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ATTACHMENT #1 POINT ONE
THE TAXING CLAUSES OF THE
CONSTITUTION PROHIBIT THE FEDERAL GOVERNMENT
Article 1, Section 8, Clause 1: The Congress shall have the power to lay and collect Taxes, Duties, Imposts and Excises…but all Duties, Imposts and Excises shall be uniform throughout the United States. Article 1, Section 9, Clause 4 and 5: No Capitation, or other direct, Tax shall be laid, unless in Proportion to the Census or Enumeration herein before directed to be taken….No Tax or Duty shall be laid on Articles exported from any State.” Sixteenth Amendment: The Congress shall have the 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.
POINT TWO
THE EXECUTIVE BRANCH’S
POSITION THAT WAGES AND SALARIES EQUALS “INCOME”
It is common knowledge that Congress cannot define the word “income.” Only the Supreme Court can interpret the Constitution. It is common knowledge that the Supreme Court has, in fact, defined the legal term “income.” The high Court’s repeated and consistent definition of “income” is the gain or profit derived from labor, or capital, or both. It is common knowledge that the Court has further determined that there are different sources of taxable “income” within the meaning of the taxing clauses of the Constitution. For instance, the Court has determined that a corporation may derive “income” from labor, as that corporation utilizes labor in pursuit of profits, and that such corporate income is taxable. The Supreme Court has also determined that a person or a corporation may derive “income” from investments in stocks and bonds or real estate, and that such (passive) income is taxable. However, there is absolutely no foundation to the position of the Executive branch (the Treasury Department, the IRS and the Department of Justice) that the Supreme Court has determined that wages and salaries EQUALS taxable “income” within the meaning of the 16th Amendment. While the Court has determined that corporate income derived from labor is taxable within the meaning of the 16th Amendment, the Court has never held that an individual’s (stand alone) wages, received in direct exchange for his labor, equals income and is, therefore, taxable under the Sixteenth Amendment. In fact, not a bit, not a whit, of American history recorded at the time of the adoption of the taxing clauses of the Constitution, including the 16th Amendment, offers a scintilla of evidence in support of the Executive’s position that the government has the authority to force people to work for -- to be employed by -- the government. There is no evidence to support the Executive’s position that the government has the authority to force People who work for a living to turn over to the IRS an amount of their wages, much less the authority to force companies to withhold and turn over to the IRS any amount of a worker’s wage. The Executive cannot cite a Supreme Court ruling that supports its position. There is no evidence upon which the government can rely for its claim that the American People desired to clothe the government with the power to tax their wages and salaries. In the years leading up to the purported ratification of the 16th Amendment, no evidence can be found in the law journals of the time, or in the journals on political economy or economics, nor in the Congressional Record, nor in any of the newspapers of record at the time, in support of the Executive’s claim.Nowhere, in the recorded documents of the time did anyone come close to suggesting that with the passage of the 16th Amendment, wages and salaries would be taxed by a direct tax without apportionment.2
On the contrary, all recorded
American History before and after the adoption of the taxing clauses of the
Constitution, including the 16th Amendment, supports the position
of the People that the Executive Branch has always been and remains
prohibited by the Constitution from doing what it is currently doing –
that is, forcing wage earners to turn over to the IRS a percentage of their
wages, and forcing companies to withhold and turn over to the IRS a
percentage of their workers’ wages.3 In a country where government derives its just power from the consent of the People, government cannot legitimately seize power from the People. This is true, no matter how long the People may delay in challenging the government’s exercise of that power.
