds of ores mined by a corporation from its own premises income within the meaning of the aforementioned act of Congress?

      'III. If the proceeds from ore sales are to be treated as income, is such a corporation entitled to deduct the value of such ore in place and before it is mined as depreciation within the meaning of 38 of said act of Congress?'

The provisions of 38 are set forth in the margin.1

38. Is question II, a question as to whether proceeds (money received by the Stratton's corporation from sales of its ore) is "income within the meaning of the aforementioned act of Congress?"

39. If there is a question as to what is income within the meaning of the term defined, does this not also question exactly how the term is defined in order to see if the proceeds fit within the term defined?

40. In other words, does this not question what is "income" is "within the meaning of the aforementioned [section 38 of the 1909 tax] act of Congress?"

Stratton’s Independence, LTD. v. Howbert, 231 U.S. 399 (1913)

We do not think it necessary to follow the argument through all its refinements. The pith of it is that mining corporations engaged solely in mining upon their own premises have but one kind of assets, and that in the ordinary use of them the enjoyment of the assets and the wasting thereof are in direct proportion, and proceed pari passu; and hence that a mining corporation is not engaged in business, properly speaking, but is merely occupied in converting its capital assets from one form into another, and that a tax upon the doing of such a business, where the tax is measured by the value of the property owned by the corporation, would be in excess of the constitutional limitations that existed at the time of the passage of the act of 1909, as laid down in Pollock v. Farmers' Loan & T. Co.

41. Does the Supreme Court identify part of the argument that the mining company (Stratton's Independence) is not engaged in business?

Stratton’s Independence, LTD. v. Howbert, 231 U.S. 399 (1913)

As has been repeatedly remarked, the corporation tax act of 1909 was not intended to be and is not, in any proper sense, an income tax law. This court had decided in the Pollock Case that the income tax law of 1894 amounted in effect to a direct tax upon property, and was invalid because not apportioned according to populations, as prescribed by the Constitution. The act of 1909 avoided this difficulty by imposing not an income tax, but an excise tax upon the conduct of business in a corporate capacity, measuring, however, the amount of tax by the income of the corporation, with certain qualifications prescribed by the act itself. Flint v. Stone Tracy Co.

42. Does the act of 1909 impose an "excise tax" upon the doing of "corporate business"?

43. Is the amount of "excise" (corporate privilege) tax measured by the (corporate) income of the corporation?

44. Is the amount of "excise" tax measured by the (non-corporate) income of the corporation?

45. Can a corporation have non-corporate (personal) income?

Stratton’s Independence, LTD. v. Howbert, 231 U.S. 399 (1913)

It is not correct, from either the theoretical or the practical standpoint, to say that a mining corporation is not engaged in business, but is merely occupied in converting its capital assets from one form into another. The sale outright of a mining property might be fairly described as a mere conversion of the capital from land into money.

46. Is a mining corporation engaged in business?

47. Is a mining corporation engaged in (corporate) business?

48. Is a mining corporation engaged in (corporate) business?

49. Is a mining corporation engaged in business?

Stratton’s Independence, LTD. v. Howbert, 231 U.S. 399 (1913)

The very process of mining is, in a sense, equivalent in its results to a manufacturing process. And, however the operation shall be described, the transaction is indubitably 'business' within the fair meaning of the act of 1909;

50. Is the business of the Stratton's Independence corporation the business defined within the meaning of the 1909 tax act?

51. Are the "gains" derived from "business" within the meaning of the act of 1909 the "income" from that "business".

52. In other words, Is "income" the "gain" from business as business is defined in the act of 1909?

53. In other words, Is "income" the "gain" from "business done in a corporate capacity"? (See questions 10, 16, 21 & the related Supreme Court passages above.)

54. Is (corporate) "income" the (corporate) "gain" from (corporate) "business done in a corporate capacity"?

55. Is "income" the "gain" from "business done in a corporate capacity"?

56. Is the "company" referred to here the Stratton's Independence Ltd "company"?

57. Since Stratton's Independence Ltd is a corporation, (see question 37) Is the "company" referred to here a corporation?

