SteveSy wrote:More importantly we're talking about court cases here. You have not provided a court case that uses Stratton's in the context you used it against the argument that wages are always 100% taxable as income.
Here are a few:
“Treas.Reg. § 1.61-2(a)(1) clearly includes wages within the definition of income. Buras, however, argues that this regulation is invalid because it is inconsistent with the constitutional definition of income. According to Buras, income must be derived from some source. Wages cannot be taxed because the wage earner enjoys no gain from that source. Since the wage earner exchanges his labor and personal time for its equivalent in money, he derives no gain and therefore cannot be taxed.
Appellant's argument is refuted by one of the cases he cites. In Stratton's Independence, Ltd. v. Howbert, 231 U.S. 399, 415, 34 S. Ct. 136, 140, 58 L. Ed. 285 (1913), the Court did define income as gain derived from labor. The Court went on to explain, however, that "the earnings of the human brain and hand when unaided by capital" are commonly treated as income. Id.”
U. S. v. Buras, 633 F. 2d 1356 (9th Cir. 1980)
"Compensation for labor or services, paid in the form of wages or salary, has been universally held by the courts of this republic to be income, subject to the income tax laws currently applicable… Stratton's Independence, Ltd. v. Howbert, 231 U.S. 399, 415, 34 S. Ct. 136, 140-41, 58 L. Ed. 285 (1913) ("the earnings of the human brain and hand when unaided by capital * * * are commonly dealt with in legislation as income.")."
Hill v. U. S., 599 F. Supp 118 (M.D. Tenn. 1984)
“May argues that according to Eisner v. Macomber, 252 U.S. 189, 207, 64 L. Ed. 521, 40 S. Ct. 189 (1920), "income" must be a "gain." Since he presumes that wages are a fair exchange for time and effort expended, he theorizes that there is no gain derived from wages. There is no merit to this argument. Any discussion of wages gain and income in Eisner is dicta -- it deals with whether stock dividends are income…
’Income may be defined as the gain derived from capital, from labor, or from both combined . . . It is of course true that the revenues derived from the working of mines result to some extent in the exhaustion of the capital. But the same is true of the earnings of the human brain and hand when unaided by capital, yet such earnings are commonly dealt with in legislation as income.' n7
n7 Stratton's Independence, Ltd. v. Howbert, 231 U.S. 399, 415, 58 L. Ed. 285, 34 S. Ct. 136 (1913).
U. S. v. May, 555 F. Supp 1008 (E. D. Mich. 1983)
“The Supreme Court early established the principle that the word "income", as it is used in the Sixteenth Amendment, is to be construed according to its common, everyday meaning. In Lynch v. Hornby, 247 U.S. 339, 344 (1918), the Court stated, "* * * Congress was at liberty under the [Sixteenth] Amendment to tax as income, without apportionment, everything that became income, in the ordinary sense of the word * * *." Under this principle, the ordinary, and perhaps most common, meaning of "income" has been wages. Thus, when a coal company argued before the Supreme Court that the proceeds from its sale of ore, which it had dug from its properties, were the return of depleted capital, not income, the Court dismissed the argument, observing, "the same is true of the earnings of the human brain and hand when unaided by capital, yet such earnings are commonly dealt with in legislation as income." Stratton's Independence v. Howbert, * * * [231 U.S. 399, 415 (1913)]. This quote illustrates that whether or not wages can be characterized as the product of an exchange, they are still income within the Constitutional embrace.”
Rowlee v. CIR, 80 T. C. 1111 (1983)