The Income Tax, the Constitution, and the Supreme Court

The Income Tax, the Constitution, and the Supreme Court

- free teleconference Tuesday June 18

Many commentators on the cable news networks are talking about the income tax and what needs to be done to fix it. Yet one important consideration is never mentioned.

Nobody talks about what the United States Constitution says about taxes!

The issue of oppressive taxation by King George III set the American Revolution in motion, and the Founders incorporated two important provisions in the constitution addressing this critical issue, both set forth in Article I of the charter of the new nation.

These clauses provided for direct taxes (otherwise known as “capitations” in the language of Adam Smith’s Wealth of Nations) which are subject to apportionment; and indirect taxes (“taxes, duties, excises, and imposts” in the language of Article I Section 8 of the Constitution) which are subject to the requirement of uniformity.

These fundamental principles of taxation in the United States have never been altered, repealed, modified, or changed in an any way. Moreover, the U.S. Supreme Court has re-affirmed these principles in every case brought before it in which this issue has been addressed.

Attempts to establish an income tax generated huge controversy every time they were proposed, particularly in light of the extremely restrictive clauses relating to taxes in the Constitution. A landmark Supreme Court decision in the historic Pollock case [POLLOCK v. FARMERS' LOAN & TRUST CO., 157 U.S. 429 (1895)] ruled that the income tax is unconstitutional as an unapportioned direct tax. Notwithstanding widespread misunderstanding regarding the effect of the Sixteenth Amendment (see below) , this ruling remains in effect and is the controlling interpretation of the income tax.

Yet the Congress and the IRS continue to act like they were somehow granted authority to implement a direct tax without apportionment, which is what the current income tax represents. Nothing could be further from the truth.

If you do not understand this important truth, and the devastating effect the income tax has had on our country and our fellow citizens and their families, you should consider listening in on tonight’s teleconference.

[Note: See below for significant excerpts from the Supreme Court ruling in the Pollock case. This ruling included and thorough analysis of the background and intent of the Founders in drafting the tax clauses of the U.S. Constitution.]

To join in on this teleconference call, dial the phone number shown below, then enter the pin number when directed to do so.

Tuesday Night June 18, 2013    9:00pm EST / 6:00pm Pacific

Phone:  (321) 354-6946   pin: 217399#

Topic:  Tony Davis ~ DIRECT TAX OR INDIRECT TAX - APPORTIONED.... REALLY ??!!!??!!

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T O N I G H T’ S  D I S C U S S I O N - IS THE INCOME TAX A DIRECT TAX OR AN INDIRECT TAX ?
See example below
IS THE IRS TAX VOLUNTARY AS STATED BY THE FORMER IRS COMMISSIONER ON MAY 22, 2013?
SPEAKER: Mr. Tony Davis
Several Supreme Court cases, including Hylton v. United States, have declared that the income tax is an indirect tax.
Hylton was buried for over 200 years in the Library of Congress. Four other Supreme Court cases also support the fact that the only way that the IRS can enforce an income tax is to apportion it between the states, according to population.
This topic covers the issue of the income tax being an "indirect tax", which cannot be legally claimed by the IRS.
How do you use this issue for your own benefit?
How do you use the Rule of Stare Decisis to win?
In Hylton v. United States, 3 US 171, 176-181 (1796), the Supreme Court stated: "All taxes presently found in the Internal Revenue Code are indirect taxes” (meaning circuitous modes of reaching the income of the individual).
Thus the statutory language in the Internal Revenue Code must be strictly construed in conformity with the parameters of indirect taxation so as to not run afoul of the federal constitution's prohibition against Congress imposing a capitation tax.
What does this mean for you?
Is the tax supposed to be apportioned among the states?
Yes! The Grace Commission Report instituted by Ronald Reagan showed that all taxes are applied to the National Debt.
In 1916 the Supreme Court ruled that the income tax legislation that was enacted is constitutional because the tax that was laid was not laid as a direct tax under the 16th Amendment, but because the legislation that was actually enacted, was laid as an indirect tax.  [Stanton v. Baltic Mining Co., 240 US 103, 112-113 (1916),  Brushaber v. Union Pacific R.R. Co., 240 U.S. 1, 9 (1916)]
The court further identifies that the income tax legislation actually enacted is clearly and obviously an indirect tax because it is laid in the form of a tariff.
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EXAMPLE: IS THE IRS TAX AN INDIRECT TAX?
Sample letter to the IRS regarding letters assessing tax:
To: Internal Revenue Service From: xxxx
RE: Form letter xxxx
Account Number: xxxx
Dear Sir/Ms. I am in receipt of your letter dated xxxx regarding my previous correspondence.
You stated you are working on a reply to my inquiries and concerns. I am providing you additional information to support my position.
In 1916 the Supreme Court ruled that the income tax legislation that was enacted is constitutional because the tax that was laid was not laid as a direct tax under the 16th Amendment, but because the legislation that was actually enacted, laid an indirect tax:
"...by the previous ruling, it was settled that the provisions of the 16th Amendment conferred no new power of taxation but simply prohibited the previous 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." [Stanton v. Baltic Mining Co., 240 US 103, 112-113 (1916)]
The Court further identifies that the income tax legislation actually enacted is clearly and obviously an indirect tax because it is laid in the form of a tariff:
"....the appellant filed his bill to enjoin the corporation from complying with the income tax provisions of the tariff act as of October 3, 1913." [Brushaber v. Union Pacific R.R. Co., 240 U.S. 1, 9 (1916)].

