Code of Silence: Time for the IRS to Answer The Question!

The 16th Amendment says that "Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States..." Sounds pretty clear to me.

Yes that's the way it appears doesn't it? That is exactly what the gubbermint needs you to believe. That is why you need to go into the historical contruction and USSC decisions to see what it really is.

Here goes from my letter to Congressman Pat Tiberi:

Almost everyone including yourself, whether intentionally by malice or by tradition and ignorance, believes that the apportionment provision has been nullified and as you correctly wrote it was the "intent" of lawmakers to use the 16^th Amendment to avoid "census" and "enumeration" or make it easier to tax. Regardless of the position about so-called ratification of the 16^th Amendment, as to whether it is or is not makes no difference to me. The Brushaber decision, although not very clear in one sentence that is over 200 words, was very clear in others as to what the 16^th Amendment could not do.

There is great clarity in the following quotes from the Brushaber decision:

"[…] the Amendment (16^th) contains nothing repudiating or challenging the ruling in the Pollock case […] But it clearly results that the proposition and the contentions under it, if acceded to, would cause one provision of the Constitution to destroy another; that is, they would result in bringing the provisions of the Amendment exempting a direct tax from apportionment into irreconcilable conflict with the general requirement that all direct taxes be apportioned. Moreover, the tax authorized by the Amendment, being direct, would not come under the rule of uniformity applicable under the Constitution to other than direct taxes, and thus it would come to pass that the result of the Amendment would be to authorize a particular direct tax not subject either to apportionment or to the rule of geographical uniformity, thus giving power to impose a different tax in one state or states than was levied in another state or states. This result, instead of simplifying the situation and making clear the limitations on the taxing power, which obviously the Amendment must have been intended to accomplish, would create radical and destructive changes in our constitutional system and multiply confusion. […] In fact, the two great subdivisions embracing the complete and perfect delegation of the power to tax and the two correlated limitations as to such power were thus aptly stated by Mr. Chief Justice Fuller in Pollock v. Farmers' Loan & T. Co. 157 U. S. supra, at page 557: 'In the matter of taxation, the Constitution recognizes the two great classes of direct and indirect taxes, and lays down two rules by which their imposition must be governed, namely: The rule of apportionment as to direct taxes, and the rule of uniformity as to duties, imposts, and excises.’ It is to be observed, however, as long ago pointed out in Veazie Bank v. Fenno, 8 Wall. 533, 541, 19 L. ed. 482, 485, that the requirements of apportionment as to one of the great classes and of uniformity as to the other class were not so much a limitation upon the complete and all-embracing authority to tax, but in their essence were simply regulations concerning the mode in which the plenary power was to be exerted. In the whole history of the government down to the time of the adoption of the 16th Amendment, leaving aside some conjectures expressed of the possibility of a tax lying intermediate between the two great classes and embraced by neither, no question has been anywhere made as to the correctness of these propositions. […] (emphasis added)

It seems here that the court tip its’ hat far and long, by what has been quoted above, to the apportionment and uniformity provisions of our Constitutions and now somehow it is turned around again and 1 + 1 = 2 is being used in our laws. How is it, that in the face of the language quoted above and the Pollock decision that has never been reversed, we have out present arbitrary, oppressive and lawlessly (often times with criminal intent) applied and administered tax system? There is more from Brushaber and history of the 16^th Amendment.

Which makes me think did I find a serious error in your letter to me? The letter said in the fifth paragraph, "Indeed, the Amendment was drafted in order to make legal a direct tax on the incomes of individuals." Indeed, Senator Brown of Nebraska second draft on June 17, 1909 submitted the following updated joint resolution for a constitutional amendment:

"That Congress shall have power to lay and collect direct taxes on incomes without apportionment among the several States according to population." (emphasis added)

On June 28, 1909 Senator Aldrich proposed what we now have today as the 16^th Amendment. The word "direct" is missing. For a very good reason, therefore, the following from Brushaber defines "income" under the class of indirect and as an excise:

