Text of the Sixteenth Amendment:
The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.
--Ratified Feb. 3, 1913 (declared ratified Feb. 25, 1913).
This is what many tax protesters argue the amendment means:
"The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration, except for income taxes that are direct taxes."
Unfortunately, that's not what the Amendment says, and that's not what it means.
Here are my main points:
1. The question of whether a particular income tax is direct or indirect is legally irrelevant to the question of whether the Congress has the power, under the U.S. Constitution as amended by the Sixteenth Amendment, to impose that tax. Congress has the power to impose any income tax, regardless of whether that tax is deemed direct or indirect.
2. The question of whether a particular income tax is direct or indirect is also legally irrelevant to the issue of whether that tax must be apportioned. After the Sixteenth Amendment, no income tax of any kind whatsoever, whether direct or indirect, is required to be apportioned.
3. Under the Constitution as amended, the only important legal relevancy to the question of whether a particular income tax is Constitutionally valid (aside from rules such as the one prohibiting taxes on exports, or rules that revenue measures must originate in the House, etc.) is probably whether that income tax is imposed with what the law refers to as ''geographical uniformity''. That is, an income tax cannot be imposed on, say, just the incomes of people who happen to reside in New York and Montana.
--from a commentary at another web site, on 18 March 2007.
From the United States Tax Court:
Thus, since the ratification of the Sixteenth Amendment it is immaterial, with respect to income taxes, whether the tax is a direct or an indirect tax.
---from
Johnson v. Commissioner, 37 T.C.M. (CCH) 189, T.C. Memo 1978-32 (1978).
And, from the United States Tax Court in another case:
Thus, since the ratification of the Sixteenth Amendment it is immaterial, with respect to income taxes, whether the tax is a direct or an indirect tax.
---from
Sortillon v. Commissioner, 38 T.C.M. (CCH) 1097, T.C. Memo 1979-281, CCH Dec. 36,194(M), Docket No. 2108-79 (July 26, 1979).
From the U.S. Court of Appeals for the Tenth Circuit:
Dickstein's argument that the sixteenth amendment does not authorize a direct, non-apportioned tax on United States citizens similarly is devoid of any arguable basis in law. Indeed, the Ninth Circuit recently noted the patent absurdity and frivolity of such a proposition. In re Becraft, 885 F.2d 547, 548 (9th Cir.1989). For seventy-five years, the Supreme Court has recognized that the sixteenth amendment authorizes a direct nonapportioned tax upon United States citizens throughout the nation, not just in federal enclaves, see Brushaber v. Union Pac. R.R., 240 U.S. 1, 12-19, 36 S.Ct. 236, 239-42, 60 L.Ed. 493 (1916); efforts to argue otherwise have been sanctioned as frivolous, see, e.g., Becraft, 885 F.2d at 549 (Fed.R.App.P. 38 sanctions for raising frivolous sixteenth amendment argument in petition for rehearing); Lovell v. United States, 755 F.2d 517, 519-20 (7th Cir.1984) (Fed.R.App.P. 38 sanctions imposed on pro se litigants raising frivolous sixteenth amendment contentions).
--from
United States v. Collins, 920 F.2d 619 (10th Cir. 1990) (bolding added).
And, from the decision in yet another case before the United States Tax Court:
Since the ratification of the Sixteenth Amendment, it is immaterial with respect to income taxes, whether the tax is a direct or indirect tax. The whole purpose of the Sixteenth Amendment was to relieve all income taxes when imposed from [the requirement of] apportionment and from [the requirement of] a consideration of the source whence the income was derived.
---from
Abrams v. Commissioner, 82 T.C. 403, CCH Dec. 41,031 (1984).
From the U.S. Tax Court:
At the trial, Mr. Wikoff [the taxpayer] also raised the issue of the constitutionality of the Federal income tax. He argues that as a graduated direct tax on income, the Federal income tax statute was not within the intended scope of the 16th Amendment to the Constitution. According to him, the framers of the 16th Amendment envisioned an indirect excise tax on corporations, such as that contained in the Tariff Act of 1909. Since the petitioner is an "individual sovereign citizen" and the Federal income tax is a direct, progressive tax, he claims not to be subject to such tax.
