The Constitutionality of a Mark-to-Market Taxing System
Erik M. Jensen
Case Western Reserve University School of Law
July 1, 2014
Tax Notes 1299 (June 16, 2014)
Case Legal Studies Research Paper No. 2014-17
This article comments on “Is a Broadly Based Mark-to-Market Tax Unconstitutional,” by Gene Magidenko. Magidenko gets all the big points right in questioning the constitutionality of a mark-to-market system of taxation, but this article suggests he did not emphasize one point enough: the Supreme Court’s 1920 decision in Eisner v. Macomber, which concluded that realization is a requirement for a tax to be on income within the meaning of the Sixteenth Amendment, continues to reflect the Court’s understanding. Although the Court cut back on Macomber’s scope over the years, it has not repudiated the case. And in National Federation of Independent Business v. Sebelius, decided in 2012, Chief Justice Roberts, in an opinion joined in relevant part by four other justices, cited Macomber favorably on an issue of constitutional law.
Number of Pages in PDF File: 4
Keywords: mark-to-market, realization, Sixteenth Amendment, income tax, Eisner v. Macomber, National Federation of Independent Business v. Sebelius, Pollock v. Farmers’ Loan & Trust Co.
JEL Classification: K34
Date posted: July 5, 2014 ; Last revised: July 10, 2014