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Unread post December 17th, 2012, 8:54 am
Weston White Lead Researcher

Lead Researcher
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Location: Fresno, California

NOTE: I will be working on converting this into a whitepaper or treatise.


Points in Further Support of the Crux of Federal Taxation (CFT)




3. The entirety of this is to so timely filed with our designated IRS regional service center/district office in lawful accordance with 26 CFR § 301.6402-2(b)(1) and subsequently 26 CFR § 601.105(a),(b)(1-2,4),(c)(1),(d)(1),(e)(1-3), et seq.

i. Submission of a claim of refund (or credit) is not frivolous (26 USC § 6702); however, under illegitimate circumstances doing so may be erroneous (26 USC §§ 6662, 6676.)

4. The submission of completed IRS published W-3/W-2 Form receipts by a respective payer to the SSA/IRS alone does not establish any federally taxable liabilities. Such forms are merely informational receipts, thereby providing for a proper claim of lawful ownership; by identifying the rightful owner of specifically withheld monies and stating the aggregate and precise amounts having been withheld (and deposited, 26 USC §§ 3501(a), 7501(a), 7809(a)) throughout a respective federal tax year in consideration of a total sum (26 USC § 6051(a).)

i. Under the Federal Rules of Evidence an IRS published W-2 Form as submitted by a third-party would not qualify as an original document –and is in fact an out of court affidavit; ARTICLES IX and X, inclusive.

ii. As a contractual obligation to the benefit of our sustained livelihood, our ‘payers’ required our participation in IRS W-4 (stoppage at the source) withholdings with respect to the total sum of our pay received for each pay-period throughout the duration of the respective federal tax year. See also: IRM at 4.2.2.4(4E).

5. Social Security, Medicare, Medicaid, etc., are voluntary participation federal entitlement programs, with exception to those classes explicitly stipulated within 42 USC § 405(c)(2)(B)(i). See also: 26 CFR §§ 31.6011(b)-2(b)(1)(iv),(c)(2)(i), 301.6109-1(c),(d)(1),(d)(3)(i), et seq.

i. With consideration to the respective federal tax year, neither PRIMARY SPOUSE nor SPOUSE were at any point among those classes listed therein and thereby are not legally compelled to comply with or participate in any respective federal entitlement programs during the relevant federal tax period.

ii. Both PRIMARY SPOUSE and SPOUSE willfully elect to opt-out of receiving whatever such future benefits, as pertaining specifically to 26 USC Chapter 21—FICA, as such contributions having so been withheld throughout the duration of the respective federal tax year and respectfully demand that the aggregate of such Social Security and Medicare withholdings be rightfully returned to our possession and whereby we shall seek our own reliance upon such respective private plans or policies, as we independently and personally determine necessary and proper.

6. As prescribed by 26 USC § 6201(a)(1), the Congress has required that: “The Secretary shall assess all taxes determined by the taxpayer …” American jurisprudence has well-established that “shall” means “must” and that “must” means “to be required to”. See also: IRM at 4.10.12.1.2(4).

i. With respect to the relevant federal tax period, the IRS has not made nor provided us notice of any such assessment of whatever underlying taxes (26 USC §§ 6203, 7522.)

ii. Both PRIMARY SPOUSE and SPOUSE have made such a determination of taxes for the relevant federal tax period and have forthwith timely filed that determination with our designated IRS regional service center/district office.

7. The bona fide sum of ‘gross income’, 26 USC § 61(a), realized by both PRIMARY SPOUSE and SPOUSE for the 2012 federal tax year is: $0,000.00.

i(a). The aggregate (whole) financial capital earned by PRIMARY SPOUSE for the duration of the 2012 federal tax year is: $00,000.00; including the taxable sum, so stated in 7.i(c).

i(b). $0. ‘gross income’, 26 USC § 61(a), was born out from the whole of the financial capital, so stated in 7.i(a); the entirety of that source-capital was applied throughout the duration of the 2012 federal tax period for personal sustenance and incurred debt.

i(c). The bona fide sum of ‘gross income’, 26 USC § 61(a), realized by PRIMARY SPOUSE for the 2012 federal tax year is: $0.00; resulting from contractual compensation in the form of: (1) holiday payoff: $0.00, (2) sick leave payment: $0.00, (3) vacation payoff: $0.00, and (4) vacation payment: $0.00.

ii(a). The aggregate (whole) financial capital earned by SPOUSE for the duration of the 2012 federal tax year is: $00,000.00; including the taxable sum, so stated in 7.ii(c).

ii(b). $0. ‘gross income’, 26 USC § 61(a), was born out from the whole of the financial capital, so stated in 7.ii(a); the entirety of that source-capital was applied throughout the duration of the 2012 federal tax period for personal sustenance and incurred debt.

ii(c). The bona fide sum of ‘gross income’, 26 USC § 61(a), realized by SPOUSE for the 2012 federal tax year is: $0.00; resulting from contractual compensation in the form of: (1) vacation payment: $0.00 and (2) annual bonus: $0.00.

iii. The joint standard deduction awarded for the 2012 federal tax year is: $19,000.00.

iv. Jointly, our acquired ‘gross income’, 26 USC § 61(a), is ($0,000.00) less than the joint standard deduction, idem, permitted for the 2012 federal tax year to married filers, and thereby no federal tax is owed and all monies withheld throughout the relevant federal tax period are due to be promptly returned to PRIMARY SPOUSE and SPOUSE as per this joint claim of refund.

8. The total amount overpaid through IRS W-4 (stoppage at the source) withholdings from both PRIMARY SPOUSE and SPOUSE for the 2012 federal tax year is: $00,000.00.

i(a). The bona fide sum of monies withheld from PRIMARY SPOUSE throughout the 2012 federal tax year is: $0,000.00; resulting from contractual IRS W-4 withholding requirements as follows: (1) Social Security tax: $0.00, (2) Medicare tax: $0.00, and (3) federal income tax: $0,000.00.

i(b). The bona fide sum of monies withheld from SPOUSE throughout the 2012 federal tax year is: $0,000.00; resulting from contractual IRS W-4 withholding requirements as follows: (1) Social Security tax: $0.00, (2) Medicare tax: $0.00, and (3) federal income tax: $0,000.00.

ii. Both PRIMARY SPOUSE and SPOUSE respectfully demand that the aggregate of such 2012 federal tax year IRS W-4 withholdings totaling: $00,000.00 be rightfully returned to their possession; with (1) $0.00 pertaining to Social Security, (2) $0.00 pertaining to Medicare, and (3) $0,000.00 pertaining to federal income tax.

9. As a point of reference, in federal tax law, with regard to stoppage at the source, the Congress has statutorily authorized individuals the option to commence voluntary IRS W-4 withholdings within 26 USC § 3402(p)(3)(B) and to make claims of refund on whatever so withheld and overpaid (including accruing interest), without regard to whatever tax liabilities realized, (see: 26 USC § 31(a)(1) §§ 3503, 6401(c), 6402(a), 6611(a),(b)(2), 6621(a), 6622(a), 7422(a), et seq.)

10. The federal income tax, 26 USC § 61(a) is not a tax upon a ‘source’ whatever; that is to say, it is not a tax upon one’s basis in establishing or acquiring pecuniary capital, (i.e., one’s “whole” estate or personal property; including their: assets, contracts, earnings, livelihood, personalty, principal, remuneration, savings, stock, sustenance, etc.) Moreover, an individual’s federal income tax liability is not born merely from the receipt of money; it is born from the growth or increase of monies being within their possession or command, or otherwise through a pecuniary conversion of whatever assets or arrangements held that results in realizing a ‘gain’ or ‘profit’.

i(a). A tax upon those compelled to toil in exchange for monetary pay being necessary to subsist is indifferent than a tax upon their right to pursue and enjoy life and thereby is constitutional only when prudent and levying is being achieved through ‘apportionment’.

i(b). The XVI Amendment to the U.S. Constitution in rendering constitutionality, subsequently, to the pride of 26 USC, was never designated to permit for levying a national tax, indirectly, upon the portion of income that is itself the capital, but to permit for levying a national tax, indirectly, only upon the portion of income that has been severed therefrom —the capital— and that results in deriving a monetary addition of “wealth” to the originating sum, (thereafter being “severed” from the ‘source’, viz, after deducting all legally permissible loss, expense, etc.)

i(c). The term ‘incomes’ as provided for within the XVI Amendment to the U.S. Constitution and subsequently adopted for implementation within the Internal Revenue Code (IRC) of 1913 as the term ‘net income’ is in direct reference to the ‘1909 Corporation Excise Tax Act’, which therein defined ‘income’ peculiarly as: “profit gained through sale or conversion of capital assets”, thereby providing the term ‘gross income’ an intentionally unambiguous legal context and breadth, (see: Stratton's Independence, Ltd. v. Howbert, 231 U.S. 399 (1913); Doyle v. Mitchell Bros. Co., 247 U.S. 179 (1918); Eisner v. Macomber, 252 U.S. 189 (1920); Merchants' Loan & Trust Co. v. Smietanka, 255 U.S. 509 (1921); Bowers v. Kerbaugh-Empire Co., 271 U.S. 170 (1926); et al.)

i(d). Poignant insight between the relational aspects of the various classes of indirect taxation and the ‘Corporation Tax of 1909’ was provided by Flint v. Stone Tracy Co., 220 U.S. 107, 151 (1911) in quoting Thomas v. United States, 192 U. S. 363, 370 (1904): “And in the same connection the Chief Justice, delivering the opinion of the court in Thomas v. United States, 192 U. S. 363, in speaking of the words “duties,” “imposts,” and “excises,” said: “We think that they were used comprehensively, to cover customs and excise duties imposed on importation, consumption, manufacture, and sale of certain commodities, privileges, particular business transactions, vocations, occupations, and the like.” Duties and imposts are terms commonly applied to levies made by governments on the importation or exportation of commodities. Excises are “taxes laid upon the manufacture, sale, or consumption of commodities within the country, upon licenses to pursue certain occupations, and upon corporate privileges.” Cooley, Const. Lim., 7th ed., 680.

The tax under consideration, as we have construed the statute, may be described as an excise upon the particular privilege of doing business in a corporate capacity, i.e., with the advantages which arise from corporate or quasi corporate organization; or, when applied to insurance companies, for doing the business of such companies. As was said in the Thomas case, 192 U. S. 363, supra, the requirement to pay such taxes involves the exercise of privileges, and the element of absolute and unavoidable demand is lacking. If business is not done in the manner described in the statute, no tax is payable.

i(e). In quoting legislative draftsman for the Treasury Department, F. Morse Hubbard, (page 2580 of the March 27th, 1943, House Congressional Record) for Amendment XVI:

So the 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. It is still fundamentally an excise or duty with respect to the privilege of carrying on any activity or owning any property which produces income.