"This must be unless it can be said that although the Constitution, as a result of the Amendment, in express terms excludes the criterion of source of income, that criterion yet remains for the purpose of destroying the classifications of the Constitution by taking an excise out of the class to which it belongs and transferring it to a class in which it cannot be placed consistently with the requirements of the Constitution. Indeed, from another point of view, the Amendment demonstrates that no such purpose was intended, and on the contrary shows that it was drawn with the object of maintaining the limitations of the Constitution and harmonizing their operation. We say this because it is to be observed that although from the date of the Hylton Case, because of statements made in the opinions in that case, it had come to be accepted that direct taxes in the constitutional sense were confined to taxes levied directly on real estate because of its ownership, the Amendment contains nothing repudiation or challenging the ruling in the Pollock Case that the word 'direct' had a broader significance, since it embraced also taxes levied directly on personal property because of its ownership, and therefore the Amendment at least impliedly makes such wider significance a part of the Constitution,-a condition which clearly demonstrates that the purpose was not to change the existing interpretation except to the extent necessary to accomplish the result intended; that is, the prevention of the resort to the sources from which a taxed income was derived in order to cause a direct tax on the income to be a direct tax on the source itself, and thereby to take an income tax out of the class of excises, duties, and imposts, and place it in the class of direct taxes." (emphasis added)

Yes, I agree again that it was the "intent" to make a "direct" tax on incomes as you wrote. It clearly shows that the original intent was adverted because of the "apportionment" provisions of the constitution.

Our lawmakers can only make up laws for either direct or indirect taxes as outlined previously by the Brushaber, Pollock and the Constitution. Now can you tell me, are the taxes endorsed by a 1040 are they "income" or "excise" taxes? If they are income taxes then why are they not apportioned and if indirect why are they not "uniform" as in Art 1, Section 8 of our Constitution? Ask the courts whether the tax is "income" or "excise". They are not sure either depending on the district or decision. I do believe there will be a time when court decisions will be necessary to determine that oxygen and water is needed to live or that the sky is indeed blue. In the mean time I guess I’ll stop breathing and drinking.

Can you or someone explain to me what is the classification of tax that appears to be neither uniform or apportioned that requires someone to complete a 1040 that is not in-between the two great classifications taxes called for in the Brushaber decision quoted above?

To the uninitiated your point about Eisner vs. Macomber would seem to say it all. However, the quote used did not go far enough. Let me expand, "Income may be defined as the gain derived from capital, from labor, or from both combined", provided it be understood to include profit gained through a sale or conversion of capital assets, to which it was applied in the Doyle case pp. 183, 185. (emphasis added) (note: Kills the theory about not including "wages and salaries"in the Pollock case as that is one of the cases referenced in this decision.)

What is the "…gain derived from …labor…" that would "…include profit gained through a sale or conversion of capital assets…"? What is the profit gained that is taxable? Labor is normally undervalued to promote a profit or gain for someone other than the laborer, is that not true? In fact, when someone "volunteers" to do work for you an undeclared value, benefits you as an undeclared gain or profit. I’m sure you would agree. Of course I’m talking in common sense terms which normally has nothing to do with most court decisions so I will move on.

To quote "Eisner" then the following should also be quoted as it is more recent. Please note the part of the last sentence with red letters. It seems to say that the definition of income is definitely settled. Notice how it refers to the latter half of the "Eisner" quote I used previously and then conclusively defines the meaning of income which is stated obviously a "corporate profit" as an excise tax.

Merchants' Loan & Trust Co. v. Smietanka 255 U.S. 509 (1921) "It is obvious that these decisions in principle rule the case at bar if the word "income" has the same meaning in the Income Tax Act of 1913 that it had in the Corporation Excise Tax Act of 1909, and that it has the same scope of meaning was in effect decided in Southern Pacific Co. v. Lowe 247 U.S. 330, 335, where it was assumed for the purposes of decision that there was no difference in its meaning as used in the act of 1909 and in the Income Tax Act of 1913. There can be no doubt that the word must be given the same meaning and content in the Income Tax Acts of 1916 and 1917 that it had in the act of 1913. When to this we add that in Eisner v. Macomber, supra, a case arising under the same Income Tax Act of 1916 which is here involved, the definition of "income" which was applied was adopted from Strattons' Independence v. Howbert, arising under the Corporation Excise Tax Act of 1909, with the addition that it should include "profit gained through sale or conversion of capital assets," there would seem to be no room to doubt that the word (income) must be given the same meaning in all the Income Tax Acts of Congress that was given to it in the Corporation Excise Tax Act, and that what that meaning is has now become definitely settled by decisions of this Court." (So you would think)

The following reiterates the previous.

