Indiana Law Journal

Document Type


Publication Date

Fall 2011

Publication Citation

86 Indiana Law Journal 1459 (2011)


One of the most famous Supreme Court tax cases celebrated its eightieth birthday last year. In Poe v. Seaborn, the Court reified two principles of the federal income tax: ownership determines tax liability and state law determines ownership. This Article affirms that family taxation continues to follow ownership, not marriage, despite the federal government’s position that the “ownership equals taxability” rule applies almost exclusively to heterosexual spouses. Verifying the vitality of this principle carries significant implications for all families, particularly nontraditional families. Under the aegis of Seaborn, the principle authorizes certain members of state-recognized relationships—marriages, domestic partnerships, civil unions—to file federal income taxes based on ownership interests under state law and to split combined income in half, an outcome largely at odds with current treatment. Indeed, Seaborn provides legally recognized samesex couples a way around the tax filing restrictions and disadvantages imposed on them by the Defense of Marriage Act, which does not consider them spouses under federal law. Seaborn empowers these families to take advantage of tax savings associated with income splitting.

To prove that ownership of income and property, rather than marriage, determines family tax liability, this Article traces the “ownership equals taxability” principle from the late nineteenth century to after World War II; that is, from the decades leading up to ratification of the Sixteenth Amendment to the Supreme Court’s landmark decision in Seaborn and beyond. It is a story of the early federal income tax, of tax avoidance opportunities for families, of the nature of spouses’ legal interests as defined by state property law, and of early tax enforcement efforts by the Treasury Department and Congress. It is also a story of how the Supreme Court protected Congress’s taxing power and the federal purse by articulating an expansive definition of ownership for tax purposes, particularly in the context of the family.