Indirect Taxes Imposed Directly

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Indirect Taxes Imposed Directly

Post by LPC »

A couple of the threads on Micheal/Jameson have pointed out that the words "direct tax" in the Constitution have little to do with how the tax is imposed or collected. The Tax Protester FAQ addresses this issue, and I've been thinking about updating that section because the en banc Murphy decision addressed it in some detail.

First, I should point out that the Constitution says that "Representatives and direct Taxes" shall be apportioned (Article I, section 2) and that "No Capitation, or other direct, Tax" shall be laid unless apportioned (Article I, section 9). The Constitution also refers to "Duties, Imposts and Excises" being uniform (Article I, section 8), but the word "indirect" does not appear in the Constitution. (In Hylton v. United States, 3 U.S. 171, 176 (1796), Justice Paterson observed that, "The general division of taxes is into direct and indirect. Although the latter term is not to be found in the Constitution, yet the former necessarily implies it. 'Indirect' stands opposed to 'direct.'")

From the FAQ:

The majority opinion in one of the Pollock decisions introduced some confusion about the meaning of “direct tax” and “indirect tax” through the following statement:

“The first question to be considered is whether a tax on the rents or income of real estate is a direct tax within the meaning of the constitution. Ordinarily, all taxes paid primarily by persons who can shift the burden upon some one else, or who are under no legal compulsion to pay them, are considered indirect taxes; but a tax upon property holders in respect of their estates, whether real or personal, or of the income yielded by such estates, and the payment of which cannot be avoided, are direct taxes. Nevertheless, it may be admitted that, although this definition of direct taxes is prima facie correct, and to be applied in the consideration of the question before us, yet the constitution may bear a different meaning, and that such different meaning must be recognized.” Pollock v. Farmers’ Loan & Trust Co., 157 U.S. 429, 558 (1895).

There are several problems with the meaning of “indirect taxes” as “all taxes paid primarily by persons who can shift the burden upon some one else” and “direct taxes” as taxes “the payment of which cannot be avoided”:
  • First (and most importantly), there is no support for those meanings in the words of the Constitution, the Federalist Papers, or any writings of the authors of the Constitution. As noted above, both the Federalist Papers and the opinions of the justices in the Hylton decision (some of whom were members of the Constitutional Convention) support the conclusion that a “direct tax” means a tax on the value of property.
  • There is no support for those definitions in any previous (or later) decision of the Supreme Court.
  • In the Pollock case itself, the Supreme Court admitted in the very next sentence that “the constitution may bear a different meaning.” As explained previously, the Supreme Court has consistently held that a tax on incomes is not a “direct tax” within the meaning of the Constitution. The Pollock court itself held that a tax on incomes from “professions, trades, employments, or vocations,” is not a “direct tax” without ever discussing whether the tax was one “the payment of which cannot be avoided.” (158 U.S. at 637.) The above definition of “direct tax” is therefore inconsistent with the decision of the Pollock court itself.
The last consideration seems to have been recognized by the Supreme Court itself, because in a later opinion it explicitly rejected the principle that an inability to shift the burden of a tax should be the test of whether a tax is “direct.” In Knowlton v. Moore, 178 U.S. 41, 81-82 (1900), the Supreme Court upheld the constitutionality of a federal inheritance tax, and referring to the assertion that it was decided in the Pollock case that “in order to determine whether a tax be direct within the meaning of the Constitution, it must be ascertained whether the one upon whom by law the burden of paying it is first cast can thereafter shift it to another person,” the court found that “this disputable theory was not the basis of the conclusion of the court” in Pollock.

The same (or similar) arguments were also rejected in Nicol v. Ames, 172 U.S. 509, 515 (1899) (“t it is no part of the duty of this court to lessen, impede, or obstruct the exercise of the taxing power by merely abstruse and subtle distinctions as to the particular nature of a specified tax, where such distinction rests more upon the differing theories of political economists than upon the practical nature of the tax itself.”)

This argument was most recently rejected by a Circuit Court in Murphy v. I.R.S., 493 F.3d 170, No. 05-5139 (D.C. Cir. 7/3/2007), vacating 460 F.3d 79 (8/22/2006).

[End of FAQ quote]

The issue in Murphy was whether damages received in a personal injury lawsuit could be taxed as "income" when the damages were not from "personal physical injuries or physical sickness" within the meaning of IRC section 104(a). This lead the court to a long discussion of the meaning of "income" and the meaning of "direct" and "indirect" taxes.

