THE FEDERAL TAX SYSTEM: LEGAL OR NOT

By Cheron Williams

In the break of a failing economy, people are finding it more difficult to comfortably financially support their families.  Most people work hard day in and day out, but many times their take home pay does not reflect their efforts due in part to income tax deductions.  Therefore, “income tax” is a familiar word that we all have a tendency to associate with the loss of our hard earned dollars.  As a result, there are a growing number of people in our society that oppose the income tax.  According to these opponents, the federal income tax is illegal.  They base their conclusion on several factors of the United States Constitution and inconsistencies in government messages.  The Constitution states that a direct tax must be apportioned or divided equally amongst the people and all indirect taxes must be the same throughout all the states.  The government asserts that the Sixteenth Amendment opened the door for the income tax.  However, those in opposition, claim that the Sixteenth Amendment was never ratified.  In 2003, U.S. District Court Judge, James C Fox, stated “If you …examined [16th Amendment] carefully, you would find that a sufficient number of states never ratified that amendment.”   In addition, they stand on various Supreme Court ruling between 1913-1923, where the income tax was ruled unconstitutional and that the Sixteenth Amendment conferred “no new power of taxation”  (Brushaber vs. Union Pacific R.R. Co., 240 U.S. 1).  In addition, they contend that “income” in the Constitution, as defined by the Supreme Court case Doyle vs. Mitchell (1918), is “the idea of gain or increase rising from corporate activity” – not wages or labor.  Instead labor is considered private property as stated in the Supreme Court rulings, Coppage vs. Kansas 236 U.S. 1, 14 (1914):  “chief among such contracts is that of personal employment by which labor and other services are exchanged for many or other forms of personal property.”

As far as the inconsistencies in government messages, we will start with the government’s claim that the income tax is necessary to fund the government.  G. Edward Griffin, author of “Creature From Jekyll Island,” states that “the main purpose of the income tax is not to raise revenue, but to redistribute wealth and to control the society.”  The documentary, “America: Freedom to Facism,” by Aaron Russo states, “after interest payments and government waste, not one penny collected from the tax on your labor pays for services you expect from the government.”  Instead those services are funded from other taxes and fees collected by local and federal agencies.  If you remember the Federal Reserve System article published in the July-August 2007 issue of IWP! magazine, a distinguished group of bankers, consisting of J.P Morgan, Paul Warburg, Benjamin Strong, Abraham Piatt Andrews, Frank Vanderlip and Charles Norton were introduced.  It was stated that this group of infamous bankers were also involved in the creation of the Federal Reserve System.  This same group of bankers is now being linked to the creation of the Federal Income Tax system.  Aaron Russo’s documentary also states, “the bankers understood that whoever issued the money for America would control the government and they knew that the tax would ultimately end up in their pocket.”  With the establishment of the two entities, the bankers would issue the money, charge the government interest and the government would then tax the people to pay the bankers.  Brilliant isn’t it?

The next inconsistency lies with the fact that the Federal Income Tax is mandatory.  The opponents of the income tax declare that there is no statue or law requiring American citizens to pay taxes.  In fact, they reference that the Internal Revenue Code states “the purpose of publishing revenue rulings and revenue procedure in the Internal Revenue Bulletin is to promote correct and uniform application of the tax law by IRS employees and to assist taxpayers in attaining maximum voluntary compliance.”  Did you get that -  “voluntary compliance!”  If it is indeed voluntary, then why is it regulated with people being penalized for not participating?  There is a big difference between voluntary and mandatory and the Income tax is nowhere near voluntary.

ALTERNATIVE TAX SYSTEM

Many opponents of the current tax system are supporters of an alternative tax system – “The FairTax.”  The FairTax proposes that the IRS tax system/code is too complicated, broken and unrepairable.  “In 1995, FairTax.org assembled a team of economists to conduct extensive economic and market research to devise a simpler and more efficient tax system that would unleash the potential of the U.S. economy and help every working American create wealth.”  The end result was the Fair Tax Act (HR 25 & S1025).  As stated on FairTax.org, “it abolishes all personal and corporate income taxes, gift, estate, capital gains, alternative minimum, social security, Medicare, and self employment taxes and replaces them with one simple, visible, federal retail sales tax administered primarily by existing state sales tax authorities.”  It is simply a retail sales tax that is collected on items we purchase.  It only taxes goods one time, when they are originally purchased.  Therefore, the purchase of used items (i.e. used cars) are not taxed again, ever.  It includes a family consumption allowance that is disbursed monthly to each taxpayer to cover the tax collected on purchases of basic household necessities.  The amount of the monthly allowance would be based on the federal poverty levels.  The tax would be 23% on every item purchased, but taxpayers would get to keep their entire paycheck, capital gains, dividends, etc. and receive a monthly family consumption check.  Essentially the taxpayer would control how much he/she pays in taxes based on the items he/she choose to purchase.  Under the system, the IRS would be eliminated and the government would still get the same amount of funds they currently receive.  In addition, Social Security/Medicare benefits would still be functional.

Overall, according the contributors of the FairTax, it will:

o       Eliminate the income tax and the dreaded IRS

o       Jump-start the U.S.  economy

o       Bring businesses and jobs back to the United States

o       Lower interest rates

o       Make April 15 just another beautiful      spring day

With each passing day, people are finding it more difficult to make ends meet.  The government is attempting to provide some relief, but how much relief does a one-time economic stimulus payment of $600 really provide?  Therefore, I ask the question, “how much more of a difference would the elimination of the Income Tax withholding make?”  Does the Fair Tax Plan provide a possible solution?  Maybe or maybe not! However, if there is a chance to increase taxpayers’ take-home pay by eliminating the income tax, then why not explore the option?  It could be on a temporary basis – sort of a trial run to see if it actually works.  For more information, visit www.FairTax.org.

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Cheron Williams is just a concerned citizen seeking answers and providing information to the uniformed public.  Get In The Know – The Information Is Out There.

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