income from whatever source derived (again)

[Weston White]

Weston ....

Is it your contention that the income tax laws (as originally written and as originally conceived by the founders) did not impose a tax on compensation (remuneration) or payments made in exchange for labor, and that those original tax laws have been changed so much from the original that the most pertinent parts of the law have been hidden?

In other words, that the important understanding of what was intended to be taxed (and originally taxed) was made ambiguous by the later tax laws enacted by Congress?

I'm seriously trying to understand the core of your argument, and the best that I can conceive of it, is that you believe the income tax laws (as they stand today) are not what was originally intended or what was allowed by the founding documents.

Am I getting close? Please don't argue with me, and please simply answer the questions.

If you read the Federalist Papers (12, 21, 30-36) you will note that direct taxes were only meant to used as last resort of taxation. It was realized that import and internal taxes should suffice adequate revenue for government expense as authorized by the U.S. Constitution.

Seriously, if taking labor however deemed by Congress was the original plan, why even have two categories of taxation? What is so extraordinary about realty and slaves that they wanted to make some silly little clause that would hardly ever be used? Seriously, if ‘capitation taxes’ is of no consequence, why even mention it in the U.S. Constitution? Obviously, they felt it important enough to include within its own special clause, regardless of whatever it means. If they meant to tax ones labor or the revenue generated from it, whoever deemed proper by Congress, why not realty and slaves as well? Being that ones realty and slaves would ultimately derive from their effort in labor or revenue from it, what would it matter then? If ‘income’ is or was what a ‘capitation tax’ used to be, why would the XVI Amendment not make any reference to that fact or why would they not use ‘capitation taxes’ instead of some obscure reference to ‘incomes’ as they did?

e.g.

Amendment XVI [Income Tax (1913)]
The Congress shall have power to lay and collect taxes on capitation taxes, from whatever source derived, without apportionment among the several states, and without regard to any census or enumeration.

Also note the use “The Congress shall have power to lay and collect taxes on incomes”, I feel that is strange redeclaring a power they had already been given within AI,S8,C1 or had they? Perhaps they realized they needed to do this because they were in essence creating a new class of tax, ‘income taxes’, which had been extricated from another class of tax, such as ‘direct taxes’, just as a thought.


...An amusing subliminal for you, Federalist Paper 21:

The wealth of nations depends upon an infinite variety of causes. Situation, soil, climate, the nature of the productions, the nature of the government, the genius of the citizens, the degree of information they possess, the state of commerce, of arts, of industry,gthese circumstances and many more, too complex, minute, or adventitious to admit of a particular specification, occasion differences hardly conceivable in the relative opulence and riches of different countries. The consequence clearly is that there can be no common measure of national wealth, and, of course, no general or stationary rule by which the ability of a state to pay taxes can be determined. The attempt, therefore, to regulate the contributions of the members of a confederacy by any such rule, cannot fail to be productive of glaring inequality and extreme oppression.

Also, I'd like to see you answer the question asked by 'Dr. Caligari' below.

Dr. Caligari wrote:
No other items may be excluded from gross income except (a) those items of income which are, under the Constitution, not taxable by the Federal Government

OK, fine (even though that language no longer appears in the Code or regulations). Just what items of income are there that are not taxable by the federal government under the Constitution? (Hint: if you can answer that question, you will know why that language has been removed from the current versions of the Code and Regulations.)

I already posted the link to Subchapter B, that was my answer. And just because certain text has been omitted does not mean that the context has actually changed, unless there is something else to make that so, such as a repeal or conflict clause. Otherwise it still stands as if that text were there.

[Weston White]

law practice and interest on government bonds.

Well there you go, most likley he had taxable income as per the IRC.

