|
Tax Reform
The following is a copy of my brief before the Supreme Court
of the United States filed on May 9, 1977, case numbers
76-270 and 76-1696, stating the unconstitutionality of five
major tax preferences on the grounds that they “creat[e] a
condition of involuntary servitude upon this petitioner and
others similarly situated....” because they allow the
wealthy to avoid paying their fair share of taxes.
Unfortunately, the Supreme Court denied me certiorari back
in 1977 or 1978. Inclusion of the brief is mainly
meant to be historical and autobiographical. I will
not update it because I currently do not practice law.
I was employed by the IRS at the time, and everywhere my
managers went others asked about me. I did not lose my
job, just never got promoted. I could have fought it
but I chose not to. In 1983 I developed cancer of the
diverticulum of the bladder which was surgically removed.
I believe part of the reason I had cancer was because I was
not doing the work I wanted to do.
Assuming the success of future reformation of the quagmire
of our current tax laws, my only hope would be to see the
money gained by the government be used to benefit mankind,
not to carry on the war against Iraq (See “Israeli
Palestinian” on this website, www.davidhakim.com).
As to the success of my lawsuit: Perhaps I was
somewhat successful in part. The stepped up basis of
property acquired from a decedent was actually discontinued
for awhile after I filed my lawsuit in the United States
District Court for the Eastern District of Michigan. I
estimate that billions of dollars may have been saved by the
government. However, the old law was restored because of the
complexity of the new law and I am not researching what
happened to any prior gain upon its subsequent re-enactment.
David C. Hakim
Rochester, Michigan
March 18, 2007
File Copy
No. 76-1696
In The Supreme Court Of The United States
October Term, 1976
David C. Hakim, PETITIONER
v.
Commissioner of Internal Revenue
PETITION FOR IMMEDIATE GRANTING OF A WRIT OF CERTIORARI AND
MISCELLANEOUS MOTIONS TO THE UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
David C. Hakim
Petitioner in Pro Se
21245 Prestwich
Harper Woods, MI 48225
Phone: (313) 884-****
TABLE OF CONTENTS.
Statement of the case and issue
presented
Jurisdiction
Summary or the complaint:
l) The investment tax credit
(I.R.G. Section 46)
2) Percentage depletion (Section 611,613, 6l3A)
3) The Domestic International Sales Corporations' deferral
of income
4) The stepped up basis of property acquired from a decedent
(Section 1014 and 1032)
5) The capital gains exclusion (Section 1201 and 1202)
Argument:
Standing to sue
The Problem
Common features of the alleged unconstitutional tax
preferences
Specific effects of the alleged unconstitutional tax
preferences
Due Process, equal protection, and the taxing power
Conclusion:
Appendix:
Copy of the petitioner's prior Supreme
Court petition (No. 76-270)
Order of dismissal of the Court of Appeals
Order of dismissal of the U. &. District Court
Affidavit of service of this petition
CITATIONS
Constitutional Provisions:
Firth Amendment
Article I, Section 8 [1]
Statutes & Court Rules:
I.R.C. Section 46
I.R.C. Section 48(c)
I.R.C. Section 61
I.R.C. Section 61(a)
I.R.C. Section 63
I.R.C. Section 163
I.R.C. Section 167
I.R.C. Section 611
I.R.C. Section 612
I.R.C. Section 613
I.R.C. Section 613A
I.R.C. Section 991
I.R.C. Section 995
I.R.C. Section 1014
I.R.C. Section 1015
I.R.C. Section 1023
I.R.C. Section 1032
I.R.C. Section 120
I.R.C. Section 1201(a)
I.R.C. Section 1201(b)
I.R.C. Section 1202
I.R.C. Section 1302
28 U.S.C.. 1254
Rule 20, U.S. Supreme Court
Cases :
Aaron v. Cooper, 358 U.S~ 1
(1958)
Baker v. Carr, 369 U.S. 186, S. Ct. 691, 7 L.Ed. 2d 663
(1962)
Bolling v. Sharpe, 347 U.S.497
Brushaber v. Union Pac. R. R., 240 U.S. 1, 17, 36 s. ct.