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This is part of an eleven page memorandum plus fourteen pages of attachments used to remove proposed assessments, proposed liens and levies, and proposed charges against your wages and social security. Much more will be discussed tonight, Tuesday, June 18, 2013.
For more information on NOT volunteering information to the IRS and how to use the information to your benefit then tune in to www.FreedomsRadio.com
Other tools are available. If you understand the law, you can win!!
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U.S. Supreme Court

POLLOCK v. FARMERS' LOAN & TRUST CO., 157 U.S. 429 (1895)

157 U.S. 429

POLLOCK
v.
FARMERS' LOAN & TRAUST CO. et al. 1  
No. 893.

April 8, 1895

Excerpted
The constitution provides that representatives and direct [157 U.S. 429, 556]   taxes shall be apportioned among the several states according to numbers, and that no direct tax shall be laid except according to the enumeration provided for; and also that all duties, imposts, and excises shall be uniform throughout the United States.
The men who framed and adopted that instrument had just emerged from the struggle for independence whose rallying cry had been that 'taxation and representation go together.'
The mother country had taught the colonists, in the contests waged to establish that taxes could not be imposed by the sovereign except as they were granted by the representatives of the realm, that self-taxation constituted the main security against oppression. As Burke declared, in his speech on conciliation with America, the defenders of the excellence of the English constitution 'took infinite pains to inculcate, as a fundamental principle, that, in all monarchies, the people must, in effect, themselves, mediately or immediately, possess the power of granting their own money, or no shadow of liberty could subsist.'
The principle was that the consent of those who were expected to pay it was essential to the validity of any tax.
The states were about, for all national purposes embraced in the constitution, to become one, united under the same sovereign authority, and governed by the same laws. But as they still retained their jurisdiction over all persons and things within their territorial limits, except where surrendered to the general government or restrained by the constitution, they were careful to see to it that taxation and representation should go together, so that the sovereignty reserved should not be impaired, and that when congress, and especially the house of representatives, where it was specifically provided that all revenue bills must originate, voted a tax upon property, it should be with the consciousness, and under the responsibility, that in so doing the tax so voted would proportionately fall upon the immediate constituents of those who imposed it.
More than this, by the constitution the states not only gave to the nation the concurrent power to tax persons and [157 U.S. 429, 557]   property directly, but they surrendered their own power to levy taxes on imports and to regulate commerce. All the 13 were seaboard states, but they varied in maritime importance, and differences existed between them in population, in wealth, in the character of property and of business interests. Moreover, they looked forward to the coming of new states from the great West into the vast empire of their anticipations. So when the wealthier states as between themselves and their less favored associates, and all as between themselves and those who were to come, gave up for the common good the great sources of revenue derived through commerce, they did so in reliance on the protection afforded by restrictions on the grant of power.
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.
The rule of uniformity was not prescribed to the exercise of the power granted by the first paragraph of section 8 to lay and collect taxes, because the rule of apportionment as to taxes had already been laid down in the third paragraph of the second section…
And although there have been, from time to time, intimations that there might be some tax which was not a direct tax, nor included under the words 'duties, imports, and excises,' such a tax, for more than 100 years of national existence, has as yet remained undiscovered, notwithstanding the stress of particular circumstances has invited thorough investigation into sources of revenue. [157 U.S. 429, 558] …
We inquire, therefore, what, at the time the constitution was framed and adopted, were recognized as direct taxes? What did those who framed and adopted it understand the terms to designate and include?
We must remember that the 55 members of the constitutional convention were men of great sagacity, fully conversant with governmental problems, deeply conscious of the nature of their task, and profoundly convinced that they were laying the foundations of a vast future empire.