Footnotes:
POINT THREE ANY
ARGUMENT BY EXECUTIVE BRANCH THAT THE PEOPLE HAVE THE AUTHORITY There are limits to the authority and power the people can grant to their government.4 “Governments are instituted among Men, deriving their JUST powers from the consent of the governed.”5 Governments cannot assume nor derive from the people powers that are UNJUST. The People, as a collective of individuals, cannot grant power to the government that they themselves do not inherently possess as free individuals. One such limit, as determined by the United States Supreme Court, is the forceful taking of the fruits of another man’s labor:
“That every man has a natural right to the
fruits of his own labour, is generally admitted; and that no other person
can rightfully deprive him of those fruits, and appropriate them against his
will, seems to be the necessary result of this admission.” The inescapable conclusion from the Supreme Court’s ruling in ANTELOPE follows: Individual people lack the authority to seize the fruits of another person’s labor against his will. Therefore, no lawful mechanism can ever exist to permit people to clothe their government with that authority – an authority they themselves do not possess in the first place. Ours is a government of, by and for the People. Government has no source of authority apart from the People. Therefore, the government does not possess, and indeed can never possess, the authority or just power to compel or appropriate the fruits of a citizen’s labor against the will of that person. To do otherwise, particularly while failing to respond to the abolitionists – the People who are crying out with questions against such behavior by those wielding governmental power, is the equivalent of placing the People into a condition of involuntary servitude. Footnotes:
THE EXECUTIVE BRANCH’S
POSITION THAT WAGES AND SALARIES ARE TAXABLE “INCOME”
This is an essential principle that is
implicit under our Constitution and EXPLICIT in biblical law – "Because the law worketh wrath: for where no law is, there is no transgression." See Romans 4:15. Unless and until we abandon the fundamental principle of popular sovereignty and unless and until the Constitution is further amended to give Congress the power to pass a law that authorizes the Executive Branch to force all wage earners to turn over to the IRS a percentage of their wages, and force all companies to withhold and turn over to the IRS a percentage of their workers’ wages, any such law, if one existed, would be unconstitutional on its face. In fact, notwithstanding the assertions, intimidation and brutality of the IRS and the DOJ, and the complicity of the lesser courts, Congress has yet to pass such a law.6 If Congress had passed such a law it would be unconstitutional ON ITS FACE. While Congress may impose a tax on corporations that profit or gain income that is derived from the labor of individuals, Congress is prohibited from imposing an un-apportioned direct tax on an ordinary American’s wages or salary.
Today, under
the circumstances the People find themselves in, any reasonable person would
conclude the Internal Revenue Code is unconstitutional as applied and
enforced, if not on its face.
POINT FIVE
WHOLLY WITHOUT
FOUNDATION IS THE JUDICIAL BRANCH’S POSITION Every defendant in a civil or criminal trial is allowed to defend himself and to offer evidence in support of his legal arguments, unless there is absolutely no merit to his argument in law or in fact, AND no reasonable argument can be made for an extension of the law AND the defendant’s intent is merely to delay or harass. Today, in America, thousands of workers and company officials are comprehending the Constitution and the statutes and coming to the conclusion that the government does not have the authority to do what it is doing – that is, forcing ordinary American workers to file an “income” tax return and pay an “income” tax on their wages and salaries and forcing companies to withhold and turn over to the IRS a percentage of the workers’ wages. For decades, especially since the end of World War II, thousands of wage earning Americans and company officials have written their elected representatives and to the IRS, requesting answers to their legitimate questions relating to what the People argue is the illegal enforcement and operation of the income tax system. The People have never received responsive answers to their legitimate questions. Many then act on their good faith beliefs by stopping their practice of voluntarily withholding and voluntarily filing and paying a tax based on a percentage of wages. In response, the IRS and the DOJ have now publicly announced that the policy of the Executive Branch is to respond with enforcement actions to the People’s Petitions for Redress of Grievances regarding the legality of the operation of the income tax system. By enforcement actions, the IRS and the DOJ mean preventing those who have acted on their convictions from presenting exculpatory information to the grand jury, getting judges to direct guilty verdicts, severely restricting the defendant’s ability to defend himself and to otherwise fail to uphold traditional judicial doctrines and Supreme Court rulings. The current case of Texas small businessman Richard Simkanin and the recent 9th circuit case involving Idaho citizen Phil Hart are the latest examples of what the government means by “enforcement actions” in cases involving those who question the legality of the operation of the income tax system.
