The argument at full strength

Before any test, each argument is set out in the strongest form its words allow, with every text that helps it, including texts the arguments do not name. The premises are then listed one by one and graded: those the texts state (A1–A11, B0–B12, G1), those valid logic needs and the texts leave unstated (AU1–AU12, BU1–BU8), those added at full strength (AS1–AS10, BS1–BS6), and the readings against that the tests enter (AX4, BX6, N4c).

Text 01 at full strength

Congress holds the power “To coin Money, regulate the Value thereof” (Art. I, § 8, cl. 5). It has directed the Federal Reserve to promote “stable prices” (12 U.S.C. § 225a), and the Federal Reserve’s committee holds that “inflation at the rate of 2 percent” a year is “most consistent” with that mandate. The government aims at a rise in the general level of prices.

A property whose real value does not change therefore shows, when it is sold, a gain in dollars equal to that rise. Section 1001 taxes the gain in full. It counts the gain from “cost” (§ 1012) and recognizes “the entire amount” (§ 1001(c)), and none of the thirty-eight adjustments in § 1016 removes inflation from it. The government that aims at the rise is the government that taxes it.

The Sixteenth Amendment reaches “incomes”, and income is a gain, not capital returned: “something entirely distinct from principal or capital” (1918). The Court has said it is “not a gain accruing to capital; not a growth or increment of value in the investment” (1920). If an accession to wealth is measured in what it commands, a gain that is only inflation is no accession at all. To tax it without apportionment exceeds the power the Amendment grants, so the deficiency on a purely nominal gain is zero.

The founding generation knew the harm. Hamilton held “the uniform preservation of the intrinsic value of the money unit” of the greatest moment, since “On this the security and steady value of property essentially depend” (1791). To degrade the unit, he wrote, is “obliging creditors to receive less than their just dues—and depreciating property of every kind”. The Coinage Act of 1792 punished debasement at the Mint with death. The Court has spoken of Congress’s “obligation to protect and to preserve in its purity this constitutional currency” (1850), and in 1935 it asked whether a bondholder had lost anything “in relation to buying power”.

Congress itself named the effect, “ADJUSTMENT TO PREVENT INFLATION-CAUSED TAX INCREASE” (1981), and cured it only in the brackets. The Treasury “does not have legal authority to index capital gains for inflation by means of regulation” (1992).

The revenue the tax collects on the inflation part rises because of the government’s monetary action, not because the House voted a higher tax. On text 01’s reading, that revenue escapes the House’s control of the purse, and the Origination Clause is rendered surplusage. Either the Court enforces the words as ratified, and the deficiency is zero, or it declares that the Constitution permits double extraction.

Text 02 at full strength

The House is “chosen every second Year by the People”, and “they alone can propose, the supplies requisite for the support of government”; the power over the purse is “the most complete and effectual weapon with which any constitution can arm the immediate representatives of the people” (The Federalist No. 58). “At base, though, the Framers’ purpose was to protect individual rights” (1990). Congress may tax “to pay the Debts”.

The deficit for fiscal 2026 was projected at $1.9 trillion and recorded at $1.99 trillion. It is met by issuing debt and, on text 02’s account, by expanding the money supply. A rise in prices of 3.8 percent lowers the real burden of the government’s debt and the real worth of every holder’s dollars. That moves real resources to the government, and no new revenue Bill passes to do it.

In 1828 “tax” was “a term of general import, including almost every species of imposition on persons or property for supplying the public treasury”. The Court looks past an exaction’s label to “its substance and application” (2012). Hamilton warned that without an adequate power of taxation “the people must be subjected to continual plunder, as a substitute for a more eligible mode of supplying the public wants”, and Madison condemned “the pestilent effects of paper money”. On text 02’s account the transfer is a tax raised without representation, and the practice is not authorized by the words.

Text 03 · The claim about the Court

Text 03 claims that the Supreme Court has never ruled “that it’s OK for the executive branch to dilute the dollar by increasing the money supply”. A claim that something does not exist is checked by listing every case that bears on it, done/total (What courts have held; hard question 12).