The Income Tax
The subject that affects the most people in this country, yet is probably understood by
the least, is the United States federal income tax. Have you ever come across the
saying that the only thing that's certain in life is death and taxes? I consider it
somewhat appalling that each year the government uses the media to disseminate tax
statistics in the form of the date that you stop working for the government. This is
called Tax Freedom Day. It's the day you start working for yourself and stop working to
pay your federal income tax. American Citizens, with the help of the government and
media, actually make a joke out of it. But consider for a moment the concept of the
citizen working for the government.
In 1994, Tax Freedom Day was July 8. That means that for over half the year,
Americans' earnings went to the government, or more accurately, to the Internal
Revenue Service. Is this the America envisioned by our Founding Fathers?
Ask yourself this simple, basic question. Why do you pay income and social security
taxes? Probably it is because somewhere, sometime, someone told you that you had
to, and you BELIEVED him or her. but is it truly your responsibility to pay these taxes?
Are these taxes mandatory; are they required of you? Do you KNOW this? In order to
properly answer these questions and address the subject of the income tax we have to
go back to the beginning of a system of taxation which evolved from a series of original
fabrications and lies perpetrated on the American people.
There are two basic types of taxation; indirect and direct. Indirect taxation involves a
tax you pay at the point of purchase or a tax you pay for engaging in certain types of
activities. Excises, tariffs, lawful levies, imposts, and duties are all examples of indirect
taxes. If you don't want to pay indirect tax, don't purchase the item/engage in the taxed
activity, and you can lawfully avoid the tax. Real simple.
Direct taxes, on the other hand, are taxes on ownership, that is, taxes imposed on that
which you already possess as your property. The Constitution is very clear on this
point; that there shall be no direct taxation without appo9rtionment among the several
states. This is one of the very few elements mentioned in the Constitution more than
"...direct Taxes shall be apportioned among the several States..."
U.S. Constitution, Article I, Section 2, Clause 3
"No Capitation, or
other direct Tax shall be laid, unless in proportion to the Census..."
U.S. Constitution, Article I, Section 9, Clause 4
"Any direct tax that is not apportioned is unlawful."
Commissioner v. Obear-Nester, 349 U.S. 948 (1954)
Apportionment guarantees that any direct tax, such as an emergency tax imposed
during time of war, is evenly distributed among the population. The way it works is like
this: let's say that the federal government wants to raise 500 million dollars to fund the
"war effort" and let's say that at the time California has ten percent of the population.
California receives a bill for 50 million dollars. Let's say that California has a population
of 25 million people. Everybody pays two dollars. That's apportionment. Level of
earnings is not relevant; everyone pays the same. Furthermore, any lawfully imposed
and apportioned direct taxes must be temporary and repealed within two years of
The 16th Amendment
In 1913, along with passage of the Corporation and Tax Act, the 16th Amendment to
the Constitution was implemented, apparently changing the rules relating to direct
taxation and apportionment.
"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."
16th Amendment, United States Constitution
The fact that there is overwhelming evidence that this amendment was not legally
ratified as required by the Constitution (see The Law That Never Was, by Red Beckman
and Bill Benson) becomes a moot point in light of U.S. Supreme Court rulings which
have determined that this amendment gave Congress no new powers, nor did it extend
their jurisdictional authority to include new classes of Citizens.
"(The Sixteenth Amendment)...does not extend the taxing power to new or excepted
subjects (i.e. state Citizens), but merely removes all occasion, which otherwise might
exist, for an apportionment among the states of taxes laid on income, whether it be
derived from one source or another."
Peck & Co. v. Lowe, 147 U.S. 165 (1918)
"Income is the gain come to fruition, from capital, from labor, or from both combined.
This is sound doctrine both in law and in economics...
...it becomes essential to distinguish between what is, and what is not 'income'...
Congress may not, by any definition it may adopt, conclude the matter, since it cannot
by legislation alter the Constitution, from which alone it derives its power to legislate,
and within whose limitations alone, that power can be lawfully exercised.
...this (16th) Amendment shall not be extended by loose construction, so as to repeal or
modify, except as applied income, those provisions of the Constitution that require an
apportionment according to population for direct taxes upon property, real and
personal. This limitation still has an appropriate and important function, and is not to be
overridden by Congress or disregarded by the courts."