Simkanin’s legal defense was his
theory, his proposition, his good-faith belief that neither the taxing
clauses of the Constitution, nor the statutes authorized the government to
force his company's wage earners to pay to the government a percentage of
their wages and salaries AND neither the taxing clauses of the Constitution,
nor the statutes authorized the government to force him to withhold and
turnover to the IRS a percentage of his workers wages and salaries.
Judge McBryde directed a guilty
verdict. First, when the jury asked him for the law that Simkanin violated
McBryde responded by paraphrasing a mere penalty statute ( 26 USC Section
7202) -- a statute to be applied to someone if that person breaks a law or
commits a crime. McBryde did not properly respond to the jury by citing a
law that Simkanin had violated. He did not answer the jury’s question. Simkanin’s defense rested on his good faith, exhaustive effort to find what the internal revenue laws required of him as an individual tax payer and as the owner of a company. Yet, during his trial he was not allowed to discuss the results of his multi-year investigation. The law he is alleged to have violated by allowing his workers to receive all of their earning and by ending his habit of filing a personal tax return does not appear anywhere on his indictment, or in the entire record of his trial, or in the instructions to the jury. Not even the jury, when they asked to see it, was allowed to see the law. In effect, McBryde denied Simkanin the ability to defend himself. The law was the controversy before the court. The law was Simkanin’s defense. The law purportedly requiring Simkanin’s company to withhold was NEVER identified either in the indictment or during the trial. Later, when, on its own, the jury asked to see the law, the Judge said, in effect, “Trust me, its there, you don’t need to concern yourself with that fact.”
QUESTIONS REGARDING THE MEANING OF “INCOME”
1. Admit or deny that the “gross income” mentioned in Section 6012 of the Internal Revenue Code is the “gross income” as set forth at Section 61(a) of the Internal Revenue Code. 2. Admit or deny that Section 61(a) of the Internal Revenue Code defines “gross income” as “all income” from whatever source derived, but does not define “income.” 3. Admit or deny that in Eisner v. Macomber, 252 U.S. 189, 206 (1920), the United States Supreme Court held that Congress cannot by any definition it may adopt conclude what “income” is, 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. 4. Admit or deny that the definition of income as it appears in Section 61(a) is based upon the 16th Amendment and that the word is used in its constitutional sense. 5. Admit or deny that the United States Supreme Court has defined the term “income” for purposes of all income tax legislation as: The gain derived from capital, from labor or from both combined, provided it include profit gained through a sale or conversion of capital assets. 6. Admit or deny that the United States Supreme Court defined "income" to mean the following: “…Whatever difficulty there may be about a precise scientific definition of ‘income,’ it imports, as used here, something entirely distinct from principal or capital either as a subject of taxation or as a measure of the tax; conveying rather the idea of gain or increase arising from corporate activities.” “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, but an excise tax upon the conduct of business in a corporate capacity, measuring, however, the amount of tax by the income of the corporation…” Flint v. Stone Tracy Co., 220 U.S. 107, 55 L.Ed. 389, 31 Sup.Ct.Rep. 342, Ann. Cas.” 7. Admit or deny that in the absence of gain, there is no “income.” 8. Admit or deny that there is a difference between gross receipts and gross income. 9. Admit or deny that the United States Supreme Court recognizes that one’s labor constitutes property. 10. Admit or deny that the United States Supreme Court stated in Butchers’ Union Co. v. Crescent City Co., 111 U.S. 746, 757 (concurring opinion of Justice Fields) (1883), that: “It has been well said that, ‘The property which every man has in his own labor, as it is the original foundation of all other property, so it is the most sacred and inviolable.’” 11. Admit or deny that the United States Supreme Court recognizes that contracts of employment constitute property.
