Opinion
No. 01-03-01215-CV
Opinion issued January 27, 2005.
On Appeal from County Civil Court at Law No. 3, Harris County, Texas, Trial Court Cause No. 794,125.
Panel consists of Chief Justice RADACK, and Justices HIGLEY and BLAND.
MEMORANDUM OPINION
Appellant, James E. Leaf, brought a declaratory action seeking a determination that his employer, appellee CDI Engineering Group, Inc. ("CDI"), did not have the legal authority to withhold federal income taxes and social security contributions from his wages. Leaf asserts that he does not consent to be governed by federal statutes that diminish his constitutional privileges and immunities. The trial court granted CDI's summary judgment declaring that CDI possessed the legal authority to withhold employment, income, social security, Medicare, FICA, and other required taxes from Leaf's wages. The trial court directed CDI to tender to Leaf the net wages he refused, minus an award of $3,750 in attorneys' fees. We affirm the judgment of the trial court.
Background
Leaf is a United States citizen who permanently resides in Brazoria County, Texas. He was born in Texas, and has resided in the state for twenty years. In September 2002, CDI, a Texas corporation with its principal office in Houston, hired Leaf as a senior design engineer. CDI assigned Leaf to work at a facility in Bay City, Texas. CDI placed Leaf on a regular payroll schedule and withheld employment taxes and social security contributions. CDI mailed Leaf his paychecks, but Leaf chose not to cash any of them.
On March 16, 2003, Leaf wrote a letter to CDI and enclosed all of his paychecks issued during his employment. Leaf marked the paychecks with the words "refused for cause." In his letter, Leaf informed CDI that he could not accept the paychecks without diminishing his "unalienable rights." Leaf then brought suit seeking a declaratory judgment that CDI did not have the authority to withhold income taxes and social security contributions from his wages.
Standard of Review
The movant for a summary judgment has the burden of showing that no genuine issue of material fact exists and thus he is entitled to judgment as a matter of law. Tex. R. Civ. P. 166a(c); Park Place Hosp. v. Estate of Milo, 909 S.W.2d 508, 510 (Tex. 1995); Nixon v. Mr. Prop. Mgmt. Co., 690 S.W.2d 546, 548 (Tex. 1985). A defendant moving for summary judgment must either disprove at least one element of each of the plaintiff's causes of action, or plead and conclusively establish each essential element of its affirmative defense, thereby rebutting the plaintiff's causes of action. Cathey v. Booth, 900 S.W.2d 339, 341 (Tex. 1995).
Discussion
Although his appellate brief does not present a specific issue, Leaf's contention on appeal appears to be that the trial court erred in granting CDI's motion for summary judgment, declaring that CDI has the legal authority to withhold federal taxes from Leaf's wages. Leaf claims that by withholding federal taxes from his wages, CDI attempted to "compel and entrap [Leaf] to volunteer into a foreign jurisdiction and consent to be governed within the federal government's exclusive legislative jurisdiction." Leaf asserts that he is not subject to "federal statutes that are locally inapplicable." Relying on Article 1, Section 8, Clause 17 of the United States Constitution, Leaf contends that the social security and income tax laws are applicable only to areas where Congress has the power to exercise exclusive jurisdiction — those areas set forth in Article 1, Section 8, Clause 17 of the United States Constitution, and that Congress is not constitutionally empowered to tax citizens of the State of Texas. U.S. Const. art. 1, § 8, cl. 17. In further support of his argument, Leaf cites to the definition section of the Internal Revenue Code, which provides the following:
"Congress shall have the power to exercise exclusive Legislation in all Cases whatsoever, over such District (not exceeding ten Miles square) as may, by Cession of particular States, and the Acceptance of Congress, become the Seat of the Government of the United States, and to exercise like Authority over all Places purchased by the Consent of the Legislature of the State in which the Same shall be, for the Erection of Forts, Magazines, Arsenals, dock-Yards, and other needful Buildings." U.S. Const. art. 1, § 8, cl. 17.
(e) State, United States, and citizen. For the purposes of this chapter —
(1) State. The term "State" includes the District of Columbia, the Commonwealth of Puerto Rico, the Virgin Islands, Guam, and American Samoa.
(2) United States. The term "United States" when used in a geographical sense includes the Commonwealth of Puerto Rico, the Virgin Islands, Guam, and American Samoa.
26 U.S.C. § 3121(e) (2000). Leaf claims that, as these definitions do not refer to the fifty states, subtitle C of the Internal Revenue Code governing employment taxes and the collection of income tax is not applicable to the fifty states, including Texas.
Leaf's contention is without merit. Federal courts have consistently rejected similar arguments. In United States v. Ward, the Eleventh Court of Appeals held that the term "included" in 26 U.S.C. § 3121(e) is not a term of limitation, but rather is a term of definition that clarifies that the United States includes not only the fifty states, but also the District of Columbia and United States territories. Ward, 833 F.2d 1538, 1539 (11th Cir. 1987) (per curiam); see also United States v. Sloan, 939 F.2d 499, 501 (7th Cir. 1991) (stating that "all individuals, natural or unnatural, must pay federal income tax on their wages, regardless of whether they requested, obtained or exercised any privilege from the federal government"); In re Becraft, 885 F.2d 547, 548-49 (9th Cir. 1989) (noting that federal courts have both implicitly and explicitly recognized Sixteenth Amendment's authorization of non-apportioned direct income tax on United States citizens residing in United States and validity of federal income tax laws applied to such citizens).
Moreover, the Fourteenth Amendment of the United States Constitution provides that "[a]ll persons born or naturalized in the United States, and subject to the jurisdiction thereof, are citizens of the United States and of the States wherein they reside." U.S. Const. amend. XIV, § 1. Leaf admits that he was born in Texas and has lived and worked within the state for most of his life. Leaf is a citizen of the United States, and as such, is subject to federal income tax laws. The Sixteenth Amendment specifically gives Congress the power to tax incomes without apportionment among the several States. In addition, the United States Supreme Court has upheld social security contributions. See Helvering v. Davis, 301 U.S. 619, 640, 645-46, 57 S. Ct 904, 910-11 (1937). The trial court therefore properly granted summary judgment.
"The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration." U.S. Const. amend. XVI.
Conclusion
We hold that Leaf, a native-born citizen of both Texas and the United States, is subject to the jurisdiction and taxation power of the federal government. Thus, CDI properly withheld federal income taxes and social security contributions from his wages. We affirm the judgment of the trial court.