236, 60 L.Ed. 493 (1916)
Coit v. Green, 404 U.S. 97 (1971)
Flast v. Cohen, 392 u.s. 83 (1968)
Frothingham v. Mellon, 262 U.S. 447 (1923)
Green v. Connally, 330 F. Supp. 1150 (1971)
Green v. Kennedy, 309 F. Supp. 1127
Knowlton v. Moore, 178 U.S. 41 (1900)
Marbury v. Madison, 5 U.S.137
Pollack v. Farmers' Loan & Trust Co., 157 u.s. 429, 158
U.S. 601
R. v. Barker, 3 Burr. 1265 (1762)
Thornton v. Attorney General Of Canada, 43 D.L.R. 3d 1
(1974)
Traux v. Corriigan, 257 U.S. 312
Miscellaneous:
Bancroft, George, History of the
Constitution of the United States (1884)
Fried, et al, Setting National Priorities: The 1974
Budget (Washington: Brookings Institution, 1973)
Pschman, Joseph A. & Okner, Benjamin A., Who Bears the
Tax Burden? (Washington: Brookings Institution,
1974)
Seldes, George, Great Quotations (N.Y.: Pocket
Edition, Nov. 1972)
Schumacher, E. F., Small is Beautiful, (New York:
Harper & Row, 1973)
Special Analysis, Budget of the United States Government,
Fiscal Year 1976, Office of Management and Budget
Stern, Phillips M., The Rape of The Taxpayer,
(New York: Random House, lnc., 1974)
Surrey, Stanley S., Pathways to Tax Reform, (Mass:
Harvard University Press, 1974)
Tax Reform Studieff and Proposals, U.S. Treasury
Department (Joint Publication, Committee on Ways and
Means of the U.S. House of Representatives and Committee on
Finance of the U.S Senate, 91st Congress, First Session,
published February 5, 1969)
Wall Street Journal, Midwest Edition, Vol. LVI (#146)
5-10-76; Vol. LVII (#17) 11-5-76
IN THE. SUPREME COURT. OR THE.. UNITED· STATES:
No. ______________________________
David C. Hakim, Petitioner
v.
Commissioner of Internal. Revenue
PETITION FOR IMMEDIATE GRANTING OF
A WRIT OF CERTIORARI AND
MISCELLANEOUS MOTIONS TO
THE UNITED STATES COURT OF APPEALS
FOR THE. SIXTH CIRCUIT
STATEMENT OF THE CASE AND
ISSUE PRESENTED
On August 20, 1976, this
petitioner prior to judgment. in the Court of Appeals filed
before this Court a PETITION FOR IMMEDIATE GRANTING OF
CERTIORARI AND MISCELLANEOUS MOTIONS, No. 76-270, which
petition was denied on November 1, 1976. 50 L. Ed. 2d. 300.
On March 3, 1977, subsequent to
the: above named petition, the United States Court of
Appeals for the Sixth Circuit dismissed this petitioner's
appeal, calling it "frivolous and completely without merit".
Now is recapitulated and
incorporated by reference each and every part or such prior
petition to this Court to enjoin the operation of five tax
preferences alleged by this petitioner to be arbitrary
exercises of the taxing power and therefore unconstitutional
under the Fifth Amendment Due Process Clause of the United
States Constitution.
JURISDICTION
Jurisdiction is permitted under 28
U.S.C. 1254 and Rule 20. See; Aaron-v. Cooper,
358 U.S. 1, 13 (1958).
SUMMARY OF THE COMPLAINT
1 - The Investment Tax Credit (I.R.C.
Section 46).
The above section sets forth a maximum
11% credit, against the income tax for qualified investment
in depreciable or amortizable property which is used as an
integral part in a business. The tax credit generally may
not exceed .. $25,OOO.OO plus 50% of the tax liability over
that amount.
1)
It should be noted that if the alleged unconstitutional
sections are held unconstitutional, ordinary income would
result from the application of Sections 61(a.) and 63; the
basis of property inherited :from a decedent would be its
adjusted cost, from section 1012.
The dollar loss for the preferences
other' than section 1014 and 1023 is supported by "Table
F-l, Tax Expenditure Estimates by Function "', Special
Analysis Budget of the United StatesGovernment, Fiscal Year
1976, 108-9; for section 1014 and 1023 is an estimate from
material in Surrey, Stanley S., Pathways to Tax Reform,
n. 53 to Ch VI, p. 351.
