I'm applying the KISS principle in this narrative paragraph. In 1894 Congress imposed a tax on rental income from real estate. In the Pollock Case, the Supreme Court did an exhaustive analysis to determine what a direct tax was, determined that a tax on the rental income is the same as a tax on the rental property (the source the rental income was derived from), and then ruled that a tax on rental income was a direct tax. The court also basically said, If you don't like the decision, amend the Constitution. It was.
U.S. Constitution, 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.
There are some, including ignorant lawyers, who "believe" that the Sixteenth Amendment gave Congress the power to levy a direct tax that wasn't subject to the rule of apportionment.
This is understandable for the average person in light of the wording of the Sixteenth Amendment and the failure of American school systems to properly educate Americans. This is unconscionable for lawyers who are trained in law. Doubly so for judges (lawyers wearing black dresses.)
By the previous ruling it was settled that the provisions of the 16th Amendment conferred no new power of taxation,
STANTON v. BALTIC MINING CO, 240 U.S. 103 (1916)
The supporting words of the previous ruling:
We are of opinion, however, that the confusion is not inherent, but rather arises from the conclusion that the 16th Amendment provides for a hitherto unknown power of taxation; that is, a power to levy an income tax which, although direct, should not be subject to the regulation of apportionment applicable to all other direct taxes.
[...]
But it clearly results that the proposition and the contentions under it, if acceded to, would cause one provision of the Constitution to destroy another; that is, they would result in bringing the provisions of the Amendment exempting a direct tax from apportionment into irreconcilable conflict with the general requirement that all direct taxes be apportioned.
[...]
This result, instead of simplifying the situation and making clear the limitations on the taxing power, which obviously the Amendment must have been intended to accomplish, would create radical and destructive changes in our constitutional system and multiply confusion.
BRUSHABER v. UNION PACIFIC R. CO., 240 U.S. 1 (1916)
- The 16th Amendment conferred no new power of taxation.
- What was not taxable before the 16th Amendment is not taxable after the Amendment.
The Sixteenth Amendment acts upon the Supreme Court.
Indeed, in the light of the history which we have given and of the decision in the Pollock Case, and the ground upon which the ruling in that case was based, there is no escape from the conclusion that the Amendment was drawn for the purpose of doing away for the future with the principle upon which the Pollock Case was decided;
[...]
[T]he command of the Amendment that all income taxes shall not be subject to apportionment by a consideration of the sources from which the taxed income may be derived forbids the application to such taxes of the rule applied in the Pollock Case...
BRUSHABER v. UNION PACIFIC R. CO., 240 U.S. 1 (1916)
- The command of the Amendment forbids the application of the rule applied in the Pollock Case.
In other words, we are here dealing solely with the restriction imposed by the 16th Amendment on the right to resort to the source whence an income is derived in a case where there is power to tax for the purpose of taking the income tax out of the class of indirect, to which it generically belongs, and putting it in the class of direct, to which it would not otherwise belong, in order to subject it to the regulation of apportionment.
STANTON v. BALTIC MINING CO, 240 U.S. 103 (1916)
- The restriction is upon the Supreme Court.
The sixteenth amendment authorizes the taxation of income "from whatever source derived" -- thus taking in investment income --"without apportionment among the several States." The Supreme Court has held that the sixteenth amendment did not extend the taxing power of the United States to new or excepted subjects but merely removed the necessity which might otherwise exist for an apportionment among the States of taxes laid on income whether it be derived from one source or another.
Page 2580 House Congressional Record March 27, 1943
- The Sixteenth Amendment is about "investment income".
- The rental income from property used in the opening paragraph on this page would be an example of such "Investment income"
- The sixteenth amendment did not extend the taxing power to new or excepted (excluded) subjects.
- What was not taxable before the 16th Amendment is not taxable after the Amendment.
Mark, of course, in saying this we are not here considering a tax not within the provisions of the 16th Amendment, that is, one in which the regulation of apportionment or the rule of uniformity is wholly negligible because the tax is one entirely beyond the scope of the taxing power of Congress, and where consequently no authority to impose a burden, either direct or indirect, exists.
STANTON v. BALTIC MINING CO, 240 U.S. 103 (1916)
- We are not considering a tax beyond the taxing power of Congress.
- What was not taxable before the 16th Amendment is not taxable after the Amendment.
- The Sixteenth Amendment restricts the Supreme Court.
- The Sixteenth Amendment ONLY affects "investment income", otherwise known as "Constitutional Income".
- What you are paid in exchange for your work is not Constitutional Income.
- The Sixteenth
Amendment has absolutely NOTHING to do with what you are paid in
exchange for your labor.
- Therefore, the Sixteenth Amendment did not, does not, and can not allow for taxation of what you are paid for working.
Constitutional Income will be explained on the next page.