As Long as Myths Persist

7/26/2019 As Long as Myths Persist

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As Long As Myths About The Income Tax Persist, The Misapplication Of The

Tax Will Continue

FEBRUARY 3, 2013 MARKED THE 100th ANNIVERSARY of the adoption of the 16th Amendment. As

was to be expected, a lot of punditry on the subject could be found throughout cyberspace and in the

mainstream media harmfully mis-stating the facts concerning the amendment, and thereby helping

perpetuate the mis-application of the "income" tax.

The chief error made in these articles is the characterization of the amendment as the origin of the

income tax. The chief ill effect of this error is that imagining the 16th Amendment to be the origin of

the tax makes it very easy to misunderstand the real nature of the tax as an excise of limited scope

on only distinguished, specialized receipts.

On the other hand, understanding that the 16th is NOT the origin of the tax makes recognition of the

true nature of the tax virtually inescapable. Understanding the true origin of the tax means

recognizing that the tax predates the amendment by many years during which it was applied to the

very same things to which it applies now-- and was so applied without apportionment, while being

properly upheld by the courts as completely Constitutional. This, in turn, reveals that the objects of

the tax were, and are, of a limited, distinguishable character suited to a non-apportioned tax.

Because getting these things wrong conceals the true nature of the tax, and getting them right

reveals that true nature, this is not only just a matter of academic and professional integrity. Instead,

it is a matter of enormous public interest concerning the truth about a tax by which control of 35-

45% of productive America's earnings has annually been transferred from its rightful owners to a

hungry horde of sociopaths intent on living by the "political means".

What follows, then, will be facts (and the documentation to support them) clarifying that the 16th

Amendment is not the origin of the income tax, nor the authority for the tax generally. It will be

shown, rather, that the tax predates the 16th by many years, and is an excise on specialized activity

with limited scope, and is entirely different from the tax on "all that comes in" that most Americans

have been led to imagine.

HERE IS ONE TRUTH-REVEALING FACT-- indeed, the only one necessary to prove that the 16thAmendment was NOT the origin of the income tax:

The internal revenue title, which comprises all of the Code except the preliminary sectionsrelating to its enactment, is intended to contain all the United States statutes of a general and

permanent nature relating exclusively to internal revenue, in force on January 2, 1939; alsosuch of the temporary statutes of that description as relate to taxes the occasion of which mayarise after the enactment of the Code. These statutes are codified without substantive changeand with only such change of form as is required by arrangement and consolidation. The titlecontains no provision, except for effective date, not derived from a law approved prior toJanuary 3, 1939 The whole body of internal revenue law in effect on January 2,


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expression, including the different species of direct taxes-- an acceptation of the wordpeculiar, it is believed, to Dr. Smith-- leaves little doubt that the framers o the one had theother in view at the time, and that they, as well as he, by direct taxes, meant those paiddirectly from the falling immediately on the revenue;...'"

f

Pollock v. Farmer's Loan & Trust, 157 U.S. 429 (1895).

Adam Smith's definition of "capitation" (and therefore that of the Framers) includes the following

(among much else):"The taxes which, it is intended, should fall indifferently upon every different species ofrevenue, are capitation taxes," "Capitation taxes, if it is attempted to proportion them to thefortune or revenue of each contributor, become altogether arbitrary. The state of a man'sfortune varies from day to day, and without an inquisition more intolerable than any tax, andrenewed at least once every year, can only be guessed at.""Capitation taxes, so far as theyare levied upon the lower ranks of people, are direct taxes upon the wages of labour, and areattended with all the inconveniences of such taxes."" In the capitation which has been leviedin France without any interruption since the beginning of the present century, the highesorders of people are rated according to their rank by an invariable tariff; the lower orders of

people, according to what is supposed to be their fortune, by an assessment which varies from

year to year."'An Inquiry Into the Nature and Causes of the Wealth of Nations' by Adam Smith, Chapter IV

(Bear in mind that Smith is using the common word 'wages', not the custom-defined legal term of thesame spelling found in the modern revenue laws.) Smith goes on to discuss the version ofcapitations imposed under the name of "poll taxes," as well, observing that in the first poll tax, forinstance, many were taxed according to their supposed fortune, being "assessed at three shillings inthe pound of their supposed income."

Capitations are specifically subject to the apportionment requirement:

"No capitation, or other direct, Tax shall be laid, unless in Proportion to the Census orEnumeration herein before directed to be taken."United States Constitution, Article 1, Section 9

This requirement has never changed, and remains in force today, the 16th Amendment

notwithstanding. In fact, the amendment came about solely in order to undo a ruling in the Pollock

case concerning the taxation of dividends and rent.

Pollock was a stockholder who argued that the attempt by Congress in 1894 to tax dividends and

rents from investments in federally-subsidized railroads and real-estate as income was

unconstitutional because a tax on such gains had to be apportioned. Pollock reasoned that since the

dividends and rent were derived from personal property (his stock), the tax on them amounted to a

property tax on the stock itself. The court agreed.