12. Admit or deny
that the United States Supreme Court stated in Coppage v. Kansas, “The principle is fundamental and vital. Included in the right of personal liberty and the right of private property--partaking of the nature of each--is the right to make contracts for the acquisition of property. Chief among such contracts is that of personal employment, by which labor and other services are exchanged for money or other forms of property.” 13. Admit or deny that the United States Supreme Court recognizes that a contract for labor is a contract for the sale of property. 14. Admit or deny that the United States Supreme Court has stated in Adair v. United States, 208 U.S. 161, 172 (1908) that: “In our opinion that section, in the particular mentioned, is an invasion of the personal liberty, as well as of the right of property, guaranteed by that Amendment (5th Amendment). Such liberty and right embraces the right to make contracts for the purchase of the labor of others and equally the right to make contracts for the sale of one’s own labor.” 15. Admit or deny that the leading authority on the terms "direct" and "indirect" taxation at the time of the ratification of the Constitution and at the time of the debates of the Sixteenth Amendment was Adam Smith, author of Wealth of Nations. In the 1909 congressional debates over the Sixteenth Amendment, Adam Smith was quoted far more than any other authority and was always quoted with approval. Adam Smith was quoted 18 times, Albert Gallatin four times and Jacques Turgot, three times. There were numerous other political economists quoted, but these three dominated the debate. Just as Adam Smith greatly influenced the framers of the Constitution, he was also the respected and undisputed authority on taxation among those members of Congress who debated the Sixteenth Amendment. "There is every reason to believe that the framers of the Constitution followed the usage of Adam Smith, who eleven years before the convention met had refuted the Physiocratic doctrine as to the incidence of taxes. Albert Gallatin, writing in 1796, stated emphatically his belief that the distinction in the minds of the framers of the Constitution was that of Adam Smith. Gallatin was born and bred a Frenchman, and would have been as likely as any American of the time to accept the Physiocratic view; and in the absence of any evidence to the contrary the testimony of such an authority as Gallatin should be considered conclusive in any question of finance." Max West, The Income Tax and National Revenues, 8 The Journal of Political Economy 433, 435 (1900). "If the term 'direct taxes' had been used for the first time in the Constitution, and we could not, therefore, trace its source, much might be left to doubt and to surmise. A large majority of the Constitutional Convention were scholars, 35 of its members were college graduates, and the eight leaders of the great debate were all college men. Were they likely to use terms they did not understand? Had they never seen the term direct tax before; and, if so, where? In the books that were in every man's hand. Many had studied Turgot in the original or in translations of particular passages, and they knew his clear definition of 'Les impôts directs.' Turgot today is still the great work put in the hands of French students of the science of finance and government. Every member of that Convention was familiar with the handbook of statesmen of that age - Adam Smith's Wealth of Nations... Macaulay tells us that Pitt studied only one work on political economy, which guided him through his whole brilliant career in the financial administration of the British Empire, and that was Smith's Wealth of Nations. If we had only these two works, known to almost every educated man in those days, could we refuse to follow their definitions and explanations in the absence of any other evidence?" Opening argument of Appellant at 7-8, Pollock v. Farmers' Loan and Trust Co., 158 U.S. 601 (1895). "Mr. CUMMINS. I had referred to the fact that at the time of the Constitutional Convention, so far as I can now recall, this term had been mentioned by but two economic writers - one, Adam Smith, in the Wealth of Nations, and the other a French writer by the name of Turgot. Their general idea was that a direct tax was a tax upon property or [gross] revenue and an indirect tax was a tax upon consumption or expense." 44 Cong. Rec. 3972(1909). 