It has long been settled that the Federal income tax is within the scope of the 16th Amendment and is constitutional. See, e.g., Brushaber v. Union Pac. R.R. Co. [1 USTC ¶ 4], 240 U.S. 1 (1916); Stanton v. Baltic Mining Co. [1 USTC ¶ 8], 240 U.S. 103 (1916); Cupp v. Commissioner [Dec. 33,459], 65 T.C. 68 (1975), affd. without published opinion 559 F. 2d 1207 (3d Cir. 1977). The whole purpose of the 16th Amendment, as stated by the Supreme Court in Brushaber v. Union Pac. R.R. Co., supra at 18, was to relieve all income taxes when imposed from apportionment from a consideration of the source whence the income was derived. Thus, since the ratification of the 16th Amendment, it is immaterial, with respect to Federal income taxes, whether the tax is a direct or an indirect tax. Mr. Wikoff relied on the Supreme Court's decision in Pollock v. Farmers' Loan & Trust Co., 157 U.S. 429 (1895), but the effect of that decision has been nullified by the enactment of the 16th Amendment. Brushaber v. Union Pac. R.R. Co., supra.
--from
Wikoff v. Commissioner, 37 T.C.M. (CCH) 1539, T.C. Memo. 1978-372 (1978) (bolding added) (footnote omitted).
Thus, the U.S. Tax Court has stated, in at least four different decisions (Johnson, Sortillon, Abrams, and Wikoff), that with respect to the Federal income tax, it does not matter whether the tax is deemed to be a direct tax or an indirect tax.
Tax lawyer Alan O. Dixler has written:
Each year some misguided souls refuse to pay their federal income tax liability on the theory that the 16th Amendment was never properly ratified, or on the theory that the 16th Amendment lacks an enabling clause. Not surprisingly, neither the IRS nor the courts have exhibited much patience for that sort of thing. If, strictly for the purposes of this discussion, the 16th Amendment could be disregarded, the taxpayers making those frivolous claims would still be subject to the income tax. In the first place, income from personal services is taxable without apportionment in the absence of the 16th Amendment. Pollock specifically endorsed Springer's holding that such income could be taxed without apportionment. The second Pollock decision invalidated the entire 1894 income tax act, including its tax on personal services income, due to inseverability; but, unlike the 1894 act, the current code contains a severability provision. Also, given the teaching of Graves [Graves v. New York ex rel. O'Keefe, 306 U.S. 466 (1939)] -- that the theory that taxing income from a particular source is, in effect, taxing the source itself is untenable -- the holding in Pollock that taxing income from property is the same thing as taxing the property as such cannot be viewed as good law.
--Alan O. Dixler, "Direct Taxes Under the Constitution: A Review of the Precedents," Report to the Committee on Legal History of the Bar Association of the City of New York, Nov. 20, 2006, as republished in
Tax History Project, Tax Analysts, Falls Church, Virginia (italics in original; footnotes omitted).
The United States Court of Appeals for the Fourth Circuit has indicated that after the ratification of the Sixteenth Amendment in 1913, whether an income tax is a capitation or other direct tax or not, the apportionment restriction (the rule that capitations or other direct taxes must be apportioned) simply does not apply if the tax in question is an income tax:
The power to tax is conferred on Congress by article I, section 8, clause 1 of the Constitution, but other sections of the Constitution impose certain restrictions upon the manner in which the taxing power of the Federal Government may be exercised. In addition to the general limitations placed upon that power by the due process clause of the Fifth Amendment, Congress is specifically prohibited from laying any tax on the export of goods; whatever indirect taxes it may enact shall be uniform throughout the United States and it may impose a capitation or direct tax only if apportioned among the states according to population. This last restriction, the only one pertinent to the present case [the federal income tax under the Internal Revenue Code], has been limited in scope by the Sixteenth Amendment which permits taxes on incomes, from whatever source derived without regard to the apportionment requirement.
---
Simmons v. United States, 308 F.2d 160, 165-66, 62-2 U.S. Tax Cas. (CCH) ¶9713 (4th Cir. 1962).
"My greatest fear is that the audience will beat me to the punch line." -- David Mamet