Burnet vs. Harmel, 287 US 103 ... and before the 1921 Act this Court had indicated ... what it later held, that "income," as used in the revenue acts taxing income, adopted since the 16th Amendment, has the same meaning that it had in the Act of 1909.

These are a few of this type of decision and all of them seem to refer back to Pollock and Brushaber. All of them claim "income" as a corporate profit.

Later I learned this:

COMMISSIONER OF INTERNAL REVENUE v. GLENSHAW GLASS CO.

CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE THIRD

CIRCUIT. *

No. 199.

Argued February 28, 1955.

Decided March 28, 1955.

[ Footnote 11 ] In discussing 61 [...] This definition is based upon the 16th Amendment and the word

`income' is used in its constitutional sense." H. R. Rep. No. 1337, supra, note 10, at

A18.

A virtually identical statement appears in S. Rep. No. 1622, supra, note 10, at 168. [348

U.S. 426, 434] (note: For all that is said and done in this decision why do you need to mention "'income' is used it's constiutional sense"? That can only refer back to Merchants' Loan & Trust Co. v. Smietanka 255 U.S. 509 (1921). [...] the word (income) must be given the same meaning in all the Income Tax Acts of Congress that was given to it in the Corporation Excise Tax Act, and that what that meaning is has now become definitely settled by decisions of this Court."

It really isn't that clear is it?

‘IRS management does what it wants, to whom it wants, when it wants, how it wants with almost complete immunity,’ retired Internal Revenue Service official Tommy Henderson told the U.S. Senate Finance Committee."

You have to ignore much in my post and much more everywhere else to believe that and that is definitely Clintonian.

‘IRS management does what it wants, to whom it wants, when it wants, how it wants with almost complete immunity,’ retired Internal Revenue Service official Tommy Henderson told the U.S. Senate Finance Committee."

"Do you really believe that since 1913, if such easy loopholes existed, Congress wouldn't have fixed them?"

Federal Judges have consistently ruled against the Schiff thesis. That is all that counts these days.

Schiff's politcal critque of the income tax has a great deal of merit, in my view. The move toward a more equitable tax system will have to be accomplished politcally. No Federally appointed judge will ever have the "stones" to overturn the IRS code unilaterally.

Lots of red and blue font, but the language of the 16th Amendment still says that Congress can tax incomes, from all sources, without apportionment.

In the Pollock case, which tax protestors love to cite but which few have read, the Supreme Court upheld the parts of the 1909 income tax act that put an an income tax on wages and salaries, finding that it was an "excise" which didn't require apportionment, but struck down the parts of the law which taxed income from real and personal property (including the taxes on rent, dividends, capital gains, etc.), finding that those were "direct taxes" which had to be apportioned. That decision was promptly overturned by the 16th amendment, which said that "incomes, from whatever source derived" could be taxed without apportionment.

It is true that, since then, courts have used different terms to describe the income tax-- some have said it's an "excise" and some have said it's a "direct tax" which doesn't have to be apportioned-- but the debate is completely academic: every one of those court decisions has held that it is now constitutional for Congress to tax all incomes, including salaries, wages, rents, dividends and capital gains, without apportionment. The label is irrelevant.

Lots of red and blue font, but the language of the 16th Amendment still says that Congress can tax incomes, from all sources, without apportionment.

