The Constitution clearly defines only TWO forms of taxation:

Article I

Section 2, Clause 3; Representatives and direct Taxes shall be apportioned among the several States which may be included within this Union, according to their respective Numbers,

Section 8 Clause 1: "The Congress shall have power to lay and collect taxes, duties, imposts and excises to pay the debts and provide for the common defense and general welfare of the United States:but all duties, imposts and excises shall be uniform throughout the United States."

Section 9, clause 4; No Capitation, or other direct, Tax shall be laid, unless in Proportion to the Census of Enumeration herein before directed to be taken.

Indirect, (excise taxes) according to uniformity,

Direct taxes must be "apportioned among the several states which may be included within this Union."[See Article I, Section 2, Clause 3 and Article 1, Section 9, Clause 4.] These include taxes directly upon people or personal property.

"...all duties, imposts and excises [indirect taxes], shall be uniform throughout the United States."[See Article I, Section 8, Clause 1.]

There is great confusion within the courts as to what type of tax, "income tax" is:

On June 16, 1909, President William H. Taft, in his message to Congress (found on pg. 3344 Congressional Record for that year) stated:

"...It is now proposed to make up the deficit by the imposition of a general income tax, in the form and substance and almost exactly the same character as that which case of Pollock v. Farmers' Loan and Trust Co. (157 US 420) was held by the supreme Court to be a direct tax, and therefore NOT within the power of the federal government to impose unless apportioned among the several states according to population... ...I, therefore, recommend an amendment to the tariff bill imposing upon corporations and joint stock companies for profit, except national banks otherwise taxed, savings banks. and building and loan association, an excise tax, measured by 2% on the net income of such corporations. This is an excise tax upon the privilege of doing business as an artificial entity and the privilege of freedom from a general partnership liability enjoyed by those who own the stock. This course is much to be preferred to the one proposal of reenacting a law once judicially declared to be unconstitutional."

"The power to tax real and personal property and the income from both, there being an apportionment, is conceded: that such a tax is a direct tax in the meaning of the Constitution has not been, and, in our judgment, cannot be successfully denied Ordinarily, all taxes paid primarily by persons who can shift the burden upon some one else, or who are under no legal compulsion to pay them, are considered indirect [excise] taxes. Taxation on income is in its nature an excise entitled to be enforced as such." Pollock v. Farmers Loan & Trust, 157 U.S. 429 and 158 U.S. 601 (1895)

"Thus, 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." ...determining that, the classification of Direct adopted for the purpose of rendering it impossible for the government to burden, by taxation, accumulation of property, real or personal, except subject to the regulation of apportionment..." Pollock v. Farmers' Loan & Trust Co. 158, U.S. 601, at 637 (1895)

"The income tax is an excise tax, (indirect tax) and income is merely the basis for determining its amount... In 1862, in order to meet the need for continued war revenues, Congress passed the second income-tax law. This act took effect on July 1, 1862 (12 Stat. 432). The act of 1862 which used the word "duty" instead of "tax" provided that this "duty" should be levied, collected and paid in the year 1863 and each year thereafter until and including 1866 'and no longer' (Sec. 92).. .That investment income may be included as a part of the basis for measuring an excise tax was recognized by Congress in the act of August 5, 1909 (36 Stat. 11, 12), 'That every Corporation shall be subject to pay annually a special excise tax with respect to the [privilege of] carrying on or doing business by such Corporation.' The sixteenth amendment authorizes the taxation of income 'from whatever source derived'- thus taking in investment income - without apportionment among the several states... The Supreme Court has held that the sixteenth amendment did not extend the taxing power of the United States to new or excepted subjects... The [16th] 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 [as and excise tax]. Congressional House Record, Vol. 89, Part 2, March 27, 1943 pgs 2579, 2580.

"Direct taxes bear immediately upon persons, upon possessions and enjoyments of rights. Indirect taxes are levied upon the happening of an event..." Knowlton v. Moore. 178 U.S. 41.