Murphy court wrote:Murphy and the amici supporting her argue the dividing line between direct and indirect taxes is based upon the ultimate incidence of the tax; if the tax cannot be shifted to someone else, as a capitation cannot, then it is a direct tax; but if the burden can be passed along through a higher price, as a sales tax upon a consumable good can be, then the tax is indirect. This, she argues, was the distinction drawn when the Constitution was ratified. See Albert Gallatin, A Sketch of the Finances of the United States (1796), reprinted in 3 THE WRITINGS OF ALBERT GALLATIN 74-75 (Henry Adams ed., Philadelphia, J.P. Lippincott & Co. 1879) ("The most generally received opinion . . . is, that by direct taxes . . . those are meant which are raised on the capital or revenue of the people; by indirect, such as are raised on their expense"); THE FEDERALIST No. 36, at 225 (Alexander Hamilton) (Jacob E. Cooke ed., 1961) ("internal taxes[ ] may be subdivided into those of the direct and those of the indirect kind . . . by which must be understood duties and excises on articles of consumption"). But see Gallatin, supra, at 74 ("[Direct tax] is used, by different writers, and even by the same writers, in different parts of their writings, in a variety of senses, according to that view of the subject they were taking"); EDWIN R.A. SELIGMAN, THE INCOME TAX 540 (photo. reprint 1970) (2d ed.1914) ("there are almost as many classifications of direct and indirect taxes are there are authors"). Moreover, the amici argue, this understanding of the distinction explains the different restrictions imposed respectively upon the power of the Congress to tax directly (apportionment) and via excise (uniformity). Duties, imposts, and excise taxes, which were expected to constitute the bulk of the new federal government's revenue, see Erik M. Jensen, The Apportionment of "Direct Taxes": Are Consumption Taxes Constitutional?, 97 COLUM. L.REV. 2334, 2382 (1997), have a built-in safeguard against oppressively high rates: Higher taxes result in higher prices and therefore fewer sales and ultimately lower tax revenues. See THE FEDERALIST No. 21, supra, at 134-35 (Alexander Hamilton). Taxes that cannot be shifted, in contrast, lack this self-regulating feature, and were therefore constrained by the more stringent requirement of apportionment. See id. at 135 ("In a branch of taxation where no limits to the discretion of the government are to be found in the nature of things, the establishment of a fixed rule . . . may be attended with fewer inconveniences than to leave that discretion altogether at large"); see also Jensen, supra, at 2382-84.

Finally, the amici contend their understanding of a direct tax was confirmed in Pollock II, where the Supreme Court noted that "the words `duties, imposts, and excises' are put in antithesis to direct taxes," 158 U.S. at 622, 15 S.Ct. 912, for which it cited THE FEDERALIST No. 36 (Hamilton). Pollock II, 158 U.S. at 624-25, 15 S.Ct. 912. As it is clear that Murphy cannot shift her tax burden to anyone else, per Murphy and the amici, it must be a direct tax.

The Government, unsurprisingly, backs a different approach; by its lights, only "taxes that are capable of apportionment in the first instance, specifically, capitation taxes and taxes on land," are direct taxes. The Government maintains that this is how the term was generally understood at the time. See Calvin H. Johnson, Fixing the Constitutional Absurdity of the Apportionment of Direct Tax, 21 CONST. COMM. 295, 314 (2004). Moreover, it suggests, this understanding is more in line with the underlying purpose of the tax and the apportionment clauses, which were drafted in the intense light of experience under the Articles of Confederation.

The Articles did not grant the Continental Congress the power to raise revenue directly; it could only requisition funds from the States. See ARTICLES OF CONFEDERATION art. VIII (1781); Bruce Ackerman, Taxation and the Constitution, 99 COLUM. L.REV. 1, 6-7 (1999). This led to problems when the States, as they often did, refused to remit funds. See Calvin H. Johnson, The Constitutional Meaning of "Apportionment of Direct Taxes," 80 TAX NOTES 591, 593-94 (1998). The Constitution redressed this problem by giving the new national government plenary taxing power. See Ackerman, supra, at 7. In the Government's view, it therefore makes no sense to treat "direct taxes" as encompassing taxes for which apportionment is effectively impossible, because "the Framers could not have intended to give Congress plenary taxing power, on the one hand, and then so limit that power by requiring apportionment for a broad category of taxes, on the other." This view is, according to the Government, buttressed by evidence that the purpose of the apportionment clauses was not in fact to constrain the power to tax, but rather to placate opponents of the compromise over representation of the slave states in the House, as embodied in the Three-fifths Clause.
[*] See Ackerman, supra, at 10-11. See generally SELIGMAN, supra, at 548-55. As the Government interprets the historical record, the apportionment limitation was "more symbolic than anything else: it appeased the antislavery sentiment of the North and offered a practical advantage to the South as long as the scope of direct taxes was limited." See Ackerman, supra, at 10. But see Erik M. Jensen, Taxation and the Constitution: How to Read the Direct Tax Clauses, 15 J.L. & POL. 687, 704 (1999) ("One of the reasons [the direct tax restriction] worked as a compromise was that it had teeth — it made direct taxes difficult to impose — and it had teeth however slaves were counted").

