Brushaber case followed to the effect that the provisions of the income-tax act 1913 are not unconstitutional either because not sanctioned by the sixteenth amendment and otherwise beyond the general taxing power of Congress, or because of its retroactive operation for a designated period, or because of discriminations, inequalities, or progressive increases on incomes of individuals or the method provided for computing income of corporations. (Tyee Realty Co. v. Anderson, 240 U. S. 115, 1916.)

The unconstitutionality of the law and of the surtaxes which it imposes have been considered and adversely disposed of in Brushaber case, followed herein. (Dodge v. Brady, 240 U. S. 122, 1916.)

There is no room for argument as to the general constitutionality of the tax upon returns made in 1914 and estimated or based upon the income of an individual for a certain definite preceding period, even though that period be partially prior to the date of the enactment of the law. If the person is liable for the tax in the future, the method of its computation as estimated upon the past does not invalidate the tax. (Citing Stockdale v. Insurance Companies, 87 U. S. 331; Edwards e. Keith, 224 Fed. 585, 587, 1915. Affirmed by 231 Fed. 110; see 243 U. S. 638, 1916.)

The claim that the act is unconstitutional if construed to cover dividends, whether in stock or in cash, derived from earnings prior to the sixteenth amendment, is denied in Brushaber v. Union Pacific Railroad Co., 240 U. S. 1; Stanton v. Baltic Mining Co., 240 U. S. 103; Edwards . Keith, 231 Fed. 110, 243 U. S. 638. See also Memphis & C. R. R. Co. v. U. S., 108 U. S. 228; (Towne e. Eisner, 245 U. S. 418, 1918.)

Sixteenth amendment.

Independently of the operations of the sixteenth amendment, tax on the product of a mine is not a tax upon property as such because of its ownership, but is a true excise levied on the result of the business of carrying on mining operations. (Stratton's Independence e. Howbert, 231 U. S. 399, followed in Stanton v. Baltic Mining Co., 240 U. S. 103, 1916.)

Under the sixteenth amendment of the Constitution, Congress has power to tax as income, without apportionment, everything that became income in the ordinary sense of the word after the adoption of the amendment. (Lynch e. Hornby, 247 U. S. 339, 1918.)

The sixteenth amendment to the Constitution of the United States does not extend the taxing power to new or excepted subjects, but merely removes all occasion which otherwise might exist for an apportionment among the States of tax laid on income, whether it be derived from one source or another. (Peck v. Lowe, 247 U. S. 165, 1918.)

Construction.

In the interpretation of statutes levying taxes, it is the established rule not to extend their provisions by implication beyond the clear import of the language used, or to enlarge their operations so as to embrace matters not specifically pointed out, and in case of doubt they are to be construed most strongly against the Government. (Haiku Sugar Co. et. al. v. Johnstone, 249 Fed. 103, 1918.) And (Gould v. Gould, 245 U. S. 151, 1917.)

While taxing statutes are to be strictly construed, this merely means that neither the courts nor the executive may, through judicial or administrative construction, impose a tax not imposed by Congress, and, when Congress had indicated its purpose and intent to tax, the law is not to be strictly construed, but is to be given that construction given to remedial statutes.

In construing a law, the judicial inquiry is not into what enactment Congress should have made, but into what enactment Congress did in fact make.

While an act of Congress must be accepted for the purpose of interpretation in the form in which it was finally passed, and can not be altered or amended to conform to the meaning given it by individual members who advocated its passage, or by a committee which may have discussed it in a report, such expressions of opinion are entitled to weight in construing the law. (Penn. Mut. Life Ins. Co. v. Lederer, 247 Fed. 559, 1918. This case was reversed on another point by 258 Fed. 81.)

In case of ambiguity in the income-tax act of 1913, the language is to be construed most strongly in favor of the taxpayer. (United States v. Coulby, 258 Fed. 27, 1919.)

