Kenneth Ryesky

When the US Congress overrode the US Supreme Court

I am of the “Baby Boomer” generation, a child born to the “Greatest Generation” of veterans who returned home after winning World War II and defeating Hitler and his evil Nazi apparatus.

Having grown up during the era, my appreciation of the technology that pertains to the subject of this blogposting is far greater than that of the typical Millennial and Generation Z readers, so an excursus into some subsequent history is necessary to break through the figurative (and, as it turns out, a physical) brick wall to elucidate the relevant state of the art. The prefatory prologue that immediately follows should also be interesting and elucidating to my fellow Baby Boomers and Generation X readers.

My father’s professional and social contacts included people who played significant roles to make the computer age happen, and so, many of my childhood playmates, high school classmates, and college acquaintances were children of computer pioneers.

My father took me to see a Philadelphia Eagles game in 1963. In those days, the Eagles played at Franklin Field at the University of Pennsylvania. What I remember the most of that Sunday excursion was not so much the game play (the Eagles lost to the New York Giants), but the stories Dad told me during the walks between where Dad parked the car and the stadium. Dad had attended Penn’s Moore School of Electrical Engineering; during his student days there, the Electronic Numerical Integrator And Computer (ENIAC) was developed and delivered to the US Army at the Aberdeen Proving Ground, where it would be put to use in computing the trajectories of artillery ordnance. Many of the people who had worked on the ENIAC also worked on the UNIVAC I computer, first delivered to the US Census Bureau in 1951.

During our ambulations to and from Franklin Field, Dad showed me the Moore School building. He showed me the brick color variations in the wall that was temporarily demolished in order to remove the ENIAC’s 30 large units for delivery to the Army (the cost of the demolition and reconstruction was included in Moore School’s contract to develop the ENIAC). To operate the hundreds of thousands of vacuum tubes, relays, resistors, capacitors, and wiring that comprised the ENIAC required 200 kilowatts of electricity. Today, if you have a simple digital watch, you are wearing more electronic logic on your wrist than was in the ENIAC.

Calculations that previously required 20 hours could be done by the ENIAC in a half-minute, and the ENIAC and the UNIVAC were slow and primitive, by factors of thousands, compared to today’s ever-advancing standards.

A perfunctory mention is now appropriate as background for the Supreme Court decision that the Congress invalidated. That the US Internal Revenue Code is complex and confusing has long been easily and well nigh universally understood.  The US Supreme Court has historically shown a reluctance to deal with taxation cases, and rules in the taxpayer’s favor on comparative infrequent occasions.

{A most notable exception to the Supreme Court’s want of taxation acumen was Justice Robert Houghwout Jackson, who, before ascending to the bench and making an international name for himself as Chief US Prosecutor at the Nuremburg Trials, had served as (1) General Counsel of the Bureau of Internal Revenue (before it became the Internal Revenue Service); (2) Special Counsel to the US Department of the Treasury; and (3) Assistant Attorney General at the US Department of Justice Tax Division.  Mr. Justice Jackson was known to issue dissenting opinions reproving both the Treasury and his fellow Justices in taxation matters. Justice Jackson’s nonpareil gold standard in taxation matters has yet to return to the US Supreme Court following his passing in 1954.}

Now we come to the Supreme Court case that Congress annulled. The case was Edwards v. Slocum, decided in February 1924. The Edwards case affirmed a decision handed down a year earlier by the Second Circuit appellate court in New York involving the disposition of a $49 million estate (when a dollar was still worth a dollar). The Collector of Internal Revenue had taken the position that the charitable deduction needed to be computed using an interrelated mathematical calculation entailing what the courts respectively described as “a cumbrous system of substitutions” using “two mutually dependent indeterminates.” The trial court decision, affirmed by the Second Circuit and again affirmed on appeal by the US Supreme Court, was that Congress could not have intended to require taxpayers (or revenue bureaucrats) to resort to such arithmetic complexities in order to determine the correct tax.

A few months later, when Congress passed the Revenue Act of 1924, it specifically provided that deductions, charitable or otherwise, must be reduced by the amount of taxes payable on them; Congressional documents accompanying the legislation confirmed that the interrelated mathematical calculations were required. Although the provision was suspended between 1926 and 1932, it remains the law today.

The mathematics involved entail successive calculations of limits, whereby the lower limit progressively increases as the higher limit regressively decreases. The process continues infinitely, but for taxation purposes can be concluded when the difference between the minimum and the maximum is reduced to less than one cent. It is well to note that the interrelated calculation is all the more complex and reiterative when more than one tax is relevant (such as a state or local estate tax in addition to the federal Estate Tax).

All of this before the ENIAC!!!

{For its part, even long after the ENIAC and the UNIVAC the IRS could have been more facilitative of its employees’ calculation of the correct tax. During my time there in the late 1980’s, we were issued Zenith Z-171 computers, whose “portability” was facilitated by a folding luggage cart. The Z-171 had two 5¼-inch floppy disc drives. The IRS program that performed the interrelated calculation for interest to be paid (we called it the “Bahr deduction” from the Tax Court case which established the deductibility as an administrative expense of interest to be paid on the Estate Tax) required that we continually swap two separate floppy disks in one of the drives .

An IRS Estate Tax Attorney in Dallas had come up with a one-disk program that did not require any disk swapping. The IRS computer people, perhaps fearing scorn, ridicule, degradation, and humiliation on account of their not having produced such an efficiency themselves, refused to adopt the one-disk method. With non-objections from our Dallas colleague (and some tacit winks by IRS Estate Tax group managers nationwide), copies of the single floppy disk made their way to IRS Estate Tax Attorneys throughout the USA. The IRS could have adopted the Dallas guy’s improvement and given him a Beneficial Suggestion cash award, but apparently did not do so.}

In a fortuitous irony of history, one of the attorneys who appeared in the 1924 Edwards case was Harlan Fiske Stone, who would later become a Supreme Court Chief Justice, and whose death in 1946 created the vacancy which Robert H. Jackson was appointed to fill.

One current high-profile political controversy in Israel is the Netanyahu coalition’s plans for legislation to enable the Knesset to override the judiciary in general and the Supreme Court in particular. From the Edwards case can be found lessons applicable to the current controversy in Israel, notwithstanding the differences between the governmental systems in Israel and in the United States.

In the Edwards case, the US Supreme Court set forth what it perceived to be Congressional intent behind the taxation statute, and Congress, believing that the Court had misread legislative intent, effectively reversed the decision less than a year later. The legislature surely knows better on a firsthand basis what it intends than does any court’s secondhand divination of what the legislature really meant.

On the other hand, the Edwards court was better attuned than the Congress to the realities of the public’s difficulties in complying with the tax laws.

The fact is that any governmental bureaucracy can and will stray away from its good purposes if left unchecked. The Knesset needs to be kept in control by the Supreme Court, and the Israeli judiciary, which of late has been known to lose touch with the needs for law and order, needs to be kept honest by the Knesset.

About the Author
Born in Philadelphia, Kenneth lived on Long Island and made Aliyah to Israel. Professionally, he worked as a lawyer in the USA (including as an attorney for the Internal Revenue Service), a college professor and an analyst for the U.S. Department of Defense. He's also a writer and a traveler.
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