The income tax 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. …

ii(a). The federal income tax (“Underwood Tariff Act of 1913”), is conspicuously a tax designated upon one’s realized ‘gain’ or ‘profit’ emanating —deriving— from a ‘source’ as income; being either monetarily intrinsic or readily convertible thereto, however, so obtained, invested, or employed (and without regard to the legality of such.) So as to return a positive sum increase, dissevered therefrom one’s base —source— pecuniary capital or principal, and without lending consideration to the originating ‘source’ from whence the positive increase had emanated (or ‘derived’.)

ii(b). The federal income tax exists as a mode of indirect taxation, requiring national ‘uniformity’, being in the proper form of an internal excise; that is to say, it is meant to function as a financial excision upon capitalistic gains, profits, dividends, entrepreneurship, commerce, trade, and denoted business, industrial, or professional privileges, and the like.

ii(c). Moreover, the federal income tax, is an indirect tax upon the realized increase or conversion arising (so being severed) from an individual’s acquired capital or principal. Thereby, having resulted in a monetary growth, even when the case involves such —hence, “the source”— being directly obtained through or as a result of an individual’s private contracting, exertion, laboring, or toiling. The distinction concerning the federal income tax is not a tax upon the ‘source’ itself; it is a tax upon what was positively brought in as a result of the wise, prudent, or enterprising application of that ‘source’.

ii(d). It is when one applies their acquired source-capital, so as to take in a financial growth or increase (i.e., gains or profits), ergo ‘incomes’, having so becomingly severed or converted therefrom that source —a financial corpus, that it realizes XVI Amendment ‘incomes’ and is thereby uniformly taxable, indirectly, under the federal income tax.

ii(e). To tax an individual’s basis in acquiring or establishing personal contracts, earnings, livelihood, payments, property, remuneration, sustenance, etc., correlates a personal tax, which is a direct tax levied in consideration of or with respect to conjoin any of: (1) one’s social standing, class, or caste —as poll taxes; (2) one’s occupation, industry, or labor —as capitation taxes; or (3) one’s movable personal property —as personalty.

iii. As to the above empirical facts and law pertaining to statutory ‘incomes’, being so well-established and supported by American jurisprudence, emphasizing specifically: Stratton's Independence, Ltd. v. Howbert, 231 U.S. 399 (1913); Brushaber v. Union Pacific R. Co., 240 U.S. 1 (1916); Stanton v. Baltic Mining Co., 240 U.S. 103 (1916); Doyle v. Mitchell Bros. Co., 247 U.S. 179 (1918); Lynch v. Turrish, 247 U.S. 221 (1918); Southern Pacific Co. v. Lowe, 247 U.S. 330 (1918); Lynch v. Hornby, 247 U.S. 339 (1918);Eisner v. Macomber, 252 U.S. 189 (1920); Merchants' Loan & Trust Co. v. Smietanka, 255 U.S. 509 (1921); Bowers v. Kerbaugh-Empire Co., 271 U.S. 170 (1926); Lucas v. Alexander, 279 U.S. 573 (1929); U.S. v. Safety Car Heating & Lighting Co., 297 U.S. 88 (1936); Commissioner v. Glenshaw Glass Co., 348 U.S. 426 (1955); South Carolina v. Baker, 485 U. S. 505 (1988); et al.

iv(a). Pollock v. Farmers' Loan & Trust Co., 157 U.S. 429, 632 (1895) in quoting Veazie Bank v. Fenno, 75 U.S. 533, 543 (1869) elucidated the impropriety and fundaments in referencing the legislative history for ‘direct’ taxation: “This review shows that personal property, contracts, occupations, and the like have never been regarded by Congress as proper subjects of direct tax. It has been supposed that slaves must be considered as an exception to this observation. … As persons, slaves were proper subjects of a capitation tax, which is described in the Constitution as a direct tax; as property, they were, by the laws of some, if not most, of the States classed as real property, descendible to heirs. …

iv(b). This point, idem, was further emphasized at 157 U.S. 429, 633 and in the Pollock rehearing 158 U.S. 601, 653 (1895), in quoting Chief Justice Chase whom delivered the unanimous judgment, supra, in 75 U.S. 533, 544 (1869): “ It may be rightly affirmed, therefore, that, in the practical construction of the Constitution by Congress, direct taxes have been limited to taxes on land and appurtenances, and taxes on polls, or capitation taxes. And this construction is entitled to great consideration, especially in the absence of anything adverse to it in the discussions of the convention which framed, and of the conventions which ratified, the Constitution.

v(a). By the by, so having been substantively explicated by the watershed case, Pollock v. Farmers' Loan & Trust Company, 158 U.S. 601, 625 (1895) in quoting our Forefather, a Federalist (moniker: Publius, which also included: James Madison and John Jay), Secretary of the Treasury, Alexander Hamilton [7 Hamilton’s Works, 848]: “A tax upon one's whole income is a tax upon the annual receipts from his whole property, and as such falls within the same class as a tax upon that property, and is a direct tax in the meaning of the Constitution.” See also, supra: 247 U.S. 179, 185 (1918); 247 U.S. 330, 335 (1918).

v(b). And in further quoting Mr. Hamilton, supra, 157 U.S. 429, 591; 158 U.S. 601, 626 (1895) [3 Hamilton’s Works, 34]: “This principle, which seems critically correct, would exempt as well the income as the capital of the property. It protects the use as effectually as the thing. What, in fact, is property but a fiction without the beneficial use of it? In many cases, indeed, the income or annuity is the property itself.” Thus enlightenment is rendered unto the concept that money, mostly, exists as a form of personalty; and that when income exists also as the capital it is to be exempted, as such is likely an instance of personalty.

vi. As an inclusionary means of persuasive authority, wholly in support to the above, such was pointedly rendered by dissent in Helvering v. Gerhardt, 304 U.S. 405, 430 (1938) [DISSENTING]: “ As they stood when the cases now before us were in the Circuit Court of Appeals, our decisions required it to hold that the salaries paid by the Port Authority to respondents are not subject to federal taxation. I would affirm its judgments.

11. It was stated on behalf of President William Taft —himself being knowledgeable on matters of taxation— within his proposal for what would become the XVI Amendment, (pages 3344-3345 of the June 16, 1909, House Congressional Record) that: “… it is now proposed to make up the deficit by the imposition of a general income tax, in form and substance of almost exactly the same character as, that which in the case of Pollock v. Farmer’s Loan and Trust Company (157 U.S., 429) 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. …

The decision of the Supreme Court in the income-tax cases deprived the National Government of a power which, by reason of previous decisions of the court, it was generally supposed that government had. It is undoubtedly a power the National Government ought to have. …

I therefore recommend to the Congress that both Houses, by a two-thirds vote, shall propose an amendment to the Constitution conferring the power to levy an income tax upon the National Government without apportionment among the States in proportion to population.

Second, the decision in the Pollock case left power in the National Government to levy an excise tax, which accomplishes the same purpose as a corporation income tax and is free from certain objections urged to the proposed income tax measure.
...
... This is an excise tax upon the privilege of doing business as an artificial entity and of freedom from a general partnership liability enjoyed by those who own the stock. …

The decision of the Supreme Court in the case of Spreckels Sugar Refining Company against McClain (192 U.S., 397), seems clearly to establish the principle that such a tax as this is an excise tax upon privilege and not a direct tax on property, and is within the federal power without apportionment according to population. The tax on net income is preferable to one proportionate to a percentage of the gross receipts, because it is a tax upon success and not failure. It imposes a burden at the source of the income at a time when the corporation is well able to pay and when collection is easy.

Another merit of this tax is the federal supervision, which must be exercised in order to make the law effective over the annual accounts and business transactions of all corporations. While the faculty of assuming a corporate form has been of the utmost utility in the business world, it is also true that substantially all of the abuses and all of the evils which have aroused the public to the necessity of reform were made possible by the use of this very faculty. If now, by a perfectly legitimate and effective system of taxation, we are incidentally able to possess … the gains and profits of every corporation in the country, we have made a long step toward that supervisory control of corporations which may prevent a further abuse of power.

12. Chronologically, the term ‘GROSS INCOME’, 26 USC § 61(a) of the 1954-2002 IRC —initially termed: ‘NET INCOME’— derives from: (1) Sec. 22(a) of the 1928 IRC, (2) Sec. 213 of the 1917/1918 IRC, (3) Sect. 2(a) of the 1916 IRC, and (4) Sect. II B. of the 1913 IRC.

i(a). It is a binding principle in statutory interpretation that pari materia establishes the intended context and breadth of a statute as ratified by the Legislature with relevant consideration to its prior forms in concurrency to its now present form, as has been succinctly stated by American jurisprudence: “… and in interpreting a statute a court should always turn first to one cardinal canon before all others. We have stated time and again that courts must presume that a legislature says in a statute what it means and means in a statute what it says there.” —Connecticut Nat. Bank v. Germain, 503 U.S. 249, 253-254 (1992)— [See, e.g., United States v. Ron Pair Enterprises, Inc., 489 U.S. 235, 241-242 (1989); United States v. Goldenberg, 168 U.S. 95, 102-103 (1897); Oneale v. Thornton, 6 Cranch 53, 68. “When the words of a statute are unambiguous, then this first canon is also the last: “judicial inquiry is complete.”Rubin v. United States, 449 U.S. 424, 430(1981); see also Ron Pair Enterprises, supra, at 241.]

i(b). So was it stated in Chevron U.S.A., Inc. v. NRDC, 467 U.S. 837, 843 (1984): “When a court reviews an agency's construction of the statute which it administers, it is confronted with two questions. First, always, is the question whether Congress has directly spoken to the precise question at issue. If the intent of Congress is clear, that is the end of the matter; for the court, as well as the agency, must give effect to the unambiguously expressed intent of Congress. [Footnote 9] If, however, the court determines Congress has not directly addressed the precise question at issue, the court does not simply impose its own construction on the statute, [Footnote 10] as would be necessary in the absence of an administrative interpretation. Rather, if the statute is silent or ambiguous with respect to the specific issue, the question for the court is whether the agency's answer is based on a permissible construction of the statute. [Footnote 11]” See also: Connally v. General Construction Co., 269 U.S. 385, 391(1926).

Footnote 9 — “The judiciary is the final authority on issues of statutory construction, and must reject administrative constructions which are contrary to clear congressional intent. [i][i] … [/i]If a court, employing traditional tools of statutory construction, ascertains that Congress had an intention on the precise question at issue, that intention is the law, and must be given effect.[/i]”

Footnote 10 — “See generally R. Pound, The Spirit of the Common Law 174-175 (1921).

Footnote 11 — “The court need not conclude that the agency construction was the only one it permissibly could have adopted to uphold the construction, or even the reading the court would have reached if the question initially had arisen in a judicial proceeding. …

i(c). Also clarified in Foster v. United States, 303 U.S. 118, 120-121 (1938): “… Courts should construe laws in harmony with the legislative intent and seek to carry out legislative purpose. With respect to the tax provisions under consideration, there is no uncertainty as to the legislative purpose to tax post-1913 corporate earnings. We must not give effect to any contrivance which would defeat a tax Congress plainly intended to impose. …” i(d). Legislation scope was addressed in Phelps v. United States, 274 U.S. 341, 344 (1927): “… Acts of Congress are to be construed and applied in harmony with, and not to thwart, the purpose of the Constitution. …” See also: Nigro v. United States, 276 U.S. 332, 341(1928).

i(e). Most exactly the legislative intent of the XVI Amendment was made clear in Eisner v. Macomber, 252 U.S. 189, 206 (1920): “As repeatedly held, this did not extend the taxing power to new subjects, but merely removed the necessity which otherwise might exist for an apportionment among the states of taxes laid on income. …

A proper regard for its genesis, as well as its very clear language, requires also that this amendment shall not be extended by loose construction, so as to repeal or modify, except as applied to income, those provisions of the Constitution that require an apportionment according to population for direct taxes upon property, real and personal. This limitation still has an appropriate and important function, and is not to be overridden by Congress or disregarded by the courts.

