The Concept of Income—Economic and Legal Aspects

Abstract

The Sixteenth Amendment to the Constitution gives Congress power to tax "incomes, from whatever source derived." Acting under this grant of authority, Congress has, for eight years past, collected taxes upon what it has been pleased to term income. In no one of the three statutes passed during that time has Congress attempted to formulate definitely a positive definition of income. Moreover, eight years have proved insufficient to secure from the courts a fully adjudicated definition. Modern economic analysis recognizes that fundamentally income is a flow of satisfactions, of intangible psychological experiences. If one receives a dollar he receives something which he ordinarily can and does spend—perhaps for a dinner. How universal is the acceptance of this general view may be gauged from the following pronouncements of the writers of some of the most recent and widely used texts dealing with the principles of economics.

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