Problems With The Income Tax :: by Phil Hart

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The current income tax harvests vast sums of money from the wages of our citizenry. The average worker never possesses the taxes deducted from his paycheck. The government benefits from this arrangement by receiving taxes directly from the employer, bypassing the wage-earner.

As the income tax is liberally applied today, citizens are taxed on nearly every dollar exchanging hands. Such broad-spectrum taxation diminishes most people’s ability to accumulate wealth.

A government able to tax its people so thoroughly has the ability to purchase $100 hammers and $600 toilet seats from its contractors, supply colleges with government grants to conduct all sorts of research, pay able-bodied people not to work and pay farmers to not grow crops.

The disadvantage of such comprehensive taxing authority is that, for government to support its growth, it must become increasingly oppressive: It must plunder its citizens.

Frederic Bastiat’s timeless book The Law (1850) defines “legal plunder” as plunder authorized by law. “The law takes from some persons what belongs to them, and gives it to other persons to whom it does not belong. The law benefits one citizen at the expense of another by doing what the citizen himself cannot do without committing a crime.”

Other disadvantages of the income tax include practical considerations like the governmental cost of administration, the enormous private sector cost of compliance, and the cost to society for incarcerating those who have purportedly violated the law.

There are also a host of serious legal problems with the income tax. However, most of these valid legal arguments do not get a fair hearing in courtrooms today.


Our modern income tax is said to be authorized by the 16th Amendment to the Constitution. According to Bill Benson, author of “The Law That Never Was,” the 16th Amendment was never ratified. Benson was a criminal investigator with the Illinois Department of Revenue for 10 years. His first exposure to the questionable legality of the federal income tax was a 1983 Wyoming tax case where documents were presented proving the nonratification of the 16th Amendment. In this case, the judge would not accept these documents into evidence because they were not certified.

So began Benson’s investigation of this issue. During 1984, Benson traveled to the capitals of all 48 continental States to collect certified documents either proving or disproving the validity of the 16th Amendment. There were 17,000 certified documents collected in all.

What Benson proved was that there were multiple violations of due process in the ratification process such that not one of the 48 States properly ratified the Amendment. Errors were made by both the states and U.S. Secretary of State Philander Knox. Among these errors are three States that are reported to have ratified the Amendment that had not (Kentucky, Tennessee and Wyoming); nine states where evidence of ratification was either missing or incomplete (in Minnesota there is no evidence in any Washington, D.C. archive that Minnesota ratified the Amendment); twenty-two states changed the wording of the Amendment and; 31 states changed its punctuation.

Each of these myriad of errors is cataloged in Benson’s 700 page, two volume set The Law that Never Was. These books are available at:

Wages and salaries are not income

Let us assume for a moment that Benson and his 17,000 certified documents are not an issue and the 16th Amendment was ratified. If it was ratified, what did it do? It struck down the Supreme Court’s Pollock Rule from Pollock v. Farmers’ Loan & Trust Co., 158 U.S. 601 (1895). In this case, what had been an indirect tax on net income from real estate and investments became a constitutional direct tax in need of apportionment.

The Pollock Rule allowed for one to consider the “source” of the income when determining whether a tax was “direct” or “indirect.” A direct tax on real estate and personal property was a tax that diminished the property, whereas a tax on net income only taxed the profit after it had been severed from the source. Using its magic wand, the Supreme Court ruled that the two were the same, both being direct taxes. An apportioned tax requires each citizen to pay the same lump sum amount. But apportioning an income tax among the States on income from accumulated wealth was now impossible as most of the wealth of the country was found in a few northeastern states.

A tax directly on property is a different creature than a tax on the severed net income from property. A direct tax falls directly on the asset taxed and diminishes its value much like our typical county property tax. Whereas an indirect tax only taxes the income thrown off from the underlying asset (like net profit from real estate), leaving the underlying asset whole. It was a political stretch on the part of the Supreme Court’s Pollock Decision to combine the two. The Pollock Decision resulted in protecting the property of the wealthy from taxation.