In order, therefore, that the clauses cited from Article I of the Constitution may have proper force and effect, save only as modified by the amendment, and that the latter also may have proper effect, it becomes essential to distinguish between what is and what is not “income,” as the term is there used, and to apply the distinction, as cases arise, according to truth and substance, without regard to form. …

i(f). As a relative principle so being antecedently upheld within Hassett v. Welch, 303 U.S. 303, 314 (1938), see also: 263 U.S. 179, 187-188 (1923); 245 U.S. 151, 153 (1917); et al: “In the interpretation of statutes levying taxes, it is the established rule not to extend their provisions by implication beyond the clear import of the language used, or to enlarge their operations so as to embrace matters not specifically pointed out. In case of doubt, they are construed most strongly against the government and in favor of the citizen.

ii(a). The established legal context and breadth of 26 USC § 61(a), was last, clearly depicted in Section 22(a) termed ‘GROSS INCOME’ of the IRC of 1939 (and preceding statutes), stating in part: ““gross income” includes gains, profits, and income derived from salaries, wages, or compensation for personal service, of whatever kind and in whatever form paid, or from professions, vocations, trades, businesses, commerce, or sales, or dealings in property, whether real or personal, growing out of the ownership or use of or interest in such property; also from interest, rent, dividends, securities, or the transaction of any business carried on for gain or profit, or gains or profits and income derived from any source whatever. …” Similarly as from the repealed Revenue Acts of 1861 (Sec. 90) and 1894 (Sec. 27).

ii(b). The post-1939 IRC for 26 USC § 61(a) wholly collaborates the above, rendering full consideration to the XVI Amendment, stating in-part: “Except as otherwise provided in this subtitle, gross income means all income from whatever source derived, including (but not limited to) the following items: …” See additional clarification: IRM at 4.10.12.1.2(8).

iii(a). Pollock v. Farmers' Loan & Trust Company, 158 U.S. 601, 628, 637 (1895), established in pari materia that to tax the source (including its shadow [see: 155 U.S. 688, 698 (1895)] —hence, the necessity thereafter for the XVI Amendment language), was to be achieved only through apportionment by the direct taxing clauses of the U.S. Constitution. As the court had inferred summarily that a tax levied upon real estate, or rents or incomes deriving from real estate, or upon personal property, or incomes deriving from personal property, were likewise ‘direct taxes’; thereby requiring apportionment.

iii(b). Brushaber v. Union Pacific R. Co., 240 U.S. 1, 19 (1916), clarified the well-intended breadth of the XVI Amendment, stating its ratified purpose: “… that is, the prevention of the resort to the sources from which a taxed income was derived in order to cause a direct tax on the income to be a direct tax on the source itself, and thereby to take an income tax out of the class of excises, duties, and imposts, and place it in the class of direct taxes.

iii(c). The perceptual breadth of the XVI Amendment was zealously postulated in Eisner v. Macomber, 252 U.S. 189, 207-208 (1920): “Brief as it is, it indicates the characteristic and distinguishing attribute of income essential for a correct solution of the present controversy. The government, although basing its argument upon the definition as quoted, placed chief emphasis upon the word “gain,” which was extended to include a variety of meanings; while the significance of the next three words was either overlooked or misconceived. “Derived from capital;” “the gain derived from capital,” etc. Here, we have the essential matter: not a gain accruing to capital; not a growth or increment of value in the investment; but a gain, a profit, something of exchangeable value, proceeding from the property, severed from the capital, however invested or employed, and coming in, being “derived” -- that is, received or drawn by the recipient (the taxpayer) for his separate use, benefit and disposal -- that is income derived from property. Nothing else answers the description.

The same fundamental conception is clearly set forth in the Sixteenth Amendment -- “incomes, from whatever source derived” -- the essential thought being expressed with a conciseness and lucidity entirely in harmony with the form and style of the Constitution.

iii(d). With the foregoing being further upheld within South Carolina v. Baker, 485 U. S. 505, 522 (1988) [Footnote 13]: “… We disagree. 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 federal taxation, and that the 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 [i]Brushaber v. Union Pacific R. Co.[/i],240 U. S. 1, 240 U. S. 17-18 (1916).

iv. As ‘gross income’, 26 USC § 61(a), pertains to the core of remuneration earned by menial or subservient workforces, the federal income tax is intended only as a tax to be assessed with apparent consideration to the monetary fruit that has germinated out from the soil of financial capital, however, cultivated or refined; it is not, however, a tax upon the soil itself, (paraphrased as from Eisner v. Macomber, 252 U.S. 189, 206 (1920).) ‘Gross income’ is to leave the monetary source —that is to say the corpus— unimpaired, as otherwise the federal income tax is, ultra vires, no longer taxing with consideration to XVI Amendment ‘incomes’, thereby rendering the tax wholly unconstitutional.

13. Concerning enumerated powers of national taxation, the Legislature may neither provide itself nor the Executive Branch (including its bureaucracies) circumvention from constitutional constraints by creatively morphing a stated method of taxation in form only; i.e., a tax assessed upon the core of personalty an individual has acquired through the course of their livelihood is indifferent to a tax assessed upon that very livelihood itself, regardless if whether the imposition of whatever tax is waged upon the property itself or the menial performance exerted in order to justify the acquisition. As to seek taxes from either course results in the same affliction —for without exception, both means are relative only to the ‘direct’ methods of taxation, i.e., capitation, personal, or poll taxes and thereby requiring ‘apportionment’. With such being inherent to the prudent construction of our U.S. Constitution and thusly clarified in the following cases:

i(a). In United States v. Butler, 297 U.S. 1, 61 (1936): “ A tax, in the general understanding of the term, and as used in the Constitution, signifies an exaction for the support of the Government. The word has never been thought to connote the expropriation of money from one group for the benefit of another. … The exaction cannot be wrested out of its setting, denominated an excise for raising revenue, and legalized by ignoring its purpose as a mere instrumentality for bringing about a desired end. To do this would be to shut our eyes to what all others than we can see and understand. Child Labor Tax Case, 259 U. S. 20, 259 U. S. 37.

i(b). As in Eisner v. Macomber, 252 U.S. 189, 206 (1920): “In order, therefore, that the clauses cited from Article I of the Constitution may have proper force and effect, save only as modified by the amendment, and that the latter also may have proper effect, it becomes essential to distinguish between what is and what is not “income,” as the term is there used, and to apply the distinction, as cases arise, according to truth and substance, without regard to form. …

i(c). This principle, idem, further, having been extensively recounted in Pollock v. Farmers' Loan & Trust Co., 157 U.S. 429, 581-583 (1895). See also: Bailey v. Drexel Furniture Co., 259 U.S. 20, 38 (1922).

i(d). And moreover directly stated by Postal Telegraph Cable Co. v. Adams, 155 U.S. 688, 698 (1895): “… The substance, and not the shadow, determines the validity of the exercise of the power.

14. The CRS Annotated Constitution, a project of the Congressional Research Service (CRS) and Government Printing Office (GPO), regarding the XVI Amendment has concluded the following:

i. Under the heading “History and Purpose of the Amendment”, so stated:

“… [T]he 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.” [13]
[13 — Stanton v. Baltic Mining Co., 240 U.S. 103, 112 (1916)]

ii. Under the heading “Income Subject to Taxation”, so stated:

Building upon definitions formulated in cases construing the Corporation Tax Act of 1909, [14] the Court initially described income as the “gain derived from capital, from labor, or from both combined,” inclusive of the “profit gained through a sale or conversion of capital assets”; [15]
[14 — Stratton’s Independence v. Howbert, 231 U.S. 399 (1913); Doyle v. Mitchell Bros. Co., 247 U.S. 179 (1918)]
[15 — Eisner v. Macomber, 252 U.S. 189 (1920); Bowers v. Kerbaugh– Empire Co., 271 U.S. 170 (1926)]

15. The IRS within its own published employee’s manual (IRM at 4.10.7.2.9.8(2) ‘Importance of Court Decisions’) has sought to assert that decisions rendered by SCOTUS establishes “the law of the land and takes precedence over decisions of lower courts.” Moreover stating (ibid, IRM at 4.10.7.2.9.8(3)) that “[d]ecisions made by lower courts, such as Tax Court, District Courts, or Claims Court, are binding on the Service only for the particular taxpayer and the years litigated.

16. The historical intent and empirical context of both direct and indirect taxation empowered to the Legislature by our Forefathers through our Nation’s framing are further depicted, infra:

i. Direct taxation, (viz, capitation, poll, and land or realty taxes) are federally enforceable, only through state-by-state ‘apportionment’, under A.I,S.2,C.3 and A.I,S.9,C.4 of the U.S. Constitution as pertaining to the several enumerated powers of taxation granted to the Congress over the several states of the Union by A.I,S.8,C.1, supra, explicitly for: (1) paying debts in provision of either the (2) common defense or (3) general welfare of the United States of America.

ii. In Pollock v. Farmers' Loan & Trust Co., 157 U.S. 429, 566 (1895), addressing the intended application of ‘direct taxes’, it was noted: “Id. 93. And John Adams, Dawes, Sumner, King, and Sedgwick all agreed that a direct tax would be the last source of revenue resorted to by Congress.” Reflected upon further at 157 U.S. 429, 574: “ That the original expectation was that the power of direct taxation would be exercised only in extraordinary exigencies…” And moreover noted at 157 U.S. 429, 564 and also in 158 U.S. 601, 606 (1895); 3 U.S. 171, 180 (1796). See also, Alexander Hamilton’s statements within Federalist Papers: No. 36, Para. 16 and No. 79, Para. 1.

iii. Efficiently elucidated in Knowlton v. Moore, 178 U.S. 41, 47 (1900) as: “… This view of the inheritance and legacy tax conforms to the official definition of indirect taxes, among which inheritance and legacy taxes are classed, which prevails in France at the present day. The definition is as follows: “Direct taxes bear immediately upon persons, upon the possession and enjoyments of rights; indirect taxes are levied upon the happening of an event or an exchange.”” See also: Tyler v. United States, 281 U.S. 497, 502 (1930).

iv. As expertly deduced by Mr. Albert Gallatin in his work entitled “Sketch of the Finances of the United States” [1796], so being excerpted in the eminent Pollock case (157 U.S. 429, 569 (1895)), (Mr. Gallatin among many titles served in the 4th-6th Congresses, becoming Party Leader –also being elected into the Senate though immediately lost his seat after being challenged as to his citizenship; is the longest serving Secretary of the Treasury, serving from 1801-1814 as the 4th Treasury Secretary, and is the name-designation of the highest service achievement award available to civil servants working for the Department of the Treasury, titled the “Gallatin Award”): “The most generally received opinion, however, is that, by direct taxes in the Constitution, those are meant which are raised on the capital or revenue of the people; by indirect, such as are raised on their expense. …that a fixed interpretation should be generally adopted, it will not be improper to corroborate it by quoting the author from whom the idea seems to have been borrowed.”