[Weston White]

Pollock also recognized that a tax on wages and personal earnings is not a direct tax:

I do not know how you got that from this (remember this is prior the year 1909):

“… We do not mean to say that an act laying by apportionment a direct tax on all real estate and personal property, or the income thereof, might not also lay excise taxes on business, privileges, employments, and vocations. But this is not such an act, …”

Keeping in mind:

LABOR.
“Labor,” “business,” and “work” are not synonyms. Labor may be business, but it is not necessarily so; and business is not always labor. Labor implies toll; exertion producing weariness; manual exertion of a toll some nature.
BLACK’S LAW DICTIONARY

This is stating that an Act could lay simultaneously both direct and indirect categories of taxation; however, for the purposes of the IRC, this is not the case. It is discussing a 'direct tax', which includes a tax on realty, personal property, and related income; again this is aside from 'capitation tax', which is not a 'direct tax'. Ergo, this is what the XVI Amendment served to do, to remove income from direction taxation and place it within indirect taxation. Capitation taxes was never a subject or concern of this.

Furthermore this substantiates exactly what [XVI Amendment] 'incomes' are, which is to say a tax upon the gains and profits deriving from realty and personal property, whatever the source of such may actually be. And that this is where the confusion had lied; that type of 'income' is not the revenue or stock generated from laboring, being only taxable by a 'capitation tax'... this serves as the basis for obtaining that which is only taxable under a 'direct tax' and subsequently the 'income tax'.

[Nikki]

Weston:

I hope you are maintaining a well-indexed collection of your various posts here and elsewhere plus all the details of your independent, underlying research.

It will prove of significant value to you in the future when you magically terminate the collection proceedings, make all the penalties vanish, and rid your assets of all of those nasty liens.

Also, I apologize for not posting this yesterday.

[ASITStands]

Weston ....

First of all, thank you for answering my questions as honestly and completely as you did.

Now, a couple of other questions:

The moral of the story is: ‘Direct Taxation’ is either (1) a ‘capitation tax’ as expressed within the Constitution; ergo no further explanation needed, because there is no doubt as what that actually means, to argue about such a point we might as well begin arguing about the meaning of “conclusion” or “constitution” or “freedom” or “liberty” or it is (2) a ‘direct tax’, a tax on realty or that which is tied to the land, i.e. slaves.

I have never said the income tax is a capitation tax, the income tax is its own class of tax, that exisits within the excise tax; as the poll-tax exists within the capitation tax.

Into which category did the tax on slaves fall?

Was it a capitation? Was it a poll tax? Or, was it merely a tax on property?

Seriously, if taking labor however deemed by Congress was the original plan, why even have two categories of taxation? What is so extraordinary about realty and slaves that they wanted to make some silly little clause that would hardly ever be used? Seriously, if ‘capitation taxes’ is of no consequence, why even mention it in the U.S. Constitution? Obviously, they felt it important enough to include within its own special clause, regardless of whatever it means. If they meant to tax ones labor or the revenue generated from it, whoever deemed proper by Congress, why not realty and slaves as well? Being that ones realty and slaves would ultimately derive from their effort in labor or revenue from it, what would it matter then? If ‘income’ is or was what a ‘capitation tax’ used to be, why would the XVI Amendment not make any reference to that fact or why would they not use ‘capitation taxes’ instead of some obscure reference to ‘incomes’ as they did?

If taxing labor was the original plan, why have two categories of taxation? Is there a difference between receiving payment in exchange for one's own labor and payment in exchange for the labor or production of something you own, such as a slave or farm land?

In regard to the question of 'Dr. Caligari:'

I already posted the link to Subchapter B, that was my answer. And just because certain text has been omitted does not mean that the context has actually changed, unless there is something else to make that so, such as a repeal or conflict clause. Otherwise it still stands as if that text were there.

If I'm understanding you correctly, the "Subchapter B" to which you refer is the same that includes, Part III: Items Specifically Excluded from Gross Income, or Sections 101-140.

The question posed by 'Dr. Caligari' concerned "those items of income which are, under the Constitution, not taxable by the Federal Government." How are the items excluded by Part III of Subchapter B not taxable by the Federal Government under the Constitution?

Where do those items appear in the Constitution or what is their connection to it?

[Weston White]

Weston:

I hope you are maintaining a well-indexed collection of your various posts here and elsewhere plus all the details of your independent, underlying research.