16. Admit or deny that taxes on wages and salaries when paid by the recipient are Capitation Taxes, a species of direct taxes. When these writers, Smith and Turgot, used the word "revenue" it was gross revenue to which they were referring. In the Supreme Court's Decision for the Hylton Case, 3 U.S. (3 Dall.) 171 (1796), the following quote from Adam Smith's Wealth of Nations was used authoritatively: "The impossibility of taxing people in proportion to their revenue, by any capitation, seems to have given occasion to the invention of taxes upon consumable commodities; the State, not knowing how to tax directly and proportionally the revenue of its subjects, endeavors to tax it indirectly by taxing their expense, which it is supposed, in most cases, will be nearly in proportion to their revenue. Their expense is taxed by taxing the consumable commodities upon which it is laid out." Adam Smith, Wealth of Nations, Book V, 541 (Prometheus Books, Amherst, New York, 1991) (1776). If we back up two paragraphs from the paragraph of Adam Smith's Wealth of Nations quoted authoritatively by the Supreme Court in the Hylton Case, we read: "Capitation taxes, so far as they are levied upon the lower ranks of people, are direct taxes upon the wages of labour, and are attended with all the inconveniences of such taxes." id. at 540. In Book V of Adam Smith's Wealth of Nations, Smith has a four-page section entitled, "Taxes upon the Wages of Labour." Five times in this section Smith states that a tax on wages is a direct tax. And as we saw above, Smith says it is a species of a capitation tax. id. at 534-38. Turgot agreed. In Turgot's work, Plan d'un mémoire sur les impositions, 1764, he wrote: "The tax which the proprietor pays immediately on his revenue is called direct tax. The tax which is not assessed directly on the revenue of the proprietor, but which falls on the cost of production of the revenue, or on the expenditure of the revenue, is called indirect tax." Teachings of Political Economists defining Direct and Indirect Taxes, at 3, by Max West, Pollock v. Farmers' Loan and Trust Co., 157 U.S. 629 (1894). Gallatin agreed too. Albert Gallatin, in his Sketch of the Finances of the United States, wrote: "The most generally received opinion, however, is, that by direct taxes in the Constitution, those are meant which are raised on the capital or revenue of the people; by indirect, such as are raised on their expense. “The taxes which it is intended should fall indifferently upon every different species of revenue are capitation taxes...These must be paid indifferently from whatever revenue the contributors may posses." Rehearing Brief of Appellant at 112, Pollock v. Farmers'Loan and Trust Co., 158 U.S. 601 (1895). 17. Admit or deny that labor is property. In the case of Butchers' Union Co. v. Crescent City Co., 111 U.S. 746 (1883), Supreme Court Justice Field wrote in his concurring opinion at page 757: "It has been well said that, 'The property which every man has in his own labor, as it is the original foundation of all other property, so it is the most sacred and inviolable.'" 18. Admit or deny that a tax on property is a direct tax. To speak of a poll tax (or other direct tax on a natural person) as a tax on property requires resort to the legal theory that a freeman is owner of himself and his labor force in a sense analogous to a master's ownership of his slave." Prof. Isaac A. Loos, Allen Ripley Foote, The Division Between State and Local Taxation, State and Local Taxation, Second International Conference, International Tax Association, 203, 206 (1909). "Direct taxes are those that are levied 'upon the very person who it is supposed as a general thing will bear their burden.' The general property, the income tax, the poll tax, may be classed as direct taxes for the reason that when a person pays one of these taxes, he is likely to bear the burden himself and is not likely to shift it to another." Israel Freeman, Constitutionality of Federal Corporation Tax Law, 72 Central Law Journal 59 (1911). 19. Admit or deny that the executive branch of government must follow the intent of the legislative branch which must itself conform to the intent of the Constitution. "One of the most readily available extrinsic aids to the interpretation of statutes is the action of the legislature on amendments which are proposed to be made during the course of consideration in the legislature. Both the state and federal courts will refer to proposed changes in a bill in order to interpret the statute as finally enacted. The journals of the legislature are the usual source for this information. Generally the rejection of an amendment indicates that the legislature does not intend the bill to include the provisions embodied in the rejected amendment." Sutherland on Statutory Construction, sec. 48.18 (5th Edition). "It is plain, then, that Congress had this question presented to its attention in a most precise form. It had the issue clearly drawn. The first alternative was rejected. All difficulties of construction vanish if we are willing to give to the words, deliberately adopted, their natural meaning." U.S. v. Pfitsch, 256 U.S. 547, 552 (1921). 