He then quotes from Smith’s Wealth of Nations, and continues: “The remarkable coincidence of the clause of the Constitution with this passage in using the word ‘capitation’ as a generic expression, including the different species of direct taxes, an acceptation of the word peculiar, it is believed, to Dr. Smith, leaves little doubt that the framers of the one had the other in view at the time, and that they, as well as he, by direct taxes, meant those paid directly from, and falling immediately on, the revenue, and, by indirect, those which are paid indirectly out of the revenue by falling immediately upon the expense.” 3 Gallatin's Writings (Adams' ed.) 74, 75.” See additionally: the Pollock rehearing at 158 U.S. 601, 628 (1895).

v. As Alexander Hamilton had so stated in his brief for the government concerning [i]Hylton[/i] v. United States, 3 U.S. 171 (1796); quoted, supra, 157 U.S. 429, 572; 158 U.S. 601, 625 (1895) [7 Hamilton’s Works, 332]: “The following are presumed to be the only direct taxes. Capitation or poll taxes. Taxes on lands and buildings. General assessments, whether on the whole property of individuals, or on their whole real or personal estate; all else must of necessity be considered as indirect taxes.” Retaining perspective in that the above is with consideration to only the taxable period for which such assessments would be levied and collected; idem, Pollock v. Farmers' Loan & Trust Company, 158 U.S. 601, 625 (1895) [7 Hamilton’s Works, 848]. Otherwise the intent renders itself ambivalent or ambiguous.

vi. In Hylton v. United States, 3 U.S. 171, 180-181 (1796) quoting from Dr. Adam Smith’s “Wealth of Nations” [1776] the crisp distinction and tenets between the prescribed constitutional ‘apportionment’ of direct taxes and ‘uniformity’ of indirect taxeshad been provided worthwhile insight:

Apportionment is an operation on states, and involves valuations and assessments which are arbitrary and should not be resorted to but in case of necessity. Uniformity is an instant operation on individuals, without the intervention of assessments or any regard to states, and is at once easy, certain, and efficacious. All taxes on expenses or consumption are indirect taxes.Indirect taxes are circuitous modes of reaching the revenue of individuals, who generally live according to their income. In many cases of this nature the individual may be said to tax himself. I shall close the discourse with reading a passage or two from Smith's Wealth of Nations.



“The impossibility of taxing people in proportion to their revenue by any capitation seems to have given occasion to the invention of taxes upon consumable commodities; the state, not knowing how to tax directly and proportionally the revenue of its subjects, endeavors to tax it indirectly by taxing their expense, which it is supposed in most cases will be neatly in proportion to their revenue. Their expense is taxed by taxing the consumable commodities upon which it is laid out.” Vol. 3, p. 331.

Consumable commodities, whether necessaries or luxuries, may be taxed in two different ways: the consumer may either pay an annual sum on account of his using or consuming goods of a certain kind or the goods may be taxed while they remain in the hands of the dealer, and before they are delivered to the consumer. The consumable goods, which last a considerable time before they are consumed altogether, are most properly taxed in the one way, those of which the consumption is immediate or more speedy in the other; the coach tax and plate tax are examples of the former method of imposing; the greater part of the other duties of excise and customs of the latter.” Vol. 3, p. 341.”

vii(a). Objections to the adoption of the U.S. Constitution as raised by the Anti-Federalists, written by Samuel Bryan (moniker: Centinel), after the Pennsylvania Convention, entitled “The Address and Reasons of Dissent of the Minority of the Convention of Pennsylvania to their Constituents” [December 12, 1787], these contentions of which were not objected to nor denied by the Federalists within any of their myriad of rebuttals or exchanges, stated in-part:

The power of direct taxation applies to every individual, as congress, under this government, is expressly vested with the authority of laying a capitation or poll tax upon every person to any amount. This is a tax that, however oppressive in its nature, and unequal in its operation, is certain as to its produce and simple in its collection; it cannot be evaded like the objects of imposts or excise, and will be paid, because all that a man hath will he give for his head.

The power of direct taxation will further apply to every individual, as congress may tax land, cattle, trades, occupations, etc. in any amount, and every object of internal taxation is of that nature, that however oppressive, the people will have but this alternative except to pay the tax, or let their property be taken, for all resistance will be in vain. The standing army and select militia would enforce the collection.

vii(b). See additionally: Luther Martin’s Letter on the Federal Convention of 1787, Para. 52; Elliot’s Debates Vol. 1.

viii(a). As poignantly synthesized by economist Dr. Adam Smith (founder of free market economics, i.e., free trade, laissez-faire), within Book Five, Chapter II, Article III – “Taxes upon the Wages of Labour” of his five-part erudite works entitled “An Inquiry into the Nature And Causes of the Wealth of Nations” [1776]:

The wages of the inferior classes of work men, … While the demand for labour and the price of provisions, therefore, remain the same, a direct tax upon the wages of labour can have no other effect than to raise them somewhat higher than the tax. … A direct tax upon the wages of labour, therefore, though the labourer might perhaps pay it out of his hand, could not properly be said to be even advanced by him; ...”

viii(b). And ibid, within Book Five, Chapter II, Article IV – “Capitation Taxes”: “Capitation taxes, so far as they are levied upon the lower ranks of people, are direct taxes upon the wages of labour, and are attended with all the inconveniences of such taxes.”

17. In “Reflections on the Formation and Distribution of Wealth” [1766] (authored by: Turgot), it was clarified that contractual competitiveness amongst proletariats —the ignoble— do not realize such ‘gains’ nor ‘profits’, but only what is necessary to subsist: “6. The wages of the workman is limited by the competition among those who work for a subsistence. He only gains a livelihood.

The mere workman, who depends only on his lands and his industry, has nothing but such part of his labour as he is able to dispose of to others. He sells it at a cheaper or a dearer price; but this high or low price does not depend on himself alone; it results from the agreement he has made with the person who employs him. The latter pays him as little as he can help, and as he has the choice from among a great number of workmen, he prefers the person who works cheapest. The workmen are therefore obliged to lower their price in opposition to each other. In every species of labour it must, and, in effect, it does happen, that the wages of the workman is confined merely to what is necessary to procure him a subsistence.

18. In Pollock v. Farmers' Loan & Trust Co., 157 U.S. 429, 558-559 (1895), the historical appreciation for such writings as by the French baron, comptroller general, and economist Anne-Robert-Jacques Turgot, and Adam Smith, LL.D., was acknowledged: “The Federalist demonstrates the value attached by Hamilton, 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. …” Also, Thomas Jefferson kept a bust of Turgot in his Monticello home and Dr. Smith’s great work was well influenced by Turgot.

19. “Black's Law Dictionary 3rd Edition” [1933] defines the following relative legal terms as:

i. CAPITATION TAX.
[1] A poll tax. An imposition levied upon the person simply, without any reference to his property, real or personal, or to any business in which he may be engaged, or to any employment which he may follow.
[2] A tax or imposition raised on each person in consideration of his labor, industry, office, rank, etc.
[*] It is a very ancient kind of tribute and answers to what the Latins called “tributum,” by which taxes on persons are distinguished from taxes on merchandise called “vectigalia.” Wharton.

ii. PERSONAL TAX.
[E]ither a tax imposed on the person without reference to property, as a capitation or poll tax, or a tax imposed on personal property, as distinguished from one laid on real property.

iii. POLL-TAX.
A capitation tax; a tax of a specific sum levied upon each person within the jurisdiction of the taxing power and within a certain class (as, all males of a certain age, etc.) without reference to his property or lack of it.

20. The government of the United States of America and of the State of STATE are legitimate and proper to function only under the fundamentals of a republic as stipulated by A.IV,S.4,C.1 of our U.S. Constitution and so conferred in West Virginia State Board of Education v. Barnette, 319 U.S. 624, 638 (1943): “One's right to life, liberty, and property, to free speech, a free press, freedom of worship and assembly, and other fundamental rights may not be submitted to vote; they depend on the outcome of no elections.” Hence, through our covenanted due process, habeas corpus, redress, suffrage, et al, the inherent freedoms, defenses, and liberties of the individual person to life, estate, family, and personalty are as omnipresent and irrevocable, as the same are inalienable. See also: Yick Wo v. Hopkins, 118 U.S. 356, 370 (1886).

i(a). In City of Boerne v. Flores, 521 U.S. 507, 518-519 (1997): “It is also true, however, that “[a]s broad as the congressional enforcement power is, it is not unlimited.” Oregon v. Mitchell, supra, at 128 (opinion of Black, J.). …

Legislation which alters the meaning of the Free Exercise Clause cannot be said to be enforcing the Clause. Congress does not enforce a constitutional right by changing what the right is. It has been given the power “to enforce,” not the power to determine what constitutes a constitutional violation. …


i(b). United States v. Butler, 297 U.S. 1, 62-63 (1936): “There should be no misunderstanding as to the function of this court in such a case. It is sometimes said that the court assumes a power to overrule or control the action of the people's representatives. This is a misconception. The Constitution is the supreme law of the land ordained and established by the people. All legislation must conform to the principles it lays down. When an act of Congress is appropriately challenged in the courts as not conforming to the constitutional mandate, the judicial branch of the Government has only one duty -- to lay the article of the Constitution which is invoked beside the statute which is challenged and to decide whether the latter squares with the former. All the court does, or can do, is to announce its considered judgment upon the question.

i(c). Legislative empowerment to craft and ratify public law has been served proper clarification in Eisner v. Macomber, 252 U.S. 189, 206 (1920): … Congress cannot by any definition it may adopt conclude the matter, since it cannot by legislation alter the Constitution, from which alone it derives its power to legislate, and within whose limitations alone that power can be lawfully exercised.” See also: Railroad Retirement Board v. Alton Railroad Co., 295 U.S. 330, 346-347 (1935).

i(d). As by Alexander Hamilton’s statements within Federalist Paper No. 83, Para. 7: “… The plan of the convention declares that the power of Congress, or, in other words, of the NATIONAL LEGISLATURE, shall extend to certain enumerated cases. This specification of particulars evidently excludes all pretension to a general legislative authority, because an affirmative grant of special powers would be absurd, as well as useless, if a general authority was intended.

i(e). As by Alexander Hamilton’s statements within Federalist Paper No. 78, Para. 15: …and that accordingly, whenever a particular statute contravenes the Constitution, it will be the duty of the judicial tribunals to adhere to the latter and disregard the former.

i(f). As by James Madison’s statements within Federalist Paper No. 46, Para. 8: …that the powers proposed to be lodged in the federal government are as little formidable to those reserved to the individual States, as they are indispensably necessary to accomplish the purposes of the Union…

i(g). Norton v. Shelby County, 118 U.S. 425, 442 (1886): “It is difficult to meet it by any argument beyond this statement: an unconstitutional act is not a law; it confers no rights; it imposes no duties; it affords no protection; it creates no office; it is in legal contemplation as inoperative as though it had never been passed.

i(h). Marbury v. Madison, 5 U.S. 137, 176-177 (1803): “… It is a proposition too plain to be contested, that the constitution controls any legislative act repugnant to it; or, that the legislature may alter the constitution by an ordinary act.

