The point of this web page is to
refute a statement of common and incorrect belief in regard to the
Sixteenth Amendment, since others think the same
incorrect thing. To wit:
| [A]ll
the amendment does is change some of
the rules concerning income taxes: It removes the rule of
apportionment. |
This misperception needs to be
addressed, since it is a common mistake. Even the lower courts have
reading problems with this case as evidenced by their being split and
coming to two opposite conclusions citing the same case (Brushaber).
A poster to one of the news
groups made the statement (shown
in brown) in reply to my quoting a statement of a court ruling
followed by my assessment of the statement (shown
in green).
Quote: "It is clear on the
face of this text that it does not purport to confer power to levy
income taxes in a generic sense"
There is no new power
of
taxation. This means any taxation levied by Congress must still be
limited by either the rule of apportionment (direct taxes) or the rule
of uniformity (indirect taxes). |
| Ho stop. This is not what
the court is saying. The catch is in the phrase "generic sense". This
is explained in the clause after: "an authority already possessed and
never questioned". The amendment is not meant to lay down that Congress
has the right to levy an income tax, because it already had that
power.
Going on: all the amendment does is change some of the rules concerning
income taxes: It removes the rule of apportionment. |
According to the Constitution, prior
to the 16th amendment:
- Direct
taxes are subject to
the rule of apportionment.
- Indirect
taxes (imposts, duties, & excises) are subject to the rule of
uniformity.
- Congress had the power to lay a direct tax by the rule of apportionment.
- Congress had the power to lay an indirect
tax by the rule of
uniformity.
- Congress DID
NOT HAVE the power to lay a direct
tax that disregards the
rule of apportionment.
|
That is STILL the case as will be
shown.
The Pollock case is the sole
reason the
16th Amendment
was composed.
Basically the only thing Pollock
did, was take a tax on income
derived from
property owned by a corporation,
and classify it as a direct
tax. That's it.
Once so classified, it was
obvious that the tax was not laid by the rule of apportionment.
Pollock then says that a tax on property must be laid by the rule of apportionment.
Pollock rules the tax unconstitutional since it was a direct tax that was not laid by rule of apportionment.
The sole purpose of the 16th
Amendment was to
keep any court from doing what the Pollock court did. The purpose
of the
16th Amendment was to keep any court from reclassifying an income tax
as direct when it is not
direct. The proof of this is found in STANTON v. BALTIC
MINING CO, 240 U.S. 103 (1916):
STANTON v. BALTIC MINING
CO, 240
U.S. 103 (1916)
But, aside from the obvious error of
the
proposition,
intrinsically considered, it manifestly disregards the fact
that by the previous ruling it was
settled that the provisions of the
16th Amendment conferred no new power of
taxation, but simply prohibited the previous complete and
plenary power of income taxation possessed by Congress from
the beginning from being taken out of the category of
indirect taxation to which it inherently belonged, and being
placed in the category of direct taxation subject to
apportionment by a consideration of the sources from which
the income
was derived,-that is, by testing the tax not by
what it was, a tax on income, but
by a mistaken theory
deduced from the origin or source of the income taxed. |
I will return to the "obvious error of the proposition"
and the proposition itself
below.
QUOTE:
| "the 16th Amendment
conferred no new power
of taxation" |
That is, the 16th Amendment did not add to
the "previous complete and plenary
power of income taxation
possessed by Congress" which existed
prior to the 16th amendment. I re-iterate those powers:
Congress had the power to lay a direct tax by the rule of apportionment.
Congress had the power to lay an indirect
tax by the rule of
uniformity.
Congress did not
have [and still does not have] the
power to lay a direct tax that
disregards the rule of
apportionment.
I return to the
"obvious
error of the proposition" and the proposition itself.
