Helvering v. Davis, 301 U.S. 619 (1937)

Case Link: https://scholar.google.com/scholar_case?case=8426251106033758246

The Helvering case was a direct and early challenge to the Social Security Act. This is an excerpt I would like to have a discussion when you have time, about the meaning of “income tax” as stated in the Argument for Petitioners in HELVERING v. DAVIS.:

“Title II of the Social Security Act provides for “Federal Old-Age Benefits” for persons who have attained the age of 65. It creates an “Old-Age Reserve Account” in the Treasury and authorizes future appropriations to provide for the required old-age payments, but in itself neither appropriates money nor brings any money into the Treasury. Title VIII imposes an “excise” tax on employers, to be paid “with respect to having individuals in their employ,” measured on the wages, and an “income tax on employees,” measured on their wages, to be collected by their employers by deduction from wages. These taxes are not applicable to certain kinds of employment, including agricultural labor, domestic service, service for the national or state governments, and service performed by persons who have attained the age of 65 years. “

The tax on “employees” is not a constitutional income tax. They can get away with calling it an income tax because there is clear federal power to tax wages from VOLUNTARY “employment” as defined in IRC Sec. 3121. Part of the pysop to create the illusion that all “wages” are income. In the Helvering case they call it an excise on the employer and an income tax on the employee – but they are actually talking about the 6.2% Social Security tax, which is not an “income tax”, but rather a payroll tax, specifically part of the Federal Insurance Contributions Act (FICA) taxes… according to this:

https://www.irs.gov/taxtopics/tc751

So, the Helvering case is about “excise” taxes on the employer, and “income taxes” on the employee related to the Social Security tax, along with Medicare tax – which are both imposed under Subtitle C of the Internal Revenue Code (IRC) as employment taxes. The employer’s portion of the Social Security excise tax falls under Subtitle C, Chapter 21, of the Internal Revenue Code (IRC).

Also, the Employer Shared Responsibility Payment (ESRP), also known as the employer mandate penalty under the Affordable Care Act (ACA), falls under Subtitle D – Miscellaneous Excise Taxes, specifically within Chapter 43 – Qualified Pension, Etc., Plans of the Internal Revenue Code (IRC).

Therefore, it seems that the Helvering case is not about Subtitle A income taxes… regardless of the Petitioner’s contention that,

“Title VIII imposes an “excise” tax on employers, to be paid “with respect to having individuals in their employ,” measured on the wages, and an “income tax on employees,” measured on their wages, to be collected by their employers by deduction from wages. “

The link below is for those interested in digging deeper. Keep in mind that Edison Electric Illuminating Company of Boston was not a federal corporation in 1936. It was a state-chartered utility company, operating under Massachusetts law. While many companies used “Edison” in their names during the early development of the electric power industry, they remained independent entities. The Edison Electric Illuminating Company of Boston was incorporated as the Boston Edison Company in 1886, and later changed its name to the Boston Edison Company in 1937.

Please take special note of the first item in the syllabus pertaining to the bill by a “shareholder” – as in shades of the Brushaber case…

“1. The Court abstains from dismissing, sua sponte, as not properly within equity jurisdiction, a bill by a shareholder to restrain his corporation from making the tax payments and the deductions from wages required by Title VIII of the Social Security Act of August 14, 1935, the bill alleging that the exactions are void and that compliance will subject the corporation and its share-holders to irreparable damage. “

https://tile.loc.gov/storage-services/service/ll/usrep/usrep301/usrep301619/usrep301619.pdf

Here are a few clues for the correct analyses of the above case:

1. Edison Electric Illuminating Company of Boston (BECo) was a publicly traded corporation in 1936.
2. Publicly traded companies in the United States are under federal jurisdiction. The Securities and Exchange Commission (SEC) is a federal agency that regulates these companies, ensuring fair dealing, accurate reporting, and preventing fraud
3. Union Pacific was a publicly traded company in 1916. The Union Pacific Railroad was reorganized and re-established as a publicly traded company after being held in receivership until 1897, according to the Nebraska State Historical Society. While the initial public offering of the current Union Pacific Corporation was in 1969, the company’s predecessor, the Union Pacific Railroad, was already publicly traded and owned by a group of investors, according to FinanceCharts.com – – the Union Pacific Railroad was incorporated on July 1, 1862, by an act of the U.S. Congress. This makes it a domestic corporation from that date forward. The Pacific Railway Act, which was approved by President Abraham Lincoln, authorized the construction of the transcontinental railroad.
   Union Pacific was a publicly traded domestic corporation at the time of the 1916 Brushaber case. The case, Brushaber v. Union Pacific Railway Co, involved a challenge to the constitutionality of the 1909 Act imposing an income tax on domestic corporations. The Supreme Court ultimately upheld the constitutionality of the income tax. Union Pacific was incorporated in Utah and was considered a domestic corporation because it conducted its business in the jurisdiction of its incorporation
4. A domestic corporation is a corporation that does business in the jurisdiction in which it is incorporated . This can be compared to a Foreign Corporation which conducts business in a jurisdiction other than its place of incorporation.