791 F.2d 68

                  Norman E. COLEMAN, Petitioner-Appellant,
                                    v.
           COMMISSIONER OF INTERNAL REVENUE, Respondent-Appellee.
                     Gary HOLDER, Plaintiff-Appellant,
                                    v.
          SECRETARY OF the TREASURY and United States of America,
                            Defendants-Appellees.
                           Nos. 85-1202, 85-1601.
                        United States Court of Appeals,
                               Seventh Circuit.
                           Submitted Dec. 17, 1985.
                             Decided May 7, 1986.

	Before WOOD, FLAUM, and EASTERBROOK, Circuit Judges.

	EASTERBROOK, Circuit Judge.
	Some people believe with great fervor preposterous things that
just happen to coincide with their self-interest.  "Tax protesters" have
convinced themselves that wages are not income, that only gold is money,
that the Sixteenth Amendment is unconstitutional, and so on.  These
beliefs all lead--so tax protesters think--to the elimination of their
obligation to pay taxes.  The government may not prohibit the holding of
these beliefs, but it may penalize people who act on them.
	It is an important function of the legal system to induce
compliance with rules that a minority firmly believes are misguided.
Legal penalties change the balance of self-interest;  those who believe
taxes wicked or unauthorized must nonetheless pay.  When the legal system
depends on honest compliance as much as the income tax system does--and
when disobedience is potentially rewarding to those affected by the
rule--it is often necessary to impose steep penalties on those who refuse
to comply.  We have consolidated the cases of two such people.
	Norman Coleman did not file tax returns for 1979, 1980, or 1981.
The Internal Revenue Service reconstructed Coleman's income for these
years and concluded that he owed taxes of $4,806 for 1979, $6,454 for
1980, and $3,692 for 1981.  The IRS also concluded that Coleman owed
additions to tax exceeding $2,300.  Coleman sought review in the Tax
Court, demanding that the IRS prove the correctness of its computations
and arguing, among other things, that wages are not income.  Coleman
declined to offer any evidence concerning his income; he insisted that the
IRS bear the whole burden of production.  The Tax Court granted summary
judgment to the IRS, concluding that Coleman had presented no evidence
that might undermine the presumption that the Commissioner's notice of
deficiency is correct.  Because Coleman had filed tax returns for the
years before 1979 and demonstrated through the briefing an awareness of
the legal obligation to file, the court imposed a penalty of $5,000 under
26 U.S.C. s 6673, which authorizes the Tax Court to award damages when it
concludes that the case has been "maintained by the taxpayer primarily for
delay or that the taxpayer's position in such proceedings is frivolous or
groundless...."
	Gary Holder filed a tax return for 1980 but then filed an amended
return on which he subtracted his wages from his gross income, leaving
only $68.13 in taxable income.  Holder attached to the amended return a
screed insisting that wages are not income.  The amended return requested
a refund of $4,555.20.  The IRS imposed a $500 penalty under 26 U.S.C. s
6702 for filing a frivolous return.  Holder paid 15% of the penalty and
filed suit in the district court to recover the payment.  26 U.S.C. s
6703.  There he argued not only that wages are untaxable but also that s
6702 is unconstitutional.  The district court concluded that the suit is
as frivolous as the tax return.  It granted summary judgment to the
government and ordered Holder to pay the attorneys' fees the government
incurred in defending the action.
	The billingsgate in appellants' briefs is customary in
cases of this nature.  Coleman says that wages may not be taxed because
they come from his person, a depreciating asset.  The personal
depreciation offsets the wage, leaving no net income.  Coleman thinks that
only net income may be taxed under the Sixteenth Amendment--net income as
Coleman defines it, rather than as Congress does.  Holder, who styles
himself a "private citizen," insists that wages may not be taxed because
the Sixteenth Amendment authorizes only excise taxes, and in Holder's
world excises may be imposed only on "government granted privileges."
