Surprise Ruling May Transform Tax Policy

What may prove to be the most profound change in federal tax policy of our era emerged from Washington this summer without any congressional or presidential action whatsoever. In a bolt-from-the-blue ruling, the U.S. Court of Appeals for the District of Columbia Circuit found that although the Constitution’s 16th Amendment authorizes the federal income tax, Congress is not free to define “income” in any way it wants. A three-judge panel …