Between these alternatives there is no middle ground. The constitution is either a superior, paramount law, unchangeable by ordinary means, or it is on a level with ordinary legislative acts, and like other acts, is alterable when the legislature shall please to alter it.

If the former part of the alternative be true, then a legislative act contrary to the constitution is not law: if the latter part be true, then written constitutions are absurd attempts, on the part of the people, to limit a power in its own nature illimitable.

Certainly all those who have framed written constitutions contemplate them as forming the fundamental and paramount law of the nation, and consequently the theory of every such government must be, that an act of the legislature repugnant to the constitution is void.

This theory is essentially attached to a written constitution, and is consequently to be considered by this court as one of the fundamental principles of our society. It is not therefore to be lost sight of in the further consideration of this subject.

ii. As further constituted by Hale v. Henkel, 201 U.S. 43, 88 (1906) in quoting Mr. Justice Bradley in Boyd v. United States, 116 U.S. 616, 635 (1886): “It may be that it… is the obnoxious thing in its mildest and least repulsive form, but illegitimate and unconstitutional practices get their first footing in that way -- namely, by silent approaches and slight deviations from legal modes of procedure. This can only be obviated by adhering to the rule that constitutional provisions for the security of person and property should be liberally construed. A close and literal construction deprives them of half their efficacy, and leads to gradual depreciation of the right, as if it consisted more in sound than in substance. It is the duty of courts to be watchful for the constitutional rights of the citizens, and against any stealthy encroachments thereon. Their motto should be obsta principiis.

iii(a). Forthright in enlightening such fundaments was Coppage v. Kansas, 236 U.S. 1, 14 (1915): “The principle is fundamental and vital. Included in the right of personal liberty and the right of private property -- partaking of the nature of each -- is the right to make contracts for the acquisition of property. Chief among such contracts is that of personal employment, by which labor and other services are exchanged for money or other forms of property. If this right be struck down or arbitrarily interfered with, there is a substantial impairment of liberty in the long established constitutional sense. The right is as essential to the laborer as to the capitalist, to the poor as to the rich, for the vast majority of persons have no other honest way to begin to acquire property save by working for money.

iii(b). And wholeheartedly exemplified in Butcher's Union Co. v. Crescent City Co., 111 U.S. 746, 757, 762 (1884) in quoting from Dr. Adam Smith’s “Wealth of Nations” [1776]: “It has been well said that “the property which every man has in his own labor, as it is the original foundation of all other property, so it is the most sacred and inviolable. The patrimony of the poor man lies in the strength and dexterity of his own hands, and to hinder his employing this strength and dexterity in what manner he thinks proper, without injury to his neighbor, is a plain violation of this most sacred property. It is a manifest encroachment upon the just liberty both of the workman and of those who might be disposed to employ him. As it hinders the one from working at what he thinks proper, so it hinders the others from employing whom they think proper.” Smith, Wealth of Nations, Bk. I, c. 10.

… They established and declared one of the inalienable rights of freemen which our ancestors brought with them to this country. The right to follow any of the common occupations of life is an inalienable right, it was formulated as such under the phrase “pursuit of happiness” in the declaration of independence, which commenced with the fundamental proposition thatall men are created equal; that they are endowed by their Creator with certain inalienable rights; that among these are life, liberty, and the pursuit of happiness.” This right is a large ingredient in the civil liberty of the citizen. To deny it to all but a few favored individuals by investing the latter with a monopoly is to invade one of the fundamental privileges of the citizen, contrary not only to common right, but, as I think, to the express words of the Constitution. It is what no legislature has a right to do, and no contract to that end can be binding on subsequent legislatures.

iv(a). Although a privacy rights case, the same is relational as to taxation, idem having been acknowledged in Olmstead v. United States, 277 U.S. 438, 478-479 (1928): “The protection guaranteed by the Amendments is much broader in scope. The makers of our Constitution undertook to secure conditions favorable to the pursuit of happiness. They recognized the significance of man's spiritual nature, of his feelings, and of his intellect. They knew that only a part of the pain, pleasure and satisfactions of life are to be found in material things. They sought to protect Americans in their beliefs, their thoughts, their emotions and their sensations. They conferred, as against the Government, the right to be let alone -- the most comprehensive of rights, and the right most valued by civilized men. To protect that right, every unjustifiable intrusion by the Government upon the privacy of the individual, whatever the means employed, must be deemed a violation of the Fourth Amendment. And the use, as evidence in a criminal proceeding, of facts ascertained by such intrusion must be deemed a violation of the Fifth.

… Experience should teach us to be most on our guard to protect liberty when the Government's purposes are beneficent. Men born to freedom are naturally alert to repel invasion of their liberty by evil-minded rulers. The greatest dangers to liberty lurk in insidious encroachment by men of zeal, well-meaning but without understanding.


iv(b). Additionally substantiating the above, see also:

1. Loan Association v. Topeka, 87 U.S. 655, 662-665 (1874), and;
2. Budd v. New York, 143 U.S. 517, 550-551 (1892) [DISSENTING].

21. IRS ‘Policy Statement 4-7’ stipulates within IRM at 1.2.13.1.5 — ‘Impartial determination of tax liability’ in-part the following: “An exaction by the United States Government, which is not based upon law, statutory or otherwise, is a taking of property without due process of law, in violation of the Fifth Amendment to the United States Constitution. Accordingly, a Service representative … shall hew to the law and the recognized standards of legal construction. …” See additionally: IRM at 1.2.14.1.2(1-10) — IRS ‘Policy Statement 5-2’, 1.2.20.1.1(2,4,8a-c,9a-c,10-11) — IRS ‘Policy Statement 20-1’, 4.10.1.6(1-3), 4.10.7.1(1,2A-C), et seq.

22. The United States of America being a national (common law) republic that bestows absolute respect to divinely granted inalienable rights in achieving life, liberty, and individual pursuits of happiness, does not bear to any degree as a communist-socialist, corporatist/mercantilist, totalitarian, nor similar nation (e.g., autocracy/monarchy, aristocracy, bureaucracy, cronyism, democracy/demagogy/ochlocracy, corporatocracy, duopoly, hierocracy/theocracy, Keynesianism, kleptocracy, meritocracy, oligarchy, plutocracy, stratocracy, timocracy, etc.) Being that the former is wholly and utterly incompatible with such opposing fundaments, ideologies, and tenets for which those latter are blatantly inauspicious to the enjoyments and propensities of ever-advancing freedom in independence; such as those postulated within the “Communist Manifesto” (by: Karl Marx and Friedrick Engels [1848]), therein revering a ten (10) plank process to establishing Marxist-communism that includes specifically those stated in both 22.i(a) and 22.i(b):

i(a). The status quo misconception over the present day misapplication of the IRC (26 USC) so as to wrongfully implicate ‘proletariats’ as being entrepreneurs or other such business professionals; ergo: “2. A heavy progressive or graduated income tax.

i(b). The status quo misconception over the unsound practices of debt-to-credit and ratio-lending of fiat (nonconvertible paper) currency, which results in monetary depreciation through the process of inflationary monetization and ultimately lends unto financial monopolization and usury; ergo: “5. Centralisation of credit in the hands of the state, by means of a national bank with State capital and an exclusive monopoly.

ii(a). The declaratory charter and spirited foundation of the United States of America was established through our Nation’s Declaration of Independence [ratified 1776], at first as a confederacy by the Articles of Confederation [ratified 1781 and repealed 1788].

ii(b). Our national Constitution, the U.S. Constitution [ratified 1788], established, under a republic, three (3) branches of national government bestowing unto it the authority of the ‘United States’ in: (1) Article I, being the Legislative Branch (the Congress—the House of Representatives and of the Senate), holding sole power to legislate, regulate, and declare; (2) Article II, being the Executive Branch, holding sole power to administer public law, to veto, to implement regulatory-procedures, and to take such actions as by the authority granted to Congress; and (3) Article III, being the Judicial Branch, holding sole rule-making powers to implement judicial procedure and evidentiary rules, to interpret and enforce public law with regard and respect to both fundamental law and common law.

ii(c). The preamble to our national Bill of Rights [ratified 1791] states in-part the following: “ THE Conventions of a number of the States, having at the time of their adopting the Constitution, expressed a desire, in order to prevent misconstruction or abuse of its powers, that further declaratory and restrictive clauses should be added: And as extending the ground of public confidence in the Government, will best ensure the beneficent ends of its institution. …” Hence, actions by the federal government must regard our Bill of Rights.

ii(d). Respectively, our Nation’s amended U.S. Constitution prescribes the federal government, the “United States” with thirty-three (33) specifically designated functions over the several states and our Bill of Rights further stipulates ten (10) amendments thereto for the purpose of further constraining the breadth of the federal government.

iii. Our Declaration of Independence, U.S. Constitution and Bill of Rights serve conjointly as the core of what is revered as fundamental law, which is in essence the morality or standing principles (the historical causation) enrooted in our United States of America. All enacted public acts and resolutions (statutes, regulations, orders, etc.) must remain in absolute accord and spirit with these omnipresent documents, they are not conditional.

Tags direct, indirect, income taxation, irs, revenue, economy, frivolous, claim of refund
Unread post January 12th, 2013, 8:11 am
Weston White Lead Researcher

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In Nix v. Hedden - 149 U.S. 304 (1893) a tomato was found to be a vegetable, at least from a legal standpoint. So did this fundamentally redefine what was well known, historically, to become other than what it had always been? No, a tomato is still just as much of a fruit as it has always been; it does however, confirm the potentiality for arrogant ineptness within the findings of our judiciary.





And include a boildown also on:

viewtopic.php?p=1804#p1804



And also:

The Papers of Thomas Jefferson, Volume 33: 17 February to 30 April 1801, Princeton University Press (2006), 143-8, Para. 3:

"Let us then, with courage and confidence, pursue our own federal and republican principles; our attachment to union and representative government. ... Still one thing more, fellow citizens, a wise and frugal government, which shall restrain men from injuring one another, shall leave them otherwise free to regulate their own pursuits of industry and improvement, and shall not take from the mouth of labor the bread it has earned. This is the sum of good government; and this is necessary to close the circle of our felicities."


Second Treatise of Civil Government John Locke (1690)



CHAP. V. Of Property.