Eisner v. Macomber, 252 U.S. 189 (1920)
"...the Sixteenth...does not justify the taxation of persons or things previously
immune...it does not extend taxing power to new or excepted subjects..."
Evans v. Gore, 235 U.S. 245 (1920)
"The Sixteenth Amendment authorizes the taxation of income 'from whatever source
derived' - thus taking in investment income - 'without apportionment among the several
States.'...So the Amendment made it possible to bring in investment income within the
scope of a general income tax law, but it did not change the character of the tax. It is
still fundamentally an excise or duty with respect to the privilege of carrying on a...(U.S.)
activity or owning any (U.S.) property which produces income. The income tax is,
therefore not a tax on income as such. It is an excise tax with respect to certain
activities and privileges which is measured by reference to the income which they
produce. The income is not the subject of the tax: it is the basis for determining the
Congressional Record, 78th Congress, Vol. 89, Part 2, pg 2580, March 27, 1943
I am now going to dissect the 16th Amendment, so that you can clearly understand why
it is essentially an illusion, a metaphorical ball of fluff, if you will. It begins with "The
Congress shall have power to lay and collect taxes on incomes..." Congress has
always had authority to collect taxes on incomes. The important question is, whose
incomes? You would probably agree that Congress has no authority to collect taxes on
incomes from Japanese citizens living in Tokyo, or French citizens living in Paris. In
other words, Congress' jurisdictional authority is limited. Over whom, precisely, does
Congress exercise its lawful jurisdiction? The answer - like most answers concerning
the federal government - may be found in the Constitution.
The Congress shall have power... To exercise exclusive legislation in all cases
whatsoever, over such district (not exceeding ten miles square) as may, by cession of
particular States, and the acceptance of Congress, become the seat of government of
the United States, and to exercise like authority over all places purchased by consent of
the legislature of the state in which the same shall be, for the erection of forts,
magazines, arsenals, dockyards, and other needful buildings.."
Article I, Section 8, clause 17, United States Constitution
In other words, Congress' lawful jurisdictional authority extends only to those who live
and work in federal territory! Nowhere was Congress granted authority to impose any
taxes on people living outside of the federal zone, including French citizens, Japanese
citizens, Kentucky Citizens, California Citizens, etc.
Let's continue to take apart the wording of the Sixteenth Amendment. "...from whatever
source derived..." Derived is a word taken from the French, meaning de rive or from
the stream. When a fish was captured on a hook, it was not "derived" until it had been
separated from the stream. In law, the word derived means to separate from the
source. For example, if you bought a painting for 500 dollars, then the painter
suddenly died, sending the value of your painting up to one million dollars in value, you
would derive no income from that painting until you sold it, at which point you would
have separated its value from the painting itself. It is only at this point that you would
have acquired any income whatsoever. When filing a return, the IRS would allow you to
deduct the cost of the painting before calculating your taxable income - or profit - from
the sale of the painting. This is what is meant by deriving income.
When you get paid for your labor, you are engaging in a zero sum transaction, that is,
there is no profit or gain because you have simply traded your labor for compensation.
No profit, no income. No income, no taxable income. It's that simple.
Let's continue, "...without apportionment among the several States, and without regard
to any census or enumeration." On the surface, this would appear to alter the
prohibition against direct taxation without apportionment, but as you can see from the
above court rulings, it does not. This is because the federal government never had to
apportion any taxes imposed upon its own (federal) citizens! Review the portion of the
Constitution shown above. Exclusive legislation means without any limitation. However,
it is obvious that Congress was never granted such exclusive legislative jurisdiction over
the Union states.
All these reasons, or any of them, mean that the Sixteenth Amendment has no bearing
on state Citizens. But that's not the end of the matter. The real reason that I call the
Sixteenth Amendment an illusion is because it lacks an enabling clause. If you read the
Thirteenth, Fourteenth, Fifteenth, Seventeenth, Eighteenth, and other Amendments to
the Constitution, you will find a clause that reads:
The Congress shall have power to enforce this article by appropriate legislation.
This is called an enabling clause.
