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104 N.C. L. Rev. 1 (2025-2026)

handle is hein.journals/nclr104 and id is 1 raw text is: 104 N.C. L. REV. 1 (2025) THE PAST AND FUTURE OF TAXING INCOMES' CLINT WALLACE & BRET WELLS For at least half a century, the text of the Sixteenth Amendment-Congress shall have power to lay and collect taxes on incomes, from whatever source derived-has been treated by courts, lawmakers, and scholars as giving Congress broad authority to define and tax income, perhaps without any limitation. Recently, however, some members of the Supreme Court started to revive a seedling planted in the 1920s but left for dead: that the realization rule should be elevated to the status of a constitutional limit to Congress's power to determine what is income. With this, we seem to be entering a new era in constitutional tax jurisprudence, focused on the meaning of income and limits to Congress's power to tax it. This Article places realization in broader context, based on a novel investigation of the intellectual and functional roots of U.S. federal income taxation, with a particular focus on the temporality of income. We find commonality between time-conscious income tax theory developed by leading economists in the pre- ratification era (some now largely forgotten), and functional concerns percolating around the same time that we uncover in financial accounting practices and tax administrative guidance. Temporal issues are central: measuring income across time periods is a dynamic and complex undertaking, and theorists and practitioners alike recognized realization as one of many possible, partial resolutions. The history we uncover here dispels the notion, advanced recently by some scholars and Supreme Court Justices, that when the Sixteenth Amendment was ratified there was a common understanding of income that rested solely on realization. It suggests instead that there was not a single meaning of incomes as limited to realized gains, but rather that income had different meanings in different contexts. * © 2025 Clint Wallace & Bret Wells. ** Clint Wallace is a Professor of Law at the University of South Carolina Joseph F. Rice School of Law. *** Bret Wells is the John Mixon Chair and Professor of Law at the University of Houston Law Center. For helpful comments and discussion, we thank Reuven Avi-Yonah, Lad Boyle, Tommy Crocker, Brian Galle, Christine Kim, as well as participants in the Association of Mid-Career Tax Professors 2024 workshop, the UC-Irvine Moore Symposium and the National Tax Association 2024 Annual Conference. Thanks to William Raffone and Vanessa McQuinn for research and editing assistance.