Federal tax on earned wages raises valid constitutional questions

Politics
6

Snow96

I’m still waiting for you explain how you arrived at your conclusion that the Sixteenth Amendment grants power to Congress to lay and collect a tax on “earned wages” when the Amendment mentions “incomes,” and not “earned wages”.

Your conclusion is certainly not supported by the members in Congress, during which time the amendment was framed and debated, and then sent to the States for ratification.

So, Snow96, the question remains, how did you arrive at the conclusion the amendment is intended to allow Congress to lay and collect a tax on earned wages?

JWK

The whole aim of construction, as applied to a provision of the Constitution, is to discover the meaning, to ascertain and give effect to the intent of its framers and the people who adopted it._____HOME BLDG. & LOAN ASSOCIATION v. BLAISDELL, 290 U.S. 398 (1934)

7

How many angels are you going to try to keep dancing on the head of the pin this time?

1 Like
8

How many times are you going to post adolescent comments?

1 Like
9

I have no idea what you mean by that. Please rephrase for clarity.

10

Snow96

Assuming for a moment that a tax on earned wages does not violate the intentions under which the Sixteenth Amendment was adopted, nor violates the command that direct taxes are required to be apportioned, how do you calculate the taxable “income” from a working person’s earned wages?

JWK

11

Yes, Snow96, the Sixteenth Amendment is crystal clear and it states:

”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.”

The Sixteenth Amendment does not declare:

”The Congress shall have power to lay and collect direct taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.”

And, the Sixteenth Amendment does not say:

“The Congress shall have power to lay and collect taxes on earned wages, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.”

Now, with the above stated FACTS in mind, a number of obvious and legitimate questions present themselves which, to the best of my knowledge, have not been adequately addressed by our Supreme Court, and since our very own Supreme Court has stated “The whole aim of construction, as applied to a provision of the Constitution, is to discover the meaning, to ascertain and give effect to the intent of its framers and the people who adopted it.”. HOME BLDG. & LOAN ASSOCIATION v. BLAISDELL, 290 U.S. 398 (1934), should the following questions not be resolved?

What was the meaning of “income”, within the amendment, as understood by those in Congress who framed and debated the proposed amendment?

Was the meaning of income to include a working person’s earned wage, or was there a specific identifiable group and their unique type of earners the intended targeted of the amendment, who are distinguishable from a laboring class person and their earned wage?

Does a federal tax on a working person’s earned wage, as distinguished from a tax on incomes realized under a government created corporate charter, take the form of a “direct tax”, and as such, requires the protection of Article 1, Section 9, Clause 4 to be applied, since it has not been repealed, while a tax on “incomes” realized under a corporate charter would be indirect and taxable under the Sixteenth amendment?

Since Congress may lay and collect taxes “incomes” without apportionment, and there is no repeal of Article 1, Section 9, Clause 4, is it not the Courts’ duty to harmonize Congressional legislation in such a manner that effect is given to each provision of our Constitution?

JWK

12

To be a bit more accurate, the fact is, if Congress, under the authority of the Sixteenth Amendment, asserts to be taxing incomes, but the tax, as it is applied, takes the form of a direct tax, and it was not apportioned, the Supreme Court has struck the tax down as violating the constitutional protection requiring direct taxes to be apportioned, “notwithstanding the Sixteenth Amendment”, as stated in EISNER v. MACOMBER , 252 U.S. 189 (1920):

“Thus, from every point of view we are brought irresistibly to the conclusion that neither under the Sixteenth Amendment nor otherwise has Congress power to tax without apportionment a true stock dividend made lawfully and in good faith, or the accumulated profits behind it, as income of the stockholder. The Revenue Act of 1916, in so far as it imposes a tax upon the stockholder because of such dividend, contravenes the provisions of article 1, 2, cl. 3, and article 1, 9, cl. 4, of the Constitution, and to this extent is invalid, notwithstanding the Sixteenth Amendment.”

Snow86,

Are you suggesting that a federal tax on the earned wage a working person receives when selling the property each has in their own labor is not a direct tax?

13

The amendment specifically points out that it’s not to be apportioned. Amendments can not violate other parts of the constitution and can supersede them.

That’s what the tax law on incomes determines. Congress passes laws that tell how to tax incomes. The laws also determine if it’s an income.
But YOU should know this.

14

This old chestnut again?

Doing cartwheels as opposed to the plain reading of the 16th Amendment?

16th Amendment was introduced specifically to make the collection of income taxes, whether direct or not, free from apportionment.

