# The outcome left standing · One answer at each either-or

> A dollar gain is income, the clause keeps its effect, and the fix is a Bill.

Gavin Robert McGowen · interstellarblends.com. A study of the texts, not legal advice.

Canonical: https://clause5loop.com/outcome/

## The scalpel

- One answer at each fork.
- A dollar gain is income, and the Origination Clause keeps its full effect (K-A3, strong support).
- Inflation is neither a “Tax” in the Constitution’s sense nor a “Bill” (K-B2, strong support).
- The Court has decided every part, never the whole (K-G2, strong support).
- Most of the leading founders would have opposed the inflation half (strong support), and many would have counted the tax on it an added injustice (moderate support).
- The remedy is legislative: a Bill to index basis, begun in the House.

## In plain words

On the Constitution’s words, taxing inflated gains stands, with strong support. Most of the leading founders would have opposed the inflation behind it, and many would have called the tax unfair. It is a policy choice, and Congress can change it with a law that adjusts for inflation.

## The question

**What is the outcome left standing?**

A nominal gain is taxable as income counted in the dollar Congress defines, the Origination Clause keeps its full effect, inflation is neither a Tax nor a Bill, and the remedy is a Bill to index basis.

## The study, as written

**Text 01.** A nominal gain is taxable as "gain", counted in the dollar Congress defines, and the Origination Clause keeps its full effect (K-A3, strong support). The ratifying generation counted income in money, "The return in money" (Black's, 1910), and taxed gains in dollars through a doubling of prices. The clause governs "All Bills for raising Revenue", and the Bills that taxed gains began in the House. Both horns of the binary stand at weak support, below it.

**Text 02.** Inflation is neither a "Tax" in the Constitution's sense nor a "Bill". It is an effect of the powers to borrow and to regulate the value of money, exercised under statutes that passed the House (K-B2, strong support). The transfer it brings about is real at moderate support (BC2), and no new revenue Bill passes when it does.

**Gavin's question.** The Supreme Court has not decided the loop as a whole, and it has decided each of its parts (K-G2, strong support).

**The loop itself.** The loop is real at moderate support. The government aims at "inflation at the rate of 2 percent", and the Code taxes the dollar gain that rise produces, counted from "cost" with no adjustment for inflation. Congress named the effect in 1981, the "INFLATION-CAUSED TAX INCREASE", and cured it in the brackets, not in the basis.

**What the founders would have agreed to.** Most of the leading founders would have opposed the inflation half of the loop (strong support): Hamilton held "the uniform preservation of the intrinsic value of the money unit" of the greatest moment, and Madison set "A rage for paper money" beside "any other improper or wicked project". Many would have counted the tax on its nominal gain an added injustice (moderate support). The text they wrote leaves both to Congress, and its remedy is a Bill, begun in the House.

**Where the remedy lies.** How to measure gain is Congress's choice (K-A7, strong support). The Treasury "does not have legal authority to index capital gains for inflation by means of regulation", and the words leave the measure of gain to the law. The remedy the record leaves standing is legislative: a Bill to index basis.

**What would change the answer.** The record names what would. A source of 1909 to 1913 that counts income in purchasing power would lift AU4. A holding that inflation is a "Tax" in the strict sense would lift BU6. A holding that the Federal Reserve is the Executive, and that its delegated power bypasses the House, would lift AU2 and AU11. None of these is in the record.