SOURCE DERIVED FROM:  IRS Humbug, Frank Kowalik, pp.  24-26.

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Congress knew from past court actions that Federal judges already in office would not permit impairment of their existing contracts.  By changes in the wording in the Revenue Act of 1932, c. 209, to read:

Sec. 22...In the case of Presidents of the United States and judges of courts of the United States taking office after June 6, 1932, the compensation received as such shall be included in gross income; and all Acts fixing the compensation of such Presidents and judges are hereby amended accordingly.

Congress managed to get the cooperation of Federal judges taking office after June 6, 1932.  Cooperation is evidenced by acceptance of the job.

Note that this change in wording accomplished two things.  First, by specifying that it applied to judges taking office after June 6, 1932 it did not affect existing employment contracts.  Hence existing judges could not say it diminished their compensation.  Secondly, the working of "all Acts are hereby amended accordingly" means that new judges are informed up front that their employment contract includes a kickback in the compensation.  Just like other Federal Government employees, their compensation for labor was the amount arranged for under law by Congress less the kickback, which varies depending on the deduction benefits available to each judge.[1]  Judges could have challenged the lawfulness based on unequal pay for like work, but then that argument would hold true for all other Federal Government employees as well.

The effect of this Act upon the compensation of judges who enter into a new employment agreement is brought out by the court cases after 1932.  For example, in O'Malley v. Woodrough, 307 U.S. 277 (1938), Judge Woodrough brought action when his compensation as an Appeals Court judge was assessed.  He had been a U.S. District Court judge prior to accepting his new position with the Appellate Court in 1933.  The Supreme Court Justices decided that judges of courts of the United States taking office after June 6, 1932, had agreed to allow their salary to be deemed "gross income" and subject to a legal kickback.  In other words, they agreed that, as a condition of employment, the salary of judges as set by Congress--as with all other Federal Government employees--includes their remuneration for personal service (income) and a kickback (gain) to the U.S. Government.[2]  In essence, the Supreme Court said to Judge Woodrough--tough cookies, when you accepted a higher position, you agreed to a new employment contract and accepted the employment condition of kickback that all judges taking office after June 6, 1932 accepted.

As for periodic changes, it is no known if U.S. judges actually do agree and permit Congressional unilateral changes in their employment contracts through the varying rates and deduction benefits.  It they do, it certainly is contrary to their tradition.  To prove whether or not U.S. judges use current rates and deduction benefits or that which was in existence when they first took office would require review of their "U.S. Individual Income Tax Returns," which is a violation of their personal rights to privacy.  So, it is something the public will never  know, but the question is there.

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[1]  The Fourth Circuit Court of Appeals clarified this issue in Baker et al. v. Commissioner of Internal Revenue, 149 F.2d 342 (1945) with the statement:  "The necessary effect of the Woodrough case seems to us to be that a judge who takes office under an established Congressional policy of taxing his salary becomes entitled only to the salary prescribed by statute less income taxes, and that in consequence his salary is not diminished by the tax.."

[2]  The kickback is some part of the gain portion of "gross income" or "wages."  The amount depends upon the deduction benefits claimed by the Federal Government employee upon a "U.S. Individual Income Tax Return."