"A tax laid upon the happening of an event as distinguished from its tangible fruits, is an indirect tax..." Tyler v. U.S. 497 at pg 502 (1930)

"A tax levied upon property because of its ownership is a direct tax, whereas one levied upon property because of its use is an excise, duty or impost." - Manufactures' Trust Co. vs. U.S., 32 F. Supp. 289.

"As has been repeatedly remarked, the corporation tax act of 1909 was not intended to be and is not, in any proper sense, an income tax law. 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 [direct], but an excise tax [indirect] upon the conduct of business in a corporate capacity, measuring however, the amount of tax by the income of the corporation."Stratton's Independence, LTD. v. Howbert, 231 US 399, 414 (1913)

"As repeatedly pointed out by this court, the corporation tax law of 1909... imposed an excise or privilege tax, and not in any sense a tax upon property or upon income merely as income." U.S. vs. Whitridge, 231 US 144, 147 (1913).

"The name of the tax is unimportant that it is the substance and not the form which controls;' that the limitations of the constitution cannot be 'frittered away' by calling a tax indirect when it is in fact direct." Pollock v. Farmers' Loan and Trust Co., 157 U.S. 429, 580-1, 583 (1895.

"That decision affirms the great principle that what cannot be done directly (direct taxation) because of constitutional restriction cannot be accomplished indirectly by legislation which accomplishes the same result." Fairbanks v. U.S. 181 U.S. 283, 294 (1901).

"If it be true by varying the form the substance may be changed, it is not easy to see that anything would remain of the limitations of the constitution, or of the rule of taxation and representation, so carefully recognized and guarded in favor of the citizen of each state. But constitutional provisions cannot be thus evaded. It is the substance, and not the form, which controls, as has been established by repeated decisions of this court." Id. At 296.

"I believe in earning an income by personal service every man consumes a part of his principle, and that fact ought always to be taken into consideration. The man who has his fortune invested in securities may find in a hundred years, if he spent his income, (interest from his fortune) that the fortune still intact, but the lawyer or the physician or the man engaged in other personal employment is spending his principle in earning his income.. That fact ought under every just system of income taxation to be recognized and provided for." 44 Congressional Records, 4007 (1909).

"The conclusion reached in the Pollock case (Pollock v. Farmers Loan & Trust Co. 158, U.s 601(1895)... recognized the fact that taxation on income was, in its nature, an excise, entitled to be enforced as such." (the Pollock case actually correctly classified income taxes as direct taxes, NOT excise taxes - JTM) Brushaber v Union Pacific Railroad Co. 240 U.S. 1, 16-17."

"Excise: In current usage the term has been extended to include various license fees and practically every Internal Revenue tax except the income tax." Blacks Law Dictionary, Sixth Edition, 1990.

In 26 U.S.C., Table of Subtitles, the category of Excise taxes is listed as Subtitle D - Miscellaneous Excise Taxes and Subtitle E - Alcohol, Tobacco, and certain other excise taxes. Income taxes are listed separately as Subtitle A - Income Taxes.

privilege: "A particular benefit or advantage enjoyed by a person, company, or class beyond the common advantages of other citizens..." Black's Law Dictionary - 6th Edition

"The obligation to pay an excise is based upon the voluntary action of the person taxed in performing the act, enjoying in the occupation which is the subject of the excise, and the element of absolute and unavoidable demand is lacking." People ex rel. Bank of Commerce & T v. Senter. 149 Tenn. 441, 381 SW 144.

"Conceding the power of Congress to tax the business activities of private corporations... the tax must be measured by some standard...It is therefore well settled by the decisions of this court that when the sovereign authority has exercised the right to tax a legitimate subject of taxation as an exercise of a franchise or privilege , it is no objection that the measure of taxation is found in the income..." Flinty. Stone Tracy Co., 220 U.S. 107. Pg 154, 165.