The Government's view of the clauses is further supported by the near contemporaneous decision of the Supreme Court in Hylton v. United States, 3 U.S. (3 Dall.) 171, 1 L.Ed. 556 (1796), holding that a national tax upon carriages was not a direct tax, and thus not subject to apportionment. Justices Chase and Iredell opined that a "direct tax" was one that, unlike the carriage tax, as a practical matter could be apportioned among the States, id. at 174 (Chase, J.); id. at 181 (Iredell, J.), while Justice Paterson, noting the connection between apportionment and slavery, condemned apportionment as "radically wrong" and "not to be extended by construction," id. at 177-78.[*] As for Murphy's reliance upon Pollock II, the Government contends that although it has never been overruled, "every aspect of its reasoning has been eroded," see, e.g., Stanton v. Baltic Mining Co., 240 U.S. 103, 112-13, 36 S.Ct. 278, 60 L.Ed. 546 (1916), and notes that in Pollock II itself the Court acknowledged that "taxation on business, privileges, or employments has assumed the guise of an excise tax," 158 U.S. at 635, 15 S.Ct. 912. Pollock II, in the Government's view, is therefore too weak a reed to support Murphy's broad definition of "direct tax" and certainly does not make "a tax on the conversion of human capital into money . . . problematic."

Murphy replies that the Government's historical analysis does not respond to the contemporaneous sources she and the amici identified showing that taxes imposed upon individuals are direct taxes. As for Hylton, Murphy argues nothing in that decision precludes her position; the Justices viewed the carriage tax there at issue as a tax upon an expense, see 3 U.S. (3 Dall.) at 175 (Chase, J.); see also id. at 180-81 (Paterson, J.), which she agrees is not a direct tax. See Pollock II, 158 U.S. at 626-27, 15 S.Ct. 912. To the extent Hylton is inconsistent with her position, however, Murphy contends her references to the Federalist are more authoritative evidence of the Framers' understanding of the term.

Murphy makes no attempt to reconcile her definition with the long line of cases identifying various taxes as excise taxes, although several of them seem to refute her position directly. In particular, we do not see how a known excise, such as the estate tax, see, e.g., New York Trust Co. v. Eisner, 256 U.S. 345, 349, 41 S.Ct. 506, 65 L.Ed. 963 (1921); Knowlton, 178 U.S. at 81-83, 20 S.Ct. 747, or a tax upon income from employment, see Pollock II, 158 U.S. at 635, 15 S.Ct. 912; Pollock I, 157 U.S. at 579, 15 S.Ct. 673; cf. Steward Mach. Co. v. Davis, 301 U.S. 548, 580-81, 57 S.Ct. 883, 81 L.Ed. 1279 (1937) (tax upon employers based upon wages paid to employees is an excise), can be shifted to another person, absent which they seem to be in irreconcilable conflict with her position that a tax that cannot be shifted to someone else is a direct tax. Though it could be argued that the incidence of an estate tax is inevitably shifted to the beneficiaries, we see at work none of the restraint upon excessive taxation that Murphy claims such shifting is supposed to provide; the tax is triggered by an event, death, that cannot be shifted or avoided. In any event, Knowlton addressed the argument that Pollock I and II made ability to shift the hallmark of a direct tax, and rejected it. 178 U.S. at 81-82, 20 S.Ct. 747. Regardless what the original understanding may have been, therefore, we are bound to follow the Supreme Court, which has strongly intimated that Murphy's position is not the law.
Dan Evans
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Re: Indirect Taxes Imposed Directly

Post by noblepa »

LPC wrote:Ordinarily, all taxes paid primarily by persons who can shift the burden upon some one else, or who are under no legal compulsion to pay them, are considered indirect taxes; ...
So, for example, a sales tax, collected by a vendor from the customer, is an indirect tax, since the burden is passed on to the customer? Likewise a tax on wine, cigarettes or gasoline, that is included in the price, is also an indirect tax?

I've read that section of the Constitution many times, and I've never quite understood the distinction between a direct and an indirect tax.

Apportionment is also something I can't quite get my head around. Does apportionment mean that each state (and presumably, the territories) must contribute a pro-rated (based on population) percentage of the total amount collected by the government?

Are there any current examples of taxes that are apportioned? A good, concrete example might help. Even a tax levied in the past, if none are current, might help.

Since the tax that most of us are concerned with is the income tax, the 16th Amendment is paramount. That, at least to me, is easy to understand. I don't see why the tax deniers continue to obsess over the question of whether the income tax is direct or indirect.

If it is direct, the congress has the power to levy such a tax and it need not be apportioned (even if I don't understand apportionment).

If it is indirect, the congress has the power to levy such a tax and it need not be apportioned (even if I don't understand apportionment).

I really don't see what is so hard to understand about that, or why there is even a discussion about it.
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Re: Indirect Taxes Imposed Directly

Post by LPC »

noblepa wrote:I've read that section of the Constitution many times, and I've never quite understood the distinction between a direct and an indirect tax.