Because Holder believes that he is exercising no special privileges, he
thinks he may not be taxed.  These are tired arguments.  The code imposes
a tax on all income.  See 26 U.S.C. s 61.  Wages are income, and the tax
on wages is constitutional.  See, among hundreds of other cases, United
States v. Thomas, 788 F.2d 1250, 1253 (7th Cir.1986);  Lovell v. United
States, 755 F.2d 517 (7th Cir.1984);  Granzow v. CIR, 739 F.2d 265, 267
(7th Cir.1984);  United States v. Koliboski, 732 F.2d 1328, 1329 & n. 1
(7th Cir.1984).  See also Brushaber v. Union Pacific R.R., 240 U.S. 1, 12,
24-25, 36 S.Ct. 236, 239, 244-45, 60 L.Ed. 493 (1916).
	Both Coleman and Holder also argue that the income tax is a
taking, which abridges their right to earn income.  Taxes indeed "take"
income, but this is not the sense in which the constitution uses
"takings."  Article I, section 8, clause 1 of the constitution grants to
Congress "Power To lay and collect Taxes".  The power thus long predates
the Sixteenth Amendment, which did no more than remove the apportionment
requirement of Art. I, sec. 2, cl. 3 from taxes on "incomes, from whatever
source derived".  Although the government might try to achieve through
special taxes what the Takings Clause of the Fifth Amendment forbids if
done directly, the general tax levied by the Internal Revenue Code does
not offend the Fifth Amendment.  Brushaber, supra.
	Coleman argues that the IRS had to prove the amount of his
income;  he needed to show nothing.  The statute is otherwise.  People
must make an honest report of their income to the government.  If they
fail to do this, they must establish any inaccuracies in the
Commissioner's reconstruction of their income.  26 U.S.C. s 6020(b).  His
further argument that the Seventh Amendment requires a jury trial in the
Tax Court is empty.  Even in ordinary litigation, the Seventh Amendment
does not require a jury trial when there are no facts in dispute, and
Coleman put none in dispute.  The Seventh Amendment at all events does not
apply to civil litigation against the United States.  McElrath v. United
States, 102 U.S. (12 Otto) 426, 440, 26 L.Ed. 189 (1880);  see also Atlas
Roofing Co. v. OSHRC, 430 U.S. 442, 450-51, 97 S.Ct. 1261, 1266-67, 51
L.Ed.2d 464 (1977).  Our circuit has apparently never held squarely that
there is no right to a jury trial in the Tax Court, but other circuits
have held this, and we agree with them.  E.g., Parker v. CIR, 724 F.2d
469, 472 (5th Cir.1984);  Funk v. CIR, 687 F.2d 264, 266 (8th Cir.1982).
	Both appellants challenge the penalties imposed on them,
contending that "frivolous" is too vague a designation to support a
penalty.  This is a staple term of civil litigation, however, and we have
sustained against constitutional challenge 28 U.S.C. s 1927, which allows
awards against counsel for "vexatious" conduct.  In re TCI, Ltd., 769 F.2d
441, 449 (7th Cir.1985).  Statutes need not be unambiguous in every
application to be constitutional.  Many words acquire meaning through
judicial and administrative construction over the years, and this
evolutionary process is constitutional. E.g., CSC v. Letter Carriers, 413
U.S. 548, 93 S.Ct. 2880, 37 L.Ed.2d 796 (1973);  cf. Rose v. Locke, 423
U.S. 48, 96 S.Ct. 243, 46 L.Ed.2d 185 (1975).  Courts have been imposing
penalties for frivolous litigation for hundreds of years, cf. Roadway
Express, Inc. v. Piper, 447 U.S. 752, 764-67, 100 S.Ct. 2455, 2463-65, 65
L.Ed.2d 488 (1980), and the ambiguities that lurk in "frivolous" (or any
other word) in marginal cases do not prevent the imposition of penalties.
