Admittedly, I often criticize the tax nuts who claim the income tax is somehow “not mandatory” or only applies to corporations. Well, as discussed here, a federal court has ruled
that a small part of the federal tax code exceeds Congress’s power to lay income taxes under the Sixteenth Amendment. The tax code, the court held, does tax as income compensatory damages for emotional distress and loss of reputation. But such damages aren’t “income” for purposes of the Sixteenth 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”), because they are not a gain but merely a compensation for loss; therefore, the court held, they can’t constitutionally be subjected to the income tax.I’m sure the income tax-skeptics will go bonkers over this, saying they are finally starting to win. I would not hold my breath.