'To many in the assembly the work of the great French magistrate on the 'Spirit of Laws,' of which Washington with his own hand had copied an abstract by Madison, was the favorite manual. Some of them had made an analysis of all federal governments in ancient and modern times, and a few were well versed in the best English, Swiss, and Dutch writers on government. They had immediately before them the example of Great Britain, and they had a still better school of political wisdom in the republican constitutions of their several states, which many of them had assisted to frame.' 2 Bancr. Hist. Const. 9.
The Federalist demonstrates the value attached by Hamilton, [157 U.S. 429, 559]   Madison, and Jay to historical experience, and shows that they had made a careful study of many forms of government. Many of the framers were particularly versed in the literature of the period - Franklin, Wilson, and Hamilton for example. Turgot had published in 1764 his work on taxation, and in 1766 his essay on 'The Formation and Distribution of Wealth,' while Adam Smith's 'Wealth of Nations' was published in 1776. Franklin, in 1766, had said, upon his examination before the house of commons, that:
'An external tax is a duty laid on commodities imported; that duty is added to the first cost and other charges on the commodity, and, when it is offered to sale, makes a part of the price. If the people do not like it at that price, they refuse it. They are not obliged to pay it. But an internal tax is forced from the people without their consent, if not laid by their own representatives. The stamp act says we shall have no commerce, make no exchange of property with each other, neither purchase nor grant, nor recover debts; we shall neither marry nor make our wills,-unless we pay such and such sums; and thus it is intended to extort our money from us, or ruin us by the consequences of refusing to pay.' 16 Parl. Hist. 144.
They were, of course, familiar with the modes of taxation pursued in the several states. From the report of Oliver Wolcott, when secretary of the treasury, on direct taxes, to the house of representatives, December 14, 1796,-his most important state paper (Am. St. P. 1 Finance, 431),-and the various state laws then existing, it appears that prior to the adoption of the constitution nearly all the states imposed a poll tax, taxes on land, on cattle of all kinds, and various kinds of personal property, and that, in addition, Massachusetts, Connecticut, Pennsylvania, Delaware, New Jersey, Virginia, and South Carolina assessed their citizens upon their profits from professions, trades, and employments.
Congress, under the articles of confederation, had no actual operative power of taxation. It could call upon the states for their respective contributions or quotas as previously determined on; but, in case of the failure or omission of the states to furnish such contribution, there were no means of [157 U.S. 429, 560]   compulsion, as congress had no power whatever to lay any tax upon individuals.
This imperatively demanded a remedy; but the opposition to granting the power of direct taxation in addition to the substantially exclusive power of laying imposts and duties was so strong that it required the convention, in securing effective powers of taxation to the federal government, to use the utmost care and skill to so harmonize conflicting interests that the ratification of the instrument could be obtained…
In the course of the debates, and after the motion of Mr. Ellsworth that the first census be taken in three years after the meeting of congress had been adopted, Mr. Madison records: 'Mr. King asked what was the precise meaning of 'direct taxation.' No one answered.' But Mr. Gerry immediately moved to amend by the insertion of the clause that 'from the first meeting of the legislature of the United States until a census shall be taken, all moneys for supplying the public treasury by direct taxation shall be raised from the several states according to the number of their representatives respectively in the first branch.' This left for the time the matter of collection to the states. Mr. Langdon objected that this would bear unreasonably hard against New Hampshire, and Mr. Martin said that direct taxation should not be used but in cases of absolute necessity, and then the states would be the best judges of the mode. 5 Elliot, Deb. 451, 453.
Thus was accomplished one of the great compromises of the constitution, resting on the doctrine that the right of representation ought to be conceded to every community on which a tax is to be imposed, but crystallizing it in such form as to allay jealousies in respect of the future balance of power; to reconcile conflicting views in respect of the enumeration of slaves; and to remove the objection that, in adjusting a system of representation between the states, regard should be had to their relative wealth, since those who were to be most heavily [157 U.S. 429, 564]   taxed ought to have a proportionate influence in the government.