It will prove of significant value to you in the future when you magically terminate the collection proceedings, make all the penalties vanish, and rid your assets of all of those nasty liens.

Also, I apologize for not posting this yesterday.

Not sure what you are talking about... And by the looks of it neither do you.

[Weston White]

Into which category did the tax on slaves fall?

SCOTUS has stated that in historical precedence various states treated such taxes differently, either slaves were taxed as realty under the ‘direct tax’ or as a class of citizen [e.g. non-free or slave] under the ‘poll-tax’.

Was it a capitation? Was it a poll tax? Or, was it merely a tax on property?

A ‘capitation tax’ is a tax in consideration of ones labor, employment, or business.
A ‘poll-tax’ is a tax according to ones rank or class, without any consideration to ones labor, employment, business, etc.
A ‘direct tax’ is a tax upon ones property, real or personal, buildings, items tied to the land, and use to contain taxes of the income realized therefrom, until the XVI Amendment extricated the aspect of that class of tax into the form of an ‘excise tax’.

If taxing labor was the original plan, why have two categories of taxation? Is there a difference between receiving payment in exchange for one's own labor and payment in exchange for the labor or production of something you own, such as a slave or farm land?

Generally speaking, there would be no difference; either would need to be taxed in a form of direct taxation.

Though the purpose of having two categories of taxation it to have one for taxing the people and their property and to have another to tax their spending and consumption. This is pointed example, of course they expand and include many other aspects, namely this is so for 'indirect taxation', though this is the core of each of the two categories.

In regard to the question of 'Dr. Caligari:'

If I'm understanding you correctly, the "Subchapter B" to which you refer is the same that includes, Part III: Items Specifically Excluded from Gross Income, or Sections 101-140.

The question posed by 'Dr. Caligari' concerned "those items of income which are, under the Constitution, not taxable by the Federal Government." How are the items excluded by Part III of Subchapter B not taxable by the Federal Government under the Constitution?

Where do those items appear in the Constitution or what is their connection to it?

Oh sorry, I did not catch the reference to the Constitution. Being that there is no actual reference to the definition of income being referenced, thus presuming this is still implementing the intention of XVI Amendment ‘incomes’ it would be in reference to the fact that the federal government can only tax such gains and profits that they are party to, such as an existing or established federal nexus. Now presuming that it meaning income in its common sense meaning, it would be a references to those classes of taxes which exist within direct taxation. Though I doubt the latter is actually the case, because such items would never be the intended subject anyway. Though it could be simply meant as a safety/escape hatch mechanism.

[Famspear]

A ‘capitation tax’ is a tax in consideration of ones labor, employment, or business.

No.

[SteveSy]

A ‘capitation tax’ is a tax in consideration of ones labor, employment, or business.

No.

Well, it was like that for the entire world which is pretty well documented. It's truly strange that people like yourself have been convinced that we adopted a version of "direct taxes" that's different than every other country in the world and failed to even mention that fact even once in the debates. In fact the only time direct taxes have been explained in the debates of constitution they specifically included a tax on income as being included in the category. But don't let the facts get in the way.

What do you think a capitation tax is? Let me set some things straight prior to your answer. A capitation tax has never been laid on all people at a flat amount equal per person nor has it included everyone in the U.S. We've had a couple of them since our founding.

[Weston White]

No.

No. ...ROFL

Hey, you had you chance to change my mind, I gave you 30-seconds, you choose not to. To bad, so sad... Sorry, you lost. Thanks for playing, tell him what he has won Johnny... A week supply of canned tuna!

[Weston White]

A ‘capitation tax’ is a tax in consideration of ones labor, employment, or business.

No.

Well, it was like that for the entire world which is pretty well documented. It's truly strange that people like yourself have been convinced that we adopted a version of "direct taxes" that's different than every other country in the world and failed to even mention that fact even once in the debates.

What do you think a capitation tax is? Let me set some things straight prior to your answer. A capitation tax has never been laid on all people at a flat amount equal per person nor has it included everyone in the U.S. We've had a couple of them since our founding.

