Iowa State Representative Speaks Out Against the Murphy Decision
Back in April, when the Supreme Court denied certiorari for Murphy v. IRS, a lot of people were upset. Whistleblowers and other civil rights leaders knew that the DC Court of Appeals' terrible opinion (ruling that the 16th Amendment of the Constitution gives government the power to tax court-awarded compensatory damages as if they were income) was a slap in the face to victims of discrimination. We knew that this ruling would be a disincentive for people to blow the whistle or report civil rights violations.
We are finding out that we aren't the only ones who disagreed with the decision. There are a lot of scholars out there who feel that income tax itself is illegal under the Sixteenth Amendment, and they are speaking up as well. One of these individuals is a state representative from Ohio named Phil Hart, who wrote this article on the Murphy decision. Although Mr. Hart disagrees with the DC court for different reasons than the whistleblower/civil rights community, his article rightly points out how the "Murphy Court" disgracefully bowed to political pressure when they flip-flopped from their original decision (which was in favor of Ms. Murphy) to a more pro-government stance.
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Unfair and Excessive Taxation on Whistleblowing Cases Violates the First Amendment
Although I agree with Murphy, I am not arguing what I perceive to be unfair taxation of Civil Rights Cases as it pertains to the Sixteenth Amendment. I am arguing that unfair taxation of Civil Rights Cases by IRS is a First Amendment Violation and is therefore unconstitutional and discriminatory.
IRS Discriminatory Taxation on Unlawful Discrimination and Whistleblowing Cases is unconstitutional and violates the First Amendment by enforcing unfair and excessive taxation on settlements of these cases. This excessive and unfair taxation is likely to deter the expression of protected speech by making it very difficult to be “made whole†after filing claims.
In fact, such excessive and unfair taxes can be considered retaliatory and an attempt to deter employees from filing Civil Rights Cases and attorneys from representing employees who’s Civil Rights have been violated. The IRS should not be entitled to retaliate against certain groups of tax payers who speak up against Civil Rights Violations (Sexual Harassment, Whistle Blowing, and Racial Discrimination) and should be held to the same or higher standard as government and other employers.
(Coszalter v. City of Salem, Court of Appeals for the Ninth Circuit).
In Coszalter, the court correctly held that defendants’ actions were adverse employment actions. In making its determination, the court correctly emphasized the fact that a government employer (and I would extend this to the IRS or any other government agency) cannot abuse its position and interfere with the constitutional right to exercise freedom of expression guaranteed to employees under the First Amendment. I would ask the Court to extend this ruling to the IRS, a Government Agency that is abusing its position in order to discriminate against citizens who speak up against unlawful employment discrimination, whistle blowing – often against government employers and sexual harassment by creating arbitrary tax laws. Ironically, the IRS is discriminating against those who file unlawful discrimination cases.
Prior to the amending Section 62 (a) of the American Job Creations Act of 2004 (“Actâ€) on October 22, 2004, those who received settlements for unlawful discrimination cases could not deduct attorneys’ fees and were taxed on the total settlement. Potentially, a victim of such discriminatory tax laws could spend years fighting a case and end up receiving nothing, and in fact, owing the IRS taxes due to the taxation of attorneys’ fees. This obviously unfair and excessive tax injustice has finally been resolved.
Today, there remain two major sources of excessive and unfair taxes in such cases:
1. Taxation of damages for noneconomic harm that employees suffer as a result of egregious, intentional harassment, retaliation, or similar workplace wrongs; and
2. Taxation of lump-sum settlements or awards that compensate for lost back pay over a period of years at the artificially high marginal tax rates of the year of receipt.
These taxes drive up the cost of settlement of workplace-related cases for America’s businesses, while at the same time reducing recoveries for victims of discrimination. They also create unfair and arbitrary distinctions among taxpayers. (National Employment Lawyers Association – NELA)
Unfair and excessive taxation of Civil Rights Settlements by the IRS would appear to be intentional and outrageous and done for the purpose of causing government employees who exercise their First Amendment Rights and speak up against racial discrimination, sexual harassment, and threats to Public Health and Public Safety to suffer further insult and financial injury. These unfair tax laws were and continue to be enforced with reckless disregard of the consequences to those seeking relief for the actions of their employers. In imposing excessive and unfair taxation on unlawful discrimination, whistle blower, and sexual harassment settlements, I believe it is done by the IRS for the purpose of making an example of those who settle or litigate their cases to other government employees not to comment on or criticize the practices related to their practices.
