Macomber brought new issues to income tax. This case defined the “income” mentioned in the sixteenth amendment. The issue was if stock dividend is considered a taxable event. Technically, a shareholder owns part of the company. Shareholders process stocks or share that worth money but not direct income. A stock dividend is a payment method that is in form of shares rather than cash. It doesn’t mean the stock receiver of a stock dividend owns more of the company. Now the issue rises, was stock dividend regarded as “incomes from whatever source derived” or simply capital? Macomber, the owner of the standard oil company, sued Eisner, the tax collector, for a refund on stock dividends tax. Macomber claimed that, “Nothing could more clearly show that to tax a stock dividend is to tax a capital increase, and not income, than this demonstration that in the nature of things it requires conversion of capital in order to pay the tax"(252 U.S. 189). Meaning taxation should be required only when the stock dividend is converted to cash. The Supreme Court specified …show more content…
They provide guidelines for taxation under several circumstances such as stock dividends and state bonds. They also show several changes in the Supreme Court’s interpretation of this amendment overtime. For instance, the definition of “income” changes from solely cash to including certain capitals and other types of asset. Furthermore, the case Eisner v. Macomber settled on no income tax on stock dividend under the sixteenth amendment. However, there are certain conditions where people have to pay taxes on stock dividends nowadays. Even though the law is established, disagreements and arguments still remain. The federal tax system helps solve many governmental crises. However, not everyone is in favor of this system. There are people who still think income tax is unconstitutional and it’s an exercise on privilege. There are unsatisfied citizens everywhere and Americans who despise the government’s inability to fully function without income tax on people. Because of the dissatisfaction, there are assorted current issues including protest groups, campaigns, and scandals against the