In fact the ruling in Pollock was one of the main reasons why the amendment was passed in the first place.

All subsequent cases have been in regards to arguments over whether something was income or not…NOT an argument about direct v indirect taxes.

If something was declared income, then it could be taxed without apportionment…period.

In McComber, the stock dividend was declared not to be income because the shareholder’s stake in the company didn’t change.

These arguments are so ridiculous, but I expect they will be brought up again in April 2024…and 2025…and so on and so on…

1 Like
15

The Sixteenth Amendment does not authorize a direct tax which is not apportioned.

Nor does the Sixteenth Amendment declare:

“The Congress shall have power to lay and collect taxes on earned wages, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.”

And in Eisner v. Macomber 252 U.S. 189, 206 (1920) the Court confirms if Congress, under the authority of the Sixteenth Amendment, asserts to be taxing “incomes”, but the tax, as it is applied, takes the form of a direct tax, and is not apportioned, the tax violates the constitutional protection requiring direct taxes to be apportioned. The Court concluded:

“Thus, from every point of view we are brought irresistibly to the conclusion that neither under the Sixteenth Amendment nor otherwise has Congress power to tax without apportionment a true stock dividend made lawfully and in good faith, or the accumulated profits behind it, as income of the stockholder. The Revenue Act of 1916, in so far as it imposes a tax upon the stockholder because of such dividend, contravenes the provisions of article 1, 2, cl. 3, and article 1, 9, cl. 4, of the Constitution, and to this extent is invalid, notwithstanding the Sixteenth Amendment.”

16

The truth is, our Supreme Court in EISNER provided the rules by which to calculate a profit or gain, collectively referred to in the Sixteenth Amendment as “income”.

Is it not a fact, that If a profit or gain cannot be calculated from a laboring class citizen’s earned wage, then there is no “income” within the meaning of the Sixteenth Amendment?

I have tried endlessly to calculate a profit and/or gain a laboring class person may realize when selling the property each has in their own labor, when following the rules laid out in EISNER and It seems to me to not be possible.

It is not self-evident that a wage earner does in fact invest capital in pursuit of earning a wage, e.g., the cost of transportation to and from work; the cost of food which fuels the wage earners body during working hours; the costs involved with housing, medical needs, and even clothing are all expenses incurred by the wage earner and are necessary expenses and outlays which makes one’s labor possible. And this does not even take into account the “investment” of eight hours of life itself which the wage earner makes available to their employer, and that is in addition to the actual physical and mental labor invested by the wage earner, which is also made available to their employer.

In accordance with the rules set out in EISNER, and as tersely stated by the Court in Sullenger vs. Commissioner “No authority has been cited for denying to this taxpayer the cost of goods sold in computing his profit, which profit alone is gross income for income tax purposes.”

So, please provide the worksheet calculating a profit and/or gain of the laboring class person mentioned above. Or is it your opinion the rules set by the S.C. are only applicable to capitalists who have money working, as opposed to those who work for their money?

JWK

1 Like
17

And in your “plain reading of the 16th Amendment” what is the definition of “income”?

In Eisner v. Mcomber the Court answers the question, “Income may be defined as the gain derived from capital, from labor, or from both combined.”

And as emphasized in U.S. v. Ballard: “Understanding the term in this natural and obvious sense, it cannot be said that a conversion of capital assets invariably produces income.” Is that not also applicable to a working person who converts the property one has in their own labor into an “earned wage”?

In order for there to be taxable income under the Sixteenth Amendment an actual gain or profit must be realized by the wage earner, “severed from the capital however invested or employed.”

Seems to me from what the Court states in United States v. Ballard and Eisner v. Macomber, in order to arrive at taxable income under the Sixteenth Amendment, a calculation must be performed to separate capital invested from money coming in to arrive at a taxable gain or profit, collectively called “incomes” in the Sixteenth Amendment.

So, how do we apply these rules to a wage earner who sells the property each has in their own labor?

JWK
.

18

That’s precisely how it works.

Congress lets capital investors deduct all those expenses, but doesn’t let wage earners do so.

Are you claiming Congress should do that?

How progressive of you!

19

If wages are income then please tell me where I can pay the Lord to get more life (make a profit with what I invested to get those wages) and how much it will cost per hour?

20

What are you implying by your comment, “How progressive of you!”

21

Apparently things have become so twisted that (the attempted talking point) equates people keeping what’s theirs rather than government taking (for endless social do-gooding) is somehow “progressive”.

