The Story of Income Taxation

(My comments are in ITALIC)

The ORIGINAL Intent of the Constitution of the United States of America
http://www.originalintent.org/edu/docs/Constitutional%20Issues%20of%20Taxation.pdf

Section 8 – Powers of Congress
The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to
pay the Debts and provide for the common Defence and general Welfare of the United
States; but all Duties, Imposts and Excises shall be uniform throughout the United States;
Section 9 – Limits on Congress
(No capitation, or other direct, Tax shall be laid, unless in Proportion to the Census or
Enumeration herein before directed to be taken.)

*Amendment 16 – Status of Income Tax Clarified. Ratified 2/3/1913.
The Congress shall have power to lay and collect taxes on incomes, from whatever
source derived, without apportionment among the several States, and without regard to
any census or enumeration.

It is a completely factual statement to say that the 16th Amendment has resulted in the largest fraud ever perpetrated by a government against its Citizens.

“Remember the Original Constitution is what the United States of America was built upon and what it remains to represent. Millions have died to protect our rights. Do not let the corporate power of America and their puppet politicians push you around into paying income taxes you can not afford. Stand up for your rights! Income tax is and always will remain a voluntary choice to contribute to the government’s national debt created by the failures of Management within the Federal Reserve sham. The 1913 ratification of the 16th Amendment was a sham by the Ferderal Reserve puppets increasing the gap between the wealthy corporations and the middle class.”

KEY BULLET POINTS:

HISTORY:
When the US Constitution was created, the Founding Fathers sought to correct the problems of the Articles of Confederation which allowed States to use taxes irresponsibly.The Consitution gave the federal government clearly defined taxing powers. Direct taxes were to operate solely upon the state governments, while indirect taxes were to operate upon whomsoever would avail himself of a privileged activity (i.e. indirect taxation).

However, because the states (as colonies) had been subject to taxes that were used for political punishment, as well as at times enduring taxes rates that were considered intolerably high, the Founding Fathers clearly specified the forms of the taxation that could be laid, along with the rules that the government must follow in order to Constitutionally lay such taxes.

The Federal Constitution only permits the government to lay two forms of taxation. One is a “direct tax” and the other an “indirect tax”. Together these two forms of taxation comprise the whole; much like the northern and southern hemisphere – there’s no third choice.

The term “indirect tax” never appears in the Constitution. The Constitution permits the US Government to “lay and collect taxes, duties, imposts and excises…” [See Article 1, Section 8, Clause 1.]

Although there has been some debate about the meaning of the word “taxes”, as it appears in the above quote, it is generally held that its use refers to the direct taxes authorized in Article I, Section 2, Clause 3, while “duties, imposts and excises” are the three species of taxes which comprise the class of indirect taxes.

Direct taxes cannot be avoided because they are upon things that are fixed – such as your physical being, your real property, and certain fundamental rights. Indirect taxes can be avoided by not becoming involved in the activity upon which the tax is laid. For example, not buying fuel or not generating income revenue from taxable sources.

If one cannot avoid a taxable activity without sacrificing the ordinary affairs of life, the tax is not indirect, but direct.

16th Amedment of Constitution of the United States of America
“The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.”

This amendment exempted income taxes from the constitutional requirements regarding direct taxes, after income taxes on rents, dividends, and interest were ruled to be direct taxes in Pollock v. Farmers’ Loan & Trust Co. (1895). It was ratified on February 3, 1913.

Sales taxes, on the other hand, are still annoying, but we understand why they are there, and we know that we are agreeing to pay them by purchasing the item that is being taxed. Sales taxes are levied upon a business activity, not upon individuals or businesses directly. You determine how much you buy. You control how you spend your money. And short of attempting to defraud someone or conspiring to avoid taxes, there is no legal penalty for not paying.

Maintaining an income tax or any direct tax on citizens has the effect of instituting an organization of government police whose charge is to constantly review your bank accounts and your finances, leaving you alone only so long as you keep paying. You are in effect, paying the government for protection from your government.

