Posted by . on September 24, 1998 at 00:22:51:
In Reply to: Appendix "J": Petitions to Congress, from "The Federal Zone" posted by Paul Andrew Mitchell, B.A., M.S. on September 23, 1998 at 19:32:52:
What is the purpose of this FAQ?
The purpose of this FAQ is to provide concise, authoritative rebuttals to the nonsense about the U.S. tax system that is frequently posted in misc.taxes by a variety of fanatics, idiots, and dupes.
This "FAQ" is therefore not really a collection of frequently asked questions, but a collection of frequently made assertions, together with an explanation of why each assertion is false. Furthermore, the assertions addressed in this FAQ are assertions which are not merely false, but which are completely ridiculous, so ridiculous that a belief in the assertion requires not just ignorance of law and history, but a dedicated aversion to logic and reason.
In this FAQ, you will read many decisions of judges who refer to the views of tax protestors as "frivolous," "ridiculous," "absurd," or "preposterous." If you don't read a lot of judicial opinions, you may not understand the full weight of what it when a judge calls an argument "frivolous" or "ridiculous."
Imagine a group of professional scientists who have met to discuss important issues of physics and chemistry, and then you come into their meeting and challenge them to prove that the earth revolves around the sun. At first, they might be unable to believe you are serious. Eventually, they might be polite enough to explain the observations and calculations which lead inevitably to the conclusion that the earth does indeed revolve around the sun. Suppose you then persist, challenging their calculations and assumptions. At that point, they are jaw-droppingly astounded, and will no longer be polite, but will start to look for ways to evict you from their meeting, because you are wasting their time. That is the way judges view tax protestors. At first, they try to be civil and treat the claims as seriously as they can. However, after dismissing case after case with the same insane claims, sometimes by the same litigant, judges start pulling out the dictionary to see how many synonyms they can find for "absurd." For example, read the following opinion of the Fifth Circuit Court of Appeals, responding in frustration to an appeal raising some of the ridiculous constitutional claims described in this FAQ:
"We are sensitive to the need for the courts to remain open to all who seek in good faith to invoke the protection of law. An appeal that lacks merit is not always--or often--frivolous. However we are not obliged to suffer in silence the filing of baseless, insupportable appeals presenting no colorable claims of error and designed only to delay, obstruct, or incapacitate the operations of the courts or any other governmental authority. Crain's present appeal is of this sort. It is a hodgepodge of unsupported assertions, irrelevant platitudes, and leglistic gibberish. The government should not have been put to the trouble of responding to such spurious arguments, nor this court to the trouble of 'adjudicating' this meritless appeal." Crain v. Commissioner, 737 F.2d 1417, 1418 (5th Cir. 1984).
The court not only ruled against Crain, but imposed a damage award against him of $2,000 for bringing a frivolous appeal. Id at 1418.
So when a judge calls an argument "ridiculous" or "frivolous," it is absolutely the pits. There is almost nothing the judge could say that could be any worse. It's not just an opinion, it's an insult. It means that the lawyer arguing the case has absolutely no idea of what he is doing, and has completely wasted everyone's time. It doesn't mean that the case wasn't well argued, or that judge simply decided for the other side, it means that there was NO OTHER SIDE. The argument is ABSOLUTELY, POSITIVELY, INCOMPETENT.
So when a judge starts calling your arguments "frivolous" and "ridiculous," they are not telling you that you that you are just wrong, and they are not telling you that you are just ignorant. They are telling you that you are absolutely out of your mind. The psychology of tax protestors has been described well by two different Circuit Courts of Appeal:
"Like moths to a flame, some people find themselves irresistibly drawn to the tax protestor movement's illusory claim that there is no legal requirement to pay federal income tax." United States v. Sloan, 939 F.2d 499 (7th Cir. 1991).
"Some people believe with great fervor preposterous things that just happen to coincide with their self-interest. 'Tax protestors' have convinced themselves that wages are not income, that only gold is money, that the Sixteenth Amendment is unconstitutional, and so on. These beliefs all lead--so tax protestors think--to the elimination of their obligation to pay taxes. The government may not prohibit the holding of these beliefs, but it may penalize people who act on them." Coleman v. Commissioner, 791 F.2d 68, 69 (7th Cir. 1986).
This FAQ addresses only questions of law, not politics or economics, and it is not the purpose of this FAQ to criticize any opinion, or stifle any debate, about the proper scope or operation of the federal tax system. For example, claims that the federal income tax is unfair, morally equivalent to theft, or bad economic policy are all matters of opinion, not law, and are outside the scope of this FAQ. However, a claim that the federal income tax is unconstitutional, unenforceable, or inapplicable is an assertion of law and is within the scope of this FAQ.