I have already asked him numerous times, the best answer he was able to provide besides outright ignoring the post (while somebody being very thorough in replying to all of my other posts) was to state it was a "head tax". Oh yea that pretty sums it all up right? heh.

He also refuses to post how POLLOCK completely rejected Wealth of Nations, he just keeps posting that it had and that he wants to let me "stew for a bit" for he tells me the answer.

I got to give it to him, he knows how to keep the suspense roaring.

[LPC]

Seriously, if taking labor however deemed by Congress was the original plan, why even have two categories of taxation? What is so extraordinary about realty and slaves that they wanted to make some silly little clause that would hardly ever be used? Seriously, if ‘capitation taxes’ is of no consequence, why even mention it in the U.S. Constitution? Obviously, they felt it important enough to include within its own special clause, regardless of whatever it means.

The first time I read the Hylton decision, I was puzzled by the idea that taxes on people (capitations) and taxes on the value of real estate (other "direct taxes") were lumped together, because as objects of taxation they seemed to have nothing in common.

The answer is found in the Articles of Confederation and Madison's Notes on the constitutional convention. Briefly:

1. Under the Articles of Confederation, requisitions of Congress for money were to be apportioned among the states in proportion to the value of the lands within the state.

2. An early draft of the Constitution (specifically, the Paterson plan), had the same formula we now see in the Constitution for the apportionment of direct taxes, but it had the word "requisitions" instead. Later drafts simply changed the word "requisitions" to "direct taxes."

3. Early in the constitutional convention, there was an agreement that representation in Congress and the apportionment of requisitions/"direct taxes" should both be done the same way. So (for example), if a slave is treated as three-fifths of a person for purposes of determining the number of seats a state should have in the House of Representatives, the slave should be treated the same way for purposes of any capitation (or other requisition/"direct tax").

The whole apportionment process was therefore the product of (a) the recent history of the Articles of Confederation and (b) political struggles between the northern states, which had poor, relatively small farms with few slaves, and the southern states, with larger more valuable farms with many slaves.

Please note that, if you abolish slavery, the apportionment of a capitation becomes largely meaningless. If State A has 4,000 people and State B has 6,000 people, and Congress wants $10,000, it's going to be $1 per person in both states *UNLESS* slaves are counted as only three-fifths of a person. Eliminate slavery, and the apportionment is going to produce the same dollar amount per person in every state. It is for this reason that many scholars believe that apportionment is an anachronism that should have been abolished along with slavery.

Incidentally, the power given Congress to impose duties, excises, and imposts was added relatively late in the drafting process, and with very little discussion. It seemed to have been understood all along that Congress would have the power to tax "commerce" (i.e., transactions) and the only sticking point was the link between representation and taxing people and property.

[ASITStands]

I do not have time to write more clearly on the subject.

Do not overlook the following from Springer v. United States:

The tax here in question falls within neither of these categories. It is not a tax on the "whole . . . personal estate" of the individual, but only on his income, gains, and profits during a year, which may have been but a small part of his personal estate, and in most cases would have been so. This classification lends no support to the argument of the plaintiff in error.

The Constitution went into operation on the 4th of March, 1789.

It is important to look into the legislation of Congress touching the subject since that time. The following summary will suffice for our purpose. We shall refer to the several acts of Congress, to be examined [***24] according to their sequence in dates. In all of them the aggregate amount required to be collected was apportioned among the several States.

The act of July 14, 1798, c. 75, 1 Stat. 53. This act imposed a tax upon real estate and a capitation tax upon slaves.

The act of Aug. 2, 1813, c. 37, 3 id. 53. By this act the tax was imposed upon real estate and slaves, according to their respective values in money.

The act of Jan. 19, 1815, c. 21, id. 164. This act imposed the tax upon the same descriptions of property, and in like manner as the preceding act.

The act of Feb. 27, 1815, c. 60, id. 216, applied to the District of Columbia the provisions of the act of Jan. 19, 1815.

[*599] The act of March 5, 1816, c. 24, id. 255, repealed the two preceding acts, and re-enacted their provisions to enforce the collection of the smaller amount of tax thereby prescribed.