"An income tax is neither a property tax nor a tax on occupations of common rights but is an excise tax... The legislature may declare as 'privileged ' and tax as such state revenue, those pursuits not matters of common right, but it has no power to declare as 'privilege ' and tax for revenue purposes, occupations that are of common right." Simms v. Ahrens, Ark. 557; 271 SW 720 (1925);

26 RC.L. 132 TAXATION: "A right common in every citizen such as the right to own property or to engage in business of a character not requiring regulation CANNOT, however, be taxed as a special franchise by first prohibiting its exercise and then permitting its enjoyment upon the payment of a certain sum of money." - Stevens v State 2 Ark., 291. 35 Am. Dec. 72 Spring Val. Water Works v Barber, 99 Cal. 36, 33 Pac. 735, 21 L.R.A. 416. Note: 57 L.R.A. 416

"The individual, unlike the corporation, cannot be taxed for the mere privilege of existing. The corporation is an artificial entity which owes its existence and charter powers to the state; but the individuals' Right to live and own property are natural Rights for the enjoyment of which an excise cannot be imposed..." - Redfield v. Fisher, Oreg. Sup. Ct. 292 at 813, 817, 819. (1930)

"Income tax statutes apply only to state created creatures known as Corporations no matter V whether state, local or federal." Colonial Pipeline Co. v. Traigle, 421 US 100 (1975)

"Citizens under our Constitution and laws mean free inhabitants [not subjects].. .Every citizen and freeman is endowed with certain rights and privileges, to enjoy which no written law or statute is required. These are fundamental or natural rights, recognized among all free people... That the right to..... accept employment as a laborer for hire as a fundamental right is inherent in every free citizen and is indisputable..." United States v. Morris. 125 F. Rept. 325, 331.

"...The right to enjoy property without unlawful deprivation, is. ..a 'personal' right, whether the 'property' in question is a welfare check, a home, or a savings account. In fact a fundamental interdependence exists between the person's right to liberty and the personal right in property. Neither could have meaning without the other." Lynch v. Household Finance Corp., 405 U.S. 538. (1970)

"The income taxes 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." F. Morse Hubbard, Treasury Department legislative draftsman. House Congressional Record March 27th 1943, page 2580.

"When a court refers to an income tax as being in the nature of an excises it is merely stating that the tax is on the property itself but rather it is a fee for the privilege of receiving gain from the property. The tax is based upon the amount of the gain, not the value of the property." John R. Luckey, Legislative Attorney with the Library of Congress, "Frequently Asked Questions

"The tax imposed by sections 27 to 37, inclusive, of the act of 1894, so far as it falls on the income of real estate and of personal property, being a direct tax, within the meaning of the constitution, and therefore unconstitutional and void because not apportioned according to representation, all those sections, constituting one entire scheme of taxation, are necessarily invalid." Pollock v. Farmers Loan & Trust, 157 U.S. 429 and 158 U.S. 601 (1895)

"The tax imposed by the Act of 1894, (income tax) inasmuch as it falls upon the income of real and personal property, being a direct tax within the meaning of the Constitution, was unconstitional and void because it was not apportioned according to representation among the several states, all these sections, constituting one entire scheme of taxation, are necessarily invalid." Pollock v. Farmers Loan and Trust, 157 U.S. 429 (1894), reh. 158 U.S. 601, 637 (1895).

In the brief for the United States at 11-12, Brushaber v. Union Pacific R.R. Co., 240 U.S. 1 (1916), the government postulated that the 16^th amendment allowed the government to tax income directly without apportionment according to the constitution, but the Supreme Court stated they were (and are) wrong:

"The various propositions are so intermingled as to cause it to be difficult to classify them. We are of opinion, however, that the confusion is not inherent, but rather arises from the conclusion that the 16^th Amendment provides for a hitherto unknown power of taxation; (That of being able to tax people outside direct and indirect, as they are being taxed today - JTM) that is, a power to levy an income tax which, although direct, should not be subject to the regulations of apportionment applicable to all other direct taxes. And the far-reaching effect of this erroneous assumption will be made clear by generalizing the many contentions advanced in argument to support it..."

"...[T]he confusion is not inherent, but rather arises from the [erroneous] conclusion that the 16th Amendment provides for a hitherto unknown power to levy an income tax which, although direct, should not be subject to the regulation of apportionment applicable to all other direct taxes. And the far reaching effect of this erroneous assumption will be made clear by generalizing the many contentions advanced in argument to support it..."