Apportionment is also something I can't quite get my head around. Does apportionment mean that each state (and presumably, the territories) must contribute a pro-rated (based on population) percentage of the total amount collected by the government?
Oliver Wendell Holmes (the author, not the judge) wrote that an ounce of history is worth a pound of logic, and I believe that the direct/indirect dichotomy can only be understood in the context of the history of the Constitution.

Under the Articles of Confederation, Congress could requisition money from the states, and the requisitions were in proportion to the value of the land in the state. (This was probably because the US was not yet an industrial economy, and in an agricultural economy the main and most dependable source of wealth is land.)

Early in the Constitutional Convention, the delegates agreed on three fundamental principles:

1. Congress could impose taxes directly, without requisitioning the states.

2. At least one house of Congress should have representatives which were apportioned among the states based on population.

3. Requisitions from the states should be apportioned in the same way as representation.

The linkage between 2 and 3 caused the biggest problem, because slaves were both people and property. The political solution was the three-fifths formula, under which slaves would be counted as three-fifths of a person for the purpose of both representation and requisitions.

It's the linkage between 1 and 3 that caused the "direct tax" problem. An early draft of the Constitution said that "requisitions" should be apportioned. In later versions, this was changed to "direct tax." I think that that is the clearest historical evidence that the framers thought of "direct tax" as equivalent to a "requisition." So what is a "direct tax."

A capitation would be an obvious requisition, and would obviously show the need for the three-fifths formula. A tax on land would also be an obvious requisition, because that had been the basis of requisitions under the Articles of Confederation. What else?

I believe that, more broadly, a "direct tax" is anything that can be assessed based on values or conditions as of a certain day. So a capitation can be imposed on the population on January 1, and you can figure out the capitation per person by figuring out how much money you need and dividing by the population. You can also assess the value of land on January 1, or the value of stocks and bonds on January 1, and then impose impose a tax by figuring out how much money you need and then dividing by the total value of the land, or stocks and bonds. (The real estate tax bill that I receive from a township actually shows this process.)

An "indirect tax" is therefore anything based on future events or transactions. A sales tax is imposed when (and if) sales occur. An income tax is imposed when (and if) income is received.
noblepa wrote:Are there any current examples of taxes that are apportioned? A good, concrete example might help. Even a tax levied in the past, if none are current, might help.
I know of no federal tax now on the books that is apportioned. Congress did impose a number of direct taxes in the early part of the 19th Century. I'll see if I can dig up an example.
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Re: Indirect Taxes Imposed Directly

Post by The Operative »

LPC wrote:An early draft of the Constitution said that "requisitions" should be apportioned. In later versions, this was changed to "direct tax." I think that that is the clearest historical evidence that the framers thought of "direct tax" as equivalent to a "requisition." So what is a "direct tax."
Thanks LPC. That makes a lot of sense to me and I like your description. I think I will use it in any other discussions I may have with those that are confused about direct and indirect taxes in regards to the current tax laws and the Constitution.
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Re: Indirect Taxes Imposed Directly

Post by noblepa »

Wasn't one of the biggest problems with the Articles of Confederation that the states were free to refuse the "requisition" of funds? IIRC, that was one of the principle reasons for calling the Constitutional Convention in 1787.

The word "taxes" has a much stronger air of authority than "requisitions".
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Re: Indirect Taxes Imposed Directly

Post by notorial dissent »

That was certainly a good portion of it, the national gov't couldn't fund itself and so really couldn't do anything, it was possibly in even worse shape than the Continental Congresses had been during the Revolution, a great number of the states were bankrupt or near bankrupt, they were continually squabbling over borders, citizens in one state were suing citizens of another state, getting judgments in their home state that were unenforceable in the other state, the currencies of some states were worthless or all but, and there was no equitable rate of exchange between them, the money issued by the Continental Congress was worthless, the land grants they issued in lieu of currency were also a sore point all round, so you could say there were a LOT of problems, taxes being the least of them.
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Re: Indirect Taxes Imposed Directly

Post by LPC »

LPC wrote:
noblepa wrote:Are there any current examples of taxes that are apportioned? A good, concrete example might help. Even a tax levied in the past, if none are current, might help.
I know of no federal tax now on the books that is apportioned. Congress did impose a number of direct taxes in the early part of the 19th Century. I'll see if I can dig up an example.
An example is the act of July 14, 1798, c. 75, 1 Stat. 53, which imposed a tax upon real estate and a capitation tax upon slaves. It appears in the US Statutes at Large, the relevant provisions of which can be found here.
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Re: Indirect Taxes Imposed Directly

Post by Judge Roy Bean »

notorial dissent wrote:... so you could say there were a LOT of problems, taxes being the least of them.
Not the least of which were the incredible delays imposed by the communications of the day. The sheer scope of American geography only added to the problem.