The compromise, in embracing the power of direct taxation, consisted not simply in including part of the slaves in the enumeration of population, but in providing that, as between state and state, such taxation should be proportioned to representation. The establishment of the same rule for the apportionment of taxes as for regulating the proportion of representatives, observed Mr. Madison in No. 54 of the Federalist, was by no means founded on the same principle, for, as to the former, it had reference to the proportion of wealth, and, although in respect of that it was in ordinary cases a very unfit measure, it 'had too recently obtained the general sanction of America not to have found a ready preference with the convention,' while the opposite interests of the states, balancing each other, would produce impartiality in enumeration.
By prescribing this rule, Hamilton wrote (Federalist, No. 36) that the door was shut 'to partiality or oppression,' and 'the abuse of this power of taxation to have been provided against with guarded circumspection'; and obviously the operation of direct taxation on every state tended to prevent resort to that mode of supply except under pressure of necessity, and to promote prudence and economy in expenditure…
From the foregoing it is apparent (1) that the distinction between direct and indirect taxation was well understood by the framers of the constitution and those who adopted it; (2) that, under the state system of taxation, all taxes on [157 U.S. 429, 574]   real estate or personal property or the rents or income thereof were regarded as direct taxes; (3) that the rules of apportionment and of uniformity were adopted in view of that distinction and those systems; (4) that whether the tax on carriages was direct or indirect was disputed, but the tax was sustained as a tax on the use and an excise; (5) that the original expectation was that the power of direct taxation would be exercised only in extraordinary exigencies; and down to August 15, 1894, this expectation has been realized. The act of that date was passed in a time of profound peace, and if we assume that no special exigency called for unusual legislation, and that resort to this mode of taxation is to become an ordinary and usual means of supply, that fact furnishes an additional reason for circumspection and care in disposing of the case…
Nothing can be clearer than that what the constitution intended to guard against was the exercise by the general government of the power of directly taxing persons and property within any state through a majority made up from the other states.
It is true that the effect of requiring direct taxes to be apportioned among the states in proportion to their population is necessarily that the amount of taxes on the individual [157 U.S. 429, 583]   taxpayer in a state having the taxable subject-matter to a larger extent in proportion to its population than another state has, would be less than in such other state; but this inequality must be held to have been contemplated, and was manifestly designed to operate to restrain the exercise of the power of direct taxation to extraordinary emergencies, and to prevent an attack upon accumulated property by mere force of numbers.
… It is not doubted that property owners ought to contribute in just measure to the expenses of the government. As to the states and their municipalities, this is reached largely through the imposition of direct taxes.
As to the federal government, it is attained in part through excises and indirect taxes upon luxuries and consumption generally, to which direct taxation may be added to the extent the rule of apportionment allows.
And through one mode or the other the entire wealth of the country, real and personal, may be made, as it should be, to contribute to the common defense and general welfare.
But the acceptance of the rule of apportionment was one of the compromises which made the adoption of the constitution possible, and secured the creation of that dual form of government, so elastic and so strong, which has thus far survived in unabated vigor.
If, by calling a tax indirect when it is essentially direct, the rule of protection could be frittered away, one of the great landmarks defining the boundary between the nation and the states of which it is composed, would have disappeared, and with it one of the bulwarks of private rights and private property.
We are of opinion that the law in question, so far as it levies a tax on the rents or income of real estate, is in violation of the constitution, and is invalid.
http://caselaw.lp.findlaw.com/scripts/getcase.pl?court=us&vol=157&invol=429