2)
Percentage Depletion (I.R.C. Sections 611, 613 and 6l3A)
The above sections, 611 and 613 are the
controlling sections (Section 6l3A is cont~8ent upon their
continuation) permitting percentage depletion (as opposed to
cost depletion, which is. section 612, and is similar to
depreciation). Section 611 is the enabling section, whereas
section 613 permits a flat percentage deduction of a
maximum of 50% of the taxable income from the sale of
property computed without the deduction for depletion. The
property for which depletion is allowed is that property
generally known as natural resources which are extracted
from the earth.
Section 6l3A, enacted after the
proceedings in the U. S. District Court, limits the
percentage oil depletion allowance only to “independent
producers and royalty owners” and to a maximum output of
1,600 barrels daily, (1400 in 1978). Depletion for gas
producers is similarly limited.
3)
The Domestic International Sales Corporations' (DISCs)
"deferral" of income (I-R.C. Sections 991 and 995).
Section 991 is the enabling act to
permit the preferential treatment accorded corporations
which meet the qualifications of a DISC, which is a type of
domestic corporation whose income is predominately (95% or
more)derived from export sales and rentals. Section 995 sets
forth the deferral or effectively eliminates from taxation
50% of the income of a DISC, which deferred income is taxed
to the shareholder, usually the parent corporation, only
which is distributed, when a shareholder sells his stock, or
when the corporation no longer qualifies as a DISC.
4)
The Stepped-Up Basis of Property Acquired, from a Decedent
(I.R.C~ Sections 101~ and 1023).
The above section 1014 as supplemented
by section 1023, added by the extremely complex Tax Reform
Act of 1976, also enacted after the proceedings in District
Court, steps up the basis of most property of a decedent
passing away after December 31, 1976, to its fair market
value on that date.
The above preference is especially
discriminatory in that present appreciation of property
remains untaxed by the income tax law, whereas the
accumulation of wealth from ordinary income is subject to
the income tax as the wealth is accumulated.
It is interesting to note that despite
the unification of the estate and gift tax law under the Tax
Reform Act off 1976, Congress allowed section 1015 of the
Code to continue the taxation to the donee of the difference
between the amount realized upon sale and the donor's
adjusted basis.
5)
The Capital Gains Exclusion (I.R.C. Sections 1201 and 1202).
The above sections set forth two
alternative methods ot taxation of the excess o£ the gain
or the appreciation realized upon the sale or exchange of
generally property held for investment purposes for a
period longer than nine months (as amended by the Tax
Reform Act of 1976, the mandatory holding period will
increase to twelve months in 1978) less any loss realized on
property held less than the mandatory holding period.
Section 1201(a) provides a 30% rate of taxation on the net
capital gains of corporations, and l201(b) provides for
individuals a rate of 25% on the net capital gain to
$50,000.00 ($25,000.00 for married individuals filing
separate returns). Section 1202 permits the exclusion
of 50% of the net capital gain from gross income for
individuals.
ARGUMENT
1) Standing to Sue.
Whenever this Court in civil rights cases has been faced
with the problem of standing and the conscience of the
Court compelled it to act, it invariably responded with the
following:
The very essence of civil liberty
certainly consists in the right of every individual to
claim the protection of the laws, whenever he receives an
injury. MarbuB v. Madison, 5 U.S. 137, 163.
Certainly this case can be compared
with Baker v. Carr, 369 U.S. 186, S.Ct. 691, 7 L. Ed.
2d 663 (1962), another case alleging discrimination (in the
equality of a citizen's vote). Therein Mr. Justice Brennan
stated that' a person has standing , if he has alleged "such
a personal stake in the outcome of the controversy as to
assure that concrete adverseness which sharpens the
presentation of issues upon which the court so largely
depends for
illumination of difficult constitutional questions"' and a
constitutional limitation upon legislative action.
Isn't justice to this petitioner as a
taxpayer, obviously in combination with the will of the
majority in our nation to control excesses of Congress, at
least as important as the equality of his vote? But
this petitioner need not end his argument on standing with
the preceding, for this Court has stated, in Flast v.
