Sonny Tufts
Member

They don't plan to. As proposed the service industry tip compliance agreement is a voluntary tip reporting program for employers. Employers are responsible for their share of FICA taxes even on unreported tips received by their employees. In 2002 the Supreme Court ruled that the IRS is authorized to use an aggregate estimation method when a restaurant underreports its tip income and that restaurants could be held liable for taxes beyond what their individual employees reported for tips. The aggregate estimation method uses overall credit card charges to determine the average percentage tip rate paid by the customers. This rate is then applied to the total sales reported to estimate unreported cash tips. The idea behind the proposed service industry tip compliance agreement program is to give employers in the service industry a way to report tip income without being liable for unpaid FICA taxes. The program would not force customers to do or refrain from doing anything.

That's not surprising, since Congress already had the authority to levy an unapportioned tax on wages and personal earnings. Congress was well aware of the Springer decision, which had held that the income tax was in the nature of an excise or duty and it also knew that the Pollock decision had not overruled Springer with respect to a tax on wages and personal earnings. Indeed, Pollock had expressly recognized that such a tax was not a direct tax, and Brushaber later reaffirmed Pollock in this regard: In its discussion of the severance issue (i.e., could the rest of the 1894 Tax Act be saved if only the part about taxing investment income were stricken), the Pollock majority reiterated its view that an unapportioned tax on pay-for-work was valid: So it's ludicrous to think the 16th Amendment implicitly overruled Springer and turned a tax on pay-for-work into a direct tax. Congress isn't in the habit of cutting itself off from sources of revenue.

The majority held that the stock dividend Mrs. Macomber received wasn't income so that a tax on it wasn't a "tax on incomes" authorized by the 16th Amendment. Accordingly, the case is inapplicable to a situation in which someone receives income, such as pay-for-work. In addition, his claim "The Eisner case confirms the constitutional requirement that “No Capitation, or other direct, Tax shall be laid, unless in Proportion to the Census or Enumeration herein before directed to be taken.” is still in effect, "notwithstanding the Sixteenth Amendment" is misleading. The actual quote from the opinion is "The Revenue Act of 1916, insofar as it imposes a tax upon the stockholder because of such dividend, contravenes the provisions of Article I, § 2, cl. 3, and Article I, § 9, cl. 4, of the Constitution, and to this extent is invalid notwithstanding the Sixteenth Amendment."

Since English does not appear to be your native language, let me spell it out. "As repeatedly held, this did not extend the taxing power to new subjects, but merely removed the necessity which otherwise might exist for an apportionment among the states of taxes laid on income." This means that the Amendment got rid of any apportionment requirement for taxes on incomes. "removed" = eliminated; got rid of; dispensed with, etc. "It is clear on the face of this text that it does not purport to confer power to levy income taxes in a generic sense -- an authority already possessed and never questioned -- or to limit and distinguish between one kind of income taxes and another, but that the whole purpose of the Amendment was to relieve all income taxes when imposed from apportionment from a consideration of the source whence the income was derived." This means that regarding apportionment there is to be no distinction between types of income taxes. ALL income taxes were relieved from apportionment, and it would be incorrect to subject some income taxes to apportionment by looking at where the income came from.

It did just the opposite. I'll quote from Eisner again: It seems you have difficulty in reading and understanding these passages. To suggest that if a tax on a certain type of income is a direct tax then it has to be apportioned is to be deaf, dumb, and blind. It is to ignore not only what the plain language of the 16th Amendment says (i.e., Congress can tax incomes from whatever source without apportionment) but also to ignore the language from other cases. "This is the text of the Amendment: "The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several states, and without regard to any census or enumeration."

You might want to actually read the Eisner case. The majority held that a stock dividend wasn't income at all but rather capital and could therefore not be taxed under the income tax statute as if it really were income. Since in its view a tax on capital would be a direct tax, it would have to be apportioned. So it's clear that all direct taxes, other than taxes on income, must be apportioned. I realize that you think that a tax on income was considered a direct tax when the Constitution was adopted. Most scholars disagree, but one who shares your view in this regard is Professor Eric Jensen. But even he recognizes that due to the 16th Amendment the Direct Tax Clause doesn't apply to a tax on income:

Withholding was actually first introduced in the 1913 Tax Act. It wasn't popular, so it was eliminated after a few years.