Uncertainty is a fact of legal life.  The "law is full of instances where
a man's fate depends on his estimating rightly, that is, as the jury
subsequently estimates it, some matter of degree."  Nash v. United States,
229 U.S. 373, 377, 33 S.Ct. 780, 781, 57 L.Ed. 1232 (1913). "Whenever the
law draws a line there will be cases very near each other on opposite
sides.  The precise course of the line may be uncertain, but no one can
come near it without knowing that he does so, if he thinks, and if he does
so it is familiar to the ... law to make him take the risk."  United
States v. Wurzbach, 280 U.S. 396, 399, 50 S.Ct. 167, 169, 74 L.Ed. 508
(1930).  See also, e.g., United States v. Powell, 423 U.S. 87, 96
S.Ct. 316, 46 L.Ed.2d 228 (1975).
	The purpose of 26 U.S.C. ss 6673 and 6702 is to compel
taxpayers to think and to conform their conduct to settled principles
before they file returns and litigate.  A petition to the Tax Court, or a
tax return, is frivolous if it is contrary to established law and
unsupported by a reasoned, colorable argument for change in the law.  This
is the standard applied under Fed.R.Civ.P. 11 for sanctions in civil
litigation, and it is a standard we have used for the award of fees under
28 U.S.C. s 1927 and the award of damages under Fed.R.App.P. 38.  See
Indianapolis Colts v. Mayor and City Council of Baltimore, 775 F.2d 177
(7th Cir.1985);  In re TCI, supra; Lepucki v. Van Wormer, 765 F.2d 86 (7th
Cir.) (attorneys' fees awarded), cert. denied, --- U.S. ----, 106
S.Ct. 86, 88 L.Ed.2d 71, damages awarded, --- U.S. ----, 106 S.Ct. 403, 88
L.Ed.2d 355 (1985);  Steinle v. Warren, 765 F.2d 95, 102 (7th Cir.1985)
($2,500 damages awarded);  Oglesby v. RCA Corp., 752 F.2d 272, 279-80 (7th
Cir.1985).  The inquiry is objective. If a person should have known that
his position is groundless, a court may and should impose sanctions.  See
Thornton v. Wahl, 787 F.2d 1151, 1154 (7th Cir. 1986).
	Things are otherwise under ss 6673 and 6702, the appellants say;
these statutes require not only a lack of objective support but also
subjective bad faith.  Coleman cites May v. CIR, 752 F.2d 1301 (8th
Cir.1985), for this proposition.  As originally published May used a
subjective test, although the court found that May himself acted in
subjective bad faith.  The court later revised the opinion, stating the
inquiry as whether the taxpayer "knew or should have known" that the
claim, return, or argument was groundless.  55 A.F.T.R.2d 747, 751 (8th
Cir.1985).  "Should have known" is an objective test.  We used an
objective test for penalties under the tax laws in Lovell v. United
States, supra, and there is no reason to change that approach.  Section
6673, for example, states alternative tests:  whether the suit was
"maintained ... primarily for delay" or whether the position is "frivolous
or groundless."  The former is a subjective inquiry, the latter is
objective;  either will support a penalty.  See also In re TCI, supra, 769
F.2d at 445 (subjective bad faith is important under s 1927 only when the
litigation is objectively colorable).
	The purpose of ss 6673 and 6702, like the purpose of Rules 11 and
38 and of s 1927, is to induce litigants to conform their behavior to the
governing rules regardless of their subjective beliefs.  Groundless
litigation diverts the time and energies of judges from more serious
claims;  it imposes needless costs on other litigants.  Once the legal
system has resolved a claim, judges and lawyers must move on to other
things.  They cannot endlessly rehear stale arguments.  Both appellants
say that the penalties stifle their right to petition for redress of
grievances.  But there is no constitutional right to bring frivolous
suits, see Bill Johnson's Restaurants, Inc. v. NLRB, 461 U.S. 731, 743,
103 S.Ct. 2161, 2170, 76 L.Ed.2d 277 (1983).  People who wish to express
displeasure with taxes must choose other forums, and there are many
available.  Taxes are onerous, no doubt, and the size of the tax burden
gives people reason to hope that they can escape payment.  Self-interest
calls forth obtuseness.  An obtuse belief--even if sincerely held--is no
refuge, no warrant for imposing delay on the legal system and costs on
one's adversaries.  The more costly obtuseness becomes, the less there
will be.