58. Does it stand to reason that the wording can be paraphrased accurately to read: But when a corporation is digging pits, sinking shafts, tunneling, drifting, stoping, drilling, blasting, and hoisting ores, it is employing capital and labor in transmuting a part of the realty into personalty, and putting it into marketable form?

Stratton’s Independence, LTD. v. Howbert, 231 U.S. 399 (1913)

But when a company is digging pits, sinking shafts, tunneling, drifting, stoping, drilling, blasting, and hoisting ores, it is employing capital and labor in transmuting a part of the realty into personalty, and putting it into marketable form.

The very process of mining is, in a sense, equivalent in its results to a manufacturing process. And, however the operation shall be described, the transaction is indubitably 'business' within the fair meaning of the act of 1909; and the gains derived from it are properly and strictly the income from that business;

for 'income' may be defined as the gain derived from capital, from labor, or from both combined, and here we have combined operations of capital and labor.

59. Is (corporate) "income" the (corporate) "gain" derived from capital, from labor, or from both combined?

Stratton’s Independence, LTD. v. Howbert, 231 U.S. 399 (1913)

The resulting judgment having been removed by writ of error to the circuit court of appeals, that court certifies that the following questions of law are presented to it, the decision of which is indispensable to a determination of the cause, and upon which it therefore desires the instruction of this court:

'I. Does 38 of the act of Congress entitled, 'An Act to Provide Revenue, Equalize Duties, and Encourage the Industries of the United States, and for Other Purposes,' approved August 5, 1909 (36 Stat. at L. p. 11, chap. 6, U. S. Comp. Stat. Supp. 1911, p. 741), apply to mining corporations?

'II. Are the proceeds of ores mined by a corporation from its own premises income within the meaning of the aforementioned act of Congress?
.
.
.

It seems to us that the first two questions certified must be answered in the affirmative principally for two reasons.

60. Does the Supreme Court rule that "the proceeds of ores mined by a corporation from its own premises [are] income within the meaning of the aforementioned act [section 38 of the 1909 tax act] of Congress"?

61. Did the Supreme Court tell us that Stratton's Ltd, (a corporation) had (corporate) income because the Stratton's corporation was within the definition of doing business in the corporate form?

62. If Stratton's Ltd. was NOT within the general description of 38, would the Supreme Court have answered question II no, since the reason given to answer yes was because Stratton's WAS within the general description of 38?

Stratton’s Independence, LTD. v. Howbert, 231 U.S. 399 (1913)

First, because mining corporations are within the general description of 38, which comprises 'every corporation, joint stock company, or association organized for profit, and having a capital stock represented by shares , . . . and engaged in business in any state or territory of the United States;'

63. Does the Supreme Court rule that "the proceeds of ores mined by a corporation from its own premises" are "income within the meaning of the aforementioned act of Congress"

64. Since "income" is the "gain" from "business done in a corporate capacity" (see question 55 and its court citation), Does it not stand to reason that "the proceeds of ores mined by a corporation" are "income within the meaning of the aforementioned act of Congress" because such a mining corporation is "within the general description of 38, which comprises 'every corporation, joint stock company, or association organized for profit, and having a capital stock represented by shares , . . . and engaged in business in any state or territory of the United States"?

65. Conversly then, if a corporation is NOT within the "general description of 38", would such a corporation have income as it is defined in the tax act of 1909?

66. Likewise, would a natural person have (corporate) income as defined in section 38 of the tax act of 1909 since a natural person is NOT a corporate person as defined in that same act?

Stratton’s Independence, LTD. v. Howbert, 231 U.S. 399 (1913)

... That mining companies are doing business, within the fair intent and meaning of this clause, seems to us entirely plain, for reasons already given. The conduct of such business results in profit, for it cannot be seriously contended that the ores are not worth more at the mine mouth than they were worth in the ground, plus the cost of mining. Corporations engaged in such business share in the benefits of the Federal government, and ought as reasonably to contribute to the support of that government as corporations that conduct other kinds of profitable business.