Indeed. And did you ever wonder why Brown's version was rejected? Could it be that it implicitly supported Pollock's faulty reasoning* that a tax on the income from property was a direct tax? Roberts's quote doesn't support your erroneous claim that the Direct Tax Clause applies to ALL federal taxation. Great Caesar's Ghost, man, can you not understand the language of the 16th Amendment? Suppose the income tax, or if you want to narrow it down a tax on pay-for-work, is a direct tax. So what? The 16th Amendment says it doesn't have to be apportioned. Read again what Roberts wrote: "In 1895, we expanded our interpretation to include taxes on personal property and income from personal property, in the course of striking down aspects of the federal income tax. Pollock v. Farmers’ Loan & Trust Co., 158 U.S. 601, 618 (1895). That result was overturned by the Sixteenth Amendment, although we continued to consider taxes on personal property to be direct taxes." I've pointed out to you before that the income tax isn't a property tax. It's a tax on the receipt of income, not its mere ownership. Moreover, I've also pointed out that the dictum from the Butchers' Union case is from an antitrust case having nothing whatsoever to do with taxation. In addition, it's not from the majority opinion but rather from the concurring opinion of a single Justice who, by the way, voted to uphold the Civil War income tax just 3 years earlier. In that case, Springer v. United States, the Supreme Court unanimously ruled that the tax was not a direct tax but was in the nature of a duty or excise. In actuality, the quote in the Butchers' Union concurrence was from Adam Smith's The Wealth of Nations. Mr. Springer also tried to use Smith to support his claim that the income tax was a direct tax, but the Court didn't buy it.

It's more accurate to say that your claim is that a tax on the pay one receives for work is a direct tax and must therefore be apportioned. This claim is incorrect for two main reasons. First, no court in the history of the country has ever held that a tax on pay-for-work is a direct tax. To the contrary, such a claim has been uniformly and consistently rejected, beginning with the Springer case in 1881. You undoubtedly think the decision was wrong, but your opinion isn't the law; that of the Supreme Court is. Second, the 16th Amendment makes it clear that a tax on incomes does not have to be apportioned. Accordingly, unless you're operating under the delusion that pay-for-work isn't income (another claim that has been uniformly and consistently rejected by the courts), it's patently obvious that a tax on pay-for-work needn't be apportioned even if it were considered a direct tax. Incidentally, Oliver Ellsworth isn't the authority on the meaning of "direct tax" as that term is used in the Constitution. The view that became law wasn't Ellsworth's, but was that of the Justices in the Hylton case, who opined that the only direct taxes under the Constitution were capitations and taxes on land. And this characterization, with the addition of the category of taxes on real and personal property that was added by the Pollock case, remains the law today as explained by Justice Roberts's quote I cited. Btw, the Justices who thus opined were also involved in the ratification of the Constitution -- Justice Paterson was a delegate to the Constitutional Convention, and Justices Chase and Iredell were members of their states' ratifying conventions. So your cherry-picking of Ellsworth as the authority regarding the meaning of "direct tax" is disingenuous. Your argument boils down to nothing more than bitching about how all the courts have gotten it wrong and that the 16th Amendment doesn't mean what it says.

