P.G. Wodehouse, Tax Evader

Everyone loves P.G. Wodehouse -- his books were so good that Punch once remarked that he was "exhausting the superlatives of the critics." Even as you read this, I am enjoying Right Ho, Jeeves, which I received on CD as a present.

But did you know that Wodehouse had a big dispute over payment of U.S. taxes that went all the way to the Supreme Court? It's true. I'm editing a case from volume 337 of the U.S. Reports, and, flipping through it to get to the case I'm interested in, I happened across Commissioner v. Wodehouse, 337 U.S. 369 (1949).

Wodehouse sold the U.S. serial and book rights to some of his works. He claimed that the resulting income was from the sale of property, and that the U.S. did not, at the time, tax nonresident aliens on such income. The IRS claimed that the income was from royalties on a U.S. copyright, which was taxed.

Wodehouse lost, 5-3 (with one Justice recused). Frankly, he had a pretty decent argument. Without going into all the details, prior to 1936 U.S. law clearly would have taxed Wodehouse's income, but in that year Congress changed the law to relieve aliens of tax on slaes of property, but to increase the tax imposed on aliens for "dividends, rents, salaries, wages, premiums, annuities, compensations, remunerations, emoluments, or other fixed or determinable annual or periodical gains, profits, and income" from sources within the U.S. and required that the tax be withheld at the source.

The Court majority relied less on the new statutory language and more on its understanding of Congress's overall goal, which, in the Court's view, was to limit the tax on nonresident aliens to that which was readily collectible, while increasing the rate to make the change roughly revenue neutral. Money given for the use of copyrights, the Court thought, was readily accessible and a long-established source of revenue, and the Court discerned no congressional intent to change its taxablility.

Nothing ever changes in statutory interpretation. There are always disputes between those who want to parse each word Congress enacts and those who would rather enforce Congress's overall gestalt. Sorry, P.G., but Bertie and Uncle Fred will just have to pony up some of the ready.