- The 16th amendment of the US constitution DOES NOT allow the congress to tax personal income with a direct tax that is not subject to apportionment and, in fact, does not add any new taxing power to the congress.
- This fact is extremely important in understanding the true nature of the income tax as currently implemented.
- There is a large misunderstanding of this fact and most of the details surrounding the taxation of income in the United States.
In fact the 16th amendment DOES NOT allow the government to tax earnings of most Americans.
2 types of tax: Direct and Indirect
It basically revolves around the constitutional taxing authority given to congress and the fact that there are two types of tax: direct and indirect.
Direct taxes must be appropriated according to the rule of apportionment:
apportion v. to distribute proportionately Source: NMW
In the context of the Constitution, apportionment means that each state gets a number appropriate to its population. For example, Representatives are apportioned among the states, with the most populous getting the greater share. Direct taxes (of which there are none today) were to be charged to the states in this manner as well.
The need for apportionment of taxes, and the reason for it, is difficult for us to imagine today, but there were good reasons for it. The following is an explanation of the need for the Direct Tax Apportionment clause. It was written by Supreme Court Justice Paterson in Hylton v US (3 US 171 [1796]):
The constitution declares, that a capitation tax is a direct tax; and both in theory and practice, a tax on land is deemed to be a direct tax... The provision was made in favor of the southern states; they possessed a large number of slaves; they had extensive tracts of territory, thinly settled, and not very productive. A majority of the states had but few slaves, and several of them a limited territory, well settled, and in a high state of cultivation. The southern states, if no provision had been introduced in the constitution, would have been wholly at the mercy of the other states. Congress in such case, might tax slaves, at discretion or arbitrarily, and land in every part of the Union, after the same rate or measure: so much a head, in the first instance, and so much an acre, in the second. To guard them against imposition, in these particulars, was the reason of introducing the clause in the constitution.
Indirect taxes take the form of an excise tax, which is a tax based on privileged activities.
THE IMPORTANT THING TO REMEMBER:
Since the 16th amendment did not revoke article 1, section 2, clause 3 of the constitution, (Representatives and direct Taxes shall be apportioned among the several States….) which constrained direct taxes to apportionment, it clearly could not be allowing an income tax to be applied as a direct tax without apportionment. Rather, what it says is that an income tax can be an indirect tax.
Income Tax today:
So, in fact, the statutes and regulations contained in the internal revenue code TODAY are still legally bound by the constraints regarding direct and indirect taxation. They are, in fact, implemented as an excise tax (indirect). Remember though, an excise tax is one regarding privilege. And in fact, if you read the Internal Revenue Code, you find that its regulations and statutes are fully compatible with an excise tax. So, in order to work, the IRC must twist itself around excise taxation AND allow for a ‘voluntary compliance’ aspect so as to not violate the constitution. Thus, it has some very narrow and specific definitions of terms like “income”, “wages”, “employee”, etc. Remember, it is a RIGHT, not a PRIVILEGE, to work for pay.
The details of the real meaning of the 16th amendment are very adequately discussed here and here.
The details of how “the income tax” is implemented in the US are discussed here. A summary of which is:
- No capitation, or other direct, Tax shall be laid, unless in Proportion to the Census or Enumeration herein before directed to be taken." - United States Constitution, Article 1, Section 9
- So, federal capitations (taxes on normal, private-sector earnings) are prohibited
- So, the tax is an excise on the exercise of privilege, not a tax on money...
- So, working, earning money, being paid, etc., in the private sector are NOT privileges...
- So, the 16th Amendment has nothing to do with anything about any of the foregoing...
- What is called "income" in the internal revenue laws (that is, what is taxed under those laws) is NOT "money" or "receipts" or "earnings", etc.. It is the exercise of federal privilege, which is measured, for purposes of determining the tax, by the receipts brought in by that exercise. Thus, it is only receipts resulting from the exercise of federal privilege that are relevant to those laws and the related taxes.
Thus, the scope of true application of the code is rather narrowly constrained, as it must be under the constitution. However, its actual implementation is construed to encompass a much broader scope of subjects.
My position on this most closely aligns with that of Pete Hendrickson, author of “Cracking the Code”. That position, stated as succinctly as possible is this:
The Federal Income Tax is implemented as a fraudulent scam and is intended to collect as much revenue as possible from as many people as possible under the guise of law although it is perfectly legal for most Americans to not pay a dime of their receipts as a tax to the federal government. Unfortunately, you have to know some of the relevant details of the IRC to know this, and most Americans do not. It is my sincere belief that the IRC is intentionally obfuscated so that the truth of its actual scope of application is well hidden and thus it can remain as a convenient mechanism to rob people of their rightful property in order to fund an unnecessarily large government.