We are so accustomed to almost instantaneous communications that until you spend an extended period of time in an isolated situation it's hard to understand just how difficult it was to resolve almost anything in a timely manner.
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Re: Indirect Taxes Imposed Directly

Post by Micheal360 »

Nicely done, LPC. You must have put a lot of time and effort into this. Kudos to you! I want to point out a couple more things. I am pretty confident that you know who Jon Siegel is. For people who are not familiar with him here is his link to his website. http://docs.law.gwu.edu/facweb/jsiegel/ ... /16thc.htm

Jon Siegel admits that the income tax is a excise or duty in the constitutional sense. Then he goes on to say, it doesn't matter if the tax is direct or indirect because. Here is his quote. "Clear and simple. Whatever "direct" taxes might be, and whatever the rule is for other kinds of direct taxes, Congress can now impose an income tax without apportionment among the states. The rule of apportionment does not apply to income taxes by virtue of the Sixteenth Amendment."

Seems to me that Jon is interpreting the 16th amendment the way that he wants to. Anybody can interpret the 16th amendment the way that they want to, but it doesn't matter. The only interpretation of the 16th amendment matters is from chief justice White. Everyone who sat on the Supreme Court with White agreed with the interpretation that was set forth. Nobody can change that interpretation. Not Jon Siegel, Daniel B. Evans, IRS, or any lower court judge can change the Chief Justice whites interpretation. It is law binding.

It's not that people are too stupid to realize they need to pay their income taxes. It is that people are too stupid to realize that they are being distorted. It is just moronic to say that it doesn't matter if the tax is indirect or direct. All those Supreme Court cases are about if the tax is direct or indirect. If it didn't matter. The Supreme Court would just cite the 16th amendment. But that's not the case. If it so simple and clear like Jon and Dan claim. How come the supreme courts don't see it that way? It's all about the income itself. Is one's personal income taxable under the provisions of the 16th amendment and within the meaning of our Constitution.

I have came to the conclusion that Jon and Dan sold people their own personal opinions to be legal facts. Just because they are law professionals, does not make them right. And I also think that people who try to discredit people like Tom Cryer, Joe banister, and etc. are fools. Ron Paul still to this day claims that Congress does not have the authority to tax income directly. People are falling for the misconceptions.

The IRS claims that they can tax income directly by virtue the 16th amendment. But they have no statute to back up that claim.
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Re: Indirect Taxes Imposed Directly

Post by Famspear »

Micheal360 wrote:.....Jon Siegel admits that the income tax is a excise or duty in the constitutional sense. Then he goes on to say, it doesn't matter if the tax is direct or indirect because. Here is his quote. "Clear and simple. Whatever "direct" taxes might be, and whatever the rule is for other kinds of direct taxes, Congress can now impose an income tax without apportionment among the states. The rule of apportionment does not apply to income taxes by virtue of the Sixteenth Amendment."

Seems to me that Jon is interpreting the 16th amendment the way that he wants to.....
No, Siegel is explaining how the courts have interpreted the Amendment.

He is correct. You are wrong.

This isn't going to change.
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Re: Indirect Taxes Imposed Directly

Post by Famspear »

Micheal360 wrote:.....It is just moronic to say that it doesn't matter if the tax is indirect or direct. All those Supreme Court cases are about if the tax is direct or indirect. If it didn't matter. The Supreme Court would just cite the 16th amendment. But that's not the case. If it so simple and clear like Jon and Dan claim. How come the supreme courts don't see it that way?
All the courts "see it" the way we have explained to you.

And, by the way, when someone goes into court and starts arguing about whether a federal income tax is "direct" or "indirect," it makes perfect sense for the court to address that argument. You seem to think that the "direct-indirect" thing "matters" merely because the courts have addressed the issue! That's utterly nonsensical "logic" on your part.

The courts DO "see it" the way Jon and Dan have described it. You, sir, simply refuse to accept that YOUR interpretation of the COURTS' interpretations of the Constitution is incorrect.
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Re: Indirect Taxes Imposed Directly

Post by Micheal360 »

Tax law professor Boris Bittker and his co-authors have stated:

As construed by the Supreme Court in the Brushaber case, the power of Congress to tax income derives from Article I, Section 8, Clause 1, of the original Constitution rather than from the Sixteenth Amendment; the latter simply eliminated the requirement (Article I, section 9, clause 4 of the US Constitution) that an income tax, to the extent that it is a direct tax, must be apportioned among the states.[4]
No income tax enacted by the US Congress (either before or after the Sixteenth Amendment) has ever been apportioned among the states by population. All income taxes enacted after the Amendment have been treated as excises (they have been imposed with geographic uniformity but have not been required to be apportioned).