Cohen, 392 U.S., 83 (1968) that a taxpayer "may or may
not have the requisite personal stake in the outcome of the
issue he seeks to litigate, depending upon the circumstances
of the case".
392 U.S., p. 101. And Justice Laskin of the Supreme
Court of Canada, in Thornton v. Attorney General of
Canada, 43 D.L.R. 3d 1 (1974), wherein was attacked the
constitutionality of the Official Languages Act, R.S.C.
1970, c. 0-2 of the Parliament of Canada, states the
following:
... It would be strange and,
indeed, alarming, if there was no way in which a question of
an alleged excess of legislative power, a matter
traditionally within the scope f the judicial process, could
be made the subject of adjudication. 43 D.L.R. 3d., p.
7.
.........................................
The question of constitutionality of legislation has in this
country always been a justicable question. Ibid., at
11.
Furthermore, after considering many tax
decisions involving tax expenditures, such as
Frothingham v. Mellon (1923) 262 U.S. 447, and its
"considerable modification"; by Flast v. Cohen,
supra, Justice Laskin on page 18 or Thornton sets forth the
following:
Lord Nansfield... looked upon the writ
of mandamus as a public remedy which "was introduced
to prevent disorder from a failure of justice, and defect
of police. Therefore it ought to be used upon all occasions
where the law has established no specific remedy, and where
in justice and good government there ought to be one."
R. v. Barker (1762), 3 Burr. 1265 at p. 1267, 97 E.R.,
823. The expansion of the declaratory action, now well
established would with a consequent denial of its
effectiveness if the law will recognize no one with
standing to sue in relation to an issue which is justiciable
and which strikes directly at constitutional authority.
2) The Problem.
On December 11, 1968, the Honorable
Henry H. Fowler, Secretary of the Treasury, commented. upon
the inequities in the tax laws, wherein low income families
are faced with for them is a heavy tax burden, whereas many
individuals with income of $1 million or more pay the same
effective rate of tax as do the latter; that "our social and
economic needs can better be served through direct measures
outside the tax system, rather than by tax credits and
other forms of incentives." Tax Reform Studies and
Proposals, U. S. Treasury Department (Joint Publication,
Committee on Ways and Means of the U. S. House Of
Representatives and Committee)
Furthermore, in 1975 it was
acknowledged by the Honorable William E. Simon, Secretary of
the Treasury, that increasingly burdensome taxes are "so
high that the average worker has difficulty making ends
meet," and that "our economy is suffering from a reduction
in the purchases of homes and consumer durable goods... The
principal buyers of (such goods) are the middle income
classes."
Obviously there is a tremendous need
for government revenue (the government cannot continue to
forever print paper money to pay for its debts without our
nation suffering the consequences). And with the need of
further government revenue so great, and the middle class
already so overburdened by taxes, it is obvious that such
revenue must come from those most able to pay their fair
share. "Welfare" for the wealthy, tax
expenditures, preferences, or loopholes, must be eliminated;
otherwise, the taxpayer revolt that-is already sweeping the
country could become so much worse that the income tax may
lose viability as the fairest source of revenue for the
government.
3) Common Features of the Alleged
Unconstitutional Tax Preferences.
A. They do not and cannot benefit those
outside the tax system who are acting in a manner consistent
with the unrealized philosophical principles behind their
enactment. Surrey, Stanley S., Pathways to Tax Reform
(Mass.: Harvard University Press, 1974) at 134
(hereafter referred to as Surrey).,
B. They are worth more to the high
income taxpayer than to the low. Ibid.
C. They benefit taxpayers by paying
them for doing what they would anyway! Because of this
there is no adequate measure of achievement possible.
Ibid.
D. They bring about unfair competition
within industries by being a source of revenue to those
whose livelihood is not directly dependent upon the success
in terms of the profitability of the enterprise. Surrey,
p.138.
E. They acknowledge the risk in certain
.endeavors and discriminate in favor of them, dis-acknowledging
that there is inherent risk in any human endeavor, even in
the work of the common laborer.
F. They keep the tax rates high by
constricting the tax base: and thereby reducing revenues.
