Brief for the Respondent in Opposition — Acker v. Commissioner

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| CITATIONS ‘oe

Brushaber v: Union P sete Rm. 300. 6 1,:.....

Erwin v. Granquist, 253 F. 2d 26, certiorari denied,

CU MEE Se es eg

Foz v. Standard Ol Co., 294 U.S. 87... -. -----

os = Helvering v: Mitchell, 303 U.S. 391. ___-

Panhandle Oli Co. v. Kinoz, 277 U.S. 218... ----

_ Ste-vard Machine Co. v. Davis, 301 U.S: 548__- -----

Waiker vy. Unitéd States, 240 F.2d 601, certiorari

denied, 354 U.S. 939. .-- — Gan the peels

Constitution and Statute: . i ..

; Article i, Section 8. - od ge

- Sixteenth Ainendment..- -----_. _--

Internal Revenue Code of 1939:

i. OEE U. 8. 0. om... S... ae rae

' Sec. 204 (d) (26, U.S.C. 294 (d)). Sige are nua

(1).

492100 58 ;

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Page

en ee Oe

& he Supreme Court of the anitd Bas |

October TERM, 1958

| No. 345.

: Pan N. AcKen, PETITIONER

° ‘ ‘ a Vv. —

2 «

‘COMMISSIONER OF INTERNAL REVENUE

—s

—_—

: ON PETITION FOR A WRIT OF CERTIORARI TO THE UNITED

STATRS COURT OF APPRALS FOR THE SIXTH OIRCUIT |

; . yy

BRIEF FOR THE RESPONDENT IN OPPOSITION |

oPrNToms BELOW

_ The memorandum findings of fact_and opinion of

the Tax Court (R. ‘36a-41a)' are not officially re-

ported. -The opinion’ of the Court of Appeals (Pet.

13--23) is ci bie at 258 F.2d - |

| ‘JURISDICTION

The judgment of the Court of Appeals was entered |

_ on June 18, 1958. (Pet. 24.) The taxpayer’ s petition

_+ for amin was denied on September 3, 1958.

‘'(Pet. 24-27.) The petition for a writ of certiorari

was filed on December 1, 1958. The jurisdiction of

” this Court is invoked under 28 U.S, C. 1254. ~ .

1 Record references are to the separately — appendix to .

the = brief in the Court of — |

(1)

. 2

QUESTIONS. PRESENTED

a Whether the court below correctly decided that

the Internal Revenue Code of 1939 is not unconstitu-

tional because of its progressive rates of taxation and

further that such-rates are not excessive or arbitrary

within the meaning of the Fifth Amendment to the

Constitution.

: 2. Whether the court below correctly decided that

Section 294 (d) (1) (A) of. the Internal Revenue

- Cade of 1939, which imposes an addition to the tax for

failure to file a declaration of estimated income tax

required ‘by Section | 58 of the: Code, is_ not

unconstitutional. |

Internal Revenue Cédt of 1939: *

STATUTE INVOLVED

.* , SEC. 294. ADDITIONS TO TAE TAX IN ‘CABE OF NON-

PAYMENT

* + a, mie he =

(d) [As added by Section 118 (a) of the

Revenue Act of 1943, c. 63, 58 Stat. 21) Estt-

nen Taz.—

‘(1) Failure to file duttinathon or pay in-

F poe at of estimated taz.—

(A) Failure to File Declaration.— mi

In the case of a failure to make and file

a deglaration of estimated tax within

the time prescribed,.unless such fail-

ure is shown to the satisfaction of the

Commissioner to be due to reasonable

cause and not to willful neglect, there

shall be added to the tax 5 percentum

_- of .each installment due but unpaid,

and in ‘addition, with respect to each

3

such installment due but unpaid, 1 per

centum of the unpaid amount thereof .

for each month (except the first) or. —

fraction thereof dum ‘g which such

amount remains unpaid. In no event . _

shall the aggregate addition to the tax =~

under this subparagraph with respect

to any installment due but unpaid, éx-

- eeed 10 per centum of .the unpaid por-

tion of-such installment. * ** ~, ° |

ret @ : + * *’ ; Sd

(26 U.S. C. 294.) ae 1

, _ STATEMENT . ne

The Gommissioner has filed a petition for a writ of |

* eertiorari in this same case, No. 553, this Term. The

question presented by’ that petition, however, is ull-

related to the questions presented by this petition. In

No. 553, the question is whether, where a taxpayer has.

failed to file a declaration of estimated income tax as

required by Section’ 58 of the Internal Revenue Code "

of 1939, the Commissioner ‘may impose concurrently

an addition to the tax under Section 294 (4) (2) of

the Code for ‘substantial underestimation of tax, as «

well as an addition under Section 294 (d) (1) (A)

for failure to file a declaration. _

The facts pertinent: to the questions raised in this

- petition may be stated as follows:

The respondent determined the net income an :

tax liability of the petitioner for the years 1947 to

1950 as follows (R. 11a-15a) : ‘i ; ie

e

4

a

| : , Incor . Tas

ee _ $9,412.30] - $1,65201| - $638.32

RC ae ee 15,968.13] . 3, 565. 38 1, 290. 01

etc cheucanrda cuca 9,047.78 | - 1,664.60] § | ‘583.95

1950...-..:-------------] 16, 8@2 18 | - 4,400. 43 231. 04

The penalties included additions for failure to file a

declaration of estimated income tax for each of the

aps involved.

