Court Opinion

ID: 9449024
Source: CourtListenerOpinion
Date Created: 2023-08-03 23:53:04.988574+00
Date Added: 2024-06-11T17:31:39.338849
License: Public Domain

DAVIS, Judge
(concurring in part and dissenting in part).
I concur in the court’s judgment against the deductibility of the advertising expenses, but I dissent from the ruling upholding the deduction of the travel and legal expenses. Under the Treasury Regulation (Treas.Reg. 111, Sec. 29.23(q)-l), the latter amounts were, I believe, non-deductible as “sums of money expended for lobbying purposes” and also for “the promotion or defeat of legislation.”
Ever since the prototype of this regulation was issued in 1915 (T.D. 2137), it has forbidden the deduction of “lobbying” expenses. The Supreme Court has said that “lobbying in its commonly accepted sense” means “representations made directly to the Congress, its members, or its committees.” United States v. Rumely, 345 U.S. 41, 47, 73 S.Ct. 543, 97 L.Ed. 770 (1953); United States v. Harriss, 347 U.S. 612, 620, 74 S.Ct. 808, 98 L.Ed. 9g9 (1954). The term has not been limited to improper or clandestine activities. In appearing before committees of the Congress, plaintiff’s officers and counsel had “direct communication with members of Congress on pending or proposed federal legislation” (United States v. Harriss, supra), communications which were within “lobbying in its commonly accepted sense.” It is true that the Regulation of Lobbying Act, enacted in 1946, excepts from its coverage “any person who merely appears before a committee of the Congress of the United States in support of or in opposition to legislation” (60 Stat. 839, 842, 2 U.S.C. § 267), but this was a special exception for that registration statute which did not affect the usual, broader, meaning of the term “lobbying” as it has been employed in the Treasury Regulations since 1915.1
The travel and legal expenses plaintiff seeks to deduct were also spent for “the promotion or defeat of legislation.” That phrase in the Regulation has a long reach. It has been applied to attempts to influence Congress to pass statutes (Textile Mills Securities Corp. v. Commissioner, 314 U.S. 326, 62 S.Ct. 272, 86 L.Ed. 249 (1941)); to efforts to induce the electorate of a state to defeat or approve an initiative or referendum (Cammarano v. United States, 358 U.S. 498, 79 S.Ct. 524, 3 L.Ed.2d 462 (1959)) ; *448to expenditures for appearances before state legislators (Bellingrath v. Commissioner, 46 B.T.A. 89 (1942)); and to programs designed to influence the voters of a city against a proposed ordinance (Sunset Scavenger Co. v. Commissioner, 84 F.2d 453 (C.A.9, 1936)). To me, this sweeping phrase — designed to cover the entire range of law-making by “legislative” bodies of all types — clearly applies to an attempt to persuade an Appropriation Committee of the Congress not to implement a pre-existing statute by including the necessary money in an appropriation bill. This is just as much an effort to defeat Congressional “legislation” as it would be if the appearances were related to a substantive bill. Authority to enact appropriation measures is among the “legislative powers” granted to Congress by Article I, Section 1, of the Constitution; an appropriation bill, once enacted, is a statute and law of the United States like any other, as the Constitution itself expressly recognizes (Art. I, See. 9) by declaring that “no Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law” (emphasis added); indeed, Congress can amend substantive legislation through an appropriation bill, if it chooses to disregard its own internal rule against doing so (United States v. Dickerson, 310 U.S. 554-555, 60 S.Ct. 1034, 84 L.Ed. 1356 (1940); Eisenberg v. Corning, 86 U.S.App.D.C. 21, 179 F.2d 275-276 (C.A.D.C. 1949)). Nor does it matter, for this comprehensive Regulation, that the plaintiff’s presentation to the Committees was primarily legal or that it acted in all good faith to show Congress that the proposed appropriations would not be validly authorized by the prior substantive statute. As the decisions show, the Regulation is neutral and all-inclusive; it has no concern with weighing the merit or scope of a taxpayer’s arguments why certain legislation should be passed or defeated; it precludes deductions of expenditures made with the purest of motives as well as those with the basest; and it applies to those petitioners with the most compelling of arguments as well as those with the most frivolous. Similarly, it is irrelevant that plaintiff thought that it was fighting for its business life; the Supreme Court, the Courts of Appeals, and the Tax Court have applied the Regulation to comparable cases in which an enterprise considered that the legislation it was opposing or promoting would destroy or save it (Cammarano v. United States, 358 U.S. 498, 79 S.Ct. 524, 3 L.Ed.2d 462 (1959), affirming 246 F.2d 751 (C.A.9, 1957) and 251 F.2d 724 (C.A.8, 1958); Sunset Scavenger Co. v. Commissioner, 84 F.2d 453, 456 (C.A.9, 1936); Revere Racing Assn. v. Scanlon, 232 F.2d 816 (C.A.1, 1956); Davis v. Commissioner, 26 T.C. 49, 58-60 (1956)).
These conclusions stem not only from the terms and history of the Regulation but also from its underlying policy — and that of the Congress at the time of plaintiff’s expenditures. This policy was against any “public subvention” by the federal fisc of efforts to change or maintain legislation. Neither side to such controversies was to be aided by tax deductions; both were to pay for their legislative activities “entirely out of their own pockets.” So far as the revenue was concerned there was to be tax equilibrium, with no weight to be thrown on either scale. Business and trade interests were not to be given a tax advantage over opposing non-business interests (individual and organizational) which ordinarily must bear their expenses of this character without compensating deduction. See Cammarano v. United States, supra, 358 U.S. at 512, 513, 79 S.Ct. at 532, 533, 3 L.Ed.2d 462 (1959); Slee v. Commissioner, 42 F.2d 184-185, 72 A.L.R. 400 (C.A.2, 1930). The basic theory was that everyone should participate in the electoral and legislative process purely as an unsubsidized citizen, not some few with the added help of financial backing by the federal treasury. Plaintiff seeks this semi-subsidized status which the law at that time deliberately chose not to accord it.

. Section 3 of the Revenue Act of 1962, 87th Gong., 2d Sess., P.L. 87-834, enacted October 16, 1962, makes new provisions for deduction of the expenses of appearing before Congressional committees, but these amendments apply only to taxable years beginning after December 31, 1962.