"if acceded to, would cause one provision of the Constitution to destroy another;...bringing the Amendment into irreconcilable conflict with the general requirement that all direct taxes be apportioned... This result would create radical and destructive changes in our constitutional system...

"...the whole purpose of the Amendment was to relieve all income taxes when imposed from apportionment from a consideration of the source... on the contrary shows that it was drawn with the object of maintaining the limitations of the Constitution and harmonizing their operation." Brushaber v. Union Pacific R.R. Co., 240 U.S. 1 (1916)

"Under former decisions here the settled doctrine is that the Sixteenth Amendment confers no power upon Congress to define and tax as income without apportionment something which theretofore could not have been properly regarded as income." TAFT v. BOWERS, 278 U.S. 470, 481 (1929).

"We must reject in this case, as we have rejected in cases arising under the Corporation Excise Tax Act of 1909 (Doyle v. Mitchell Brothers Co., ante, 179 and Hays v. Gauley Mountain Coal Co., ante, 189) the broad contention submitted in behalf of the Government that all receipts  everything that comes in  are income within the proper definition of the term 'gross income,' and that the entire proceeds of a conversion of capital assets, in whatever form and under whatever circumstances accomplished should be treated as gross income.  Certainly the term 'income' has no broader meaning in the 1913 Act than in that of 1909 (see Stratton's Independence v. Howbert, 231 U.S. 399, 416, 417), and for the present purpose we assume there is no difference in its meaning as used in the two acts." Southern Pacific Company vs. John Z. Lowe, Jr: 247 US 330.

"It is obvious that these decisions in principle rule the case at bar if the word 'income' has the same meaning as 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, arising under the Corporation Excise Tax Act of 1909, with the addition that it should include 'profit gained through a sale or conversion of capital assets,' there would seem to be no room to doubt that the word must be given the same meaning in all of 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." MERCHANTS' LOAN & TRUST CO. v SMIETANKA, 255 US 509, 519 (1921)

"The 16th Amendment, as correctly interpreted is limited to indirect taxes and for that reason is constitutional.... The conclusion reached in the Pollock case...recognized the fact that taxation on income was in its nature an excise..." Brushaber v. Union Pacific RR Co. 240 U.S. 1 at 10, 11, 12, 18, 19

"Acts of Congress are to be construed and applied in harmony with and not to thwart the purpose of the Constitution." Phelps v. U.S. 341, 344 (1927).

"The provisions of the Sixteenth Amendment conferred no new power of taxation but simply prohibited the complete and plenary power of income taxation possessed by congress from the beginning from being taken out of the category of indirect taxation to which it inherently belonged..." S. Pacific v. Lowe, 238 F. 847 (US Dist. Ct. S.D., N.Y., 1917); U.S. 330 (1918)

"The legislative history merely shows that the words 'from whatever source derived' of the Sixteenth Amendment were not affirmatively intended to authorize Congress to tax state bond interest or to have any other effect on which incomes were subject to the federal taxation, and that the sole purpose of the Sixteenth Amendment was to remove the apportionment (direct tax classification) requirement for whichever incomes were otherwise taxable." [South Carolina v. Baker, 485 U.S. 505 (1988) (footnote 13)]

"The Sixteenth Amendment, although referred to in argument, has no real bearing and may be put out of view. As pointed out in recent decisions, (Brushaber), it does not extend the taxing power to new or excepted subjects, but merely removes all occasion, which otherwise might exist, for an apportionment (direct tax classification) among the states of taxes laid on income, whether it be derived from one source or another." Peck v. Lowe, 247 U.S. 165 (1918.

"Not being within the authority of the 16th Amendment, the (income) tax is therefore, within the ruling of Pollock… a direct tax and void for want of compliance with the regulation of apportionment... it manifestly disregards the fact that by the previous ruling it was settled that the provisions of the 16th Amendment conferred no new power of taxation but simply prohibited the income tax from being taken out of the category of indirect taxation to which it inherently belonged..." STANTON v BALTIC MINING CO., 240 US 103, 112-114 (1916).