The original intent of the 16th Amendment was to put income taxes back into the category of “indirect taxes” by way of preventing the “source” of the income from being considered when determining whether the tax was an indirect or a direct tax.

What the 16th Amendment did not do was to change the status of other direct or indirect taxes, nor did it blur the boundary between them. The IRS falsely claims it now has the power to collect direct taxes without apportionment. The legislative history makes this an impossible claim.

On July 5, 1909, the U.S. Senate voted to approve the current language of the 16th Amendment. Just prior to that vote, two other versions of the Amendment were considered by the Senate. Each of these two versions attempted to provide for the collection of direct taxes without apportionment and were rejected by the Senate.

The Supreme Court stated, “Congress had this question presented to its attention in a most precise form. It had the issue clearly drawn.... All difficulties of construction vanish if we are willing to give the words, deliberately adopted, their natural meaning.” U.S. v. Pfitsch, 256 U.S. 547, 552 (1921).

Not only did the Senate reject the notion that direct taxes could be collected without apportionment, so did the Supreme Court. An examination of the complete Transcript of Record reveals that this issue was presented squarely to the Supreme Court in the following cases: Brushaber v. Union Pacific R.R. Co., 240 U.S. 1 (1916); Tyee Realty Co. v. Anderson, 240 U.S. 115 (1916); Thorne v. Anderson, October term 1915, No. 394 (24,613); Dodge v. Osburn, 240 U.S. 118 (1916); and Stanton v. Baltic Mining Co., 240 U.S. 103 (1916).

In each case, the Supreme Court rejected the claim that direct taxes could be collected without apportionment. Since it is well established that taxes on wages and salaries are capitation taxes, it follows that the 16th Amendment gives Congress and the IRS no authority whatsoever to levy such a tax on the Citizens of the several States. For an exhaustive study of this issue, please

Analysis of the Internal Revenue Code

The Internal Revenue Code (IRC) and supporting regulations are complex by design, incomprehensible and encompass about 20,000 pages of fine print. The purpose of this complexity is to blur for the taxpayer what is being taxed and what is not.

For example, there are 12 definitions of the term “United States” within the IRC. With 12 to choose from, how do you know whether or not you live and work in the “United States?” It is an important question because Congress’ taxation authority is greatly affected by whether the object of the tax is found within the 50 several States, or whether it is outside of these States. In the territories, possessions, enclaves, and federal districts, Congress is more free to levy taxes without constitutional restraints.

The IRC contains many “words of art” with unique definitions. Words like “employee,” “employer,” “trade or business,” “wages” and “withholding agent” have unique IRC meanings different than those normally used in common speech. But when the IRS enforces the tax code, it abandons the legal “word of art” definition and uses the “on the street” definition resulting in an entirely different application of the law.

Sections 861 and 862 of the IRC identify taxable “sources.” The government tells us that any “item” covered by section 61 of the code is taxable. But the 16th Amendment authorized Congress to tax income “from any source derived.” Sources are therefore taxable, not items. But the source must be within the constitutional reach of Congress.

Sections 861 and 862 divides the universe of taxable sources into two categories: Those being sources within the United States (861) and sources without the United States (862).

It appears that the term “United States” within the IRC is generally limited to places like the District of Columbia, Puerto Rico, Guam and the U.S. Virgin Islands. Historically, section 861 has been used to tax the income (including wages and salaries) from these possessions, territories and districts. In these areas the Constitution’s apportionment rule doesn’t apply. Shockingly, the 50 States are not part of the “United States” under section 861 statutes.

Whereas Section 862 taxes as income those sources within the 50 States that relate to the “constitutional” definition of the word “income.” See Brown’s Agenda page 8 for the meaning of “constitutional” income.

That the term “United States” is limited to only federal areas and not the 50 States is supported by Treasury Decision (TD) 2313 concerning the first income tax case to go before the Supreme Court (Brushaber v. Union Pacific RR Co.). In TD 2313, issued March 21, 1916, Frank Brushaber is described as a “nonresident alien” by the Treasury Department, whereas in the original court complaint filed by Brushaber he refers to himself as “a citizen of the State of New York and a resident of the Borough of Brooklyn, in the City of New York.” For more information on the 861 argument, visit

Internal IRS documents and procedures

Because America is governed by a written Constitution and not a monarch or dictator, the government must leave a paper trail. Annually, the IRS generates enough paper to circle the globe 8 times. Included in all this paper is the Individual Master File (IMF) the IRS keeps on each of us.

