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877A and 16th amendment

Would the 16th amendment work to challenge the expatriation tax -- section 877A of the internal revenue code? Section 877A says that when you give up your US citizenship or permanent residency (if you're a long time resident), and if you're rich meaning you pay too much income tax or have too much assets), then you have to pay tax on your unrealized capital gains above a threshold of about 650k. But the

16th amendment says says congress may collect tax on "incomes". They cannot collect tax on imputed income, unless you agree to a mark-to- market election and allow yourself to be taxed this way. If they can get away with taxing imputed income, what's to stop them from imputing income on all the billionaires and reducing to wealth to 10% of what it was in order to enact a redistribution of wealth?
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FYI, there's a discussion of 877A constitutionality at:

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28568 The article argues that, as it currently stands, the exit tax is not constitutional.

Reply to
Simon Baldwin

The Constitution does not define "income." Congress does.Therefore, you statement, "They cannot collect tax on imputed income," is incorrect. By the way, "imputed income" in the context in which you use it, is really "economic income."

I suggest that further discussions of the Constitutionality of the Internal Revenue Code be taken to

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Reply to
Bill Brown

The courts do get to give their OK on what constitutes income. Consider Marrita Murphy and Daniel J. Leveille, Appellants v. Internal Revenue Service and United States of America, Appellees

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(40) At the outset, we reject the Government's breathtakingly expansive claim of congressional power under the Sixteenth Amendment—upon which it founds the more far-reaching arguments it advances here. The Sixteenth Amendment simply does not authorize the Congress to tax as "incomes" every sort of revenue a taxpayer may receive. As the Supreme Court noted long ago, the "Congress cannot make a thing income which is not so in fact." Burk-Waggoner Oil Ass'n v. Hopkins, 269 U.S. 110, 114, 46 S.Ct. 48, 70 L.Ed. 183 (1925). Indeed, because the "the power to tax involves the power to destroy," McCulloch v. Maryland, 17 U.S. (4 Wheat.) 316, 431, 4 L.Ed. 579 (1819), it would not be consistent with our constitutional government, and the sanctity of property in our system, merely to rely upon the legislature to decide what constitutes income.

Then section 44 says

(44) Our conclusion at this point is tentative because the Supreme Court has also instructed that, in defining "incomes," we should rely upon "the commonly understood meaning of the term which must have been in the minds of the people when they adopted the Sixteenth Amendment." Merchants' Loan & Trust Co. v. Smietanka, 255 U.S. 509, 519, 41 S.Ct.

386, 65 L.Ed. 751 (1921).

The expatriation tax is really a wealth tax in disguise. I don't know if the "common understood meaning" of income would have included a tax on wealth.

Reply to
removeps-groups

The citation you quote from was the first decision released by the Circuit Court. Upon further consideration, the court withdrew that decision; held rehearings; and issued a new decision substantiating the government case. The USSC refused to hear the appeal by Murphy. You can read the final decision here:

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Here's a quote from the final decision (you should read the whole decision):

In the present opinion, we affirm the judgment of the district court based upon the newly argued ground that Murphy?s award, even if it is not income within the meaning of the Sixteenth Amendment, is within the reach of the congressional power to tax under Article I, Section 8 of the Constitution.

Reply to
Alan

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