Finally, it should be noted that this FAQ does not include all of the decisions of all the federal courts that have been forced to deal with tax protestors and tax protestor arguments, but includes only those published decisions of the United States Supreme Court and Circuit Courts of Appeal that most clearly refuted these tax protestor theories. A few District Court and Tax Court decisions have been included to fill some gaps, but hundreds of published decisions of the Tax Court and District Courts have not been included, as well as many published and unpublished decisions of the Courts of Appeals.
A "tax protestor" is only someone classified as a "tax protestor" by the Internal Revenue Service in accordance with the IRS definition of "tax protestor."
The IRS may have an internal policy for the classification of some taxpayers as "tax protestors." However, the IRS has no authority over the use or application of the English language, and the phrase "tax protestor" is commonly applied to two types of people:
People who refuse to pay taxes in order to protest policies of the federal government that are supported by those taxes (such as people who refused to pay taxes during the Vietnam War); and
People who refuse to pay taxes or file tax returns out of a mistaken belief, firmly held, that the federal income tax is unconstitutional, invalid, voluntary, or otherwise does not apply to them under one of a number of bizarre arguments, most of which are described in this FAQ.
This FAQ will use the phrase "tax protestor" in the second sense, referring to people who refuse to file returns or pay taxes because of ridiculous and far- fetched arguments against the validity or application of the tax laws.
The federal income tax is unconstitutional because it is a "direct tax" that must be apportioned among the states in accordance with the census.
False. The 16th Amendment to the Constitution, ratified in 1913, clearly states that "The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration."
Before the adoption of the 16th Amendment, the constitutionality of an income tax was determined under Article I, Section 9, Clause 4 of the Constitution, which states that "No Capitation, or other direct, Tax shall be laid, unless in Proportion to the Census or Enumeration herein before directed to be taken." Exactly what the framers of the Constitution meant by "Capitation, or other direct, Tax" is a little unclear. The concern seems to have been about a form of capitation tax employed in England before the Revolution under which taxes were imposed on each citizen based on the value of the land owned by the citizen. The wealthy southern states, with large plantations owned by relatively few people, may have been concerned about the imposition of a tax on the value of land and so sought an assurance that all capitation taxes would be allocated among the states in proportionate to their populations, not their wealth.
The U.S. Supreme Court adopted this view when it decided the case of Hylton v. United States, 3 U.S. 171 (1796). Four separate opinions were written by the justices who heard the case (separate opinions were the common practice of that day), and all four justices agreed that "direct tax" was limited to a tax on the value of land (and slaves, who were considered to be part of the land).
The precise question of whether an income tax was a "direct tax" within the meaning of the Constitution did not arise until the Union enacted an income tax during the Civil War. The Supreme Court followed the opinions from the Hylton decision and ruled unanimously that an income tax was an excise tax, not a "direct tax," and did not need to be apportioned among the states. Springer v. United States, 102 U.S. 586 (1880).
Hylton and Springer were limited (or "distinguished") in 1894, when the Supreme Court decided to re-examine the question of whether an income tax was a "direct tax." In the first Pollock decision, a narrow majority of the court (5 of the 9 justices) began with the premise that a tax on the income from property is the same as a tax on the value of the property itself, a premise completely inconsistent with every other Supreme Court decision before or since. The Court then concluded that a tax on rents received from real property was a "direct tax" and unconstitutional unless apportioned. Pollock v. Farmers' Loan and Trust Co., 157 U.S. 429 (1894). On rehearing, the same five justices decided that a tax on dividends, interest, and other income from personal property (property other than land) was also a "direct tax" and so unconstitutional unless apportioned. Pollock v. Farmers Bank and Trust Co., 158 U.S. 601 (1895)
The Pollock court was very clear that it was only a tax on the incomes from property that was a "direct tax," and other forms of income could be taxed without apportionment. This was confirmed by the court in Brushaber v. Union Pacific R.R. Co., 240 U.S. 1, __ (1916). (See below for a more detailed discussion of the taxation of the income from labor.)
After the Pollock decisions, and before the ratification of the 16th Amendment, the Supreme Court also held that a corporate income tax was constitutional if it was based on the income from the manufacture and sale of goods, even though real and personal property were used to manufacture the goods. Flint v. Stone Tracy Co., 220 U.S. 107 (1911)
Because of the Pollock decisions, Congress was limited in its ability to impose a tax on incomes, because it was necessary to determine the source of the income. Wages, salaries, and other earned income could be taxed, and income from manufacturing and other business activities could be taxed, but rents, interest, dividends, and other income from property could not be taxed without apportionment (a very awkward process). The 16th Amendment was therefore proposed by Congress, and ratified by the states, so that Congress could tax incomes "from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration."
In claiming that Congress cannot tax incomes, tax protestors ignore both the plain language of the 16th Amendment and the fact that Congress could tax wages and other income from employment even before the adoption of 16th Amendment, based on the unanimous ruling of the Supreme Court in Springer and both the majority and dissenting opinions in Pollock.