67. Does a natural person do corporate business?

68. Does a corporate person do corporate business?

I have absolutely NO DOUBT that "income" as defined in the corporate tax act of 1909 is CORPORATE INCOME.

If you wish to contradict this, I want 68 numbered yes / no's so I can see where we diverge on our understanding of what the two cited court cases tell us the definition of "income" is.

Let me repeat the concept: As of the tax act of 1909, the word "income" was NOT part of the Constitution. Once the word was added to the Constitution, it was REMOVED from the reach of Congress as a word whose definition they could "dick" with. That bar did not exist at the time of the 1909 tax act.

The Doyle case also deals with the 1909 tax act and I will examine it more deeply when I attack the sophistry you use where you attempt to use Doyle to support your position in regard to "income".

Now turning to your reply specifically, the first thing I am going to do is twist you ear like a school marm in the days of yore for being such a recalcitrant student who did not do his homework. You stated not just once that you have not read section 38 of the 1909 tax act.

Q32. A reason? Not sure as I have not read that tax act.

Q33. Not sure as I have not read section 38 of that tax act;

Q34. Not sure as I have not read section 38 of that tax act;

In the trial logs blogspot I challenged you:

My reply to your misrepresentations is my website, numbered pages 3 through 10. Accessable via the homepage url.

Not very long after that, you sent me the post that is in cell 1 above.

The very first thing you sent was a citation of a passage from my web pages:

You then stated:

Each of the three pages end with the same statement

“INCOME, as used in the tax act of 1909 is the MEASURE of a CORPORATE tax, Therefore, INCOME must mean CORPORATE INCOME.”

Of those three pages, one was the page that covered the Flint v. Stone Tracy case. On that page (opens in new window) is...(drum roll please) section 38 of the tax act of 1909 as the Supreme court cited it.

Oops.....

Q33. Not sure as I have not read section 38 of that tax act; but my guess is that income is not defined in that act.
Q34. Not sure as I have not read section 38 of that tax act; but my guess is that income is not defined in that act.

If you had actually read the pages I cited, you would have actually read section 38 of the 1909 tax act and would not be guessing as to what is defined in the act. Since you did guess, I had to do all the work of posting the passage citations and resultant clarifying questions 1 through 68 above. That's okay actually, because it forced me to be much more thorough in my examination and highlighting than I would have when I assumed you would read the pages. Now that I know the size of the bolt hole you will attempt to use to escape, I know the size of the snare to set in front of the bolt holes.

Q32. Is a reason the proceeds (money from the sale) of ores mined are income within the meaning of the 1909 tax act because the ores are being mined and sold by a corporation that is within the description of section 38 of the tax act of 1909?

Q32. A reason? Not sure as I have not read that tax act. What does the language Congress put in the statute have to do with the definition of income?

You ask "What does the language Congress put in the statute have to do with the definition of income?"

Uh.....
.

The answer to Q51, Q52, and Q53 when using [whatever that meaning is] is yes. Yes, the word income must be given the same meaning;......

Q51. Was it assumed by the Supreme Court that there was no difference in the meaning of the word "income" [whatever that meaning is] as used in the act of 1909 and the act of 1913?

Q52. Must the word "income" [whatever that meaning is] be given the same meaning [whatever that meaning is] and content [whatever that content is] in the tax acts of 1913, 1916, and 1917?

Q53. Does the answer to Q51, along with the answer to Q52 mean the word "income" [whatever that meaning is] has the same meaning [whatever that meaning is] in the tax acts of 1909, 1913, 1916, and 1917?