	The contentions in this case are objectively frivolous.  They
have been raised and rejected so often that this circuit now handles
almost all similar cases by unpublished orders.  The Tax Court and the IRS
were entitled to impose sanctions.  We, too, regularly impose sanctions in
these cases.  In Van Wormer this court awarded attorneys' fees as a
sanction for similar claims, and the Supreme Court added $1,000 in
damages.  Our unpublished orders in cases of this sort regularly end with
awards of double costs and attorneys' fees in favor of the government.
Precisely because the substantive claims are so weak, and the opinions are
therefore unpublished, litigants may be unaware of our practice.  The
routine use of sanctions does not deter unless people know what lies in
store.  See also, e.g., Connor v. CIR, 770 F.2d 17, 20 (2d Cir.1985) (the
argument that wages are not income "has been rejected so frequently that
the very raising of it justifies the imposition of sanctions.").
	Our usual practice has been to invite the government to submit an
itemized request for attorneys' fees.  The keeping of time and expense
records, and the preparation of affidavits supporting requests for fees,
are themselves avoidable costs of baseless litigation.  The government's
brief in No. 85-1601 informs us that the average amount of fees it has
been awarded in tax protester litigation between July 26, 1984, and June
12, 1985, is $1,258 per case.  This includes only the fees that can be
directly attributed to litigation.  In order to make simpler the task of
computing and awarding fees, courts sometimes impose uniform sanctions on
the authority of Fed.R.App.P. 38.  The Supreme Court awarded a flat $1,000
in Van Wormer on top of the fees we had earlier granted.  We, too, have
occasionally named a penalty rather than requesting an individual
computation of fees.  E.g., Steinle, supra;  Ruderer v. Fines, 614 F.2d
1128, 1132-33 (7th Cir. 1980);  and Clarion Corp. v. American Home
Products Corp., 494 F.2d 860, 865-66 (7th Cir.), cert. denied, 419
U.S. 870, 95 S.Ct. 128, 42 L.Ed.2d 108 (1974), each of which imposes
$2,500 as damages for frivolous appeals;  and Hilgeford v. Peoples Bank,
776 F.2d 176, 179 (7th Cir.1985);  and Wisconsin v. Glick, 782 F.2d 670
(7th Cir.1986), each of which imposes a $500 penalty for a frivolous
appeal.  And compare Hallowell v. CIR, 744 F.2d 406, 408 (5th Cir.1984)
($2,000 per tax protest);  and Crain v. CIR, 737 F.2d 1417, 1418 (5th
Cir.1984) (same), with Knoblauch v. CIR, 749 F.2d 200, 202-03 (5th
Cir.1984) (individual calculation).
	Because average awards of actual attorneys' fees in tax
protest cases exceed $1,000, we choose to impose sanctions of $1,500 in
lieu of attorneys' fees.  Even $1,500 cannot cover the indirect costs of
this litigation-- including the costs that befall serious litigants, who
must wait longer for their cases to receive judicial attention.  The
decision to name a penalty rather than invite proof of the government's
actual attorneys' fees produces some imprecision, doubtless.  Coleman's
case is a little more complex than Holder's--Coleman's brief is 38 pages,
the government's 31;  Holder's brief is 10 pages, the government's 16.
There should be no weeping over this imprecision, however.  Coleman and
Holder could have avoided the penalty, and other people should avoid it,
by the most minimal concern for settled rules. They knew or should have
known that their claims are frivolous, and they (rather than their
adversary) must pay the cost of their self-indulgent litigation.
	The judgments are affirmed, with double costs and $1,500 damages
in each case.