The income tax cannot apply to individual citizens, because that would be a "direct tax" prohibited by the Constitution.
False. Although the meaning of "direct tax" is a little unclear, it was always understood that taxes imposed by Congress could apply to individual citizens.
In Hylton v. United States, 3 U.S. 171 (1796), the Supreme Court was unanimous in its opinion that Congress could impose a tax on a citizen of Virginia. Of the four justices who heard the case, three were members of the Constitutional Convention that drafted the Constitution, and presumably knew what it meant.
Since the Hylton decision, no judge in the United States has ever even considered that the federal government cannot impose a tax on individual citizens.
As recently as 1991, the Supreme Court referred to arguments that the federal income tax was unconstitutional as "surely frivolous." Cheek v. United States, 498 U.S. 192 (1991).
The federal courts of appeal have also had to refute this argument:
"[H]is position can fairly be reduced to one elemental proposition: The Sixteenth Amendment does not authorize a direct non- apportioned income tax on resident United States citizens and thus such citizens are not subject to the federal income tax laws. ... We hardly need comment on the patent absurdity and frivolity of such a proposition. For over 75 years, the Supreme Court and the lower federal courts have both implicitly and explicitly recognized the Sixteenth Amendment's authorization of a non-apportioned direct income tax on United States citizens residing in the United States and thus the validity of the federal income tax laws as applied to such citizens." In re Becraft, 885 F.2d 547 (9th Cir., 1989).
"[W]e have rejected, on numerous occasions, the tax-protestor argument that the federal income tax is an unconstitutional direct tax that must be apportioned. See, e.g., Lively v. Commissioner, 705 F.2d 1017, 1018 (8th Cir.1983) (per curiam)." United States v. Gerads, 999 F.2d 1255 (8th Cir. 1993).
(It must be admitted that there is often some confusion in the opinions of the Circuit Courts of Appeal about whether the income tax is an excise tax, and therefore subject to the requirement of uniformity, or a non-apportioned direct tax. The Supreme Court has declared that there are only two types of taxes, "direct" taxes that must be apportioned in accordance with the census, and "excises" that must be geographically uniform. [___])
The income tax cannot apply to wages, because that would be a "direct tax" that must be apportioned in accordance with the Constitution.
False. There is nothing in the Constitution that says that wages or income from labor cannot be taxed, or that a tax on wages or income from labor is a "direct" tax. And it has been the consistent opinion of the Supreme Court beginning with Hylton v. United States, 3 U.S. 171 (1796), and continuing with Springer v. United States, 102 U.S. 586 (1880), Pollock v. Farmers' Loan & Trust Co., 158 U.S. 601 (1895), and Brushaber v. Union Pacific R.R. Co., 240 U.S. 1 (1916), that the phrase "direct tax" only applies to a tax on the value of property.
The majority opinion in the Pollock decision states that, if only the tax on interest, rents, dividends, and other income from property were ruled unconstitutional, "this would leave the burden of the tax to be borne by professions, trades, employments, or vocations; and in that way a tax on capital would remain in substance a tax on occupations and labor." 158 U.S. at 637. The majority opinion therefore held that the entire tax act was unconstitutional, even though Congress had the right to impose a non-apportioned tax on the income from employment. (The minority opinion in Pollock believed that the entire tax was constitutional, and so did not need to distinguish between income from property and income from employment.)
That a tax on wages and other compensation for labor would have been constitutional even before the adoption of the 16th Amendment was confirmed by the unanimous decision of the Supreme Court in Brushaber, in which the court stated:
"Nothing could serve to make this clearer than to recall that in the Pollock Case, in so far as the law taxed incomes from other classes of property than real estate and invested personal property, that is, income from 'professions, trades, employments, or vocations,' (158 U.S. 637), its validity was recognized; indeed it was expressly declared that no dispute was made upon that subject, and attention was called to the fact that taxes on such income had been sustained as excise taxes in the past. Id. p. 635." Brushaber v. Union Pacific R.R. Co., 240 U.S. 1, __ (1916).
As recently as 1991, the Supreme Court referred to arguments that the Sixteenth Amendment did not authorize a tax on wages and salaries, and that the federal income tax was unconstitutional, as "surely frivolous." Cheek v. United States, 498 U.S. 192 (1991).
In the history of the United States, not a single judge has ever issued an opinion suggesting that a tax on income from employment was a "direct tax." Not one. Never.
And even if a tax on wages might have once been considered to be a "direct tax" that must be apportioned, the 16th Amendment plainly states that Congress can tax incomes, and wages are a form of income.
The 16th Amendment is ineffective because it does not expressly repeal any provision of Article I of the Constitution.
There is nothing in the Constitution that says that an amendment must specifically repeal another provision of the Constitution. In fact, there are 27 amendments to the Constitution, and only one of the specifically repeals an earlier provision. (The 21st Amendment, when ended Prohibition, specifically repeals the 18th Amendment,