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Should Us Tax Law Be Constitutionalized? Centennial Reflections On Eisner V. Macomber (1920), Reuven S. Avi-Yonah

Law & Economics Working Papers

The US Supreme Court last decided a federal tax case on constitutional grounds in 1920, a century ago. The case was Eisner v. Macomber, and the issue was whether Congress had the power under the Sixteenth Amendment (authorizing an income tax, 1913) to include stock dividends in the tax base. The Court answered no because “income” in the Sixteenth Amendment meant “the gain derived from capital, from labor, or from both combined.” A stock dividend, since it did not increase the wealth of the shareholder, was not “income.” Macomber was never formally overruled, and it is sometime still cited by …