20. Admit or deny that the Senate considered and rejected including un-apportioned direct taxation within the authority of the Sixteenth Amendment. The evidence that direct taxes are without the authority of the Sixteenth Amendment is overwhelmingly compelling. The Senate voted on the Sixteenth Amendment (S.J.R. #40) at 1 o'clock on July 5, 1909. Senator Aldrich had earlier tried to ram it through the Senate on Saturday, July 3rd, a holiday weekend, for an immediate vote without debate when only 52 senators were present. A few senators protested and the vote was set for the following Monday. During the debate on July 3rd, several amendments were proposed to S.J.R. #40 that came up for a vote at the appointed hour of 1 PM Monday, July 5, 1909. There also was an amendment by Senator McLaurin of Mississippi. After a long discussion by him about direct taxes, Senator McLaurin proposed this amendment to S.J.R. #40 as follows: "The SECRETARY. Amend the joint resolution by striking out all after line 7 and inserting the following: The words 'and direct taxes' in clause 3, section 2, Article I, and the words 'or other direct,' in clause 4, section 9, Article I. of the Constitution of the United States are hereby stricken out." 44 Cong. Rec. 4109 (1909). The Senate rejected this, as this amendment failed by voice vote. Had it passed, it would have provided authority for a species of income tax that was inherently a direct tax to be levied without apportionment. Lastly there was an amendment by Senator Bristow of Kansas to replace S.J.R. #40 with S.J.R. #39. S.J.R. #39 read: "The Congress shall have the power to lay and collect direct taxes on incomes without apportionment among the several States according to population." id. At 4120-1. This substitute amendment also included a provision to elect senators by popular vote. After some debate this was also rejected by voice vote. The election of Senators by popular vote was soon thereafter approved by the 17th Amendment. Therefore this instant amendment failed because of the direct tax provision. 21. Admit or deny that in the Brushaber Case, 240 U.S. 1 (1916), both Brushaber and the government argued that the Sixteenth Amendment provided for an exception to the apportionment rule such that a direct tax could be collected without apportionment. This issue was presented squarely to the Supreme Court in the following cases: Brushaber v. Union Pacific R.R. Co., 240 U.S. 1 (1916); Tyee Realty Co. v. Anderson, 240 U.S. 115 (1916); Thorne v. Anderson, October term 1915, No.394 (24,613); Dodge v. Osborn, 240 U.S. 118 (1916); and Stanton v. Baltic Mining Co., 240 U.S. 103 (1916). Mr. Brushaber, Tyee Realty Co. and Mr. Thorne all had the same attorney, a Mr. Julian Davies from New York City of the law firm Davies, Tolles, Glenn and Schurick. Mr. Davies asserted in his brief in each of these cases as follows: "The effect of the Sixteenth Amendment was merely to waive the requirement of apportionment among the States, in its application to a general and uniform tax upon incomes from whatever source derived... “The evident purpose of this amendment was not to abandon the former policy of safeguarding the several sections of the Union against disproportionate taxation, but merely to substitute an apportionment according to incomes 'from whatever source derived,' in lieu of a per capita apportionment." Br.for appellant at 9-11, Brushaber v. Union Pacific R.R. Co., 240 U.S. 1 (1916). In other words, according to Brushaber, the income tax was still a direct tax. Only the criteria for apportionment changed. Apportionment was now alleged to be based on incomes instead of the per capita apportionment originally required by the Constitution. In its amicus curae brief, the government argued a similar position: "(b) Apportionment being restricted to direct taxes only (Flint v. Stone Tracy Co., supra 152), the Sixteenth Amendment, in removing that restriction, recognized any tax upon income 'from whatever source derived' as a direct tax, and as such subject to the apportionment rule unless specially exempted." Br. for the United States at 11-12, Brushaber v. Union Pac. R.R. Co., supra. 