In the Pollock case, which tax protestors love to cite but which few have read, the Supreme Court upheld the parts of the 1909 income tax act that put an an income tax on wages and salaries, finding that it was an "excise" which didn't require apportionment, but struck down the parts of the law which taxed income from real and personal property (including the taxes on rent, dividends, capital gains, etc.), finding that those were "direct taxes" which had to be apportioned. That decision was promptly overturned by the 16th amendment, which said that "incomes, from whatever source derived" could be taxed without apportionment.

It is true that, since then, courts have used different terms to describe the income tax-- some have said it's an "excise" and some have said it's a "direct tax" which doesn't have to be apportioned-- but the debate is completely academic: every one of those court decisions has held that it is now constitutional for Congress to tax all incomes, including salaries, wages, rents, dividends and capital gains, without apportionment. The label is irrelevant.

Apologize for the double post.

No Federally appointed judge will ever have the "stones" to overturn the IRS code unilaterally.

It's not a matter of "stones." The IRS has lost in court many times; UPS and Compaq Computers each won cases against the IRS last year worth tens of millions in taxes. But no court is ever going to buy the Irwin Schiff arguments that the 16th amendment doesn't mean what it says, or that the entire tax code is some kind of elaborate hoax, because you'd have to be loony to believe that, and we have few loonies on our federal courts (although the 9th Circuit makes me wonder sometimes.)

What on earth do you think the words without apportionment mean? Do you not think that was the purpose of the amendment? If Congress had to still follow the direct vs indirect language, the 16th amendment would have meant nothing.

Please read post 381.

As I have posted earlier I understand clearly what the intent or purpose was. It just failed miserably.

In those decisions it claims that an "income tax" was moved from the classification of a "direct tax" or back to it's supposed original class which is an "excise tax" or "indirect tax". So of course "without apportionment" makes sense because the "income tax" per all those USSC decisions is an indirect tax and doesn't fit under the protection of apportionment.

From Brushaber:

"This must be unless it can be said that although the Constitution, as a result of the Amendment, in express terms excludes the criterion of source of income, that criterion yet remains for the purpose of destroying the classifications of the Constitution by taking an excise out of the class to which it belongs and transferring it to a class in which it cannot be placed consistently with the requirements of the Constitution. Indeed, from another point of view, the Amendment demonstrates that no such purpose was intended, and on the contrary shows that it was drawn with the object of maintaining the limitations of the Constitution and harmonizing their operation. We say this because it is to be observed that although from the date of the Hylton Case, because of statements made in the opinions in that case, it had come to be accepted that direct taxes in the constitutional sense were confined to taxes levied directly on real estate because of its ownership, the Amendment contains nothing repudiation or challenging the ruling in the Pollock Case that the word 'direct' had a broader significance, since it embraced also taxes levied directly on personal property because of its ownership, and therefore the Amendment at least impliedly makes such wider significance a part of the Constitution,-a condition which clearly demonstrates that the purpose was not to change the existing interpretation except to the extent necessary to accomplish the result intended; that is, the prevention of the resort to the sources from which a taxed income was derived in order to cause a direct tax on the income to be a direct tax on the source itself, and thereby to take an income tax out of the class of excises, duties, and imposts, and place it in the class of direct taxes." (emphasis added)

Merchants' Loan & Trust Co. v. Smietanka

the word (income) must be given the same meaning in all the Income Tax Acts of Congress that was given to it in the Corporation Excise Tax Act, and that what that meaning is has now become definitely settled by decisions of this Court."

The income tax is a "excise tax" therefore apportionment does not apply. But it is not uniform.

‘IRS management does what it wants, to whom it wants, when it wants, how it wants with almost complete immunity,’ retired Internal Revenue Service official Tommy Henderson told the U.S. Senate Finance Committee."

In the Pollock case, which tax protestors love to cite but which few have read, the Supreme Court upheld the parts of the 1909 income tax act that put an an income tax on wages and salaries, finding that it was an "excise" which didn't require apportionment, but struck down the parts of the law which taxed income from real and personal property (including the taxes on rent, dividends, capital gains, etc.), finding that those were "direct taxes" which had to be apportioned. That decision was promptly overturned by the 16th amendment, which said that "incomes, from whatever source derived" could be taxed without apportionment.

