The Use of Exemptions to Increase Taxpayers

by:  Dr. Eduardo Rivera, Attorney at Law


The first federal income tax enacted in 1913 (see the Revenue Act of 1913), after it was announced that the Sixteenth Amendment had been ratified, exempted the income of the present President of the United States of America, the Justices of the Supreme Court and the inferior federal court judges.  Did Congress exempt out of deference to the Constitution’s protection of the compensation for services of the executive and judicial branches or is there a scheme hidden in the maneuver?   

It appears that the Presidents have always voluntarily paid federal income taxes and that the Supreme Court began to volunteer with the term of William O. Douglas.   The initial exemption of Presidential and high court income was an opening gambit similar to what occurs in chess games.  In the game of personal federal income taxation, government is prepared to take decades to achieve a desirable result.

The Supreme Court held in Evans v. Gore, 253 U.S. 245 (1920), that Article III of the Constitution protected the income of all federal judges from taxation.  Congress, aware that the inferior federal judges were not protected by Article III, enacted legislation that required judges taking office after June 6, 1932 to pay federal income taxes.  In O'Malley v. Woodrough, 307 U. S. 277 (1938) Justice Felix Frankfurter, who must have known federal judges were not Article III judges, wrote the Court’s opinion upholding the law and the tax on federal judges, but without disclosing that almost all inferior federal judges have nothing to do with Article III.  Justice of the Supreme Court, William O. Douglas, in his autobiography, Go East Young Man, interpreted O'Malley to mean that he as a new member of the Court would have to pay federal income taxes, p. 466.  Douglas as an Article III Justice was protected by Article III, Section 1, but apparently never figured out the law.   Congress has never had the power to tax the compensation for services of the President of the United States of America or the Justices of the Supreme Court.  The Congress has no power over the other two branches of government so it doesn’t have the power to exempt them from something that’s not applicable to them anyway.  Exemption is just a legislative trick that has worked well.

The exemption of the inferior federal judges was within the power of Congress because as we shall see the great majority of the inferior federal judges have never been a part of the Article III federal judiciary.  Exempt means free from an obligation or liability to which others are subject.  Exempting the present President in 1913 did not subject future Presidents to liability.  Presidents proudly display their 1040s for all to see.  Who can imagine the modern American “democracy” without an income tax paid by all including the President of the United States of America?  Exemption of the federal judges in 1913 and the subsequent Court decisions that held federal judges incomes protected from income taxation made it appear to the federal judiciary and the legal community that these judges were of the genuine Article III type.    Congress had no legislative power over Justices of the Supreme Court before or after June 6, 1932.  Examination of the first Judiciary Act of 1789 will reveal that no attempt was made to ordain and establish any inferior district federal court under Article III in that act or any subsequent judiciary act.  My examination of the statute law to create the federal district courts for all the states of the Union revealed no Article III federal trial court in the early years other than the circuit courts manned by two Supreme Court Justices.  The first Article III inferior federal court for the several states was ordained and established in Hawaii in 1959 (see Notes section under 28 U.S.C. 91).  No Article III judge was provided for the court at its inception and none has been provided since.  The act that created the Article III in Hawaii specifically prevented the appointment of any Article III judge.  No Article III federal judge sits in any state of the Union, so there is no possibility of obtaining justice or even a judicial decision in any federal district court.   The lack of a judicial federal court and an Article III judicial officer confirms the status of the federal income tax as an administrative obligation of the Congress and the inferior federal judges.

Torrance, California

Eduardo M. Rivera