You haven’t learned a thing, have you? The income tax isn’t a direct tax; it’s an excise upon the receipt of income. However, even if, for the sake of argument, the income tax is viewed as a direct tax, it still needn’t be apportioned because the 26th Amendment, in unambiguous language, says that Congress may impose income taxes without apportionment. As far as the Founders’ views are concerned, consider Hamilton’s argument in the Hylton case (quoted in Springer v. United States, 102 U.S. 586, 598 (1881)), in which he said that direct taxes are only “capitation or poll taxes, and taxes on lands and buildings, and general assessments, whether on the whole property of individuals or on their whole real or personal estate. All else must, of necessity, be considered as indirect taxes." (emphasis added). Since the income tax isn’t a capitation, a tax on land, or a tax on one’s whole estate, it’s an indirect tax. Regarding Chief Justice Roberts’s majority opinion on the Obamacare case, it’s too bad you didn’t have the honesty to quote more of his comments on direct taxes:

Well, you said "In the case IRS vs Bob Jones University, the IRS didn't simply strip BJU of federal funding...". It didn't because the IRS has no authority to strip an institution's federal funding, and there's nothing in the decision referring to federal funding. Now maybe there's a federal statute or regulation somewhere that says any institution that loses its tax-exempt status automatically loses its federal funding. I have no idea whether such a rule exists, but it seems to me that from a policy standpoint the issue of tax exempt status under Section 501(c)(3) is completely different from the issue of whether an institution gets federal funding. As an aside, there are a boatload of tax-exempt entities listed in Section 501(c) but only those described in subsection 3 can get tax-deductible donations. The Court was careful in footnote 21 to the majority opinion to state, "In view of our conclusion that racially discriminatory private schools violate fundamental public policy and cannot be deemed to confer a benefit on the public, we need not decide whether an organization providing a public benefit and otherwise meeting the requirements of § 501(c)(3) could nevertheless be denied tax-exempt status if certain of its activities violated a law or public policy." The expansion of the case to other situations not involving racial discrimination or religious institutions is what worries some people. For example, in a hypothetical Ron DeSantis administration should a secular university lose its 501(c)(3) status because it offers a course in Critical Race Theory?

The BJU case didn't deal with accepting federal money. The 7 member majority held that an organization's entitlement to the tax exemption granted by Section 501(c)(3) of the Internal Revenue Code (501(c)(3) organizations are not only tax exempt but unlike other tax-exempt entities contributions to them are tax deductible) "depends on meeting certain common law standards of charity -- namely, that an institution seeking tax-exempt status must serve a public purpose and not be contrary to established public policy" and that "racial discrimination in education violates a most fundamental national public policy, as well as rights of individuals." The case does not appear to have been extended to situations not involving racial discrimination in education, despite the concerns (both pro and con) that it could be applied to other types of discrimination (e.g., same-sex marriage). For a discussion of this issue see https://academicworks.cuny.edu/cgi/viewcontent.cgi?article=1342&context=cl_pubs, pages 11-17.

Unless the business is run in the form of a corporation, LLC, or limited partnership the business owner's personal assets (other than whatever exemptions the law provides) are subject to the creditors of the business. That's the main reason people use entities like corporations instead of doing business as a sole proprietorship.

It could be this one: Permissible punishments: A fine of not less than $100.00 nor more than $1,000.00; A sentence of confinement in the county jail or other place of imprisonment for a period not to exceed six months; or A sentence of confinement in a county correctional institution or other appropriate institution under the jurisdiction of the Department of Corrections not to exceed 12 months. Incidentally, there's no law requiring "a jury of one's peers". In some cases, it's just the opposite. For example, a former felon who's on trial can't demand that the jury consist of convicted felons because in most states (including Georgia) convicted felons can't serve on a jury.

The topic under discussion was whether a private company loses its status as private simply because it enters into a contract with the government, with the result that anything else it does, whether it's related to the contract or not, is done without the protection of being a private company. Let me give you a different example: a newspaper publishes an ad placed and paid for by the city listing the polling places for an upcoming election. Should the paper lose its status as a private company (along with its editorial discretion), and must it hereafter accept any ad, letter to the editor, or story submitted to it because otherwise it would be engaging in governmental censorship?

You're painting with too broad a brush. Suppose the university in my example didn't receive a grant, but rather entered into a contract with a government department to provide it with some sort of research and development or other consideration. What about a plumber who is hired by a post office to fix a leak in the facility's restroom. Or a company that sells the government some product that the latter uses. Does the government get to "call the tune" just because it entered into an arm's length agreement for a fair consideration? Are all these vendors turned into government agents?