O'MALLEY v. Woodrough

Background

A federal circuit judge, Joseph W. Woodrough, and his wife filed an income-tax refund suit after paying $631.60 under protest for 1936. Woodrough had been appointed in 1933 and reported a $12,500 judicial salary on a joint return, claiming that his pay was constitutionally immune from income tax. A district court sided with them, holding the tax provision unconstitutional, and the Government appealed directly to this Court under a 1937 statute.

Reasoning

The Court considered whether Congress could include the compensation of judges who took office after June 6, 1932, in "gross income" for tax purposes. The majority opinion explained that a general, non-discriminatory income tax does not necessarily "diminish" judicial compensation under Article III’s protection. The opinion relied on Congress’s power to tax generally, the changed legislative approach since earlier cases, and the view that judges remain citizens who can bear ordinary tax burdens. The Court therefore reversed the district court and upheld the tax assessment as constitutional for judges appointed after the 1932 Act.

Real world impact

As a result, judges who took office after June 6, 1932, can be required to report and pay income tax on their judicial compensation under the federal revenue acts at issue. The opinion noted that Congress later amended the law in 1939 to address judges appointed on or before June 6, 1932, but that amendment was not before the Court in this case.

Dissents or concurrances

Justice Butler dissented, arguing that Article III’s prohibition on diminishing judicial compensation bars any tax that effectively reduces judges’ pay and that the district court’s judgment should have been affirmed.