’ The: petitioner petitioned the Tax Court for rede-

termination (R. 2a-7a) and that. court upheld the .

determination of the Commissioner (R. 36a-41la).

On appeal to the Court of Appeals for the Sixth

Circuit, the petitioner, in addition to challenging the

validity of the determinations ‘of deficiencies, also as-

serted the unconstitutionality of the provision requir-

ing a declaration of estimated tax and of a progressive

income tax generally. ‘The court below upheld the.

hog constitutionality of the tax law in both respects (Pet.

App. 13-27). . ie |

. ARGUMENT ©

Tke decinica below, insofar’ as it pertains to. the

questions presented by this petition, is -correct and

there is no conflict offiecisions. ;

kk ‘The claim that\ the Internal Revenue Code of

is plain! without viihaiaillen, As tkis Court pare in

Brushaber v. Union Pactfic R. Co., 240 U.:8. 1, 25:

t is true that it is elaborately insisted that

although there be no express, constitutional pro-

5

- vision prohibiting it, the progressive feature of

the tax causes it to transcend the conception

‘ of all taxation and to be a mere arbitrary abuse:

‘of power which must be treated as wanting in -

due process. But the proposition disregards

the fact that in the very early history of the

Government 'a progressive tax was imposed by

Congress and that such authority was exerted ©

in some if not all of the various income taxes

enacted prior to 1894 to which we have pre-

_ viously adverted. And over and above all this.

the contention but disregards the further fact

that its absolute want of foundation in reason

_ was plainly pointed out in. Knowlton v. Moore,

supra, and the righf to urge it was necessarily |

_' foreclosed by the ruling in that case made.

' Plainly, Congress has the power to levy the income

tax. Constitution, Amendment XVI. ‘‘When the

power to tax exists, the extent of the burden is a mat-

ter for the discretion of the lawmakers.” Fow V.

Standard Oil Co., 294 U. S. 87; 99. To violate the

_ Constitution, the burden. must be so arbitrary as to

amount to a confiscation of property. Brushaber Vv.

Union Pacific R. Co., supra, pp. 24-29; Steward Ma- )

chine Co. v. Davis, 301 U. S. 548, 585; nhandle Oil —

Co. v. Knox, 277 U. S. 218, 223. There has no

a showing here that the rates are so arbitrary as to =.

amount to a confiscaticn of property. The taxpayer ¢

assertion that the rates are unconstitutionally i

_ sive and arbitrary is apparently based on: the .as-

sumption that his claimed deductions are allowable

(but clearly they are not) and that the nation can do

without high taxes (Pet. 3,8-12), As the.court below

indicated (Pet. 23), although the rates imposed by.

a

the 1939 Code are high, they have

fiscation’’ or a “taking”’ in the constitutional sense.

2. In rejecting taxpayer's claim that Section 24

(ad) (2) (A); supra, p. 2, is unconstitutional, the

court below observed that the taxpayer’s attack upon

the constitutionality of the provisions of the Internal

Revenue Code of 1939 requiring the filing of a decla-

ration of estisaated tax (Section 58) and imposing

an addition to the tax for failure to file (Section 2%

(d) (1) (A)) is “‘wholly without merit”, citing two

eases in which this Court recently denied certiorari.

Erwin v. Granquist, 253 F. 2d 26 (C. A. 9th), certi-

_orari denied, 356 U. S. 960; Walker v. United States,

- 240 F. 2d 601 (C. A. 5th), certiorari denied, 354 U.S.

939. -In those cases, arguments similar to the ones

that have been advanced by this taxpayer were re

jected by the Ninth and Fifth Circuits, respectively.

And in Helvering v. Mitchell, 303 U. S. 391, 399, this

Court said :

' As stated i in Oceanic Steam Mavigaiion Cov. §

‘Stranahan, ‘214 U. S. 320, 339: aa

In accord with this settled judigial construc-

tion, the legislation of Congress from the be

ginning, not only as to tariff but as to internal

revenue, taxation and other ‘subjects, has pro-

ceeded on the conception that it was within the

competency of Congress, when legislating as to

matters exclusively within ‘its control, to impose

appropriate obligations and sanction their et-

forcement by reasonable money penalties, giv-

ing to executive officers the power to enforce

such penalties without the necessity of invoking

the judicial power. ease

Cygre as

meet

Thus, as the court below observed (Pet. 16), the

provisions of the Code here under attatk are a valid

exercise of the taxing power conferred by Article 1,

“ Section 8, and the Sixteenth Amendment to the

Constitution.

\

.

The decision below pertaining to the questions raised

by this petition is correct and no other reason appears

for further review by this Court. Therefore, the pe-

_ tition should be denied. |

Respectfully submitted,

J. Lee Rankin,

Solicitor General.

CHARLES K. RIcE,

- Assistant Attorney General.

Rosert N. ANDERSON,

Cuagigs B. E. FREEMAN, .

Attorneys.

DECEMBER 1958.

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© 8 SCvERamENT PRimTINZ OFFICE: 1908 -