General Questions
The Income Tax
 

1. Is the income tax progressive or regressive?
2. Is the income tax an unapportioned direct tax or an indirect tax?
3. Is the income tax constitutional?
4. What does the Sixteenth Amendment mean?
    

Is the income tax progressive or regressive?

Regressive , and since the income tax is often referred to as a progressive income tax, don’t let the words fool you.

The current income tax system operates essentially the same as a regressive value added tax. Why is this? Simply because corporations do not effectively pay an income tax. Oh sure, paper forms are filed and taxes paid, but the actual cost of the tax is passed on down the line. Eventually, you the consumer will pay all of these combined but cleverly hidden taxes. Nobody can escape the hidden embedded costs. This especially hurts those with low incomes.

Quite regressive, don’t you think?

However, some much better questions to ask about the income tax is whether the tax is fair, equitable and uniform? Does the tax promote or discourage production? Does the tax protect or violate privacy? Does the tax encourage or discourage savings, hard work and enterprise? Does the tax encourage life, liberty, and ownership of property or promote involuntary slavery and operate under the guise of legal plunder? You need not be a rocket scientist to answer the questions.
 

Is the income tax an unapportioned direct tax or an indirect tax?

Yes.

Depends upon who the judge is, you know?

Sadly, the entire issue is so discombobulated within the legal system, that the question is essentially moot. The question is a good question, but nobody in the courts or Congress is going to answer any time soon. In essence, doesn’t matter what you argue. The courts and Congress cannot allow the house of cards to fall based upon the rhetoric of a few people. So don’t go betting the farm chasing rabbits.

However, for technical purists, the Supreme Court has declared the income tax to be an indirect tax in the nature of an excise, and that the Sixteenth Amendment conferred to Congress no new powers of taxation. Indirect taxes are not direct taxes on property, but taxes on activities. Income is not the subject of an indirect tax, but acts as a yardstick to determine the tax owed for having participated in a taxable activity.

From the Supreme Court’s perspective, the phrase “conferred no new powers” does not mean the Amendment is meaningless. Congress has always had the power to tax incomes, and that is what the phrase means. From the Court’s perspective the Amendment precludes courts from having to look for the rule of apportionment when taxes are levied on income.

However, let’s not skirt the issue. Because Congress sets the cost basis for labor at zero (please do not confuse cost basis with exchange value , the terms are not the same), the out-of-pocket effect is the same as an unapportioned direct tax.

For further information, read Brushaber v. Union Pacific R.R. Co., 240 U.S. 1 (1916) , Stanton v. Baltic Mining Co., 240 U.S. 103 (1916) , and Eisner v. Macomber, 252 U.S. 189 (1920) . Have fun.
 

Is the income tax constitutional?

Good question. Yet, who is going to step forward and provide an answer?

Some judges believe the Sixteenth Amendment created a new class of direct tax that is unapportioned. Some judges believe the Sixteenth conferred no new powers of taxation and that the income tax is an indirect tax.

There has yet to be a decisive judicial agreement (among many) made as to whether the income tax is a direct or indirect tax, although the Supreme Court seems to think the issue was put to rest more than 80 years ago. There has yet to be an agreement as to exactly what is income. The arguments have raged for decades.

If the income tax is a direct tax, then why is the tax not being collected through the states by the rule of apportionment ? The Constitution also clearly makes the several states the subject of and liable for paying any federal direct tax.

If the Sixteenth indeed created a new class of unapportioned direct tax, then such an answer strangely contradicts the Brushaber v. Union Pacific R.R. and Stanton v. Baltic Mining cases. Both of those cases were decided in 1916, only three years after the alleged ratification of the Sixteenth (1913). Those cases state clearly that the Sixteenth conferred to Congress no new powers of taxation and that the Sixteenth merely placed taxes on income into the class of indirect taxes subject to the rule of uniformity.

If the income tax is an indirect tax, then that answer begs the question of trying to explain why the income tax is not uniform, as required by the Constitution . Different tax rates and an almost uncountable number of deductions and loopholes hardly make the tax uniform.

If an indirect tax, then the question arises of what taxable activity are Americans participating in order to be subject to this tax? If the income tax is an indirect tax then what is the activity being taxed?

If the activity being taxed is general labor, then the Sixteenth Amendment conflicts with the Thirteenth Amendment (and all state constitutions) prohibiting involuntary servitude.

Then, of course, there is the question of voluntary compliance. If indeed the income tax is an indirect tax, and nobody can or will explain or provide a statute stating what taxable activity most Americans are participating, then why do people get fined or imprisoned for not complying?

No matter where one turns, there seems to be too many unanswerable questions surrounding the income tax. Or at least, too many questions that remain avoided.

Seems like a mess that Congress would love to sweep under the carpet, don’t you think?

NESARA does not directly try to answer your question (see The Bill—Part II Section 2 ), but does abolish the income tax. Congress should be greatly in favor of passing NESARA since the political questions surrounding the income tax would fade into history.
 

What does the Sixteenth Amendment mean?

The Amendment states:

The Congress shall have the 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.

There are only two types of taxes, direct and indirect. Direct taxes are governed by the rule of apportionment and indirect taxes by the rule of uniformity. The Amendment precludes courts from having to look for the rule of apportionment when taxes are levied on income.

Some people believe (as did the Supreme Court in 1916) that because the Amendment states that taxes on income are to be collected without apportionment, that by elimination taxes on income can be indirect taxes only. This would be faulty logic. The Amendment states only that taxes on income are not subject to the rule of apportionment. Indirect taxes are activity and consumption taxes. In an indirect tax, income is not the subject of the tax, but only a means to measure the tax owed.