“Often the very act of whistle blowing indicates that governmental regulation has been inadequate to protect the public; it represents a breakdown of systems whose very goal is to make sure that misconduct does not occur in the first place.†Winters v. Houston Chronicle Publ’g Co., 795 S.W.2d 723, 729 (Tex. 1990)).
In a dynamic society where breakdowns of systems are inevitable, the whistleblowing employee provides the public some assurance that the government is functioning properly, especially in the areas of safety and health.
In this case, plaintiffs Coszalter,
Jones and Johnson were punished for speaking out against their employers regarding safety and health violations. However, the Ninth Circuit protected these plaintiffs from their employer’s adverse employment actions. In so doing, the Ninth Circuit has provided the necessary protections to future employees who are faced with similar circumstances as the plaintiffs faced in this case. David Uchida∗
The Civil Rights Tax Relief Act provides the same necessary protections to employees who finally receive settlements by protecting the employee from unfair taxation and further retaliation by another government agency. (IRS) Unfair taxation of Civil Rights Cases is egregious and flies in the face of the whistle blower protection act.
The decision to uphold the Civil Rights Tax Relief Act solidifies the concept that when a government employer attempts to retaliate against a whistleblowing employee for speaking up about workplace violations, misuse of Taxpayers money, and threats to Public Health and Public Safety, the First Amendment will rightfully protect the outspoken employee from retaliation both from his employer and from the IRS.
See David Uchida's Article: COSZALTER V. CITY OF SALEM:1 JUST WHISTLE WHILE YOU WORK—EXPANDING FIRST AMENDMENT PROTECTION FOR THE WHISTLEBLOWING EMPLOYEE
The Distinction between Mind and Body is False:
Section 104(a)(2) is premised on the assumption that physical and nonphysical injuries should be compensated (and taxed) differently. Scientifically, the distinction between the mind and the body is a false perception, and making a “distinction between physical and nonphysical harm for the purposes of tax law is a destructive dualism that has the effect of discriminating against women and minorities.†(Laura Spitz – “I Think, Therefore I Am; I Feel, Therefore I am Taxed: Descartes, Tort Reform, and Civil Rights Tax Relief Act). It is not within the IRS’s scope of practice to make such profound philosophical and scientific distinctions.
Physical Illnesses have "Mental Components" just as Mental Illnesses have "Physical Components" An example is Post Traumatic Stress Disorder (PTSD) is a Psychiatric Diagnosis with a syndrome of physically manifested illnesses including, but not limited to hyperlipidemia, cardiovascular disease, endocrine disorders, sleep disorders, eating disorders, headaches, and so forth, some manifestations of which do not present immediately.
Victims of sexual molestation, intentional infliction of emotional distress, sexual harassment, suffer from severe and debilitating illnesses. Congress is enacting laws to establish parity for the treatment of mental illness and physical illness and yet the IRS is permitted to continue to discriminate against those who suffer emotionally from abuses either by employers, priests, or others.
The IRS is not a medical authority. The IRS is holding to medieval perceptions of Mind/Body Distinctions in order to collect revenue. This distinction continues the discrimination against those who become ill as a result of adverse employment actions. Please see the following:
According to APA, medical complaints arise from psychological factors at least as often as they do from physical problems. In addition, NIMH states that mental health disorders, particularly depression and anxiety, often aggravate physical illnesses.
Depression may decrease appetite, leading to poor nutrition. It can decrease energy and motivation, leading to impaired mobility and decreased productivity. It also can disrupt sleep and aggravate pain from chronic conditions. Depression can produce reversible memory loss or confusion or acerbate cardiac problems by elevating blood pressure or pulse rate.
Anxiety can have similar effects and, in addition, can bring on fear of the very activities necessary to restore function after a physical illness.
The APA reports that many studies show that including mental health treatment as part of the overall treatment plan for people with certain physical illnesses, such as cancer and diabetes, can enhance recovery or halt progression of the disease, thereby using fewer medical resources.
Mental Health Parity Act of 1996, Pub. L. No. 104-204, sec. 701 et seq. (September 1996), popularly known as the Domenici-Wellstone mental health parity amendment. The amendment was adopted as part of the fiscal year 1997 VA-HUD appropriations bill, H.R. 3666.