The Income Tax Debate
By the late 1800s and up until the passage of the 16th Amendment, in 1913, many Americans were demanding that their legislators levy an income tax on accumulated wealth. This was because families such as the Carnegies and the Morgans, although virtually untaxed, had gained ever-increasing influence and control over the American political system using their vast fortunes. By reading the Congressional Record, House and Senate documents, newspapers, magazines, law journal articles of the time and the writings of the people who were intimately involved in the development of the 16th Amendment, Phil Hart proves beyond doubt that the intent of the federal income tax as to tax the annual profit from businesses and the net annual income from investment. Wages and salaries from labor were not considered income within the original meaning and intent of the 16th Amendment, known to some people as the Income Tax Amendment.
Hart’s book provides compelling evidence that taxes on labor, as currently collected by the IRS as an “income’ tax, cannot be described as anything other than a direct tax. Senator Norris Brown from Nebraska, the man who wrote the 16th Amendment, defined clearly what income was and what the income tax was intended to accomplish. Not once did Sen. Brown, in any of his writings, mention that Congress intended to pass an amendment that would grant the federal government a new power to directly tax the wages or salaries of working people.
The historical records shows that the Republicans of the early 20th century, acting as agents for those who had monopolized the American economy, set the “wages-are-income” concept into motion by language placed into the federal tax code after the 16th Amendment was passed. The first stature threw all sorts of “sources of income” in to the mix including wages. Other statutes then “benevolently exempted the first $4,000 of a person’s “income.” Since the average American family’s earned income was about $500 a year at the time, it wasn’t until after World War II, when this nation’s economy was really booming and national pride was peaking, that Americans really began paying taxes on their wages. In post-World War II America, Americans took for granted that they could trust the federal government and the average person had long since forgotten the debates of the income tax issue, as well as what the law considered “income” to be.
We have been conditioned since kindergarten to believe that wages and salaries generated from our labors are “income” for federal tax purposes, yet this book provides testimony in direct opposition to such conditioning. The federal government knew what it was doing then and it knows what it sis doing today. The Constitution recognizes two kinds of taxes: direct and indirect. Congress does not have the constitutional authority to lay direct taxes against the people unless the tax burden is equally apportioned by population among the Several States. Congress does have the authority to lay indirect taxes on privileges, events and activities. Excise taxes on cigarettes, alcohol and gasoline are examples of constitutional indirect taxes. An excise tax on a corporate dividend is a tax on a privilege, as a corporation is a privileged entity created by government. There is no intelligent way to argue that a tax on a man’s labor is anything but a direct tax. We work, get paid for our work and then get taxed according to the amount of money we are paid. If you don’t work, you don’t eat and you die. Whereas you can choose not to consume cigarettes, alcohol, gasoline or other products subject to excise taxes. A tax on wages is a tax on our right to exist, in many ways similar to the feudal systems of old. Through threats, coercion, and “brown shirt” tactics, the federal government deceives the American public regarding the constitutional limitations of their taxing authority, leading to trillions of dollars being confiscated from the American People through questionable means. In effect, we are being taxed without our consent because, as Hart points out in this book, consent was given according to the intent of the laws passed, not to the deceitful levels commandeered by the contemporary federal tax enforcement apparatus.
My own entry into this battle began as an IRS Criminal Investigation Division Special Agent, sworn to support and defend the United States Constitution. After being exposed to claims that there might be legal problems with the manner in which the IRS administered and enforced the federal income tax system, I set out to investigate those claims myself because I knew I had a moral, ethical and legal duty to do so. During my own investigation, I also encountered disparities and inconsistencies with the manner in which the IRS enforced the federal income tax system, similar to those described by Hart in this fine book. I attempted to clarify these disparities and my concerns, I was encouraged to resign from my position. I resigned from my special agent position on February 25th, 1999, eerily coinciding with February 25th, 1913, the day that the 16th Amendment was proclaimed to be ratified.
I am so grateful to Phil Hart for dedicating so much of his life to sowing the American public what the federal income tax is all about from its inception. Phil’s book will provide you with a “big picture” view of the federal income tax, rich with history and incontrovertible facts. I know this book will be instrumental in educating the American public about the limits to federal taxing power, an education that is critical to re-harnessing an out of control federal tax enforcement apparatus.
Written by Joseph R. Banister
Former IRS Criminal Investigation Divisions Special Agent
From the Forward of Constitutional Income Do You Have Any?
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