STANTON v. BALTIC MINING
CO, 240
U.S. 103 (1916)
The bill contained many averments on the
following subjects,
which may be divided into two generic classes:
|
Of which we are only
interested in this one:
STANTON v. BALTIC MINING
CO, 240
U.S. 103 (1916)
(B) those dealing with the practical
results on the company
of the operation of the tax in question, evidently alleged
for the purpose of sustaining the
charge which the bill made
that the tax levied was not
what was deemed to be the peculiar
direct tax which the
16th Amendment exceptionally
authorized to be levied without
apportionment, and of the
resulting repugnancy of the tax to the Constitution as a
direct tax on property because of its ownership, levied
without conforming to the regulation of apportionment
generally required by the Constitution as to such taxation.
|
QUOTE:
| "the
charge which the bill made that the tax levied was not what was deemed
to be the
peculiar direct tax which the 16th Amendment exceptionally authorized
to be levied without apportionment" |
PARSE:
| "the
... direct tax which the 16th Amendment ... authorized
to be levied without apportionment" |
POINT:
| The proposition claims that the 16th
authorized a "direct
tax" "to
be levied without apportionment". |
This is what you are claiming, is
it not, Mr. Xxxxxxxxx?
QUOTE:
| Going
on: all the amendment does is change
some of the rules concerning income taxes: It
removes the rule of apportionment. |
Indeed, it looks like you are making the same claim as Mr.
Stanton.
Returning to the Stanton court ruling:
STANTON v. BALTIC MINING
CO, 240
U.S. 103 (1916)
Without attempting minutely to state every
possible ground of
attack which might be deduced from the
averments of the bill,
but in substance embracing every material grievance therein
asserted and pressed in argument upon our attention in the
elaborate briefs which have been submitted, we come to
separately dispose of the legal propositions advanced in the
bill and arguments concerning the two
classes.
|
We are only interested in how the
court disposes of the second class of averments, specifically how the
court addresses the "direct
tax" "to
be levied without apportionment".
The Stanton court directly
addresses that this is indeed one of the propositions:
STANTON v. BALTIC MINING
CO, 240
U.S. 103 (1916)
Class B.
Under this class these
propositions are relied upon:
(1) That as the 16th
Amendment authorizes only an exceptional direct income tax without
apportionment, to which the tax in
question does not conform, it is therefore not within the
authority of that Amendment.
|
Again the point covered, that is
of import to my point, is the concept:
QUOTE:
| "That as the
16th Amendment authorizes only
an exceptional
direct income tax
without apportionment." |
PARSE:
| "That ... the 16th Amendment authorizes ... direct income tax
without apportionment." |
Without much ado, the court
dismisses the proposition:
STANTON v. BALTIC MINING
CO, 240
U.S. 103 (1916)
As the first proposition is plainly
in
conflict with the
meaning of the 16th Amendment as interpreted in the Brushaber
Case, it may also be put out
of view. |
The second part of the Class B proposition
addresses some new power of taxation.
STANTON v. BALTIC MINING
CO, 240
U.S. 103 (1916)
Class B.
Under this class these
propositions are relied upon:
(2) Not being within the
authority of the 16th Amendment, the
tax is therefore, within the ruling of Pollock v. Farmers'
Loan a direct tax and void for want of compliance with the
regulation of apportionment.
As to the second, ... , a
brief analysis will serve to
demonstrate that the distinction is one without a difference,
and therefore that the proposition is
also foreclosed by the
previous ruling.
But, aside from the
obvious error of the proposition,
intrinsically considered, it manifestly
disregards the fact
that by the previous ruling
it was settled that the
provisions of the 16th Amendment conferred no new
power of
taxation...
|
Moving along to Brushaber, the
previous ruling cited in Stanton; I will show the same result: no new powers of taxation;
no relief from the rule of
apportionment for a direct tax.
Brushaber Court:
BRUSHABER v. UNION PACIFIC
R. CO., 240 U.S. 1
(1916)
... the bill alleged twenty-one constitutional objections specified in
that number of paragraphs or subdivisions.
As all the grounds assert
a violation of the Constitution, it follows
that, in a wide sense, they all charge a
repugnancy of the statute to
the 16th Amendment, under the more immediate sanction of which
the
statute was adopted.
The various propositions are so intermingled as to cause it to be
difficult to classify them.
|
Intermingled but all focus
upon the statute in question, and the 16th
amendment.
BRUSHABER v. UNION PACIFIC
R. CO., 240 U.S. 1
(1916)
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.
|
From above, I re-iterate what I
wrote regarding the powers of taxation that Congress had prior to the
16th:
According to the
Constitution,
prior to the 16th amendment:
- Direct
taxes are subject to
the rule of apportionment.
- Indirect
taxes (imposts, duties, & excises) are subject to the rule of
uniformity.
- Congress had the power to lay a direct tax by the rule of apportionment.
- Congress had the power to lay an indirect
tax by the rule of
uniformity.