By the above answers, you have agreed:

There was no difference in the meaning of the word "income" [whatever that meaning is] as used in the act of 1909 and the act of 1913.
The word "income" [whatever that meaning is] be given the same meaning [whatever that meaning is] and content [whatever that content is] in the tax acts of 1913, 1916, and 1917.
The word "income" [whatever that meaning is] has the same meaning [whatever that meaning is] in the tax acts of 1909, 1913, 1916, and 1917

My error was in not pinning you down in regard to the facts shown in the following passage:

Merchants’ Loan & Trust Co. v. Smietanka, 255 U.S. 509 (1921)

there would seem to be no room to doubt that the word [income, whatever that meaning is] must be given the same meaning [whatever that meaning is] in all of the Income Tax Acts of Congress that was given to it in the Corporation Excise Tax Act, [of 1909] and that what that meaning [whatever that meaning is] has now become definitely settled by decisions of this Court.

I will rectify that omission with some more yes/no questions.

69. Does the Supreme Court tell us that the word "income" [whatever that meaning is] must be given the same meaning [whatever that meaning is] in ALL the Income Tax Acts of Congress?

70. Does the Supreme Court tell us that the meaning [whatever that meaning is] of "income" has been nailed down by the decisions of the Supreme Court?

71. Does this mean the Supreme Court has nailed down the meaning [whatever that meaning is] of "income" in ALL the Income Tax Acts of Congress?

You ask: "What does the language Congress put in the statute [section 38 of the tax act of 1909] have to do with the definition [whatever that meaning is] of income?"

The meaning of the term "income" [whatever that meaning is] IS the SAME meaning [whatever that meaning is] as used in the tax acts of 1909, 1913, 1916, 1917, and IS the SAME meaning [whatever that meaning is] REQUIRED to be used in ALL the Income Tax Acts of Congress. Other than that, it doesn't have anything to do with the definition of income.

I stated:

You replied:

You would be correct except you appear to not be cognizant of the "privilege" of Corporate activity.
If you are a shareholder, you are a part owner of the corporation. As a shareholder, you are reaping the "profit" and "gain" of corporate activity. Add to that privilege, the privilege that if your corporation does a legal tort (wrongdoing), at worst, you will lose your investment in the corporation. What you will NOT loose is anything else you own; Unless you are an officer of your corporation and complicit in the corporation's wrongdoing, you are FULLY IMMUNIZED against damages awarded to the person (natural or corporate) that your corporation is liable for. You can NOT loose anything that is not invested in the corporation. That's one heck of a (corporate) privilege.

I specifically reject your use of the term "wage". I specifically reject your use of the term "employee". Therefore, unless you actually meant the term "wage" as statutorily defined, and "employee" as statutorily defined, I am reading your statement as if you said: "If so, then [money] paid to [workers] of the corporation would be corporate income by the same logic. Are the receipts of the corporation paid to the [workers] distinguishable from the receipts of the corporation paid to shareholders as dividends?"

Yes. See above about "privilege".

What corporate or any other privilege does a worker execute when exchanging labor (property) for money (also property)?

Remember: The requirement to pay such [excise] taxes involves the exercise of privileges, and the element of absolute and unavoidable demand is lacking.

I cited:

You stated:

There are two parts (separated by the ;) to this compound sentence.

My answer is:

sem·i·co·lon n. A mark of punctuation (;) used to connect independent clauses and indicating a closer relationship between the clauses than a period does.
American Heritage Electronic Dictionary

You stated:

The second clause is not dependent on the first clause.
1= And, however the operation shall be described, the transaction is indubitably 'business' within the fair meaning of the act of 1909; and the gains derived from that business
2= for 'income' may be defined as the gain derived from capital, from labor, or from both combined, and here we have combined operations of capital and labor.”

There is no restriction in that sentence on the definition of income to only corporate recipients. There is a scope and limitation as to what is subject to the tax act of 1909 in the first clause. This is a distinction that you do not appear to recognize.

There is no restriction in your mind, because you have NOT read section 38 of the tax act of 1909. Therefore, please excuse my rudeness, but you are CLUELESS as to the PROPER context of that which you are writing about.

Please review questions 1 through 66 above to get a PROPER understanding of the context.

Please pay particular attention to questions 60 though 66 which prove that one does NOT have income as it is defined in the tax act of 1909 unless one is a corporation described in section 38 of the tax act of 1909.