The act of Aug. 5, 1861, c. 45, 12 id. 294, required the tax to be levied wholly on real estate.

The act of June 7, 1862, c. 98, id. 422, and the act of Feb. 6, 1863, c. 21, id. 640, both relate only to the collection, in insurrectionary districts, of the direct tax imposed by the act of Aug. 5, 1861, and need [***25] not, therefore, be more particularly noticed.

It will thus be seen that whenever the government has imposed a tax which it recognized as a direct tax, it has never been applied to any objects but real estate and slaves. The latter application may be accounted for upon two grounds: 1. In some of the States slaves were regarded as real estate (1 Hurd, Slavery, 239; Veazie Bank v. Fenno, 8 Wall. 533); and, 2, such an extension of the tax lessened the burden upon the real estate where slavery existed, while the result to the national treasury was the same, whether the slaves were omitted or included. The wishes of the South were, therefore, allowed to prevail. We are not aware that the question of the validity of such a tax was ever presented for adjudication. Slavery having passed away, it cannot hereafter arise. It does not appear that any tax like the one here in question was ever regarded or treated by Congress as a direct tax. This uniform practical construction of the Constitution touching so important a point, through so long a period, by the legislative and executive departments of the government, though not conclusive, is a consideration of great weight.

... which seems instructive to me on the definition of a capitation.

And, later:

Mr. Justice Chase said further, "That he would give no judicial opinion upon the subject, [***28] but that he was inclined to think that the direct taxes contemplated by the Constitution were only two, -- a capitation tax and a tax on land."

Mr. Justice Iredell said: "Perhaps a direct tax, in the sense of the Constitution, can mean nothing but a tax on something inseparably annexed to the soil. . . . A land or poll tax may [**259] be considered of this description. The latter is to be so considered, particularly under the present Constitution, [*601] on account of the salves in the Southern States, who give a ratio in the representation in the proportion of three to five."

Mr. Justice Paterson said, he never entertained a doubt "that the principal, he would not say the only, objects contemplated by the Constitution as falling within the rule of apportionment, were a capitation tax and a tax on land." From these views the other judges expressed no dissent.

[SteveSy]

I do not have time to write more clearly on the subject.

Do not overlook the following from Springer v. United States:

Problem is under Springer, if read like you believe, the Pollock decision is impossible.

The other problem that I have and many like me have is where's the support? The first question that needs to be answered is why are direct taxes in the U.S. defined differently than every other place in the world considering we adopted our legal principles mainly from England and France? If they are different then where's the support for it? Each of those nations unequivocally place an income tax in the class of direct taxes, more specifically in the capitation tax category. Not one single time did anyone even hint a income tax was in the class of indirect taxation during the founding of the nation. In fact the only mentions of a tax on income places it in the category of direct taxes. You're going against centuries of well documented history.

If we adopted a new version of direct taxes, different than every other nation in the world I would assume someone would have said something, wouldn't they? Please don't start citing court cases, they didn't create the U.S. constitution nor did they design the foundation of this nation. They have to have something they're basing their information on or its nothing but hogwash. Especially in light of the mountains of contradictory evidence.

[Weston White]

Please note that, if you abolish slavery, the apportionment of a capitation becomes largely meaningless. If State A has 4,000 people and State B has 6,000 people, and Congress wants $10,000, it's going to be $1 per person in both states *UNLESS* slaves are counted as only three-fifths of a person. Eliminate slavery, and the apportionment is going to produce the same dollar amount per person in every state. It is for this reason that many scholars believe that apportionment is an anachronism that should have been abolished along with slavery.

This does not make the tax or process meaningless it makes it fair, see this way everybody actually does pay their “fair share”. As it stands now that is never the case. Also direct taxation is only meant to be instituted as a last resort, government revenue is meant to come namely from imports and internal taxation, excises. Not through the suffrage of the people.