- Congress DID
NOT HAVE the power to lay a direct
tax that disregards the
rule of apportionment.
|
BRUSHABER v. UNION PACIFIC
R. CO., 240 U.S. 1
(1916)
And the far-reaching effect of this erroneous
assumption will be made clear by generalizing the many
contentions advanced in argument to support it, as follows:
|
QUOTE:
"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", an "erroneous
assumption".
|
PARSE:
| "the
conclusion
that the 16th Amendment provides ... a power to levy an income tax
which, although
direct, should not be subject to the regulation of apportionment ...",
an "erroneous
assumption". |
There is only one of the
four contentions that bear on the issue in
this page. What the court is doing here is reductio ad absurdum.
re·duc·ti·o
ad ab·sur·dum
Disproof of a proposition by
showing the absurdity of its inevitable conclusion.
|
The Brushaber Court:
BRUSHABER v. UNION PACIFIC
R. CO., 240 U.S. 1
(1916)
And the far-reaching effect of this
erroneous assumption will be made clear by generalizing the many
contentions advanced in argument to support it, as follows:
(a) The Amendment authorizes only a
particular character of direct tax without apportionment, and
therefore if a tax is levied under its assumed authority which does not
partake of the characteristics exacted by the Amendment, it is outside
of the Amendment, and is void as a direct tax in the general
constitutional sense because not apportioned.
|
The contention to support the erroneous
assumption is: The amendment authorizes a "character
of direct tax without apportionment".
This is what you are claiming, is
it not, Mr. Xxxxxxxxx?
QUOTE:
| Going on: all the
amendment does is change
some of the rules concerning income taxes: It
removes the rule of apportionment. |
Indeed, it looks like you are
making the same claim as Mr. Brushaber.
Returning to Brushaber:
BRUSHABER v. UNION PACIFIC
R. CO., 240 U.S. 1
(1916)
But it clearly results that the
proposition [the "erroneous assumption
above] 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.
Moreover, the tax authorized by the Amendment, being direct, would not come under the rule of uniformity applicable
under the Constitution to other than direct
taxes, and thus it would come to pass that the result of the Amendment
would be to authorize a particular
direct tax not subject either to apportionment or to the rule of
geographical uniformity, thus giving power to impose a different
tax in one state or states than was levied in another state or states.
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.
|
After an excellent primer on
various tidbits of tax and Constitutional information, (Suggested
reading for all), the court said this:
BRUSHABER v. UNION PACIFIC
R. CO., 240 U.S. 1
(1916)
Moreover, in addition, the conclusion reached in the Pollock Case did
not in any degree involve holding that income
taxes
generically and necessarily came within the class of direct taxes on property,
but, on the contrary, recognized the fact that taxation on income was in
its nature an excise entitled to be enforced as such unless and until it was concluded that to
enforce it would amount to accomplishing the
result which the requirement as to apportionment of direct taxation was
adopted to prevent, in which case the duty would arise to disregard
form and consider substance alone, and hence subject the tax to
the
regulation as to apportionment which otherwise as an excise would not
apply to it.
|
QUOTE:
| "was in its nature an excise entitled to be
enforced as such unless and until
it was concluded that to enforce it
would amount to accomplishing
the result which the requirement as to
apportionment of direct taxation was adopted to prevent" |
PARSE:
| "an excise is entitled
to be
enforced as such ... until it is
concluded that to enforce it
would ... accomplish what
apportionment ... was adopted to prevent" |
POINT:
The rule of
apportionment on direct taxes is alive and well.
According to the Constitution, after
the 16th amendment:
- Direct
taxes are still subject to
the rule of apportionment.
- Indirect
taxes (imposts, duties, & excises) are still subject to
the rule of
uniformity.
- Congress still has the
power to lay a direct tax by the rule of apportionment.
- Congress still has the
power to lay an indirect
tax by the rule of
uniformity.
- Congress still DOES
NOT HAVE the power to lay a direct
tax that disregards the
rule of apportionment.
|
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; ...
Brushaber v. Union Pacific Railroad Co., 240 U.S. 1 (1916)
|
The
Amendment acts upon the Supreme Court so that the Supreme Court can not
rule on a similar topic in the future in the same way such as it ruled
in the Pollock case.
In short and in essence, The
Sixteenth
Amendment acts strictly and solely upon the Supreme Court.
|