Remember, if the Constitution does not specifically say that Congress can do
something, it cannot do that thing. The Sixteenth Amendment lacks a clause
authorizing Congress to enforce it with appropriate legislation, therefore Congress
cannot do so. This is why the Sixteenth Amendment is meaningless and has no power
With the trumped up Sixteenth Amendment in their hot little hands, on October 12, 1913
the 63rd Congress, in their very first session, passed the Corporation Tax Act of 1913.
Chapter 16, Section 2A, subdivision 1 reads as follows:
"That there should be levied, assessed and collected and paid annually upon the entire
net income arising and accruing from all sources in the preceding calendar year to
every citizen of the United States, whether residing at home or abroad, and to every
person residing in the United States, though not a citizen thereof, a tax of one percent
per annum upon such income."
As previously discussed, words which have common usage definitions are frequently
redefined for the purposes of specific statutes. The United States supreme Court
decided that the word "income" only pertains to profits, and that the tax law itself
defined the terms "United States" and "States" in Chapter 16, Section 2H:
"The word State or United States, when used in this section, shall be construed to
include any territory, Alaska, the District of Columbia, Puerto Rico and the Philippine
It is important that you understand that the meaning of construed - both in regular and
legal dictionaries - is "built up of"' and that includes means "to confine within." In other
words, if it is not included, it is excluded. Therefore, the definition of the United States,
for the purposes of the Corporation Tax Act of 1913, specifically excludes the 50 Union
Because this system of taxation was producing large amounts of money for the
politicians to use, greed inevitably set in and so they passed an act entitled "The Public
Salary Tax Act of 1939," which was codified in Title 4, Section 111 of the United States
Codes. It was headed, "An Act Relating to the Taxation of the Compensation of Public
Employees." Section 4 reads:
"The United States hereby consents to the taxation of compensation received after
December 31, 1938 for personal service as an officer or employee of the United States,
any territory or possession or political subdivision thereof, the District of Columbia, or
any agency or instrumentality of any one or more of the forgoing."
4 USC 111
It is very clear from this definition that it was never intended to include state Citizens
living in any of the Union states.
The coming of World War II gave rise to the last apportioned tax in American history.
Actually, it was not properly apportioned, as you will see. On October 21, 1942, public
law Chapter 619, Section 172 provided for a five (5%) percent income tax on all
Americans, regardless of citizenship (it is the graduated aspect of this tax which was
improper). This was called the Victory Tax of 1943 and everyone was happy to pay
something to support our boys in Berlin. imposition of this tax was easily accomplished
by adding Subchapter D to the existing Public Salary Tax Act of 1939. Section 450 said:
"There shall be levied, collected and paid for each taxable year beginning after
December 31, 1942, a victory Tax of five (5) percent upon the net income of every
As required by law, the victory Tax was a temporary tax and was to be repealed as soon
as practicable and absolutely after the cessation of hostilities in the war. it is interesting
to note that this tax was specifically imposed on net income, not gross income. Section
466 of the Victory Tax Act provided for withholding from private sector wages during the
year. This was the beginning of today's voluntary system of taxation that so many
Americans are naive enough to follow (see 26 USC 3402 (p)).
One of the best kept secrets of our time is the fact that the Victory Tax Act was
repealed on May 29, 1944, by the 78th Congress, at which time individual Citizens of
the several Union states were removed from federal taxing jurisdiction and returned to
state jurisdiction. The Victory Tax had served its purpose in helping to finance World
The war was over and despite its cost, the country's coffers were stuffed to
overflowing. However, the temptation to perpetuate the hoax and steal more money
from the American people became too much for the politicians to bear. They quietly
re-titled the Public Salary Tax Act of 1939, giving it a new name which did not quite so
readily reveal the true nature of the tax it imposed. They dubbed it the Internal
Revenue Code of 1939, the word Internal referring to the internal part of the federal
government, or government employees. Since they did not bother to announce to the
American public that the temporary system of taxation had been repealed, the hoax just
kept rolling along, like a snowball down a mountain, gathering size and momentum with
every revolution. The people did not complain, because they were used to having the
federal government withhold from their earnings.
"...and accordingly all experience hath shown, that mankind are more disposed to
suffer, while evils are sufferable, than to right themselves by abolishing the forms to
which they are accustomed."
Declaration of Independence, 1776
Our Founding Fathers were wise and insightful, don't you think?
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