"Some people think the Federal Reserve Banks are US government institutions. They are not... they are private credit monopolies which prey upon the people of the US for the benefit of themselves and their foreign and domestic swindlers, and rich and predatory money lenders. The sack of the United States by the Fed is the greatest crime in history. Every effort has been made by the Fed to conceal its powers, but the truth is the Fed has usurped the government. It controls everything here and it controls all our foreign relations. It makes and breaks governments at will." ~ Louis McFadden
Limited Government': A Fairy Tale
Once upon a time many years ago, a group of clever men gathered in the home town of Mr. Franklin to challenge an oxymoron: they set up a "limited government." The United States of America was the result, and to this day the tale persists that its powers have limits. This Friday, April 15th, we will each be able to check that out.
Each clever man represented a lesser government, and those governments wanted to give up a very small amount of power, so as to gain the advantage of joint action in certain circumstances: notably, they wanted the new, limited government to provide for the "common defence" and even the "general welfare." If ever they had to fight another war, they didn't want their soldiers to go barefoot and thereby possibly lose it. That bit, I must allow, has worked out quite well; the US military has been quite hard to beat and if ever a Humvee should lack armor, the needed plates are welded on in quite short order.
Otherwise, the oxymoron survived their onslaught. The control mechanism those clever men put in place was a 75% supermajority, but in reality no percentage will ever suffice; any government will use its power to acquire more power et si monumentum requiris, circumspice. Any such supermajority becomes a supergovernment and then the supergovernment needs a super super government to ride its back and so on ad inf; the theory is false.
All was documented in a "Constitution," a copy of which can be found in some D.C. museum even today; and one of the smart ways they set out to limit the powers of the monster they created was to prohibit it (ha!) from taxing State citizens directly, unless by "apportionment." This device was ingenious. Direct taxing was permitted, but only if the result would take money in exact ratio of the State populations; a task that is enormously difficult. You'll find that limit in Article 1 Section 2. Today, for example, the population of New Hampshire is exactly 2.07991 times that of Vermont ; so to abide by that limit if the Feds wanted to tax residents directly, they would have to take a total of $2,079,910 from New Hampshiremen for every $1 million they took from Vermonters--and so on, for all 50 States. For a tax on wages, the total of which cannot be known in advance, that's impossible.
Point that out to any well-prepared IRS bureau-rat, however, and he will smugly reply "Ah, but that's been repealed by the Sixteenth Amendment." Recall, limits can be removed by a 75% supermajority; in 1913, that meant that 29 States had to vote in favor of the draft Congress was thoughtful enough to provide, to enable itself to plug a vacuum hose into the pocketbook of every American who earned "income."
Researcher Bill Benson visited every State archive to find out what happened; his book The Law that Never Was documents that six of them did. All the others either rejected the proposed Amendment, or else doctored its text in ways great or small so that what they ratified was not what Congress had proposed. Even so, in 1913 Secretary of State Knox reported that ratification was complete. Such outright mendacity is one way that limits on power can be swept aside.
However, there's much more. Take a careful look at the actual wording of Amendment 16. Notice it refers to "incomes from whatever sources derived." It's very far from explicit (which it certainly should have been!) but that odd phrasing contains the clue to an even bigger deception. Casual reading might suggest it means wages from two or more employers, i.e., we have to pay tax on all wages from all three of our part-time jobs and not just the daytime one. Not a bit of it!
Remember, language changes meaning gradually over time; and in 1909 when this was drafted, "income" did not generally mean what it means today in everyday use. We often equate it to "salary," but then (and even today to a large extent) it meant "the profit that a company earns." Look in the annual report of any public corporation and the odds are fair that the bottom line will be described not as "profit" but as "income" or "earnings." In 1909, that was the predominant meaning of "income" and so what Amendment 16 actually does is just to permit the taxing of corporate profits without apportionment, regardless of where or how the income was sourced.
At this point, dear Reader, I can see your eyebrows rising and your lip begin to curl, and hear you dismiss this understanding with the word "sure!" So please, do not take my word for this. I'm not even a lawyer!
Instead, take a peek at the definitive Supreme Court case that took the first Income Tax Act apart syllable by syllable: the Brushaber one, of 1916. It concluded that Amendment 16 gave Congress "no new taxing power"!--even less, that vacuum hose. In 1921 a more lucid case referred to and reconfirmed Brushaber, namely Merchants Loan & Trust v Smietanka whose operative words are that "income" "must be given the same meaning [in all the Income Tax Acts] that was given to it in the Corporation Excise Tax Act [of 1909] and that what that meaning is has now become definitely settled by decisions of this [Supreme] Court."
That 1909 Act was about nothing but corporate profit, hence the loop is closed; not only was Amendment 16 never actually ratified, but also it is not at all about individual earnings anyway and the entire "income tax" is a gigantic hoax. Today, every last member of the Establishment says otherwise, but that's what the law (the stuff that supposedly limits government power) says--and even "definitely settles"! Consequently, this Friday if you declare "income" on your 1040 Form, you will be concurring that government power can not in fact be limited; it will eventually do whatever it wants to do, and "limited government" is in truth not an option at all and never was.
The only real options are unlimited government or no government. Guess which I prefer?