Since the income tax may be imposed on income from whatever source and without regard to any apportionment requirement (by virtue of the wording of the 16th Amendment), an income tax cannot be treated as a direct tax (as income taxes on income from property were so treated in the Pollock case). Essentially, all income taxes after the Sixteenth Amendment are again treated as indirect taxes. Subsequent lower court cases have interpreted the Brushaber decision and the Sixteenth Amendment as standing for the rule that the Amendment allows a direct tax on "wages, salaries, commissions, etc. without apportionment."[5]

Famspear Don't even tell me that I don't understand. It's quite obvious that you are the undisputed income tax champion of the world. You are the only person with this unique power to read and understand the income tax laws. You're always trying to discredit other people work, why? It doesn't matter who it is what their credentials are, you are always right.

Famspaer you tell me why my income is taxable under the provisions of the 16th amendment.

It has already been established that the income tax cannot be treated as a direct tax according to the supreme court decisions in multiple cases. Do you disagree with that?

The Court in Brushaber noted that income taxes inherently belonged in the "category" of indirect tax (or excise). The court stated that incomes taxes are indirect excise taxes by reinforcing the Pollock decision:

As this conclusion but enforced a regulation as to the mode of exercising power under particular circumstances, it did not in any way dispute the all-embracing taxing authority possessed by Congress, including necessarily therein the power to impose income taxes if only they conformed to the constitutional regulations which were applicable to them. 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...
Indeed, that had been the understanding with respect to all income taxes until the Pollock decision. The Sixteenth Amendment removed the need imposed by the Pollock decision to determine whether an income tax in any particular case was required to be apportioned, as the Congress could again (after 1913) tax income from any source without having to apportion the tax according to population.

Famspear has repeatedly said that I do not understand the interpretations of case law. But it is clear that the income tax cannot be treated as a direct tax, and it is in the category of a excise tax or duty. I keep telling Famspear that my income is not taxable income under the provisions of the 16th amendment nor in the meaning of our Constitution. But he claims that it is and doesn't provide any information on how he came to the conclusion.
Last edited by Micheal360 on Sat Mar 28, 2015 3:56 pm, edited 1 time in total.
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Re: Indirect Taxes Imposed Directly

Post by wserra »

Micheal360 wrote:the power of Congress to tax income derives from Article I, Section 8, Clause 1, of the original Constitution rather than from the Sixteenth Amendment
Micheal360 wrote:Famspaer you tell me why my income is taxable under the provisions of the 16th amendment.
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Re: Indirect Taxes Imposed Directly

Post by Famspear »

Micheal360 wrote:Tax law professor Boris Bittker and his co-authors have stated:

As construed by the Supreme Court in the Brushaber case, the power of Congress to tax income derives from Article I, Section 8, Clause 1, of the original Constitution rather than from the Sixteenth Amendment; the latter simply eliminated the requirement (Article I, section 9, clause 4 of the US Constitution) that an income tax, to the extent that it is a direct tax, must be apportioned among the states.[4]
No income tax enacted by the US Congress (either before or after the Sixteenth Amendment) has ever been apportioned among the states by population. All income taxes enacted after the Amendment have been treated as excises (they have been imposed with geographic uniformity but have not been required to be apportioned).

Since the income tax may be imposed on income from whatever source and without regard to any apportionment requirement (by virtue of the wording of the 16th Amendment), an income tax cannot be treated as a direct tax (as income taxes on income from property were so treated in the Pollock case). Essentially, all income taxes after the Sixteenth Amendment are again treated as indirect taxes. Subsequent lower court cases have interpreted the Brushaber decision and the Sixteenth Amendment as standing for the rule that the Amendment allows a direct tax on "wages, salaries, commissions, etc. without apportionment."[5]

Famspear Don't even tell me that I don't understand. It's quite obvious that you are the undisputed income tax champion of the world. You are the only person with this unique power to read and understand the income tax laws. You're always trying to discredit other people work, why? It doesn't matter who it is what their credentials are, you are always right.

Famspaer you tell me why my income is taxable under the provisions of the 16th amendment.

It has already been established that the income tax cannot be treated as a direct tax according to the supreme court decisions in multiple cases. Do you disagree with that?
You keep quoting knowledgeable people like Bittker, and Jensen and Siegel, and none of them agree with you.

You still do not understand what the courts mean (and what the constitution means) by the term "direct tax."
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Re: Indirect Taxes Imposed Directly

Post by Micheal360 »

Famspear wrote:
Micheal360 wrote:Tax law professor Boris Bittker and his co-authors have stated:

As construed by the Supreme Court in the Brushaber case, the power of Congress to tax income derives from Article I, Section 8, Clause 1, of the original Constitution rather than from the Sixteenth Amendment; the latter simply eliminated the requirement (Article I, section 9, clause 4 of the US Constitution) that an income tax, to the extent that it is a direct tax, must be apportioned among the states.[4]
No income tax enacted by the US Congress (either before or after the Sixteenth Amendment) has ever been apportioned among the states by population. All income taxes enacted after the Amendment have been treated as excises (they have been imposed with geographic uniformity but have not been required to be apportioned).