Sec.26. God, who hath given the world to men in common, hath also given them reason to make use of it to the best advantage of life, and convenience. The earth, and all that is therein, is given to men for the support and comfort of their being. And tho' all the fruits it naturally produces, and beasts it feeds, belong to mankind in common, as they are produced by the spontaneous hand of nature; and no body has originally a private dominion, exclusive of the rest of mankind, in any of them, as they are thus in their natural state: yet being given for the use of men, there must of necessity be a means to appropriate them some way or other, before they can be of any use, or at all beneficial to any particular man. The fruit, or venison, which nourishes the wild Indian, who knows no enclosure, and is still a tenant in common, must be his, and so his, i.e. a part of him, that another can no longer have any right to it, before it can do him any good for the support of his life.

Sec.27. Though the earth, and all inferior creatures, be common to all men, yet every man has a property in his own person: this no body has any right to but himself. The labour of his body, and the work of his hands, we may say, are properly his. Whatsoever then he removes out of the state that nature hath provided, and left it in, he hath mixed his labour with, and joined to it something that is his own, and thereby makes it his property. It being by him removed from the common state nature hath placed it in, it hath by this labour something annexed to it, that excludes the common right of other men: for this labour being the unquestionable property of the labourer, no man but he can have a right to what that is once joined to, at least where there is enough, and as good, left in common for others.

Sec.28. He that is nourished by the acorns he picked up under an oak, or the apples he gathered from the trees in the wood, has certainly appropriated them to himself. No body can deny but the nourishment is his. I ask then, when did they begin to be his? when he digested? or when he eat? or when he boiled? or when he brought them home? or when he picked them up? and it is plain, if the first gathering made them not his, nothing else could. That labour put a distinction between them and common: that added something to them more than nature, the common mother of all, had done; and so they became his private right. And will any one say, he had no right to those acorns or apples, he thus appropriated, because he had not the consent of all mankind to make them his? Was it a robbery thus to assume to himself what belonged to all in common? If such a consent as that was necessary, man had starved, notwithstanding the plenty God had given him. We see in commons, which remain so by compact, that it is the taking any part of what is common, and removing it out of the state nature leaves it in, which begins the property; without which the common is of no use. And the taking of this or that part, does not depend on the express consent of all the commoners. Thus the grass my horse has bit; the turfs my servant has cut; and the ore I have digged in any place, where I have a right to them in common with others, become my property, without the assignation or consent of any body. The labour that was mine, removing them out of that common state they were in, hath fixed my property in them.

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Unread post January 20th, 2013, 11:40 pm
Weston White Lead Researcher

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Frédéric Bastiat The Law (1850):

Property and Plunder

Man can live and satisfy his wants only by ceaseless labor; by the ceaseless application of his faculties to natural resources. This process is the origin of property.

But it is also true that a man may live and satisfy his wants by seizing and consuming the products of the labor of others. This process is the origin of plunder.

Now since man is naturally inclined to avoid pain — and since labor is pain in itself — it follows that men will resort to plunder whenever plunder is easier than work. History shows this quite clearly. And under these conditions, neither religion nor morality can stop it.

When, then, does plunder stop? It stops when it becomes more painful and more dangerous than labor.

It is evident, then, that the proper purpose of law is to use the power of its collective force to stop this fatal tendency to plunder instead of to work. All the measures of the law should protect property and punish plunder.

But, generally, the law is made by one man or one class of men. And since law cannot operate without the sanction and support of a dominating force, this force must be entrusted to those who make the laws.

This fact, combined with the fatal tendency that exists in the heart of man to satisfy his wants with the least possible effort, explains the almost universal perversion of the law. Thus it is easy to understand how law, instead of checking injustice, becomes the invincible weapon of injustice. It is easy to understand why the law is used by the legislator to destroy in varying degrees among the rest of the people, their personal independence by slavery, their liberty by oppression, and their property by plunder. This is done for the benefit of the person who makes the law, and in proportion to the power that he holds.

Victims of Lawful Plunder

Men naturally rebel against the injustice of which they are victims. Thus, when plunder is organized by law for the profit of those who make the law, all the plundered classes try somehow to enter — by peaceful or revolutionary means — into the making of laws. According to their degree of enlightenment, these plundered classes may propose one of two entirely different purposes when they attempt to attain political power: Either they may wish to stop lawful plunder, or they may wish to share in it.

Woe to the nation when this latter purpose prevails among the mass victims of lawful plunder when they, in turn, seize the power to make laws! Until that happens, the few practice lawful plunder upon the many, a common practice where the right to participate in the making of law is limited to a few persons. But then, participation in the making of law becomes universal. And then, men seek to balance their conflicting interests by universal plunder. Instead of rooting out the injustices found in society, they make these injustices general. As soon as the plundered classes gain political power, they establish a system of reprisals against other classes. They do not abolish legal plunder. (This objective would demand more enlightenment than they possess.) Instead, they emulate their evil predecessors by participating in this legal plunder, even though it is against their own interests.

It is as if it were necessary, before a reign of justice appears, for everyone to suffer a cruel retribution — some for their evilness, and some for their lack of understanding.

The Results of Legal Plunder

It is impossible to introduce into society a greater change and a greater evil than this: the conversion of the law into an instrument of plunder.

What are the consequences of such a perversion? It would require volumes to describe them all. Thus we must content ourselves with pointing out the most striking.

In the first place, it erases from everyone's conscience the distinction between justice and injustice.

No society can exist unless the laws are respected to a certain degree. The safest way to make laws respected is to make them respectable. When law and morality contradict each other, the citizen has the cruel alternative of either losing his moral sense or losing his respect for the law. These two evils are of equal consequence, and it would be difficult for a person to choose between them.

The nature of law is to maintain justice. This is so much the case that, in the minds of the people, law and justice are one and the same thing. There is in all of us a strong disposition to believe that anything lawful is also legitimate. This belief is so widespread that many persons have erroneously held that things are "just" because law makes them so. Thus, in order to make plunder appear just and sacred to many consciences, it is only necessary for the law to decree and sanction it. Slavery, restrictions, and monopoly find defenders not only among those who profit from them but also among those who suffer from them.

Unread post April 2nd, 2013, 11:33 am
Weston White Lead Researcher

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Here are my first draft boil-down updates:

A. Further enlightenment on matters of capital, labor, property, sustenance, and various classifications of taxation is provided by the below persuasive authorities:

i. In John Locke’s Second Treatise of Civil Government, “Chap. V. Of Property” (1690):

Sec.26. God, who hath given the world to men in common, hath also given them reason to make use of it to the best advantage of life, and convenience. The earth, and all that is therein, is given to men for the support and comfort of their being. And tho’ all the fruits it naturally produces, and beasts it feeds, belong to mankind in common, …yet being given for the use of men, there must of necessity be a means to appropriate them some way or other, before they can be of any use, or at all beneficial to any particular man. …
Sec.27. Though the earth, and all inferior creatures, be common to all men, yet every man has a property in his own person: this no body has any right to but himself. The labour of his body, and the work of his hands, we may say, are properly his. Whatsoever then he removes out of the state that nature hath provided, and left it in, he hath mixed his labour with, and joined to it something that is his own, and thereby makes it his property. ...for this labour being the unquestionable property of the labourer, no man but he can have a right to what that is once joined to, at least where there is enough, and as good, left in common for others.
Sec.28. He that is nourished by the acorns he picked up under an oak, or the apples he gathered from the trees in the wood, has certainly appropriated them to himself. No body can deny but the nourishment is his. I ask then, when did they begin to be his? when he digested? or when he eat? or when he boiled? or when he brought them home? or when he picked them up? … That labour put a distinction between them and common: that added something to them more than nature, the common mother of all, had done; and so they became his private right. And will any one say, he had no right to those acorns or apples, he thus appropriated, because he had not the consent of all mankind to make them his? Was it a robbery thus to assume to himself what belonged to all in common? If such a consent as that was necessary, man had starved, notwithstanding the plenty God had given him. We see in commons, which remain so by compact, that it is the taking any part of what is common, and removing it out of the state nature leaves it in, which begins the property; without which the common is of no use. And the taking of this or that part, does not depend on the express consent of all the commoners. Thus the grass my horse has bit; the turfs my servant has cut; and the ore I have digged in any place, where I have a right to them in common with others, become my property, without the assignation or consent of any body. The labour that was mine, removing them out of that common state they were in, hath fixed my property in them.

ii(a). Karl Marx, made amongst many points within his Economic & Philosophic Manuscripts (1844) to clarify that labor, including its objectives: capital and wages, are but various forms of private property, to wit, are necessary for the sustaining of humanity; and that in the process of laboring, the worker becomes effectively alienated. Furthermore, that the gains and profits of capital are altogether different from the wages of labor:

… The capitalist can live longer without the worker than can the worker without the capitalist. … Besides, the landowner and the capitalist can make use of industrial advantages to augment their revenues; the worker has neither rent nor interest on capital to supplement his industrial income. . . . In general we should observe that in those cases where worker and capitalist equally suffer, the worker suffers in his very existence, the capitalist in the profit on his dead mammon [i.e., wealth and possessions]. The worker has to struggle not only for his physical means of subsistence; he has to struggle to get work, i.e., the possibility, the means, to perform his activity. . . . Let us put ourselves now wholly at the standpoint of the political economist, and follow him in comparing the theoretical and practical claims of the workers. He tells us that originally and in theory the whole product of labour belongs to the worker. But at the same time he tells us that in actual fact what the worker gets is the smallest and utterly indispensable part of the product–as much, only, as is necessary for his existence, not as a human being, but as a worker, and for the propagation, not of humanity, but of the slave class of workers. The political economist tells us that everything is bought with labour and that capital is nothing but accumulated labour; but at the same time he tells us that the worker, far from being able to buy everything, must sell himself and his humanity. . . . Whilst according to the political economists … labour is man’s active possession, according to this same political economy the landowner and the capitalist, who qua landowner and capitalist are merely privileged and idle gods, are everywhere superior to the worker and lay down the law to him. . . . In theory, rent of land and profit on capital are[i]deductions[/i] suffered by wages. In actual fact, however, wages are a deduction which land and capital allow to go to the worker, a concession from the product of labour to the workers, to labour. . . . The profit or gain of capital is altogether different from the wages of labour. . . . The capitalist thus makes a profit, first, on the wages, and secondly on the raw materials advanced by him. . . . “To hire out one's labour is to begin one’s enslavement. To hire out the materials of labour is to establish one’s freedom.... Labour is man; the materials, on the other hand, contain nothing human.” (Pecqueur, Théorie sociale, etc.) . . . “… Everyone is free to exchange what belongs to him as he thinks fit, without considering anything other than his own interest as an individual” (op. cit. p. 413.) . . . But just as nature provides labor with [the] means of life in the sense that labor cannot live without objects on which to operate, on the other hand, it also provides the means of life in the more restricted sense, i.e., the means for the physical subsistence of the worker himself. . . . Thus the more the worker by his labor appropriates the external world, sensuous nature, the more he deprives himself of the means of life in two respects: first, in that the sensuous external world more and more ceases to be an object belonging to his labor–to be his labor’s means of life; and, second, in that it more and more ceases to be a means of life in the immediate sense, means for the physical subsistence of the worker. In both respects, therefore, the worker becomes a servant of his object, first, in that he receives an object of labor, i.e., in that he receives work, and, secondly, in that he receives means of subsistence. This enables him to exist, first as a worker; and second, as a physical subject. The height of this servitude is that it is only as a worker that he can maintain himself as a physical subject and that it is only as a physical subject that he is a worker. . . . We also understand, therefore, that wages and private property are identical. Indeed, where the product, as the object of labor, pays for labor itself, there the wage is but a necessary consequence of labor’s estrangement. Likewise, in the wage of labor, labor does not appear as an end in itself but as the servant of the wage. . . . For when one speaks of private property, one thinks of dealing with something external to man. When one speaks of labor, one is directly dealing with man himself. . . . But the worker has the misfortune to be a living capital, and therefore an indigent capital, one which loses its interest, and hence its livelihood, every moment it is not working. . . . The wages of labour have thus exactly the same significance as the maintenance and servicing of any other productive instrument, or as the consumption of capital in general, required for its reproduction with interest, like the oil which is applied to wheels to keep them turning. . . . The subjective essence of private propertyprivate property as activity for itself, as subject, as person-is labour. It is therefore evident that only the political economy which acknowledged labour as its principleAdam Smithand which therefore no longer looked upon private property as a mere condition external to man … and on the other hand, as a force which has quickened and glorified the energy and development of modern industry and made it a power in the realm of consciousness. . . . Just as landed property is the first form of private property, with industry at first confronting it historically merely as a special kind of property-or, rather, as landed property's liberated slave-so this process repeats itself in the scientific analysis of the subjective essence of private property, labour. Labour appears at first only as agricultural labour, but then asserts itself as labour in general.” * See chapters: “Wages of Labour”, “Profit of Capital”, “Estranged Labour”, “Antithesis of Capital and Labour”, and “Private Property and Labour”