Ibid., at 139.
G. They require the Internal Revenue
Service to regulate programs that other agencies should.
Ibid., at 144.
H. They conflict with other laws
designed to maintain our democratic institutions, such as
the Anti-trust laws.
I. They breed more inequities by giving powerful lobbyists a
focus. The will of the people is thereby further perverted
by clandestine Congressional committee action. Stern,
Phillip M., The Rape of the Taxpayer (New York:
Random House, Inc., 1974) pp. 307-319 (Hereafter referred to
as Stern).
4)
Specific Effects of the Alleged Unconstitutional Tax
Preferences.
A. The Investment Tax Credit.
The investment tax credit hastens the
replacement of men's jobs with machines, and with
discriminatory treatment against used machinery and
equipment (Code Section 48(c)), natural resources are more
easily depleted.
B. Percentage Depletion.
The above deduction discriminates
against most other industries and even against industries
in the same field (such as energy production) Tax Reform
Studies and Proposals, U. S. Treasury Department, supra, at
426. An allowance or deduction can in effect be
bought from a business to whom the allowance has absolutely
no direct benefit. Stern at 247-248. There is risk in
any enterprise (for example, inventions may become
obsolete), and generally there is no write off of profits
as there is in the favored enterprise. And furthermore,
this tax preference discriminates against industries that
recycle natural resources and encourages their depletion,
thereby denying them from future generations.
C. The DISC Deferral of Income.
The above preference initially enacted
to grant similar benefits to domestically based
corporations as were provided to American foreign based
corporations, actually discriminates against the latter
corporations and also violates international trade
agreements to which the United States is a party. "DISCs'
Validity Is Challenged by GATT Panel," Wall Street Journal,
Vol. LVII, No. 17, Fri., Nov. 5, 1976, p. 7. Only the larger
corporations can afford the legal fees needed to create and
continue DISCs. Stern, p. 273. Furthermore, the
preference:
(1) Gives foreign nations tools and
machines they cannot use. Schumacher, E. F., Small is
Beautiful (New York:. Harper & Row, 1973) at 57
(Hereafter referred to as Schumacher).
(2) Is not needed if the U.S.. adopted
sound economic policies. Ibid at 55-6.
(3) Encourages the rapid depletion of
the national resources of other nations, which in exchange
receive a technology which creates mass unemployment of
their inhabitants. Schumacher at 7.
D. The Stepped-Up Basis ot Property
Acquired from a Decedent.
The estate tax should already be
considered a preferential tax, permitted by Code section
102(a), for otherwise inherited property could be considered
income to the recipient under Section 61. The estate tax is
further loaded with so many preferences that it taxes large
estates with expert estate
planning at such a minimal rate that the estate tax provides
only about 2% of federal revenues. Stern at 325, 327. And
when Congress enacted Section 1023, it created a highly
complex provision which presently permits the avoidance of
taxation of the appreciation of property acquired from a
deceased, when supposedly the estate tax and gift tax have
been unified. Such preference furthermore causes grave
economic distortions by creating a condition which promotes
immobility of funds to avoid the payment of taxes. Stern at
113-4.
E. The Capital Gains Exclusion.
It wasn't enough that Section 1001 (a)
was enacted to avoid the annual reporting of the
appreciation of property, equivalent to a deferral of taxes
or an interest free loan. Congress further enacted the above
preference or expenditure which
(1) Benefits only one taxpayer in ten.
Stern at 95.
(2) Creates a meaningless distinction
between qualified property. Stern at 102. (See also Section
1245).
(3) Is further supplemented by the
deduction of interest on loans to purchase qualified assets
under section 163, accelerated depreciation under section
167, permissible treatment of the proceeds as capital gains
even if received in installments, and the five year income
averaging provision of section 1302.
Because of the above, preferential
capital gains treatment has been called the "greatest cause
of complexity as well as unfairness in our tax system."
(Stern at 102).
5)
Due Process, Equal Protection, and the Taxing Power.