22. Admit or deny that the Supreme Court rejected arguments that the Sixteenth Amendment provided authority for an un-apportioned direct tax within the several States. The Supreme Court stated in its opinion in the Brushaber Case: "[t]he contention that the Amendment treats a tax on income as a direct tax, although it is relieved from apportionment and is necessarily therefore not subject to the rule of uniformity as such rule only applies to taxes which are not direct, thus destroying the two great classifications which have been recognized and enforced from the beginning, is also wholly without foundation..." Brushaber v. Union Pac. R.R. Co., supra at 18. Buttressing the conclusion that the Sixteenth Amendment does not provide authority for an un-apportioned direct tax on the labor of an American Citizen living and working in the several States, we go to Harvard Law Review's commentary on the Brushaber Case: "In Brushaber v. Union Pac. R.R. Co., Mr. Chief Justice White, upholding the income tax imposed by the Tariff Act of 1913, construed the Amendment as a declaration that an income tax is 'indirect,' rather than as making an exception to the rule that direct taxes must be apportioned." The Income Tax and the Sixteenth Amendment, 29 Harvard Law Review 536 (1915-6). Cornell Law Quarterly simplifies what this Court said in Brushaber: "The contention of the appellant was as follows: (1) The Sixteenth Amendment provided for a new kind of a direct tax, a tax on incomes from whatever source derived. The court, through Chief Justice White, held that the tax [in Brushaber] was constitutional. The major proposition of the appellant's argument is not true. Hence, the conclusion does not follow. The sixteenth amendment [sic] does not permit a direct tax, (in fact as it will later be shown, the court does not think that the amendment treated the tax as a direct tax at all), carrying with it the distinguishing characteristic of a hitherto unrecognized uniformity. The amendment, the court said, judged by the purpose for which it was passed, does not treat income taxes as direct taxes but simply removed the ground which led to their being considered as such in the Pollock case, namely, the source of the income. Therefore, they are again to be classified in the class of indirect taxes to which they by nature belong." Ramon Siaca, The Federal Income Tax Law of 1913: Construction of the Sixteenth Amendment, 1 Cornell Law Quarterly 298, 299 and 301 (1916). Said another way, the theory upon which the Pollock Case was decided was overturned by the Sixteenth Amendment. See also Constitutional Law: Income Tax: Sixteenth Amendment, 4 California Law Review 333, 335-6 (1915-6), and Washington Notes, The Income Tax Decision, 24 The Journal of Political Economy 299, 300 (1916). In 1916, the New York Times wrote of the Brushaber Case: "The basic error of those who attacked the constitutionality of the tax, Chief Justice White holds... was in regarding the Sixteenth Amendment as empowering the United States to levy a direct tax without apportionment among the States according to population. In substance, the court holds that the Sixteenth Amendment did not empower the Federal Government to levy a new tax... We are of the opinion, however, that the confusion is not inherent, but rather arises from the conclusion that the Sixteenth Amendment provides for a hitherto unknown power of taxation: that is, a power to levy an income tax which, although direct should not be subject to the regulation of apportionment applicable to all other direct taxes." Income Tax Upheld In Broad Decision, N.Y. Times, p. 5, January 25, 1916. "The Supreme Court has held that the sixteenth amendment did not extend the taxing power of the United States to new or excepted subjects but merely removed the necessity which might otherwise exist for an apportionment among the States of taxes laid on income whether it be derived from one source or another. So the amendment made it possible to bring investment income within the scope of a general income-tax law, but did not change the character of the tax. It is still fundamentally an excise or duty with respect to the privilege of carrying on any activity or owning any 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 amount of tax." Congressional Record – House, March 27, 1943,page 2580.