You really didn't read enough of the red and blue. It is more than academic. It is the law. So let me help.

Again from my letter to Congressman Pat Tiberi:

To the uninitiated your point about Eisner vs. Macomber would seem to say it all. However, the quote used did not go far enough. Let me expand, "Income may be defined as the gain derived from capital, from labor, or from both combined", provided it be understood to include profit gained through a sale or conversion of capital assets, to which it was applied in the Doyle case pp. 183, 185. (emphasis added) (note: Kills the theory about not including "wages and salaries"in the Pollock case as that is one of the cases referenced in this decision.)

What is the "…gain derived from …labor…" that would "…include profit gained through a sale or conversion of capital assets…"? What is the profit gained that is taxable? Labor is normally undervalued to promote a profit or gain for someone other than the laborer, is that not true? In fact, when someone "volunteers" to do work for you an undeclared value, benefits you as an undeclared gain or profit. I’m sure you would agree. Of course I’m talking in common sense terms which normally has nothing to do with most court decisions so I will move on.

You have to ignore much to believe there is not a problem.

‘IRS management does what it wants, to whom it wants, when it wants, how it wants with almost complete immunity,’ retired Internal Revenue Service official Tommy Henderson told the U.S. Senate Finance Committee."

What is your point? That the 16th Amendment changed the Constitution? That's what amendments do. Before the 16th Amendment, "direct taxes" had to be apportioned; now, an "income tax" doesn't have to be apportioned, whether it's direct or indirect. That the definition of "income" hasn't changed? Sure, but the definition of income never raised any constitutional issue; the only issue under the original tax act was apportionment, now made a non-issue.

No problemo.

What is the "…gain derived from …labor…" that would "…include profit gained through a sale or conversion of capital assets…"?

I've found your problem. You don't understand English.

Profit gained from sale or conversion of capital assets is included in the definition of income.

It is not a mandatory component of that definition.

It would be like saying that "the definition of 'warship' must include 'aircraft carrier.'"

Saying that does not require that all warships be aircraft carriers.

What is the "…gain derived from …labor…" that would "…include profit gained through a sale or conversion of capital assets…"? What is the profit gained that is taxable? Labor is normally undervalued to promote a profit or gain for someone other than the laborer, is that not true? In fact, when someone "volunteers" to do work for you an undeclared value, benefits you as an undeclared gain or profit. I’m sure you would agree. Of course I’m talking in common sense terms which normally has nothing to do with most court decisions so I will move on.

OK, you've now moved your target-- you're not talking about "direct" vs. "indirect" taxes, or about apportionment, it's the "gain from labor" argument.

Wages and salaries were taxed in the 1909 tax act, and even Pollock found that constitutional. Wages and salaries have been taxed in every tax act since then and every court has upheld that. The word "gain" in Eisner v. Macomber means the difference between what you pay for something and what you sell it for. You pay nothing to buy your own time and effort, so your total income from working is "gain from labor."

The ammendment to the Constitution that created the basis for the Income Tax was not passed in a smoke-filled room outside the scrutiny of the public. It was passed with a strong popular mandate based largely upon the percieved inequities of the previous tariff-based tax system.

The current income tax system is now riddled with inequities and inefficiencies. The biggest impediment against changing the current tax system is the huge amount of power the code confers upon lawmakers particularly members of the tax writing committees. The tax code will not be changed without have to go through a bloody political fight.

Federal Judges do watch elections. Schiff's Constitutional argument against the legality of the Income Tax is speculative but stranger Constitutional arguments have prevailed, at least temporarily, in the Federal courts. In cases I have read that involved Schiff's litigation the judges involved simply and arbitrarily refused rule on the substance of his argument. There is no incentive for a Federal Judge to effectivly defund the branch of the Government that pays his salary.

Federal tax protesters who buy Schiff's argument should get out of fantasy land and get behind something like the national sales tax idea. The Income Tax was created politically and it will only changed by means of politics.

Before the 16th Amendment, "direct taxes" had to be apportioned; now, an "income tax" doesn't have to be apportioned, whether it's direct or indirect.