We must focus on the issue of direct v. indirect. While the phrase “income tax” has a historic meaning in law, that formerly fixed meaning has been eroded to the point of near uselessness by
misapplication of the phrase by Congress, the courts, and the public over the last 90 years.

The 16th Amendment is acting under fraudulent pretenses. One of the elements of the crime of fraud is to remain silent when there is a clear duty to speak, and certainly our government has a clear duty to come out and tell the public that most Americans do not owe a penny of Subtitle
‘A’ or ‘C’ taxes, either under the original provisions of the Constitution, or under the alleged authority of the 16th Amendment.

Representatives of the United States Department of Justice and the Internal Revenue Service had agreed to attend a hearing arranged by We The People Foundation for Constitutional Education and Congressman Bartlett. [The hearing was originally scheduled for Sept. of 2001, but was rescheduled for Feb. of 2002.]

The purpose of the hearing was for the American people to get straight answers to some disturbing questions about US tax law and the administration of tax policy. Two weeks after receiving the first 199 questions, the DOJ and the IRS broke their word and pulled out of the hearing.

The questions that were submitted to DOJ and IRS can be viewed at,
http://www.givemeliberty.org/bartlettresponse/draftquestions01-22-02.html

Furthermore, the federal government (with the state governments acting in complicity) continually seizes property not lawfully subject to seizure, routinely forces nontaxpayers into regulatory administrative tribunals, and repeatedly puts people in jail for not paying a tax they never legally owed. [See The Willful Failure to File Scam.] And all of this government deceit and manipulation became possible only because the 16th Amendment exists.

The 16th Amendment was an attempt to overturn, by Constitutional Amendment, the supposed tax limitations placed on the national government by the decision of the US Supreme Court in the case of Pollock v. Farmer’s Loan and Trust Co., 157 US 429 (1895).

In Pollock, the US Supreme Court stated that a tax upon earnings derived from one’s existing property (real or personal) must be considered a direct tax subject to the rule of apportionment. This gave rise to concern in banking and government circles because they felt (and we agree) that corporations are something that is legislated into existence by the government and therefore the fruits therefrom is properly subject to an excise tax.

In other words, the Pollock decision made no distinction between a man earning rent from his private property, and a man earning a return on his investment in a corporation. The former must properly be considered a direct tax, while the latter should rightly be considered an excise. The rent from a man’s private property is his “private affairs”, and thus outside government’s authority to lay any tax except a direct tax subject to apportionment.

Let’s look at what the various courts have said about “income” and the 16th Amendment:

“The Treasury Department cannot, by interpretive regulations, make income out of that which is not income within the meaning of the revenue acts of Congress, nor can Congress, without apportionment, tax as income that which is not income within the meaning of the 16th Amendment.”
Helvering v. Edison Bros. Stores, 133 F.2D 575

The last part of that quote is crucial to a proper understanding of the impact 16th Amendment, and indeed the entire tax structure of the federal government. It is essential that you understand that only “16th Amendment income” can be taxed without apportionment.

“The individual, unlike the corporation, cannot be taxed for the mere privilege of existing. The corporation is an artificial entity which owes its existence and charter powers to the state; but the individuals’ Right to live and own property are natural rights for the enjoyment of which an excise cannot be imposed.”
Corn v. Fort, 95 S.W.2d 620 (1936)

“As has been repeatedly remarked, the corporation tax act of 1909 was not intended to be and is not, in any proper sense, an income tax law. This court had decided in the Pollock case that the income tax law of 1894 amounted in effect to a direct tax upon property, and was invalid because not apportioned according to populations, as prescribed by the Constitution. The act of 1909 avoided this difficulty by imposing not an income tax [direct], but an excise tax [indirect] upon the conduct of business in a corporate capacity, measuring however, the amount of tax by the income of the corporation”.
Stratton’s Independence, LTD. v. Howbert, 231 US 399, 414 (1913)