23. Admit or deny that there is no
evidence that can be found anywhere upon which the government can rely in
claiming that Congress intended to use the Sixteenth Amendment An exhaustive review of the Congressional Record during the time of the debates on the Sixteenth Amendment reveals no credible evidence that the members of Congress were contemplating a direct tax on the wages and salaries of the American People. An exhaustive review of other congressional documents during the ratification process yields no evidence that Congress contemplated using the Sixteenth Amendment as a vehicle to place an un-apportioned direct tax on the wages and salaries of the American People. An exhaustive review of law journal articles of the time produced no articles that indicated Congress or the American People were contemplating a non-apportioned direct tax on the wages and salaries of the American People. No evidence was found in the journals on political economy and economics. Nor was any such evidence discovered in an exhaustive search of New York Times articles, which are all cataloged in yearbooks as the New York Times is a newspaper of record. As there is no evidence that can be found anywhere indicating that the American People sought to place an un-apportioned direct tax on their wages and salaries, we can conclude that the American People never consented to the very tax that the Commissioner is attempting to collect in the instant case. The entire weight of the evidence as to the purpose of the Sixteenth Amendment indicates that its objective was to place income taxes on net income from unincorporated business and investment into the classification of indirect taxes. Pollock was overturned by the Sixteenth Amendment. No more and no less. The purpose of the Sixteenth Amendment was to shift the tax burden off of consumption and onto incomes from the accumulated wealth of the country such as to bring tax relief to wage earners. 24. Admit or deny that the purpose of the Sixteenth Amendment was to bring tax relief to wage earners. As there is no evidence that can be found anywhere indicating that the American People sought to place an un-apportioned direct tax on their wages and salaries, we can conclude that the American People never consented to the very tax that the Commissioner is attempting to collect in the instant case. The entire weight of the evidence as to the purpose of the Sixteenth Amendment indicates that its objective was to place income taxes on net income from unincorporated business and investment into the classification of indirect taxes. Pollock was overturned by the Sixteenth Amendment. No more and no less. The purpose of the Sixteenth Amendment was to shift the tax burden off of consumption and onto incomes from the accumulated wealth of the country such as to bring tax relief to wage earners. 25. Admit or deny that the 16th Amendment created no new classification of taxes under the Constitution, and we are therefore still left only with direct and indirect taxes. 26. Admit or deny that the 16th Amendment provides taxation authority only for income taxes that are inherently indirect and that such taxes must be levied according to the constitutional rule of uniformity. 27. Admit or deny that the 16th Amendment does not provide an exception to the constitutional rule of apportionment for direct taxes. 28. Admit or deny that any tax on wages and salaries is inherently a direct tax outside the scope of the 16th Amendment, and therefore, EVEN IF wages & salaries were constitutionally valid subjects for direct taxation, that a tax upon such subjects would be required to be apportioned among the several States according to population. 29. Admit or deny that taxes on wages and salaries are direct taxes and must be apportioned among the several States. 30. Admit or deny that the current tax on the wages of ordinary Americans is an un-apportioned direct tax. 31. Admit or deny that the Supreme Court, in Brushaber v Union Pac. R.R. Co., 240 U.S. 1 (1916), rejected the idea that the 16th Amendment granted to government the power to impose an un-apportioned direct tax, such as the current tax on wages. 32. Admit or deny that the Supreme Court, in Brushaber v Union Pac. R.R. Co., 240 U.S. 1 (1916), ruled that any contention that the 16th Amendment treats a tax on income as a direct tax is wholly without foundation. 33. Admit or deny that generically an income tax has been classed as an excise by the Supreme Court in Brushaber v Union Pac. R.R. Co., 240 U.S. 1 (1916). 34. Admit or deny that the Supreme Court, in Stanton v. Baltic Mining Co., 240 U.S. 103 (1916), ruled that 16th Amendment did not confer a new power of taxation, as would be a power to impose an un-apportioned direct tax on the wages of ordinary Americans, it merely prohibited the complete and plenary power to tax income derived from labor or capital from being taken out of the category of un-apportioned indirect taxation to which it inherently belonged. 35. Admit or deny that an income tax on the severable net income from business or accumulated wealth is an indirect tax and a tax on the earned income from wages and salaries is a direct tax, and that the government is wholly without power to collect the latter from ordinary American citizens without apportionment. 36. Admit or deny that the Senate, in voting on the 16th Amendment resolution, unambiguously expressed the intent of Congress to reject the idea of an un-apportioned direct tax on wages by repeatedly rejecting the opportunity to bring direct taxes within the scope of the 16th Amendment, and that it is well settled by the Supreme Court that if Congress has directly spoken to the precise question at issue, the intent of Congress is clear and that ends the matter. 37. Admit or deny that one more than one half of the federal Appeals courts have ruled that the current tax on wages of ordinary Americans is an un-apportioned direct tax while the remaining Appeals courts have ruled the same tax to be an un-apportioned indirect tax. 38. Admit or deny that the income tax of the 16th Amendment is a tax that diminishes the income that flows from the source, leaving the source of the income undiminished.
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