Since the income tax may be imposed on income from whatever source and without regard to any apportionment requirement (by virtue of the wording of the 16th Amendment), an income tax cannot be treated as a direct tax (as income taxes on income from property were so treated in the Pollock case). Essentially, all income taxes after the Sixteenth Amendment are again treated as indirect taxes. Subsequent lower court cases have interpreted the Brushaber decision and the Sixteenth Amendment as standing for the rule that the Amendment allows a direct tax on "wages, salaries, commissions, etc. without apportionment."[5]

Famspear Don't even tell me that I don't understand. It's quite obvious that you are the undisputed income tax champion of the world. You are the only person with this unique power to read and understand the income tax laws. You're always trying to discredit other people work, why? It doesn't matter who it is what their credentials are, you are always right.

Famspaer you tell me why my income is taxable under the provisions of the 16th amendment.

It has already been established that the income tax cannot be treated as a direct tax according to the supreme court decisions in multiple cases. Do you disagree with that?
You keep quoting knowledgeable people like Bittker, and Jensen and Siegel, and none of them agree with you.

You still do not understand what the courts mean (and what the constitution means) by the term "direct tax."
Famspear What do the courts mean? Obviously I can't figure it out.

How am I misunderstand in this? The Court in Brushaber noted that income taxes inherently belonged in the "category" of indirect tax (or excise). The court stated that incomes taxes are indirect excise taxes by reinforcing the Pollock decision:
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Re: Indirect Taxes Imposed Directly

Post by Famspear »

Micheal360 wrote:Famspear What do the courts mean? Obviously I can't figure it out.

How am I misunderstand in this? The Court in Brushaber noted that income taxes inherently belonged in the "category" of indirect tax (or excise). The court stated that incomes taxes are indirect excise taxes by reinforcing the Pollock decision:
OK, for the umpteenth time, the word "direct HAS TWO DIFFERENT MEANINGS.

You're incorrectly saying that the COURTS have said that your income cannot be taxed directly.

That's not what the courts have said.

What the courts have said is that the income tax is NOT A DIRECT TAX. It is not a capitation, and it's not a tax on property by reason of ownership.

THE FACT THAT THE INCOME TAX IS NOT A DIRECT TAX DOES NOT MEAN THAT YOUR INCOME CANNOT BE TAXED "DIRECTLY."

RE-READ THE MATERIAL FROM BITTKER THAT YOU POSTED.

:brickwall:

Here's more from Bittker:
As construed by the Supreme Court in the Brushaber case, the power of Congress to tax
income derives from Article I, Section 8, Clause 1, of the original Constitution rather
than from the Sixteenth Amendment; the latter simply eliminated the requirement that an income tax, to the extent that it is a direct tax, must be apportioned among the states. A corollary of this conclusion is that any direct tax that is not imposed on "income" remains subject to the rule of apportionment. Because the Sixteenth Amendment does not purport to define the term "direct tax," the scope of that constitutional phrase remains as debatable as it was before 1913; but the practical significance of the issue was greatly
reduced once income taxes, even if direct, were relieved from the requirement of apportionment.
--Boris I. Bittker, Martin J. McMahon, Jr. and Lawrence A. Zelenak, Federal Income Taxation of Individuals (Second Edition) (emphasis added).

EDIT: What makes it more confusing for Micheal360 is that while SOME courts refer to the income tax as "indirect," other courts (and commentators) refer to the income tax as "direct." the point that seems to sail over his head is that because of the Amendment, IT DOESN'T MATTER WHAT LABEL YOU ASSIGN TO THE INCOME TAX.
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Re: Indirect Taxes Imposed Directly

Post by Micheal360 »

Famspear wrote:
Micheal360 wrote:Tax law professor Boris Bittker and his co-authors have stated:

As construed by the Supreme Court in the Brushaber case, the power of Congress to tax income derives from Article I, Section 8, Clause 1, of the original Constitution rather than from the Sixteenth Amendment; the latter simply eliminated the requirement (Article I, section 9, clause 4 of the US Constitution) that an income tax, to the extent that it is a direct tax, must be apportioned among the states.[4]
No income tax enacted by the US Congress (either before or after the Sixteenth Amendment) has ever been apportioned among the states by population. All income taxes enacted after the Amendment have been treated as excises (they have been imposed with geographic uniformity but have not been required to be apportioned).

Since the income tax may be imposed on income from whatever source and without regard to any apportionment requirement (by virtue of the wording of the 16th Amendment), an income tax cannot be treated as a direct tax (as income taxes on income from property were so treated in the Pollock case). Essentially, all income taxes after the Sixteenth Amendment are again treated as indirect taxes. Subsequent lower court cases have interpreted the Brushaber decision and the Sixteenth Amendment as standing for the rule that the Amendment allows a direct tax on "wages, salaries, commissions, etc. without apportionment."[5]

Famspear Don't even tell me that I don't understand. It's quite obvious that you are the undisputed income tax champion of the world. You are the only person with this unique power to read and understand the income tax laws. You're always trying to discredit other people work, why? It doesn't matter who it is what their credentials are, you are always right.