“[Income]…must be given the same meaning, in all the Income Tax Acts of
Congress that it was given in the Corporate Excise Tax Act, and what that
meaning is has become definitely settled by the decisions of this court”.
Merchants Loan & Trust v. Smietanka, 255 US 509 (1921)

Below is what the Court said about the definition of “income” in the 1909 Corporate Tax Act!The “form” of the tax being laid in the 1909 Corporate Tax Act must be used in every income tax act Congress might create,

“[Income is] derived–from–capitol–the–gain–derived–from–capital, etc. Here we have the essential matter–not gain accruing to capitol, not growth or increment of value in the investment; but a gain, a profit, something of exchangeable value…severed from capital however invested or employed and coming in, being “derived”, that is received or drawn by the recipient for his separate use, benefit and disposal–that is the income derived from property. Nothing else answers the description…”. [emphasis in original]
Eisner v. Macomber, 252 US 189 (1920)

“It is important here to consider what you put yourself at risk of when filing a new business venture as a corporation. If you make hand made crafts and sell them, you are creating income from your labor as long as you are not filed as a corporation. Once you file as a corporation, you gain the right to file bankruptcy and protection against debts related to the corporation while establishing a boarder between your personal assetts and the bankruptcy. This only true benefit is achieved by establishing business credit and debt and using it for nearly all your needed purchases. Merging your personal and corporate life and expenses protects any assetts you may later register as personal. If you are providing a medical service, bill as a personal provider. Use your name, not a business name. You are then still generating income on labor which is not taxable. My point is, don’t file as a corporation and you will not have to file the income generated from your labor. Don’t buy beyond your means with credit, don’t create debt, and don’t need to ever file bankruptcy!” -TF

When the government uses the word “business” in its laws, about 95% of the time, they
mean only the activities of corporations (and other state-created fictional entities).

When an American Citizen engages in a non-regulated activity from which he earns his living, such activity is not “business”, as such term is used in most statutes. When an American Citizen engages in a non-regulated activity from which he earns his living, he is actually engaged in the pursuit of his “private affairs”. However, he must keep his affairs private, lest he stumble into “business”!

What are some of the actions that can change your private affairs into “business”?

Getting a business license;
getting a resale permit;
filing state or federal tax returns that reflect the earnings from your livelihood;
getting involved with your state’s department of Consumer Affairs,
performing employee withholding under subtitle C of the Internal Revenue Code,
acquiring a Taxpayer Identification Number,
giving out a Taxpayer Identification Number, etc.

A “business” usually owes taxes and is generally subject to government regulation, but for most Americans the pursuit of their own “private affairs”, which includes the earning of one’s own livelihood, is not a taxable activity – unless you make it so. Original Intent consultants can help you steer clear of engaging in “business”. Click here for information on our consulting services, including our phone number. You can also reach us by clicking on the “contact us” icon in the left border of every page of this site.

“Study your IRS tax forms very closely and you will never find “LABOR income” cited. You will find everything based around “corporate/business” this and that.”

If one does not have “16th Amendment income”, then one cannot have any tax liability under the authority of the 16th Amendment. However, it is important to note that there are others activities that can give rise to liability for other forms of taxes.

A partial list of such activities might include; being an employee of the federal government or any of the governments indicated at 26 USC 3401(c); dealing in distilled spirits under any applicable parts of Title 27 of the United States Code and Chapter 51 of the Internal Revenue Code; doing business in tobacco products covered under Chapter 52 of the Internal Revenue Code; engaging in any of the various activities covered under Subtitle D of the Internal Revenue Code, etc. All of the above referenced activities are excise taxes. In other words, if one wishes to avoid the tax, stay away from the excise taxable activity.

If you don’t have any 16th Amendment income, and you aren’t involved in any excise taxable activity, the only way for the government to Constitutionally tax the money you earn in the course of pursuing your private affairs (which you now know includes earning your livelihood) is to do so by enacting a direct tax upon private earnings. No such tax exists today in America.