From the days of the Pilgrims to the
present, equal protection has been part of the historical
principles of the American people. Liberty has been defined
as the absence of arbitrary action wherein no class is to be
preferred over another and the right of revolution
recognized by at least the State of New Hampshire if class
preference occurred. Article 10, Right of Revolution, in the
New Hampshire Bill of Rights, 1784, (quoted in Great
Quotations Compiled by George Seldes, New York: Pocket
Book Edition, 1972 at p. 448). Although the United States
Constitution did not initially have a Bill of Rights, it was
stated in 1788 by Delegate Parsons of Massachusetts that "No
power is given to Congress to infringe on anyone of the
natural rights of the people." Bancrof't, George, History
of the Constitution of the United States (1884), 388.
The United States Supreme Court has
recognized the principle of equality in Traux v.
Corrigan, 257 U.S. 312, 331, and Bolling v. Sharpe,
347 U.S. 497, 499-500, as inherently contained within the
5th Amendment Due Process Clause: "No person shall be...
deprived of life, liberty, or property, without due process
of law."
The income tax act of 1894 was held
unconstitutional in part because it was held to be
discriminatory against professional persons, tradesmen, and
other employed persons. Pollack v. Farmers Loan & Trust
Co., 157 U.S. 429, 158 U.S. 601 at 637, and quoted in
Brushaber v. Union Pac. R. R., 240 U.S. 1, 17, 36 S. Ct.
236, 60 L. Ed. 493 (1916). The Sixteenth Amendment provides
that "Congress shall have the power to lay and collect taxes
on income, from whatever sources derived'" (emphasis
added). The progressive rate structure was stated to be
"more just and equal than a proportional one."
Knowlton v. Moore, 178 U.S. 41, 109 (1900). And Mr.
Chief JusticeWhite in Brushaber, supra, recognized
that there might develop a case where, although there was a
seeming exercise of the taxing power, the act complained of
was so arbitrary as to constrain to the conclusion that it
was not the exertion of taxation but a confiscation of
property; that is, taking of same in violation of the Fifth
Amendment; or, what is equivalent thereto, was so wanting
in basis for classification as to produce such a gross and
patent inequality as to inevitably lead to the same
conclusion. 240 u.s. at 24-25.
Yet perhaps the closest case to this is
Green v. Kennedy, 309 F. Supp. 1127, which enjoined
the granting of exempt status under section 50I(c)(3) to
private schools maintaining racially discriminatory
admissions policies and that contributions to such schools
would no longer be tax deductible (The subsequent
affirmation of Green v.Kennedy, Green v. Connally,
330 F. Supp. 1150 (D.D.C. 1971) was affirmed mem. sub
nom Coit v. Green, 404 U.S. 97l [I97l] )
CONCLUSION
[T]he general expenses of government
should be distributed among persons on the basis of ability
to pay. [T]axes should be progressive -- that is,
high-income people should pay a larger fraction of their
income in taxes than low-income people, because people with
high-incomes give up luxuries to pay taxes while those with
low-incomes give up necessities. [T]he poor should pay no
taxes, since by definition they have less than enough money
to buy the bare essentials and no way of contributing to the
general costs of government. Accordingly, the ideal tax
would be a progressive income tax from which the poor were
exempt.Fried, et aI, Setting National Priorities: The
1974 Budget (Washington: Brookings Institution, 1973),
at 45-6.
Unfortunately, the above is not the
present situation, for many of the very rich arrange their
financial affairs so they pay little to nothing for what
they receive from their nation, whereas many of the poor pay
a tax rate of 25% or higher. Pechman, Joseph A., and Okner,
Benajmin A., Who Bears the Tax Burden? (Washing:
Brookings Institution, 1974) at 59.
Even though wealth is the product of
labor, the earnings of the laborer are taxed more heavily
than the property of the wealthy through the retention of
the alleged unconstitutional tax preferences.,
Some state that a "lack of incentive"
would result if the wealthy are required to pay their fair
share. Certainly this argument works both ways. However,
since the average effective tax rate of the wealthy is
presently only 26% (Stern at 12), the probable effective
rate of' 40% without the continuing legality of the
preferences under attack should not be viewed as
confiscatory, since obviously the wealthy benefit more from
our social system than do the poor.
However, even James Madison in the
earliest days of our Republic recognized that the self
interests of the wealthy tend to trample upon the rules of
justice with respect to the apportionment of taxes upon the
various forms of property. James Madison, The Federalist,
No. 10 quoted in Great Quotations, op.
cit., p. 904.