ii(b). Karl Marx's whitepaper (edited by Friedrich Engels) entitled: Wage Labour and Capital (1847), therein synthesizes that there is a clear-cut distinction between the requisite and freely exchangeable labor-power of wage-workers and the profits of the capitalist; also crystalizing the contrasts between slaves, serfs, proletariats, and the bourgeois, viz.:

Consequently, labour-power is a commodity which its possessor, the wage-worker, sells to the capitalist. Why does he sell it? It is in order to live. . . . And this life activity he sells to another person in order to secure the necessary means of life. His life-activity, therefore, is but a means of securing his own existence. He works that he may keep alive. He does not count the labour itself as a part of his life; it is rather a sacrifice of his life. … What he produces for himself is wages . . . which enable him to sit down at a table, to take his seat in the tavern, and to lie down in a bed. . . . The existence of a class which possesses nothing but the ability to work is a necessary presupposition of capital. . . . The labourer receives means of subsistence in exchange for his labour-power; the capitalist receives, in exchange for his means of subsistence, labour, the productive activity of the labourer… But it is just this noble reproductive power that the labourer surrenders to the capitalist in exchange for means of subsistence received. Consequently, he has lost it for himself. . . . Let us take an example. For one shilling a labourer works all day long in the fields of a farmer, to whom he thus secures a return of two shillings. The farmer not only receives the replaced value which he has given to the day labourer, he has doubled it. Therefore, he has consumed the one shilling that he gave to the day labourer in a fruitful, productive manner. For the one shilling he has bought the labour-power of the day-labourer, which creates products of the soil of twice the value, and out of one shilling makes two. The day-labourer, on the contrary, receives in the place of his productive force, whose results he has just surrendered to the farmer, one shilling, which he exchanges for means of subsistence, which he consumes more or less quickly. … Capital therefore presupposes wage-labour; wage-labour presupposes capital. They condition each other; each brings the other into existence. . . . Wages are determined above all by their relations to the gain, the profit, of the capitalist. …
* See chapters: “What are Wages?”, “By what are wages determined?”, “The Nature and Growth of Capital”, “Relation of Wage-Labour to Capital”, and “The Interests of Capital and Wage-Labour are diametrically opposed”

iii. Timeless erudition on this very subject-matter has been prudently realized within Frédéric Bastiat’s, The Law (1850):

Property and Plunder
Man can live and satisfy his wants only by ceaseless labor; by the ceaseless application of his faculties to natural resources. This process is the origin of property. But it is also true that a man may live and satisfy his wants by seizing and consuming the products of the labor of others. This process is the origin of plunder. . . . It is evident, then, that the proper purpose of law is to use the power of its collective force to stop this fatal tendency to plunder instead of to work. All the measures of the law should protect property and punish plunder. But, generally, the law is made by one man or one class of men. . . . This fact, combined with the fatal tendency that exists in the heart of man to satisfy his wants with the least possible effort, explains the almost universal perversion of the law. Thus it is easy to understand how law, instead of checking injustice, becomes the invincible weapon of injustice. It is easy to understand why the law is used by the legislator to destroy in varying degrees among the rest of the people, their personal independence by slavery, their liberty by oppression, and their property by plunder. This is done for the benefit of the person who makes the law, and in proportion to the power that he holds.
Victims of Lawful Plunder
Men naturally rebel against the injustice of which they are victims. Thus, when plunder is organized by law for the profit of those who make the law, all the plundered classes try somehow to enter—by peaceful or revolutionary means—into the making of laws. According to their degree of enlightenment, these plundered classes may propose one of two entirely different purposes when they attempt to attain political power: Either they may wish to stop lawful plunder, or they may wish to share in it. . . . It is as if it were necessary, before a reign of justice appears, for everyone to suffer a cruel retribution—some for their evilness, and some for their lack of understanding.
The Results of Legal Plunder
It is impossible to introduce into society a greater change and a greater evil than this: the conversion of the law into an instrument of plunder. What are the consequences of such a perversion? . . . In the first place, it erases from everyone's conscience the distinction between justice and injustice. No society can exist unless the laws are respected to a certain degree. The safest way to make laws respected is to make them respectable. When law and morality contradict each other, the citizen has the cruel alternative of either losing his moral sense or losing his respect for the law. These two evils are of equal consequence, and it would be difficult for a person to choose between them. The nature of law is to maintain justice. This is so much the case that, in the minds of the people, law and justice are one and the same thing. There is in all of us a strong disposition to believe that anything lawful is also legitimate. This belief is so widespread that many persons have erroneously held that things are “just” because law makes them so. Thus, in order to make plunder appear just and sacred to many consciences, it is only necessary for the law to decree and sanction it. Slavery, restrictions, and monopoly find defenders not only among those who profit from them but also among those who suffer from them.

iv. Providing insight on various classes of taxes and taxation is John Stuart Mill’s, Principles Of Political Economy, “Book V. On The Influence Of Government” (1885):


Chapter I. On The General Principles Of Taxation.
§ 4. Should the same percentage be levied on Perpetual and on Terminable Incomes?
Of the net profits of persons in business, a part, as before observed, may be considered as interest on capital, and of a perpetual character, and the remaining part as remuneration for the skill and labor of superintendence. The surplus beyond interest depends on the life of the individual, and even on his continuance in business, and is entitled to the full amount of exemption allowed to terminable incomes.
§ 6. Taxes falling on Capital not necessarily objectionable.
In addition to the preceding rules, another general rule of taxation is sometimes laid down—namely, that it should fall on income and not on capital. …
Chapter II. Of Direct Taxes.
§ 1. Direct taxes either on income or expenditure.
Taxes are either direct or indirect. A direct tax is one which is demanded from the very persons who, it is intended or desired, should pay it. Indirect taxes are those which are demanded from one person in the expectation and intention that he shall indemnify himself at the expense of another: such as the excise or customs. . . . Direct taxes are either on income or on expenditure. Most taxes on expenditure are indirect, but some are direct, being imposed, not on the producer or seller of an article, but immediately on the consumer. . . . The sources of income are rent, profits, and wages. …
§ 3.—on profits.
A tax on profits, like a tax on rent, must, at least in its immediate operation, fall wholly on the payer. … If a tax were laid on the profits of any one branch of productive employment, the tax would be virtually an increase of the cost of production, and the value and price of the article would rise accordingly; by which the tax would be thrown upon the consumers of the commodity, and would not affect profits. But a general and equal tax on all profits would not affect general prices, and would fall, at least in the first instance, on capitalists alone.
§ 4.—on Wages.
I have already remarked that, in the present low state of popular education, all the higher grades of mental or educated labor are at a monopoly price, exceeding the wages of common workmen in a degree very far beyond that which is due to the expense, trouble, and loss of time required in qualifying for the employment. Any tax levied on these gains, which still leaves them above (or not below) their just proportion, falls on those who pay it; they have no means of relieving themselves at the expense of any other class. . . . Some will object that, even in this case, a tax on wages can not be detrimental to the laborers, since the money raised by it, being expended in the country, comes back to the laborers again through the demand for labor. Without, however, reverting to general principles, we may rely on an obvious reductio ad absurdum[i.e., reduction to absurdity]. If to take money from the laborers and spend it in commodities is giving it back to the laborers, then, to take money from other classes, and spend it in the same manner, must be giving it to the laborers; consequently, the more a government takes in taxes, the greater will be the demand for labor, and the more opulent the condition of the laborers—a proposition the absurdity of which no one can fail to see. . . . To attempt to tax day-laborers, in an old country, is merely to impose an extra tax upon all employers of common labor; unless the tax has the much worse effect of permanently lowering the standard of comfortable subsistence in the minds of the poorest class. We find in the preceding considerations an additional argument for the opinion, already expressed, that direct taxation should stop short of the class of incomes which do not exceed what is necessary for healthful existence. These very small incomes are mostly derived from manual labor; and, as we now see, any tax imposed on these, either permanently degrades the habits of the laboring-class, or falls on profits, and burdens capitalists with an indirect tax, in addition to their share of the direct taxes; which is doubly objectionable, both as a violation of the fundamental rule of equality, and for the reasons which, as already shown, render a peculiar tax on profits detrimental to the public wealth, and consequently to the means which society possesses of paying any taxes whatever.
§ 5.—on Income.
An income-tax, fairly assessed on these principles, would be, in point of justice, the least exceptionable of all taxes. … But the variable gains of professions, and still more the profits of business, which the person interested can not always himself exactly ascertain, can still less be estimated with any approach to fairness by a tax-collector. The main reliance must be placed, and always has been placed, on the returns made by the person himself. The tax, therefore, on whatever principles of equality it may be imposed, is in practice unequal in one of the worst ways, falling heaviest on the most conscientious. It is to be feared, therefore, that the fairness which belongs to the principle of an income-tax can not be made to attach to it in practice. This consideration would lead us to concur in the opinion which, until of late, has usually prevailed—that direct taxes on income should be reserved as an extraordinary resource for great national emergencies, in which the necessity of a large additional revenue overrules all objections. The difficulties of a fair income-tax have elicited a proposition for a direct tax of so much per cent, not on income but on expenditure; the aggregate amount of each person's expenditure being ascertained as the amount of income now is, from statements furnished by the contributors themselves. The only security would still be the veracity of individuals, and there is no reason for supposing that their statements would be more trustworthy on the subject of their expenses than on that of their revenues. The taxes on expenditure at present in force, either in this or in other countries, fall only on particular kinds of expenditure, and differ no otherwise from taxes on commodities than in being paid directly by the person who consumes or uses the article, instead of being advanced by the producer or seller, and reimbursed in the price. The taxes on horses and carriages, on dogs, on servants, are of this nature. They evidently fall on the persons from whom they are levied—those who use the commodity taxed. A tax of a similar description, and more important, is a house-tax…

v. Richard Theodore Ely, Ph.D within his, Taxation in American States and Cities (1888), succinctly distinguished between what properly constitutes direct and indirect taxes:

… The distinction which the Physiocrats made has become the generally accepted principle for classification both in the practical administration of public affairs, and in science. Taxes, it is generally stated, are direct which are borne ultimately by the one upon whom they are in the first instance laid, while taxes are called indirect when they are paid by one person and by him shifted to another. Those taxes which the Physiocrats considered indirect have since their time been held to be partly direct and partly indirect [pg.64] . . . The recent efforts to define direct taxes and indirect taxes with more precision seem, therefore, to be a move in the right direction, and two of these definitions are worthy of note. Paul Leroy-Beaulieu in his “Traité de la Science des Finances,” gives this definition: “Direct taxes are those which the legislator intends should be paid at once and immediately by him who bears their burden. They strike at once his fortune or his revenue, and every intermediary between him and the treasury is suppressed, and a rigorous proportionality is sought between the lax and his fortune or ability to pay taxes.” Indirect taxes, on the other hand, are defined by Leroy-Beaulieu as “those which the legislator does not intend should be paid at once and immediately by him who bears their burden, and he does not seek to proportion them to his revenues or fortune. The legislator seeks to lay them on the one who it is intended should bear their burden in a roundabout way. Intermediaries are put between him and the treasury.” The income lax, land tax, and tax on personal property, on successions and gifts, and on horses and equipages, are included under direct taxes, while taxes on commodities, stamp duties, and fees for registering or recording legal documents are by this definition placed among indirect taxes. . . . Professor Knies [Karl Gustav Adolf Knies, “Political Economy from the Standpoint of the Historical Method”] gives the following definition, which seems to me preferable: “Direct taxes are taxes which are based on an assessment of a person’s property and business, or bear directly on the person of the tax-payer. Indirect taxes are taxes not based on such an assessment, but taxes which are levied when the existence of a taxable object, or source of taxes (productive property), is presumed from other evidence than that of direct assessment or valuation.” [pg.66-67] . . . Taxes on real property and on incomes are by general consent direct taxes. Property and income are assessed and taxes are imposed according to some rule of proportion, but income and property are not necessarily taxed in the same proportion. Indirect taxes are taxes on articles of food, drink, and clothing, or articles of consumption, or, as is most frequently said in America, on commodities. An accessory circumstance is, that they are, as a rule, paid by a dealer who adds the tax paid with a profit to the price of the article. This does not invariably happen, for sometimes the dealer is so situated that he must bear the tax, although it is obviously the intention of the legislator in most cases that he should shift the burden. When I import my own books, however, the tax I pay on their value is as truly indirect as when I purchase the books of a foreign dealer; but I usually save by doing so, because I am not then obliged to pay a profit on the duty. … This definition includes customs duties and internal revenue taxes, which are mainly thought of by the economist when he uses the term indirect taxation. [pg.68] The definition of direct taxes may now be completed by adding other taxes which it has generally been agreed to call direct, and which will be found to have certain characteristics in common, as, for example, that they imply a list of taxable persons, natural and artificial, and that they are proportioned more nearly to the ability of the tax-payer than can well be the case with indirect taxes. Sometimes direct taxes carry with them the assessment of all a man’s fortune, more often of his total income, and perhaps still more frequently, the valuation of all of certain species of property; whereas indirect taxes are specific, a fixed charge for an object without assessment, as so much a pound for sugar; or the single object alone is valued and taxed without reference to the value of other property which the tax-payer or tax-bearer may or may not have. I would then give this as a definition of direct taxes. Direct taxes are taxes on trades (including any branch of business), on pursuits, on property consisting of other economic goods than articles of consumption, and on income. This definition includes taxes on articles of luxury, such as dogs, horses, carriages, and also on successions and gifts. Indirect taxes, on the other hand, are taxes on articles of consumption, or on commodities, as that term is now usually understood, and also taxes levied on occasion of certain transactions, as the payment of money by check, or the recording of deeds or mortgages. The following table [omitted] will help the reader to understand this classification, and also the various subdivisions of these two classes: [pg.69] Direct taxes are divided into two main sub-classes: namely, real and personal taxes. It is to be noticed, however, that these terms are not used with the meaning which is current in the United States. Real taxes are taxes on things, as the word real (res) signifies. A tax on land is an example. It is a certain charge resting on the land, and has no reference to any particular owner. … Business taxes are also regarded as real taxes, as they are taxes on pursuits. The more prominently the personal element is brought forward, the closer the resemblance to a personal tax. When each per-son engaged in a given occupation is charged a certain sum per year, no consideration of the personal element enters into the tax. This may also be said of a tax based on capital employed or rental value of premises. Things are taxed—using the word things in the broadest sense so as to include transactions and occupations. When the personal ability of the merchant or physician, as formerly in the New England colonies, was estimated, and this was allowed to influence the amount of the tax, it in so far approached the nature of a personal tax. Personal taxes are, then, taxes on persons. An income tax is the chief of personal taxes, now that poll tax or capitation tax is generally held to be antiquated, and has been abolished in most places. A man's income is taxed, regardless of its source, in a properly constructed income tax. It may come from lands, houses, bonds, or pursuits, but this is of no consequence. A person from one source and another derives an annual revenue. It is something which gathers about a person. It is properly called a personal tax. This distinction is of great practical importance. … An income tax allows, on the other hand, a deduction of interest paid on the mortgage from income, because that lessens income. Income is what is left after business expenses are paid. Personal expenses, like house-rent may not with propriety be deducted from income before it is taxed, because income exists for the sake of personal expenditures. Taxes on property are divided into taxes on immovable and movable property, called in the United States real and personal property respectively. [pg.71-72] Indirect taxes are either taxes on goods manufactured or produced at home for home consumption, or taxes on commodities entering the home market or leaving it, or taxes levied on occasion of certain transactions. Internal revenue taxes are national in America, as they are levied by the federal government. The chief commodities subject to these taxes are intoxicating liquors and tobacco in its various forms. [pg.73]”

Unread post June 4th, 2013, 11:01 am
Weston White Lead Researcher

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Location: Fresno, California

Yet another great find, in which Abraham Lincoln further expounds the relation between capital and labor and its advancement in achieving true freedom in individualism:

“… It is assumed that labor is available only in connection with capital; that nobody labors unless somebody else, owning capital, somehow by the use of it induces him to labor. This assumed, it is next considered whether it is best that capital shall hire laborers, and thus induce them to work by their own consent, or buy them and drive them to it without their consent. Having proceeded so far, it is naturally concluded that all laborers are either hired laborers or what we call slaves. And further, it is assumed that whoever is once a hired laborer is fixed in that condition for life.

Now there is no such relation between capital and labor as assumed, nor is there any such thing as a free man being fixed for life in the condition of a hired laborer. Both these assumptions are false, and all inferences from them are groundless.

Labor is prior to and independent of capital. Capital is only the fruit of labor, and could never have existed if labor had not first existed. Labor is the superior of capital, and deserves much the higher consideration. Capital has its rights, which are as worthy of protection as any other rights. Nor is it denied that there is, and probably always will be, a relation between labor and capital producing mutual benefits. The error is in assuming that the whole labor of community exists within that relation. A few men own capital, and that few avoid labor themselves, and with their capital hire or buy another few to labor for them. A large majority belong to neither class--neither work for others nor have others working for them. In most of the Southern States a majority of the whole people of all colors are neither slaves nor masters, while in the Northern a large majority are neither hirers nor hired. Men, with their families--wives, sons, and daughters--work for themselves on their farms, in their houses, and in their shops, taking the whole product to themselves, and asking no favors of capital on the one hand nor of hired laborers or slaves on the other. It is not forgotten that a considerable number of persons mingle their own labor with capital; that is, they labor with their own hands and also buy or hire others to labor for them; but this is only a mixed and not a distinct class. No principle stated is disturbed by the existence of this mixed class.

Again, as has already been said, there is not of necessity any such thing as the free hired laborer being fixed to that condition for life. Many independent men everywhere in these States a few years back in their lives were hired laborers. The prudent, penniless beginner in the world labors for wages awhile, saves a surplus with which to buy tools or land for himself, then labors on his own account another while, and at length hires another new beginner to help him. This is the just and generous and prosperous system which opens the way to all, gives hope to all, and consequent energy and progress and improvement of condition to all. No men living are more worthy to be trusted than those who toil up from poverty; none less inclined to take or touch aught which they have not honestly earned. Let them beware of surrendering a political power which they already possess, and which if surrendered will surely be used to close the door of advancement against such as they and to fix new disabilities and burdens upon them till all of liberty shall be lost. …”

—Abraham Lincoln (December 3, 1861), State of the Union Address

Unread post June 21st, 2013, 8:55 am
Weston White Lead Researcher

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letter he wrote to scholar and ecclesiastic Mandell Creighton, dated April 1887, Acton made his most famous pronouncement (Letter to Bishop Mandell Creighton, April 5, 1887 published in Historical Essays and Studies, edited by J. N. Figgis and R. V. Laurence (London: Macmillan, 1907)):

But if we might discuss this point until we found that we nearly agreed, and if we do agree thoroughly about the impropriety of Carlylese denunciations and Pharisaism in history, I cannot accept your canon that we are to judge Pope and King unlike other men, with a favourable presumption that they did no wrong. If there is any presumption it is the other way, against the holders of power, increasing as the power increases. Historic responsibility has to make up for the want of legal responsibility. Power tends to corrupt, and absolute power corrupts absolutely. Great men are almost always bad men, even when they exercise influence and not authority, still more when you superadd the tendency or the certainty of corruption by authority. There is no worse heresy than that the office sanctifies the holder of it. That is the point at which the negation of Catholicism and the negation of Liberalism meet and keep high festival, and the end learns to justify the means. You would hang a man of no position like Ravaillac; but if what one hears is true, then Elizabeth asked the gaoler to murder Mary, and William III. ordered his Scots minister to extirpate a clan. Here are the greatest names coupled with the greatest crimes; you would spare those criminals, for some mysterious reason. I would hang them higher than Haman, for reasons of quite obvious justice, still more, still higher for the sake of historical science.

John Dalberg-Acton, 1st Baron Acton



(Lord Acton)





James Madison, writing in Federalist Paper Number 62, stated that “It will be of little avail to the people, that the laws are made by men of their own choice, if the laws be so voluminous that they cannot be read, or so incoherent that they cannot be understood; if they be repealed or revised before they are promulgated, or undergo such incessant changes that no man, who knows what the law is to-day, can guess what it will be to-morrow. Law is defined to be a rule of action; but how can that be a rule, which is little known, and less fixed?”


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