Jackson v. Wisconsin Dept. of Revenue
| Decision Date | 24 October 1985 |
| Citation | 127 Wis.2d 560,378 N.W.2d 295 |
| Parties | NOTICE: UNPUBLISHED OPINION. RULE 809.23(3), RULES OF CIVIL PROCEDURE, PROVIDE THAT UNPUBLISHED OPINIONS ARE OF NO PRECEDENTIAL VALUE AND MAY NOT BE CITED EXCEPT IN LIMITED INSTANCES. ARTHUR F. JACKSON, Petitioner-Appellant, v. WISCONSIN DEPARTMENT OF REVENUE, Respondent. 84-1094. |
| Court | Wisconsin Court of Appeals |
Circuit Court, Rock County
Affirmed and remanded
Appeal from a judgment of the circuit court for Rock county: John H. Lussow, Judge.
Before GARTZKE, P.J., DYKMAN and EICH, JJ.
Arthur Jackson appeals a judgment which affirmed a decision of the Wisconsin Tax Appeals Commission. The Commission had affirmed an assessment of income taxes and the imposition of a penalty by the Wisconsin Department of Revenue. On appeal, Jackson raises several objections to the concept of income taxation, to the process of assessment, and to the power of a government to subject its citizens to a levy of taxes. He argues that the income tax statutes are vague, that the Wisconsin definition of income must follow the federal definition, that wages and salaries are not income, that an assignment of income exempts him from taxation, that the administrative procedure denies him his right to a jury trial, and that the imposition of a penalty denies him the right to petition the government for redress of grievances. We reject his arguments and affirm the order of the trial court. We conclude that his appeal raises frivolous arguments which warrants the imposition of costs and fees under Rule 809.25(3).
The income tax statutes are not vague and ambiguous provisions. They provide general definitions of income but generality is not ambiguity. Generality may permit flexibility yet not create ambiguity. Wilke v. Eau Claire First Fed. Sav. & Loan, 108 Wis.2d 650, 654, 323 N.W.2d 179, 181 (Ct. App. 1982). The legislature has written the laws broadly to allow the taxation of any aspect of income regardless of its source. The law seeks to preclude the escape of taxation by individuals who would ignore their duty to bear a proportionate share of the costs of government. The comprehensiveness of the law is not vagueness.
The federal definition of income does not bind the state of Wisconsin. The obligation of the state taxpayer has its basis in the unilateral action of state government which exercises its plenary power to raise revenue for the expenses of its sovereign authority. Lawrence v. State Tax Commission, 286 U.S. 276, 279, 76 L.Ed. 1102, 1105 (1932). Responsibility for sharing the costs of government is an inseparable obligation from the right to enjoy the privileges of residence within the state and to invoke the protection of its laws. Id. The Constitution of the United States imposes upon the states no particular mode of taxation. Id. The Constitution is not a formulary. Wisconsin v. J.C. Penny Co., 311 U.S. 435, 444, 85 L.Ed. 267, 270 (1940). It does not demand of states strict observance of rigid categories or of technical phrasing in the exercise of its taxing power. Id. The Wisconsin legislature may through its sovereign power tax income the same or differently than the federal government taxes income. The legislature has adopted some federal definitions. See, e.g., sec. 71.02(2)(a), Stats.
Wages and salaries are taxable income and are not an exchange for property. Section 71.10(2)(d), Stats., includes in gross income compensation for services which includes salaries, wages and fees. Gross income means all income from whatever source derived. Sec. 71.10(2)(d), Stats. The statute by its terms includes wages and salaries. Courts have found wages and compensation to be taxable income under state law. Knies v. Richardson, 600 F. Supp. 763, 765 (E.D. Wis. 1985); Whitman v. Wisconsin Department of Taxation, 240 Wis. 564, 572, 4 N.W.2d 180, 183 (1942). Other courts have soundly and repeatedly rejected the argument that wages and salaries are not income. See, e.g., United States v. Latham, 754 F.2d 747, 750 (7th Cir. 1985) (); Perkins v. C.I.R., 746 F.2d 1187, 1188 (6th Cir. 1984) (); Lovell v. United States, 755 F.2d 517, 519-20 (7th Cir. 1984) (); Hallowell v. C.I.R., 744 F.2d 406, 408 (5th Cir. 1984) (); Davis v. United States Government, 742 F.2d 171, 173 (5th Cir. 1984) (argument is frivolous).
An assignment of Jackson's lifetime services and labor to a trust does not provide protection from taxation of income as long as Jackson retains control over his services. Wenger v. Department of Revenue, 109 Wis.2d 677, 682, 327 N.W.2d 209, 212 (Ct. App. 1982). Nothing in the record shows transfer of control of Jackson's services to a trust. A taxpayer cannot alleviate his obligation to pay taxes through assignment of labor and services to a trust. Sham transactions do not provide an exemption from basic obligations. The assignment did not exempt Jackson's income from taxation.
The administrative procedure for resolving taxation disputes did not violate separation of powers or deny a taxpayer the right to trial by jury and due process. The state does not compel the use of administrative proceedings and does not violate constitutional rights by providing a procedure for administrative relief. The...
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