The law is so framed as to deal with the gains and profits of a partnership as if they were the gains and profits of the individual partner. (U. S. v. Coulby, 251 Fed. 982, Aff. in 258 Fed. 27, 1919.) Departmental rulings.

Regulations of the Treasury Department that unpaid charges for services or contingent income due for the year shall, if good and collectible, be included in return for such year can not interfere with the statutory determination of what is income to be taxed. (Edwards v. Keith, 231 Fed. 110, 243 U. S. 638, 1916.)

Retroactivity.

The retroactivity of the act to March 1, 1913—a date not prior to the adoption of the sixteenth amendment-is permissible. (Lynch v. Hornby, 247 U. S. 339, 1918; Brushaber case, 240 U. S. 1, followed

and approved.

Same point similarly decided in Woods v. Lewellyn, 252 Fed. 106, 1918.) (See Brady v. Anderson, 240 Fed. 665.) Applicability of general provisions of law to income tax law. (Dodge v. Osborn, 240 U. S. 118, 1916.)

Implications.

Exemptions in a tax law must be clearly expressed and will not be implied or spelled out of equivocal language. (U. S. v. Coulby, 251 Fed. 982, affirmed 258 Fed. 27, 1919.)

In the interpretation of statutes levying taxes, it is the established rule not to extend their provisions by implication beyond the clear import of the language used, or to enlarge their operations so as to embrace matters not specifically pointed out, and in case of doubt they are to be construed most strongly against the 'Government. (Haiku Sugar Co. et al. v. Johnstone, 249 Fed. 103, 1918; Gould v. Gould, 245 U. S. 151, 1917.)

Enjoining collection of tax.

(See cases under Par. L, "Restraining injunctions.")

Revised Statutes.

Sections 3220, 3224, 3226, 3227, are applicable. (Dodge v. Osborn, 240 U. S. 118, 1916.)

Act of 1894 distinguished. (Brushaber v. Union Pacific Ry. Co., 240 U. S. 1, 1916.)

Intention of the act.

It is the evident purpose of the act to refrain from taxing income that accrued prior to March 1, 1913, and to exclude from consideration, in making computation of taxable income for a given year, any income that accrued in the preceding taxable year.

The act is quite different in this respect (that of imposing liability on stockholders in the case of dividends not yet declared) from the income tax act of June 30, 1864, which provides that "the gains and profits of all companies, whether incorporated or partnership, other than the companies specified in this section, shall be included in estimating the annual gains, profits, or income of any person entitled to the same, whether divided or otherwise." (Southern Pacific v. Lowe, 247 U. S. 330, 1918. Following Lynch v. Hornby, 247 U. S. 339. Reversing 238 Fed. 847.)

PARAGRAPH A (1).

A. Subdivision 1. That there shall be levied, assessed, collected, and paid annually upon the entire net income arising or accruing from all sources in the preceding calendar year to every citizen of the United States, whether residing at home or abroad,

and to every person residing in the United States, though not a citizen thereof, a tax of 1 per centum per annum upon such income, except as hereinafter provided; and a like tax shall be assessed, levied, collected, and paid annually upon the entire net income from all property owned and of every business, trade, or profession carried on in the United States by persons residing elsewhere.

Normal tax.

INDIVIDUALS.

Where a contract between an insurance company and an agent provides that the agent shall receive as compensation for soliciting insurance, certain specified percentages of premiums paid on policies written through his solicitation for 20 years from date of policy such commissions to accrue only as the premiums were paid to the company, and that liability for any particular commission would terminate if policy ceased to be in force such percentages of premiums for second and subsequent years of the life of policies, issued prior to the enactment of the statute, were income accruing when such premiums were paid and taxable as such. This liability to tax was not affected by the fact that the agent hired subagents and maintained an office force and that his percentage to some extent represented merely deferred returns which he had anticipated and partially expended for office expenses; nor was the liability to the tax affected by the fact that such expenses were paid before the passage of the statuto. (Edwards v. Keith, 224 Fed. 585, 1915; affirmed 231 Fed. 110; petition for writ of certiorari denied in U. S. Sup. Ct. Mar. 12, 1917.) Nonresidents, income from activities carried on in the United States. See case 1 (Laurentide Co. Ltd., v. Durey) under paragraph G(a). Where stocks, bonds, and mortgages are owned by a nonresident alien, secured upon property in the United States or payable by persons or corporations there domiciled, the income therefrom being collected for and remitted to such nonresident by an agent domiciled in the United States, if the agent has physical possession of the certificates of stock, etc., such income is taxable under this act. Ganay v. Lederer, 250 U. S. 376.)