Read the actual words you cited:

Editorial note: I originally erred in that I did not notice the format changes Mr. G made when I originally posted his cites of the following three Supreme Court passages. Mr. G has changed the highlighting to present his points. (Mr. G, thanks for correcting me, else I might have totally missed the points you were seeking to highlight.)

Mr. G, you highlight "as used here". Well Mr. G, As used here, income IS: "gain or increase arising from corporate activities". That makes it corporate income is: "gain or increase arising from corporate activities". This passage does not bend the direction you are attempting to bend it.

Mr. G seeks to focus only upon "the act under consideration" "in the present case". Mr. G errs in highlighting "The difference between the acts" because the acts that are different are NOT the tax acts of 1909 and any of the acts of 1913, 1916, & 1917. This passage is clearly referring to the difference between the tax act of 1909 and the tax act of 1894 which was ruled unconstitutional in the Pollock v. Farmers' Trust Loan and Trust Company.

I'm calling you on this attempt at sleight of hand sophistry. This passage does not bend the direction you are attempting to bend it either.

While Mr. G wants to focus the discussion upon the dictionaries in common use, A plausible goal. Mr. G simply does not have the appropriate dictionary with the wonderful Century Dictionary he brought to my attention in one of his earlier posts. This line of attack would carry more weight if he could produce a verifiable copy of the actual dictionaries cited.

As to that wonderful Century Dictionary, If pushed, I will be using that very dictionary's definitions to prove that it disqualifies itself as being useful for the purpose Mr. G would like to employ it.

In any regard to any dictionary, it does not matter, because the Supreme Court has ruled as to what is the definition and meaning of income [whatever that meaning is].

Mr. G states:

This stipulation is incorrect, since it is only HALF of the truth. As I have covered at length and in great detail, the definition of "income" in the 1909 tax act is CORPORATE income. You have missed the PROPER context of Flint and Stratton's Supreme Court cases which removes any doubt as to the corporate nature of the definition of income in the tax act of 1909.

The Doyle case also involves the tax act of 1909 and the Supreme Court said this:

The gain or increase arises from corporate activities;
Stratton's case was about corporate mining activities;
Income is that gain or increase from corporate activity.
Doyle cites Stratton and remarks about the corporate activity.

You wish to loose the part about corporate activities.

The proper understanding of the context tells us:

'Income may be defined as the gain derived from capital, from labor, or from both combined' arising from corporate activities.

Your "stipulation" is nothing but a rehash of a Merchant's cite without the context. Merchant's also cites Stratton:

Merchants’ Loan & Trust Co. v. Smietanka, 255 U.S. 509 (1921)

The Corporation Excise Tax Act of August 5, 1909, was not an income tax law, but a definition of the word 'income' was so necessary in its administration that in an early case it was formulated as 'A gain derived from capital, from labor, or from both combined.' Stratton's Independence v. Howbert

Stratton's case was about corporate mining activities;
Income is that gain or increase from Stratton's corporate activity.
Merchant's cites Eisner which cites Stratton's.

Merchants’ Loan & Trust Co. v. Smietanka, 255 U.S. 509 (1921)

When to this we add that in Eisner v. Macomber, supra, a case arising under the same Income Tax Act of 1916 which is here involved, the definition of 'income' which was applied was adopted from Stratton's Independence v. Howbert, supra, arising under the Corporation Excise Tax Act of 1909, with the addition that it should include 'profit gained through sale or conversion of capital assets,'

Now this post is pretty long and I am not yet done in my replies. Suffice to say, when I examine Eisner, the truth that definitions of income in ALL the tax acts is to be the same as the definition in the Sixteenth Amendment will shake out.

As I stated:

The entire string of cases I have posted ALL point back to the 1909 tax act for the operating definition of "income" ("corporate income" or "income").