Perhaps then, we have reached that moment in history
referred to in the folowing quotation, also by James
Madison:
We are free today substantially, but the day will come when
our Republic will be an impossibility because wealth will be
concentrated in the hands or the few. A Republic cannot
stand. upon bayonets, and when the day comes, when the.
wealth of the nation will be in the hands of a few, then we
must rely upon the wisdom of the beet elements in the
country to readjust the laws of the nation to changed
conditions. Quoted in the New York Post, as quoted by
Great Quotations op. cit. 976.
Whether we survive as a nation may depend in large measure
upon this Court recognizing that it is the element referred
to in the above quotation. It should not shirk its
responsibility for "Never for a moment should [government]
be left to irresponsible action." George Washington,
as quoted in Great Quotations, op. cit., 455.
Therefore, this Court for reasons as
set forth above and previously, should find that a
substantial Constitutional issue exists by the plaintiff's
allegation that Internal Revenue Code Sections 46, 611, 613,
613A, 991, 995, 1014, 1032, 1201 and 1202 are arbitrary
exercises of the taxing power and are unconstitutional under
the 5th Amendment Due Process Clause and the Article I,
Section 8, [l] General Welfare Limitation with their
inherent equal protection limitation and the requested
injunction should be issued or this cause should be
remanded to the United States District Court for the
convening of the requested Three Judge Court.
RESPECTFULLY SUBMITTED,
DAVID C. HAKIM, Plaintiff
APPENDIX
_______________________________
IN THE
UNITED STATES SUPREME COURT
OCTOBER TERM, 1975
No. 76-270
DAVID C. HAKIM, Petitioner
v.
COMMISSIONER OF INTERNAL REVENUE SERVICE,
Respondent
PETITION FOR IMMEDIATE GRANTING OF CERTIORARI AND
MISCELLANEOUS MOTIONS
The petitioner requests certiorari
before final judgment in this cause as permitted by 28
V.S.C. sections 1254(1), 2101(e) and sets forth the
following in support of such request:
1) That this suit in equity for the convening of a Three
Judge District Court under 28 U.S.C. 2282, 2284, to enjoin
Internal Revenue Code provisions consisting of the
investment tax credit, the percentage depletion deduction,
the domestic international sales corporation's deferral of
income, the stepped up basis (to its fair market value at
the date of death or alternate valuation date) of property
acquired from a decedent, and the capital gains exclusion of
income, on the grounds that such tax preferences are
arbitrary exercises of the taxing power and are, therefore,
unconstitutional under the Fifth Amendment Due Process
Clause and the Article I, Section 8 [11 General Welfare
Limitation,. was filed in early 1975 in the United States
District Court for the Eastern District of Michigan, No.
5-70334. The alleged loss to the government and consequently
to the people of the United States due to such preferences
wherein the wealthy can avoid paying their fair share of
taxes, consequently creating a condition of involuntary
servitude upon this petitioner (plaintiff) and others
similarly situated, was estimated to be twenty-six billion
dollars ($26,000,000,000.00) yearly;
The tax preferences that are alleged
in the plaintiff's complaint and analyzed by his brief and
reply brief for the Court of Appeals are briefly explained
on pages 3 - 5 of the complaint and are summarized below:
The irreparable injury allegations
on pages 2 - 3 of his complaint were stated to be that this
plaintiff, being a member of the middle class, is subject to
the duty of paying more than his fair share of taxes because
he does not benefit from such preferences; that his taxes
would be approximately one thousand dollars less per year if
the alleged discriminatory provisions were eliminated and
the progressive rate structure adjusted accordingly to yield
the same amount of revenue currently obtained. He also
alleged that he believes such tax preferences to be a
violation of the mores of his nation as embodied in his
Federal Constitution (or. to be a violation of public
policy). Therefore, a further argument against the validity
of the alleged unconstitutional tax preferences implicitly
contained in the plaintiff's complaint is that they are per
se discriminatory, that they inherently violate public
policy whether or not the taxpayer benefiting from them is a
member of the wealthy class.