Now where in the USSC descions I listed or anywhere else does that say what you just wrote? What court decisions overturned any I quoted?

From Brushaber:

"[…] the Amendment (16^th) contains nothing repudiating or challenging the ruling in the Pollock case […] But it clearly results that the proposition and the contentions under it, if acceded to, would cause one provision of the Constitution to destroy another; that is, they would result in bringing the provisions of the Amendment exempting a direct tax from apportionment into irreconcilable conflict with the general requirement that all direct taxes be apportioned. Moreover, the tax authorized by the Amendment, being direct, would not come under the rule of uniformity applicable under the Constitution to other than direct taxes, and thus it would come to pass that the result of the Amendment would be to authorize a particular direct tax not subject either to apportionment or to the rule of geographical uniformity, thus giving power to impose a different tax in one state or states than was levied in another state or states. This result, instead of simplifying the situation and making clear the limitations on the taxing power, which obviously the Amendment must have been intended to accomplish, would create radical and destructive changes in our constitutional system and multiply confusion.

[...]leaving aside some conjectures expressed of the possibility of a tax lying intermediate between the two great classes and embraced by neither, no question has been anywhere made as to the correctness of these propositions

‘IRS management does what it wants, to whom it wants, when it wants, how it wants with almost complete immunity,’ retired Internal Revenue Service official Tommy Henderson told the U.S. Senate Finance Committee."

In cases I have read that involved Schiff's litigation the judges involved simply and arbitrarily refused rule on the substance of his argument.

The concept of stare decisis is a real PITA, isn't it?

These issues have been litigated to death since 1916, and they've been settled for many decades.

There is no incentive for a Federal Judge to effectivly defund the branch of the Government that pays his salary.

Actually, there is.

You see, it would be the same as voting himself a pay raise. Judges' pay cannot be lowered for ANY reason--that is explicitly mandated in the Constitution. That means that, in essence, their paychecks--which are taxable income--have first call on any funds the government raises. So they actually have a fiduciary interest in eliminating the income tax--but they do not vote to do so.

All I did was read the words in the complete sentence as anyone can do. If they meant to say what you believe then perhaps it should have been made crystal clear.

Eisner vs. Macomber "Income may be defined as the gain derived from capital, from labor, or from both combined", provided it be understood to include profit gained through a sale or conversion of capital assets

Now I imagine that you will next say that the author of this opinion didn't know what he was writing. I don't know about your English, but where did you put your glasses? Not the rose colored ones.

‘IRS management does what it wants, to whom it wants, when it wants, how it wants with almost complete immunity,’ retired Internal Revenue Service official Tommy Henderson told the U.S. Senate Finance Committee."

All I did was read the words in the complete sentence as anyone can do. If they meant to say what you believe then perhaps it should have been made crystal clear.

It IS crystal clear. You just don't wish to see it.

"Income may be defined as the gain derived from capital, from labor, or from both combined", provided it be understood to include profit gained through a sale or conversion of capital assets

The clause after "include" is not mandatory to each and every instance of "income."

Dividends, which are a "gain from capital," are income. Dividends are not "the product of the sale or conversion of capital assets," but they ARE income.

Now I imagine that you will next say that the author of this opinion didn't know what he was writing.

He knew EXACTLY what he was writing. The problem is that YOU don't know what you're reading.

I submit to the authorities and the law. I just don't submit to laws that can't be found.

You have not really provided anything useful to discuss in a while. You have misrepresented my position and you fail to use scripture in proper context.

Finally, you no longer amuse me. Say what you will, I now leave you and will shake off the dirt from my feet.

‘IRS management does what it wants, to whom it wants, when it wants, how it wants with almost complete immunity,’ retired Internal Revenue Service official Tommy Henderson told the U.S. Senate Finance Committee."

Nice joke, I can take it.

‘IRS management does what it wants, to whom it wants, when it wants, how it wants with almost complete immunity,’ retired Internal Revenue Service official Tommy Henderson told the U.S. Senate Finance Committee."