Also regarding ‘capitation taxes’ Dr. Adam Smith stated:

Capitation taxes, if it is attempted to proportion them to the fortune or revenue of each contributor, become altogether arbitrary. The state of a man's fortune varies from day to day, and without an inquisition more intolerable than any tax, and renewed at least once every year, can only be guessed at. His assessment, therefore, must in most cases depend upon the good or bad humour of his assessors, and must, therefore, be altogether arbitrary and uncertain.

[Famspear]

Problem is under Springer, if read like you believe, the Pollock decision is impossible.

No, the decision in Pollock essentially modified the holding in Springer. From a legal standpoint, there is nothing "impossible" about conflicts among cases. Subsequent decisions modify the rules in prior decisions all the time.

The other problem that I have and many like me have is where's the support? The first question that needs to be answered is why are direct taxes in the U.S. defined differently than every other place in the world considering we adopted our legal principles mainly from England and France?

No, that question does not really need to be answered. Why? There is no legal principle that requires that terms be defined the same way in the laws of all countries. There is no reason why the legal principles of one country must be the same as those of another country.

If they are different then where's the support for it?

In the rulings of the US courts. We're already cited the cases, over and over.

Each of those nations unequivocally place an income tax in the class of direct taxes, more specifically in the capitation tax category. Not one single time did anyone even hint a income tax was in the class of indirect taxation during the founding of the nation. In fact the only mentions of a tax on income places it in the category of direct taxes. You're going against centuries of well documented history.

Courts do sometimes consider history in making decisions but there is no legal principle that requires that law must follow an interpretation of "well documented history" in defining legal terms. The definitions of terms can vary from country to country without violating any "legal" principles.

If we adopted a new version of direct taxes, different than every other nation in the world I would assume someone would have said something, wouldn't they? Please don't start citing court cases, they didn't create the U.S. constitution nor did they design the foundation of this nation. They have to have something they're basing their information on or its nothing but hogwash.

Sorry, Steve, but under U.S. law, citing the holdings of courts of law in court cases is the proper way to answer your question. You can't have it your own way.

[Weston White]

... which it recognized as a direct tax, it has never been applied to any objects but real estate and slaves.

Mr. Justice Chase said further, "That he would give no judicial opinion upon the subject, [***28] but that he was inclined to think that the direct taxes contemplated by the Constitution were only two, -- a capitation tax and a tax on land."

Mr. Justice Iredell said: "Perhaps a direct tax, in the sense of the Constitution, can mean nothing but a tax on something inseparably annexed to the soil. . . . A land or poll tax may [**259] be considered of this description. The latter is to be so considered, particularly under the present Constitution, [*601] on account of the salves in the Southern States, who give a ratio in the representation in the proportion of three to five."

Mr. Justice Paterson said, he never entertained a doubt "that the principal, he would not say the only, objects contemplated by the Constitution as falling within the rule of apportionment, were a capitation tax and a tax on land." From these views the other judges expressed no dissent.

This is directly discussing ‘direct taxes’ not ‘capitation taxes’.

[SteveSy]

Please note that, if you abolish slavery, the apportionment of a capitation becomes largely meaningless.

I find the reasoning that the capitation tax was only put in place to protect the southern States who owned the majority of slaves an absurdity. One giant problem with that argument, congress laid a capitation tax only on slaves in 1798 which the slave owners had to pay. Exactly how did that clause help them again?

[Weston White]

No, that question does not really need to be answered. Why? There is no legal principle that requires that terms be defined the same way in the laws of all countries. There is no reason why the legal principles of one country must be the same as those of another country.

Great, so post the statutory definition you have, prescribing all of the USA's "special" tax class definitions.

[Famspear]

It's funny to think about all these imaginary rules:

Imaginary Rule 1: In defining the terms in the United States Constitution, the rulings of U.S. courts do not count. We must instead use the definitions provided by an eighteenth century foreign economist.

Imaginary Rule 2: In defining the terms in the United States Constitution, we cannot use words to have meanings different from the meanings those words might have in other countries like England and France -- or if we do use different meanings, we must find support for those meanings somewhere other than the actual rulings of courts of law created under the Constitution or statutes of our own legal system.