Retroactivity.

(De

As the tax is upon the property and not upon the person it makes no difference whether the person is living or dead at the time the act was passed. The act being made retroactive to March 1, 1913, applies to a person who died July 22, 1913, and his executors must make a return. (Brady v. Anderson, 240 Fed. 665, 1917.)

Exportation.

(* * * it is both nominally and actually a general tax. It is not laid on income from exportation because of its source, or in a discriminative way, but just as it is laid on other income.

*

*

At most, exportation is affected only indirectly and remotely. The tax is levied after exportation is completed. *.* Thus what is taxed the net income-is as far removed from exportation as are articles intended for export before the exportation begins." (Peck v. Lowe, 247 U. S., 165, 1918, affirming 234 Fed. 125.)

Divorced wife.

A divorced wife is not liable to tax on alimony received. (Gould v. Gould, 245 U. S., 151, 1917.)

Partnership liability.

(See cases under section G (a)—, "Partnerships."

PARAGRAPH A (2).

Subdivision 2. In addition to the income tax provided under this section (herein referred to as the normal income tax) there shall be levied, assessed, and collected upon the net income of every individual an additional income tax (herein referred to as the additional tax) of 1 per centum per annum upon the amount by which the fotal net income exceeds $20,000 and does not exceed $50,000, and 2 per centum per annum upon the amount by which the total net income exceeds $50,000 and does not exceed $75,000, 3 per centum per annum upon the amount by which the total net income exceeds $75,000 and does not exceed $100,000, 4 per centum per annum upon the amount by which the total net income exceeds $100,000 and does not exceed $250,000, 5 per centum per annum upon the amount by which the total net income exceeds $250,000 and does not exceed $500,000, and 6 per centum per annum upon the amount by which the total net income exceeds $500,000. All the provisions of this section relating to individuals who are chargeable with the normal income tax, so far as they are applicable and are not inconsistent with this subdivision of paragraph A, shall apply to the levy, assessment, and collection of the additional tax imposed under this section. Every person subject to this additional tax shall, for the purpose of its assessment and collection, make a personal return of his total net income from all sources, corporate or otherwise, for the preceding calendar year, under rules and regulations to be prescribed by the Commissioner of Internal Revenue, and approved by the Secretary of the Treasury. For the purpose of this additional tax the taxable income of any individual shall embrace the share to which he would be entitled of the gains and profits, if divided or distributed, whether divided or distributed or not, of all corporations, joint-stock companies, or associations however created or organized, formed or fraudulently availed of for the purpose of preventing the imposition of such tax through the medium of permitting such gains and profits o accumulate instead of being divided or distributed; and the fact that any such corporation, joint-stock company, or association, is a mere holding company, or that the gains and profits are permitted to accumulate beyond the reasonable needs of he business shall be prima facie evidence of a fraudulent purpose to escape such tax; but the fact that the gains and profits are in any case permitted to accumulate and become surplus shall not be construed as evidence of a purpose to escape the said tax in such case unless the Secretary of the Treasury shall certify that in his opinion such accumulation is unreasonable for the purposes of the business. When requested by the Commissioner of Internal Revenue, or any district collector of internal revenue such corporation, joint-stock company, or association shall forward to him a correct statement of such profits and the names of the individuals who would be entitled to the same if distributed.