"Does the Sixteenth Amendment authorize and support this tax and the attendant diminution; that is to say, does it bring within the taxing powers subjects theretofore excepted? The court below answered in the negative; and counsel for the government say: 'It is not, in view of recent decisions, contended that this amendment rendered anything taxable as income that was not so taxable before'... "... It manifestly disregards the fact that by the previous ruling it was settled that the provisions of the 16th Amendment conferred no new power of taxation." EVANS v GORE, 253 US 245, 263 (1920)

Mr. Justice BUTLER delivered the opinion of the Court. ..."The Sixteenth Amendment declares that Congress shall have power to levy and collect taxes on income, 'from [271 U.S. 170, 174] whatever source derived' without apportionment among the several states, and without regard to any census or enumeration. It was not the purpose or effect of that amendment to bring any new subject within the taxing power. Congress already had power to tax all incomes. But taxes on incomes from some sources had been held to be 'direct taxes' within the meaning of the constitutional requirement as to apportionment. Art. 1, 2, cl. 3, 9, cl. 4; Pollock v. Farmers' Loan & Trust Co., 158 U.S. 601, 15 S. Ct. 912. The Amendment relieved from that requirement and obliterated the distinction in that respect between taxes on income that are direct taxes and those that are not, and so put on the same basis all incomes 'from whatever source derived.'" BOWERS v. KERBAUGH-EMPIRE CO., 271 U.S. 170 (1926) 271 U.S. 170 BOWERS, Collector of Internal Revenue, v. KERBAUGH-EMPIRE CO. No. 173. Argued Jan. 25, 1926. Decided May 3, 1926.

The 16^th Amendment "Made it possible to bring investment income within the scope of the general income-tax law, but did not change the character of the tax." Representative Carlson, Individual Income Tax Collection Act of 1943.

"the 16th Amendment had NO legal effect... In 1916 the Supreme Court [Brushaber] rendered its decision regarding the [16^th] amendment. In essence the court stated that there is no need for the 16th Amendment..." 1979, Howard Zaritsky, legislative attorney for the Congressional Research Service for the Library of Congress.

"The Sixteenth Amendment must be construed in connection with the taxing clauses [ie. apportionment clauses regarding Direct Taxes, uniformity clauses regarding indirect taxes] of the original Constitution and the effect attributed to them before the Amendment was adopted. As repeatedly held, this did not extend the taxing power to new subjects... Eisner v. Macomber, 252 U.S. 189, at 205, 207 (1920)

31 USC 321(d)(2). "For the purposes of the Federal income, estate, and gift taxes, property accepted under paragraph (1) shall be considered as a gift or bequest to or for the use of the United States."

Because "gifts" and "bequests" are never mandatory, the income tax is VOLUNTARY!

The income tax, in other words, is STILL fundamentally an excise or duty with respect to the privilege of receiving passive income which is ONLY possible under the protection of civil government.

I have to ask, "what is this "Income" "under the Constitution, which is "excluded by law," and "not taxable by the Federal government?" Can this "income" be defined and explained in law or the IR Code? (See Attachment A).

"I don't like taxes. Every time we talk about these taxes we get around to the idea of 'from each according to his capacity and to each according to his needs.' That's socialism. It's written into the Communist manifesto. Maybe we ought to see that every person who gets a tax return receives a copy of the Communist Manifesto with it so he can see what's happening to him." T. Coleman Andrews, Commissioner of Internal revenue, May 25, 1956 in U.S. News & World Report.

The above precedence rulings show that the Constitutional prohibition against a direct un-apportioned tax still stands in full force and effect as the fundamental law of the land. Article 1, sec. 2, "Representatives and direct taxes shall be apportioned among the several States which may be included in this union, according to their respective Numbers..." and also in Article 1, sec. 9, "No Capitation, or other direct, Tax shall be laid, unless in proportion to the Census or Enumeration herein before directed to be taken."

The 8th Circuit Court also ruled in Anastasoff v. United States (2000) that, "The judicial power of the United States is limited by the doctrine of precedence."

Jeffrey Thomas Maehr, Copyright © 2006, 2007 All rights reserved.