Murphy v. Internal Revenue Service, the Meaning of 'Income,' and Sky-Is-Falling Tax Commentary

101 Pages Posted: 20 Jan 2010 Last revised: 29 Jan 2011

See all articles by Erik M. Jensen

Erik M. Jensen

Case Western Reserve University School of Law

Date Written: October 28, 2010

Abstract

This article examines the widely noted D.C. Circuit case, Murphy v. Internal Revenue Service, where a panel twice got itself hopelessly entangled in the relationship between the meaning of “income” in the Internal Revenue Code and its meaning in the Sixteenth Amendment. At issue was whether a whistle-blower's recovery for emotional distress could be reached by the income tax. The first time around, the panel concluded that the recovery could not be taxed constitutionally because it was not income. The second time, apparently after having visited another planet, the very same panel concluded that the recovery could be taxed whether or not it was income. Murphy provides the opportunity to reconsider many basic principles of American taxation. Although nearly all commentators condemned the result in Murphy I - sky-is-falling rhetoric was common - and then breathed a sigh of relief when Murphy II was decided, this article perversely argues that the panel’s first result was more defensible than its second.

Keywords: Income, Sixteenth Amendment, Internal Revenue Code, Murphy v. Internal Revenue Service, Recovery Emotional Distress, Unapportioned Tax, Direct Tax, Gross Income, Personal Rights, Recovery of Basis

JEL Classification: K13, K34

Suggested Citation

Jensen, Erik M., Murphy v. Internal Revenue Service, the Meaning of 'Income,' and Sky-Is-Falling Tax Commentary (October 28, 2010). Case Western Reserve Law Review, Vol. 60, No. 3, p. 751, 2010; Case Legal Studies Research Paper No. 2010-5. Available at SSRN: https://ssrn.com/abstract=1539031

Erik M. Jensen (Contact Author)

Case Western Reserve University School of Law ( email )

11075 East Boulevard
Cleveland, OH 44106-7148
United States
216-368-3613 (Phone)
216-368-2086 (Fax)

Register to save articles to
your library

Register

Paper statistics

Downloads
272
Abstract Views
1,656
rank
111,266
PlumX Metrics