TAXABLE INCOME

by Roswell Magill '16.Ronald Press, New York. Rev. ed. 1945. pp.VIII, 491. $6.00.

The dominant position of the income tax in our federal tax system and its significance for millions of taxpayers makes the question "What is taxable income?" a timely, practical question not only for judges, lawyers and accountants but also for legislators, economists and others. Professor Magill has performed a great service by bringing down to date his scholarly treatment of a very difficult subject.

A generation ago it was thought possible to formulate a single, satisfactory definition of "income." More recently the Supreme Court has apparently abandoned the attempt and accepted the view of Justice Holmes that "nothing (is) to be gained by the discussion of judicial definitions." The Court has nevertheless helped to clarify the concept of "taxable income" by insisting that income must be "realized," though it need not be "recurring."

Professor Magill has studied hundreds of decisions of many judges to see what principles are to be distilled from these decisions. His realistic conclusion is that there is no one judicial concept of income; that the concept is a dynamic one, not static, changing as conditions change and expanding somewhat both as a result of legislative action and through judicial decision. The explanation given is that in deciding many borderline or doubtful cases "the Court has stretched its original concept under the stress of its own or the legislative desire to prevent tax-avoidance." (451) The author's outline nevertheless of the outer boundaries of the term "income" seems not to have changed from those expressed in the 1936 edition.

Professor Magill's "analysis and integration of the decisions and legislation" and his frequent reference to the interactions of eco nomic theory, legal opinion, administrative regulation and legislative statute is a service of great merit. Careful reading of this clearly written and well-organized book should help any student of federal finance to work out his philosophy of the proper function of the federal income tax, in view of proven difficulties in application and the acknowledged importance of the canon of "legal certainty" in any "good" tax system.