You then said:

The term income as it applies to the tax act of 1909 IS the definition as defined by the Supreme Court. The term income as it applies to the tax act of 1909 IS the definition the Supreme Court says is used in the tax act of 1913. The term income as it applies to the tax act of 1909 IS the definition the Supreme Court says is used in the tax act of 1916. The term income as it applies to the tax act of 1909 IS the definition the Supreme Court says is used in the tax act of 1917. The term income as it applies to the tax act of 1909 IS the definition the Supreme Court says is to be used in ALL the tax acts of Congress. The term income as it applies to the tax act of 1909 IS the definition the Supreme Court says is the term as it is used in the 16th. Amendment (to be proven when I examine Eisner and Merchants in detail.

There is nothing in the Supreme Court definition to limit the meaning of income to only corporate income; just as there is nothing in the Constitution to limit the meaning.

An assertion without proof may be refuted without proof. You are wrong.

Nevertheless the refutation is simple. The definition of income that Congress chose in the tax act of 1909 is the definition Congress is stuck with.

I stated:

You most disengenuously stated:

Are you now saying Congress did define income in the tax act of 1909?

So for the third time in this post (to insure that you "get it"):

Congress was free to define the term "income" right up until the term "income" became part of the Constitution by way of its inclusion in the 16th Amendment. That is why the Supreme Court said:

Eisner v. Macomber, 252 U.S. 189 (1920)

The Sixteenth Amendment must be construed in connection with the taxing clauses of the original Constitution and the effect attributed to them before the amendment was adopted.
...

A proper regard for its genesis, as well as its very clear language, requires also that this amendment shall not be extended by loose construction, so as to repeal or modify, except as applied to income, those provisions of the Constitution that require an apportionment according to population for direct taxes upon property, real and personal. This limitation still has an appropriate and important function, and is not to be overridden by Congress or disregarded by the courts.

In order, therefore, that the clauses cited from article 1 of the Constitution may have proper force and effect, save only as modified by the amendment, and that the latter also may have proper effect, it becomes essential to distinguish between what is and what is not 'income,' as the term is there used, and to apply the distinction, as cases arise, according to truth and substance, without regard to form.

Congress cannot by any definition it may adopt conclude the matter, since it cannot by legislation alter the Constitution, from which alone it derives its power to legislate, and within whose limitations alone that power can be lawfully exercised.

Congress tried to do an end run around the Constitution to avoid the requirement of the rule of apportionment. Eventually this discussion will go to what can only be taxed by a direct tax.

From the comment section of Trial Logs Blogspot

"Which really means gross income means all (corporate) income from whatever source derived"

No, that is not what it means.

Despite the fact that the Corporate Tax Act of 1909 was an excise tax that used income as the measure of the tax and that act (which only subjected those conducting business as corporations to the tax) was the statute in question when several Supreme Court decisions were made that hinged on the definition of income, it is not true that the definition of income is limited to corporate recipients.
Adding words to a statute or the words in court decisions tends to color or change the meaning. The statute means what it says - no more, no less. When it is unclear and disputed as to what a statute does mean, the courts have the Constitutional authority to decide the issue.

The income tax has never been ruled to only apply to corporate income.
jg | 12.25.05 - 9:41 pm | Cite

From the comment section of Trial Logs Blogspot

"Which really means gross income means all (corporate) income from whatever source derived"

No, that is not what it means.

An assertion without proof may be refuted without proof. You are wrong.

Nevertheless, Here's the proof:
JG-c.html

There are 68 yes / no questions in that linked page. I'll be expecting 68 yes / no answers from you to posted on this blog in this format:
1. Yes (or no)
2. Yes (or no)
n. Yes (or no)
n. Yes (or no)
68. Yes (or no)

Nevertheless, Here's other proof:

page 1

From page one, you can get to page 4. On pages 4 through 10 are 74 yes / no questions. I'll be expecting 74 yes / no answers from you to posted on this blog in this format:
Q1. Yes (or no)
Q2. Yes (or no)
Qn. Yes (or no)
Qn. Yes (or no)
Q74. Yes (or no)

Answer each question yes or no BEFORE stating ANYTHING else.
.
.
Dale Eastman | 12.25.05 - 10:07 pm | Cite

U.S. Federal Income Tax

Possibly a discussion of the actual words of law?

What is income?

What is Income, continued.