Congress responded to the Pollock decision 19 years later with the 16th amendment, which was

designed and approved solely to overturn that one nuanced ruling of the court. The amendment has

no other effect, and, in fact couldn't-- remember, everything else subject to the tax was taxable

without apportionment even before the amendment.
http://www.law.cornell.edu/supct/html/historics/USSC_CR_0157_0429_ZS.htmlhttp://www.gutenberg.org/ebooks/3300http://www.law.cornell.edu/constitution/http://losthorizons.com/Documents/Snippet.htmhttp://losthorizons.com/Documents/Snippet.htmhttp://losthorizons.com/Documents/Snippet.htmhttp://losthorizons.com/Documents/Snippet.htmhttp://www.law.cornell.edu/constitution/http://www.gutenberg.org/ebooks/3300http://www.law.cornell.edu/supct/html/historics/USSC_CR_0157_0429_ZS.html


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In 1916, shortly after its adoption without challenge by the states (despite the fact that many appear

to have not ratified the amendment) and the passage of the 1913 act reviving what had become the

dormant income tax, the nature and effect of the 16th Amendment was spelled out by the Supreme

Court. In a test case just for that purpose, Frank Brushaber asserted that the tax on his railroad stock

dividends was unconstitutional because it amounted to a direct unapportioned tax, just as had

Pollock 21 years earlier.

In response, the Supreme Court carefully explained that the sole effect of the 16th Amendment is to

overrule the Pollock Court's finding that the application of the tax to qualified dividends and rent

amounted to a property tax, thus invoking the apportionment requirement in such cases. First the

court debunks Brushaber's argument that the amendment created some inherently invalid hybrid tax:

"We are of opinion, however, that the confusion is not inherent, but rather arises from the[erroneous assumption] that the 16th Amendment provides for a hitherto unknown power oftaxation; that is, a power to levy an income tax which, although direct, should not be subjectto the regulation of apportionment applicable to all other direct taxes."

Brushaber v. Union Pacific RR Co., 240 U.S. 1 (1916)

The court pointed out that a hybrid tax would cause:

...one provision of the Constitution [to] destroy another; that is, [it] would result in bringingthe provisions of the Amendment [supposedly] exempting a direct tax from apportionment intoirreconcilable conflict with the general requirement that all direct taxes be apportioned."Brushaber, supra.

If what was taxed as income was among the objects of a direct tax such as a capitation, the

irreconcilable conflict described by the court would arise, because, as the court makes clear, the

capitation clause remains fully in effect. The conflict DOESNT arise-- but only because what is taxed

as income both before and after the 16th Amendment is NOT anything that would qualify the tax as

a capitation or other direct tax, whether all that comes in or anything else described by Adam Smith

as such.

In fact, the Brushaber court goes so far as to declare that if the tax ever SHOULD come to be applied

to "all that comes in" or any other object of a capitation or other direct tax:

"the duty would arise to disregard form [ hat is, any pretense by which it is made to appearthat the tax is being confined to its proper limits when it is not, such as by creatively

construing the meaning of "income," or the use of any pretense, scheme or construction bywhich non-specialized revenue o activities are made to appear otherwise so as to subjecthem to the tax] and consider substance alone [that is, what the tax is actually falling upon asa practical reality], and hence subject the tax to the regulation as to apportionment whichotherwise as an excise would not apply to i ."

t

r

tBrushaber, supra.
http://supreme.justia.com/cases/federal/us/240/1/http://supreme.justia.com/cases/federal/us/240/1/


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The principle, and the way it plays out, is very simple. Since income is not all that comes in, it has

to be a subset of all that comes in, distinguished in some way. For the government to be able to

charge a fee (tax) for doing what produces that sub-set, such things have to be done by permission

of the government. This makes the doing an exercise of privilege.

To put it another way, if you cant do a thing without paying the government for doing it, doing it is a

privilege, and by permission only. When you pay the tax, youre paying for the privilege of [x], in themost basic sense of that expression. The reciprocal, of course, is that such a tax cant apply to things

for which you dontneed government permission (like trading your labor for work with anyone except

the feds, or engaging in any other economic activity not involving federal stuff).

So, the receipts subject to the federal excise (the "income" in the federal income tax) are those

produced through the exercise of certain federal privileges. Just like the name says, its a federa

incometax. This is the law, in plain black and white.

NOW... misunderstandings about the nature and effect of the 16th Amendment-- and the income taxitself-- have led to real problems for most Americans for over 70 years now. A lot of money and

power has gone from its rightful owners into the hands of an ever-fatter-and-sassier political class

(and its clients and cronies) just because of those misunderstandings.

Because of those misunderstandings, the state has grown big and rich and dangerous. The people

have grown small and poor and intimidated.

Happily, all thats needed for these problems to turn around is for us all to get our facts right. Once

that happens, we will soon see a welcome transformation in the relations between citizen and state

as the limits imposed by the Founders and Framers are restored to full working order. I don't think I

need to explain what a beneficial difference that will make in the lives of all Americans.

Learn the whole, liberating truth about the income tax at losthorizons.com

THE HOME OF THE SCARY, BRACING AND LIBERATING TRUTH ABOUT OURMAGNIFICENT AMERICAN HERITAGE
http://losthorizons.com/index.htmlhttp://www.losthorizons.com/index.htmlhttp://losthorizons.com/index.html

As Long as Myths Persist

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