22

I appreciate your opinion, JayJay, but that is all it is. . . an unsubstantiated opinion!

In my response to your opinion, let us keep in mind the Sixteenth Amendment does not declare:

”The Congress shall have power to lay and collect direct taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.”

The historical record, during the Congressional debates on adopting the Sixteenth Amendment confirms that on June 17th, 1909, Senator Brown offered the following Joint Resolution (S. J. R. 39) to amend the Constitution relative to TAXES ON INCOMES:

”Resolved by the Senate and House of Representatives of the United States of America in Congress assembled (two-thirds of both Houses concurring), That the following section be submitted to the legislatures of the several States, which, when ratified by the legislatures of three fourths of the States, shall be valid and binding as a part of the Constitution of the United States:

“The Congress shall have power to lay and collect direct taxes on incomes without apportionment among the several States according to population." CONGRESSIONAL RECORD ___ SENATE, June 17, 1909, Page 3377

But the wording “The Congress shall have power to lay and collect direct taxes on incomes without apportionment”, etc., never made it into the final version of the Sixteenth Amendment, nor is there any wording in the Constitution repealing the command that “No Capitation, or other direct, Tax shall be laid, unless in Proportion to the Census or Enumeration herein before directed to be taken”

With the above in mind it is important to note that, under the rules which govern constitutional construction, in situations where there appears to be constitutional provisions that are in conflict with each other, as is the current case in which there is no repeal of the constitutional requirement that “direct” taxes must be apportioned, while Congress is granted power to lay and collect taxes on incomes without apportionment, the two provisions must be interpreted to harmonize them in such a manner that effect be given to each.

Finally, with respect to your assertion that the “16th Amendment was introduced specifically to make the collection of income taxes, whether direct or not, free from apportionment”, that assertion is debatable considering what is found in the 1909 Congressional Record.

The Sixteenth Amendment was perceived necessary in order to allow for an additional revenue source in order to lower the tariff burden being paid by poor working people on articles of consumption. The additional revenue source was intended to come from “millionaires” [repeatedly identified during the debates] paying a small portion of their unearned incomes (stocks, bonds, etc.) to help support the functions of government while allowing the lowering of the tariff.

Representative Heflin, during the Congressional Debates on the Sixteenth Amendment actually pointed to a statement made by Robert Ellis Thompson, in the Irish World which articulated the purpose of an income tax:

“An income tax seeks to reach the unearned wealth of the country and to make it pay its share.” 44 Cong. Rec. Page 4420 (1909) right column halfway down the column.

Also see Page 4412, right column, July 12th, 1909, CONGRESSIONAL RECORD, Representative HENRY:

“It is undeniable that an income tax will reach millions of wealth—bonds and stocks— [which is unearned income] -that would never be touched by a corporation or inheritance tax. It is advocating no new and strange doctrine to favor an income tax. On many occasions during great emergencies this method of taxation has been resorted to, and proved abundantly satisfactory. And now, with a depleted Treasury, with swollen fortunes all around us evading taxation and receiving the protection of Government, and civilized communities everywhere recognizing the economic fairness of such a tax, and with the admitted contention that it contains the humane and sublime blessing of equality to all men, the time is ripe and appropriate for this Government to go forward and keep apace with the progress and civilization of mankind.”

Here is a link to the CONGRESSIONAL RECORD July 12th, 1909 which will substantiate what I stated above . . . scroll to desired page and either the House, or Senate record.

The fact is, a working person’s wage is earned, while the intended target of the Sixteenth Amendment was unearned profits and/or gains, collectively referenced in the Sixteenth Amendment as “incomes”.

JWK


The whole aim of construction, as applied to a provision of the Constitution, is to discover the meaning, to ascertain and give effect to the intent of its framers and the people who adopted it._____HOME BLDG. & LOAN ASSOCIATION v. BLAISDELL, 290 U.S. 398 (1934)

1 Like
23

Yep. Even if one manages to rationalize a legitimate argument here, it is for naught. No Constitutional argument is going to do away with the Federal Income Tax.

24

Progressives have been complaining about the fact business and capital owners can deduct many business-related expenses but wage earners cannot deduct equivalent job-related expenses for decades.

25

You could have…you know…waited until I answered instead of attempting to answer for me.

In the further, maybe stop assuming every argument we have on these forums is an argument over the “morality” of a government action and assigning motives to the “sides” you perceive to be engaging in such an argument.