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Taxing Income from Unlawful Activities

By Boris I Bittker


In a series of cases dating back to the 1920s, the Supreme Courthas considered whether earnings derived from unlawful activities constitutetaxable income. After tracing the development of this caselaw, Professor Bittker asserts that the federal income tax statuteshave contained no clear congressional mandate on this issue andthat therefore the question may appropriately be resolved from apolicy standpoint. Professor Bittker admits that some of the argumentsagainst taxability, such as the potential for discriminatoryenforcement and the possibility of prejudice to the defendant at trial,have merit, but he contends that these problems can be solved shortof immunizing from tax all illegal profits and concludes that theoptimal rule is to tax the net income from any unlawful activity

Topics: Law
Publisher: Yale Law School Legal Scholarship Repository
Year: 1974
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