Opinion
Case No. 01-10133-BC
December 18, 2002
ORDER ADOPTING REPORT AND RECOMMENDATION AND DISMISSING COMPLAINT WITH PREJUDICE
On May 13, 2002, the plaintiff filed this suit seeking the return of monies deducted by his employer for federal tax purposes, asserting, among other things, that earnings from employment are "compensation," not "income." The parties both filed dispositive motions, and on July 18, 2002, Magistrate Judge Charles E. Binder, to whom this matter had been referred to conduct pretrial proceedings, recommended that the defendant's motion be granted and the complaint dismissed.
The Court has reviewed the plaintiff's complaint, the parties' motion papers, the Report and Recommendation, as well as the parties' responses to the recommendation of dismissal, and concludes that the Magistrate Judge correctly determined that compensation for labor was a form of income subject to taxation under the Internal Revenue Code. See 26 U.S.C. § 61 (a).
In his objections, the plaintiff insists that there is an appropriate distinction between wages, which he characterizes as "compensation," and "income," which he describes as "the gain derived from capital, from labor, or from both combined." Objs. at 4 (citing Stratton's Indep. v. Howbert, 231 U.S. 399 (1913)). He also questions whether his income is sufficiently apportioned to come within the reach of Congress's taxing power. The United States Court of Appeals for the Sixth Circuit, however, recognizes no distinction between "compensation from labor" and "income" for taxation purposes. See Canaday v. Guitteau, 86 F.2d 303 (6th Cir. 1936) (holding life insurance premiums to be income because they were given as compensation for a company president's services). This Court is bound by the decisions of the Sixth Circuit, and cannot overrule them. If the plaintiff wishes to prevail on this issue, he must appeal to the Sixth Circuit and be prepared to seek en banc reconsideration of the initial panel decision, should the matter not initially be resolved in his favor. Because the complaint states no redressable claim under the governing law of this Circuit, the Court will adopt the recommendation and dismiss the case.
Accordingly, it is ORDERED that the Report and Recommendation is ADOPTED.
It is further ORDERED that the defendant's Motion to Dismiss [dkt #3] is GRANTED and the plaintiff's complaint is DISMISSED.
It is further ORDERED that the plaintiff's Motion for Summary Judgment [dkt #6] is DENIED AS MOOT.