And remember, Subtitle ‘C’ “employment taxes” are not upon private Citizens involved in exchanging their labor for compensation in the private sector. For more on this subject, go to our page on Federal Employment Taxes.

Because no direct tax on private earnings exists in this country, our tax system is voluntary. But the part that is voluntary is whether or not you want to engage in excise taxable activities, and thus create liability that would not otherwise exist. However, if you choose to engage in an excise taxable activity, the tax is not voluntary for you any longer – you volunteered and you must pay the tax.

There is another way Americans continually volunteer to pay federal and state income tax when they would not otherwise owe anything – you give people who pay you money your Social Security Number when they request a “tax number”. By doing this, you declare that the money you are being paid is subject to state and federal taxation, even if it was not so subject until you gave out the number! For more on this, see our Federal Income Tax article.

Let’s review what we’ve covered:

1) The US Constitution grants the federal government the authority to lay only two classes of taxation – direct and indirect.

2) Direct and indirect taxes are subject to Constitutional regulations concerning their mode of operation.

3) Direct taxes are subject to apportionment – even after the 16th Amendment.

4) Indirect taxes are subject to the rule of uniformity.

5) No direct tax on private earnings exists in this country – the disagreement of the federal courts notwithstanding.

6) The federal judicial circuits are split as to whether the 16th Amendment merely confirmed the government’s excise taxing power concerning shareholder profits from corporate investment, or whether the Amendment created a new “special” form of direct tax that does not require
apportionment.

7) In the Brushaber case, the US Supreme Court stated that any tax act under the authority of the 16th Amendment must properly be considered an excise, and is thus not subject to apportionment.

8) The definition of income used in the Corporate Tax Act of 1909 must be used in the income tax acts of Congress (passed under the authority of the 16th Amendment).

9) The definition of income used in the Corporate Tax Act of 1909 is the same definition that must be used when interpreting the 16th Amendment.

10)The 16th Amendment only pertains to “income” in the form of dividends, patronage dividends, and interest from corporate investment.

11)The 16th Amendment tax is upon the privilege (to shareholders) of operating a business as an artificial entity.

12) The 16th Amendment tax is not upon “income”; the income is only the yardstick used to determine the value of the privilege, and hence the amount of tax to be paid.

13) If you have no 16th Amendment income, you have no liability for a tax imposed under the authority of the 16th Amendment.

14) Other legitimate types of federal and state taxation do exist beyond the tax imposed under the authority of the 16th Amendment. They are all excise taxes.

15) Capital investment funds, even when invested in a corporation, are not subject to taxation except by a direct tax subject to apportionment.

16) A tax on your private earnings still needs to be apportioned to be constitutional.

17) If you wish to conduct only your private affairs, do not trespass into areas that give rise to the presumption of federal or state authority for taxation and/or regulatory authority.

18) In most statutes, “business” means the activities of a legislatively created entity such as a corporation, partnership, statutory trust, etc., and does not embrace the your private affairs, which includes your livelihood.

19) Giving out a SSN or TIN (when lawfully required) creates a powerful presumption of federal and state taxing authority over your earnings.

20) Signing any federal or state tax forms (including a Form W-4, creates a powerful presumption of federal and state taxing authority over your earnings.

21) The Gross Income argument is legally accurate, but is not intended to take the place, and does not take the place, of a constitutional argument.

22) If you choose to engage in an excise taxable activity, you must pay the tax.

23) If you choose to engage in an excise taxable activity, you are expected (by the government as well as your fellow citizens) to practice voluntary compliance.

24) An indirect tax can be effectively converted into a direct tax by improper enforcement by the Executive Branch. In that event, the US Supreme Court has said that it is its duty to declare the former excise tax to be a direct tax absent apportionment, and thus unconstitutional. We hope you’ve found this article to be of value, and if so, we encourage you to forward the URL to others who may appreciate the information. We stand ready to assist you in any way possible concerning your private affairs. Contact Us.

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