2) That on October 21, 1975, United
States District Judge Thomas P. Thornton denied this
petitioner's motion for a Three Judge District Court and
dismissed the action upon hearing of the defendant's motion
to dismiss, stating in his order that this plaintiff did
not allege a substantial constitutional issue;
3) That an amended notice of appeal to
the United States Court of Appeals for the Sixth Circuit,
No. 76-1009, was filed timely under 28 U.S.C. section 1291
on November 24, 1975, with the cause docketed shortly
thereafter and with all required briefs filed before April,
1976;
4) That on or about June 1, 1976, this
petitioner filed an amended motion for temporary and
permanent injunctions and expedited hearing by the Court of
Appeals, which motion was denied on June 24, 1976
5) That to this date the hearing on the
merits of this cause by the Court of Appeals has not been
scheduled.
Wherefore, assuming the truth of this
plaintiff's allegation that the above named preferences are
unconstitutional exercises of the taxing power, there is
consequently a daily loss of approximately seventy million
dollars ($70,000,000.00). Now then this petitioner
(plaintiff) requests the United States Supreme Court to
assume immediate jurisdiction because of the exceptional
importance of this action, to determine that this plaintiff
raised a substantial issue by his pleadings, and:
1) To issue a temporary injunction,
and/or to grant and to expedite the hearing and afterwards
to issue a permanent injunction to restrain the operation of
the aforementioned tax preferences, or
2) To remand this cause to the United
States District Court for the Eastern District of Michigan
for the immediate convening of a Three Judge District Court
under 28 U .S.C. sections 2282,2284, or to the United States
Court of Appeals for the Sixth Circuit under 28 U.S.C.
section 1291 for the immediate convening of its usual Three
Judge Court.
DAVID C. HAKIM, Petitioner in pro se
___________________________________________________________________________________________________________________
Appeals or the United States
District Court for the Eastern District of Michigan, it is
requested that the Court issue the requested temporary
injunction first.
No. 76-1009
UNITED STATES- COURT OF
APPEALS FOR THE SIXTH CIRCUIT
DAVID C. HAKIM,
Plaintiff-Appellant,
v.
COMMISSIONER OF INTERNAL REVENUE
Defendant-Appellee
ORDER
BEFORE: PHILLIPS, Chief Judge, PECK
and LIVELY, Circuit Judges
Upon examination of the
record and briefs, the Court concludes
that this appeal is frivolous
and completely without merit. The
appeal is dismissed. Rule 9, Rules
of the Sixth Circuit.
ENTERED BY ORDE:R OF THE COURT
John P. Hehman,
Clerk
Filed March 3, 1977
_______________________________
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
DAVID C. HAKIM,
Plaintiff,
v.
COMMISSIONER OF INTERNAL REVENUE
Defendant
CIVIL ACTION 5-70334
ORDER
This cause having come on before the Court upon defendant's
Motion to Dismiss, and the Court having read the filed
briefs and hearing argument thereon, and being fully advised
in the premises, the Court finds that the plaintiff does not
have standing pursuant to the requirements established by
Flast v. Cohan, 392 U.S. 83, (1968):
NOW, THEREFORE, IT IS HEREBY ORDERED AND ADJUDGED that the
plaintiff has not raised a substantial constitutional issue,
and it is not necessary to convene a three-judge court:
IT IS FURTHER ORDERED that since plaintiff does not have
standing the plaintiff's Complaint is dismissed with
prejudice.
THOMAS P., THORNTON
United States District Judge
ENTERED: OCT 21 1975
CERTIFICATE OF SERVICE OF PETITION FOR IMMEDIATE GRANTING OF
A WRIT
OF CERTIORARI AND MISCELLANEOUS MOTIONS TO THE UNITED STATES
COURT OF APPEALS FOR THE.
SIXTH CIRCUIT
It is hereby certified that three
copies of the Petition for Immediate Granting of a Writ of
Certiorari and Miscellaneous Motions to the United States
Court of Appeals for the Sixth Circuit, including an
appendix, was served by mailing in the United States Mail ,
with postage prepaid., on May 5, 1977, to:
Solicitor General
Department of Justice
Washington, D.- C~ 20530
David C. Hakim
Petitioner in Pro Se |