Keeping an IMF on each taxpayer is a part of a system of records required by the Administrative Procedures Act. The IMF “is a ...record of all individual income tax filers... All tax data and related information pertaining to the individual income taxpayers are posted to the IMF.”

In order to understand an IMF, which looks like a collection of satellite transmission data, one must decode the document. Experts in the decoding process claim they have never seen an IMF that did not contain numerous fraudulent entries. Furthermore, they claim that every IMF they have worked on contained the “VAL-1,” code indicating that the social security number was not valid for the person using it. In other words, the IMF does not apply to the person whose name and SSN appear on the document.

Another common code found on most IMFs is “MFR-01”, indicating that the individual does not have a tax return filing requirement. According to IRS whistle blowers, the IRS regularly lies to its computers in order to get them to produce tax bills for most people. Apparently IRS software is written to conform to the Constitution, but IRS use of this software is unconstitutional.

When a citizen does not file a tax return, the IRS will normally file a 1040 Substitute For Return (SFR) for them claiming section 6020(b) as their authority to do so. An SFR is necessary to trick the computer into generating a tax bill. However, section 6020(b) applies to business-related taxes; not individual income taxes.

The IRS also fraudulently skips many steps in the lien and levy process. Typically the IRS uses only a preliminary “Notice of Levy” as if it were a perfected levy while ignoring the second paragraph of section 6331(a) which limits its levy authority to government employees and elected officials. Similarly, preliminary “Notice of Liens” are processed as if they are “perfected” liens.

The IRS and Congress, by way of Tax Court Rule 142, have craftily and structurally done away with centuries of legal precedent by shifting the burden of proof to the accused. Today the taxpayer is guilty until proven innocent.

These defects represent only the tip of the iceberg. For more on IRS deceptions, visit

5th Amendment violations

The 5th Amendment protects us from being a witness against ourselves. The Supreme Court stated in Boyd v. U.S., 116 U.S. 616, 631-2 (1886), “Any compulsory discovery... or compelling the production of private books and papers, to convict him of a crime, or to forfeit his property, is contrary to the principles of a free government. It may suit the purposes of despotic power, but it cannot abide the pure atmosphere of political liberty and personal freedom.”

Those who have wrestled with the taxman know that the Bill of Rights are continually violated on tax issues. The filing of a 1040 tax return, in and of itself, is a confession in violation of the 5th Amendment of our Bill of Rights. For more information visit,

No Answers, NO Taxes

There is a long-standing maxim of law that silence is an admission of guilt. This maxim has been memorialized at Rule 36 of the Federal Rules of Civil Procedure which states, “A matter is admitted unless, within 30 days after service of the request... the party... serves... a written answer.”

On the income tax issue, thousands of Americans have been questioning the IRS as to its legal authority to collect the income tax. Silence is the answer coming back. Government silence is an admission that there are serious problems with the income tax. This is graphically demonstrated by Bob Schulz’ and We the People Foundation’s attempts to get answers from the government. See pages 12-14

Changes are in order. America needs a tax system to fund the essential functions of government while securing the freedom and liberty of her Citizenry.

Direct Tax: A direct tax, such as a tax on wages or real property, cannot be avoided. The Constitution authorizes Congress to levy direct taxes provided they are apportioned equally among the several States. For example, Congress could determine it must raise $87 billion to pay for a war, then apportion that amount among the several States according to the population of each State to raise the money.

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The originators of this site hope this information will be useful to educate the public and change the hearts of our leaders. Nothing on this website and in these articles is intended to give legal advice. Nothing on this site is intended to incite anyone to commit acts against our civil government. You are advised to read this material and other material on this subject as well as seek legal advice before you commit yourself to any course of action.

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