Famspaer you tell me why my income is taxable under the provisions of the 16th amendment.

It has already been established that the income tax cannot be treated as a direct tax according to the supreme court decisions in multiple cases. Do you disagree with that?
You keep quoting knowledgeable people like Bittker, and Jensen and Siegel, and none of them agree with you.

You still do not understand what the courts mean (and what the constitution means) by the term "direct tax."
It is not that Bittker and Jensen and Siegel agree with me, you don't agree with them.. If Siegel claims in the constitutional sense that the income tax is a excise tax or duty. So what have I misinterpreted? Excise tax or duty. So you're telling me that Siegel is not really saying that in the constitutional sense the income tax is an excise tax or duty. Framspaer what is he saying then?

Famspear What is the meaning of indirect taxes and direct taxes in the constitutional sense? You haven't provided any documentation. I really don't think that any one understands what you're trying to say. Are you saying that all income is relieved from being apportionment?And if that is your contention, then please explain why.

Famspear Please answer these questions specifically.

1. Is it your belief that all income can be taxed without the rule of apportionment? If yes, provide documentation that backs up your belief.

2. Is it your belief at the 16th amendment gave Congress the unlimited power to tax all incomes directly? If yes, provide documentation.

3. Is it your belief that the income tax is not in the category of indirect? If yes, provide documentation.

4. What is the constitutional meaning of indirect tax?

5. What is your interpretation of this text? We have considered the act only in respect of the tax on income derived from real estate, and from invested personal property, and have not commented on so much of it as bears on gains or profits from business, privileges, or employments, in view of the instances in which taxation on business, privileges, or employments has assumed the guise of an excise tax and been sustained as such.

6. What is Mr. Justice WHITE Interpretation of the 16th amendment? Provide documentation.
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Re: Indirect Taxes Imposed Directly

Post by Famspear »

Micheal360 wrote:It is not that Bittker and Jensen and Siegel agree with me, you don't agree with them.. If Siegel claims in the constitutional sense that the income tax is a excise tax or duty. So what have I misinterpreted? Excise tax or duty. So you're telling me that Siegel is not really saying that in the constitutional sense the income tax is an excise tax or duty. Framspaer what is he saying then?

Famspear What is the meaning of indirect taxes and direct taxes in the constitutional sense? You haven't provided any documentation. I really don't think that any one understands what you're trying to say. Are you saying that all income is relieved from being apportionment?And if that is your contention, then please explain why.

Famspear Please answer these questions specifically.

1. Is it your belief that all income can be taxed without the rule of apportionment? If yes, provide documentation that backs up your belief.

2. Is it your belief at the 16th amendment gave Congress the unlimited power to tax all incomes directly? If yes, provide documentation.

3. Is it your belief that the income tax is not in the category of indirect? If yes, provide documentation.

4. What is the constitutional meaning of indirect tax?

5. What is your interpretation of this text? We have considered the act only in respect of the tax on income derived from real estate, and from invested personal property, and have not commented on so much of it as bears on gains or profits from business, privileges, or employments, in view of the instances in which taxation on business, privileges, or employments has assumed the guise of an excise tax and been sustained as such.

6. What is Mr. Justice WHITE Interpretation of the 16th amendment? Provide documentation.
You're going around in circles, and it's obvious that no matter how many times you copy and paste material, you're not reading the material.

Whether the income tax is a "direct tax" or not has NOTHING TO DO WITH YOUR ARGUMENT. Your argument is that your income cannot be taxed DIRECTLY. That is incorrect.

You are hung up on the word "direct." IT HAS MORE THAN ONE MEANING. Go back and re-read all the materials you have posted, and go back and re-read what we have posted.
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Re: Indirect Taxes Imposed Directly

Post by Hyrion »

Micheal360 wrote:tell me why my income is taxable
Dude: you've already clearly stated why your income is taxable:
Jameson3171/Micheal360 wrote:The power of Congress to tax income derives from Article I, Section 8, Clause 1, of the original Constitution
Jameson3171/Micheal360 wrote:the income tax may be imposed on income from whatever source
You keep insisting your income is not taxable, but you've never explained why.

You keep quoting Cases that prove your income is taxable and then conclude your income is not taxable but never explain why.

You have, yourself, proven that your income is taxable and offered not a single point to identify why you think it's not taxable.
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Re: Indirect Taxes Imposed Directly

Post by Hyrion »

Micheal360 wrote:I really don't think that any one understands what you're trying to say.
I understand Famspear just fine. It's you, Micheal/Jameson/whatever-num-de-plume-you-wish-to-go-by, that I fail to understand.

You point to clear cases that - in essense - state "the constitution says all income is taxable" then jump straight to a conclusion that "the constitution says your income is not taxable".

It's you, M/J/w, that have not made your case - with the exception you keep proving your income is taxable.