Below is a very informative commentary on the history of the federal income tax. It will be a review for some, but good for all to know. For more info, go to the link http://losthorizons.com/N/80.
An Important History Lesson For Legal Scholars And Pundits Alike
…debunking the relentlessly persistent “income tax began in 1913 with the 16th Amendment” myth.
JUST LAST WEEK ALONE I encountered several ill-informed assertions– by well-known pundits and even one historian– that the origin of today’s income tax is to be found in 1913 and the Sixteenth Amendment. This mythological infection has burrowed deeply into the American body of received wisdom, despite being not only wrong but unmistakably contradicted by the sources of information most routinely relied upon for accuracy regarding this sort of issue.
The persistence of this myth is a testament to its importance to the “ignorance tax” scheme, the beneficiaries of which– the IRS and other tax agencies, the DOJ and its state counterparts, and the “tax professional industry”– are its most flagrant boosters. So, though I’ve done so before more than once, I’m going to take that myth apart, in the hope that this latest debunking will find its way onto the screens of every one of its victims.
Happily, doing that “take-apart” only requires a look at a couple of as-mainstream-as-you-can-get authorities. The only challenge will be overcoming that quirky human tendency to read things selectively– subconsciously editing as we go to harmonize what we’re seeing with what we already believe true. I’ll provide a little guidance (and some “emphasis added”) where needed to meet that challenge.
TO START WITH, we have to remember the Pollock case. This was a lawsuit by an investor objecting to the payment of income taxes by Farmer’s Loan & Trust Co. (now Citibank) on its national-railroading-related profits prior to distributing them as dividends. The suit led to an 1895 Supreme Court ruling that when the income tax was applied to what had previously been viewed without controversy as excisable dividends or rent it was transformed into a direct tax requiring apportionment.
The reasoning adopted by the court was that since the sources from which dividends and rent are derived– stock or real estate– are both personal property, any tax on those two forms of gains amounted to a property tax. A tax on the fruit was a tax on the tree and a tax on the tree was a direct tax, went the argument (which served a lot of very corrupt and very powerful Washington interests of the time) notwithstanding other considerations which by which those gains would qualify for the excise.
Accordingly, the court declared:
“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 [dividends], 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. Farmer’s Loan & Trust Co., 157 U.S. 429 (1895)
The purpose of the Sixteenth Amendment was to overrule the Pollock court and allow the very popular income tax to resume operations as before the corrupt interruption.
In 1916, a unanimous Supreme Court issued its landmark ruling in Brushaber v. Union Pacific RR. Co. (240 U.S. 1, 1916) sorting out and settling the purpose, meaning and effect of the Sixteenth Amendment, as summarized above. Reporting on that ruling at the time, the Cornell Law Quarterly put it this way:
“The Amendment, the [Supreme] court said, judged by the purpose for which it was passed, does not treat income taxes as direct taxes but simply removed the ground which led to their being considered as such in the Pollock case, namely, the source of the income. Therefore, they are again to be classified in the class of indirect taxes to which they by nature belong.”
Un-parsed by knowing eyes, the import of this language can just be skipped over without disturbing the deeply-encouraged myth of the 1913, Sixteenth Amendment origin of the income tax. But let’s do that parsing:
“The Amendment … simply removed the ground which led to [income taxes] being considered as [direct taxes] in the Pollock case [in 1895]” with those same taxes being “again … classified in the class of indirect taxes to which they by nature belong”.
Can there be any doubt that the Cornell legal experts are speaking of a tax pre-dating 1913 and the Sixteenth Amendment by 18 years and proceeding– unchanged but merely pulled back on the track by the amendment after being bumped off by the errant Pollock court ruling– into today’s post-Sixteenth Amendment present?
This cannot be honestly misunderstood. The income tax DID NOT begin in 1913 or by virtue of the Sixteenth Amendment. Period.
But let’s continue…
Within the same month as its Brushaber ruling, the same Supreme Court ruled on another “income” tax-related case in Stanton v. Baltic Mining Co., 240 U.S. 103 (1916). In Stanton, the court makes this unambiguous statement:
“[B]y the [Brushaber] ruling, it was settled that the provisions of the Sixteenth 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, and being placed in the category of direct taxation subject to apportionment by a consideration of the sources from which the income was derived — that is, by testing the tax not by what it was, a tax on income, but by a mistaken theory deduced from the origin or source of the income taxed.”
The Supremes saying the same again, a couple of years later:
“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, it does not extend the taxing power to new or excepted subjects…”
Peck v. Lowe, 247 U.S. 165 (1918)
61 years later, the American Law Division of the Library of Congress puts it this way:
“The Supreme Court, in a decision written by Chief Justice White, first noted that the Sixteenth Amendment did not authorize any new type of tax…”
Legislative Attorney of the American Law Division of the Library of Congress Howard M. Zaritsky in his 1979 Report No. 80-19A, entitled ‘Some Constitutional Questions Regarding the Federal Income Tax Laws’
Fast-forward 9 more years and the Supreme Court says it again:
“[T]he sole purpose of the Sixteenth Amendment was to remove the apportionment requirement for whichever incomes were otherwise taxable. 45 Cong. Rec. 2245-2246 (1910); id. at 2539; see also Brushaber v. Union Pacific R. Co., 240 U. S. 1, 240 U. S. 17-18 (1916)
So. Carolina v. Baker, 485 U.S. 505 (1988)
(This one benefits from a little knowledgeable parsing as well, or its import is capable of being missed. Inserting the clarifying elements we have:“[T]he sole purpose of the Sixteenth Amendment was to remove the apportionment requirement [imposed by the Pollock court in 1985 upon] whichever incomes were [then] otherwise taxable.”)
WELL, IS THIS ALL CLEAR ENOUGH? The income tax pre-dates 1913 and the Sixteenth Amendment.
Does this matter? Of course, it does, and hugely.
What is proven by the evidence of the pre-amendment origin of the tax is that the tax of today– the same tax as yesterday’s — can and does only fall on the same limited class of objects which were uncontroversially taxed without apportionment prior to the Pollock interruption. That means the tax still only falls on objects suited to an indirect excise (which, in turn, means objects suited to a “privilege tax”, as also declared by the Supreme Court).
It is in hope of obscuring this straightforward and “ignorance tax”-threatening cognitive light-bulb that the myth-mongers work so hard to promote the nonsense about 1913 and the Sixteenth Amendment being the origin of today’s tax. Indeed, even if these mendicants admit that an income tax was collected prior to 1913 (which is, of course, easy to prove and hard to deny), they pretend that the post-1913 tax is different in character from the pre-1913 tax, even in the face of every relevant authority saying otherwise.
The “ignorance tax” folks grasp that obscuring the truth about the origin of the tax is that important to their scheme. YOU need to grasp how important exposing the truth about the origin of the tax is to liberating everyone from the “ignorance tax” scheme.
SO, SLAP ANY PUNDIT or professional you meet who speaks of a 1913 origin of the tax with this fistful of facts! Make sure that he or she leaves the encounter knowing the truth and ruminating on its implications.
You’ll be helping restore liberty and the rule of law in America– one mind at a time. But they’ll do it wholesale once they’ve thought it all through.
“It does not take a majority to prevail… but rather an irate, tireless minority, keen on setting brushfires of freedom in the minds of men.”
-Samuel Adams
(P.S. Those looking for a comprehensive presentation on the whole history of the Sixteenth Amendment, and how that accurate history has been under assault by the “ignorance tax” beneficiaries, will find it here.)