ADDENDUM #1THE LIMITED MEANING
OF THE SIXTEENTH AMENDMENT
This paper is written in the year 2010. The Sixteenth Amendment to our Constitution has been in effect for almost
100 years. It reads as follows:
The Congress shall have power to lay and collect taxes on
incomes, from whatever source derived, without apportionment
among the several states, and without any regard to any
census or enumeration.
It is this writer’s opinion that the nebulous wording in the Amendment which fails to identify the vitally important
legal meaning of the term “income” provided a golden opportunity for our government, through the Internal Revenue Service,
to take advantage of the lack of a definition of the true meaning of the term “income”, as used in the Amendment, in order to
misapply the indisputable intent of the Amendment’s framers to limit its application in order to insure the constitutionality of a
so-called “income” tax. The Amendment’s “income” tax was subsequently specifically ruled by our Supreme Court in many
cases following as being limited to an indirect excise tax on the government-granted privileges of perpetual life and limited
liability which are enjoyed by corporations. A detailed explanation of this writer’s conclusion is the purpose of this paper.
First, I am confident that both the legal fraternity, as well as the layman, would agree that this question is best
addressed by our Supreme Court so let me do that first. Soon after ratification of the Sixteenth Amendment, both its
meaning and its constitutionality came to the attention of the Court in the landmark decision of Brushaber v. Union Pacific
Railroad, Inc., 240 U.S. 1 (1916) in which decision our Supreme Court confirmed the constitutionality of the income tax
referred to in the Amendment, but ONLY as an indirect tax in the nature of an excise. In ruling against Mr. Brushaber, the
U.S. Supreme Court stated that the tax authorized by the Amendment was not, in fact, a direct tax as he had contended, but
rather was an indirect tax in the nature of an excise and, therefore, not subject to the Constitution’s original prohibition
against unapportioned direct taxes contained in Article 1, Section 2, Clause 3 and Article 1, Section 9, Clause 4. As an
indirect excise tax, the Supreme Court said that the tax authorized by the Amendment was subject only to the constitutional
rule of uniformity required by Article 1, Section 8, Clause 1 of our Constitution which applies to all indirect taxes on duties,
imposts and excises. Shortly after the Brushaber decision, a number of other Supreme Court decisions were rendered in
support of Brushaber including almost immediately following the decision from Stanton v. Baltic Mining Co., 240 U.S. 102
(1915) wherein our Supreme Court held:
…that the provisions of the Sixteenth Amendment conferred no new power of taxation, but simply prohibited the
previous complete and plenary power of 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... (emphasis added)
Three years later in 1918, the U.S. Supreme Court in the decision of Peck & Co. v. Lowe, 247 U.S. 165 again
explained the limited application of the Sixteenth Amendment. The Court stated in this decision as follows:
The Sixteenth Amendment…does not extend the taxing power to new or excepted subjects… (emphasis added)
The “excepted subjects” wording in this Court decision is a clear reference to capitation taxes (taxes on citizens or
their earnings) which has always been, and still is forbidden by Article 1, Section 9, Clause 4 of the Constitution. The
misleading suggestions which are incorrectly included by footnotes in many printed copies of our Constitution in reference to
the provisions of Article 1, Section 9, Clause 4, are incorrect. Article 1, Section 9, Clause 4 was not modified, changed or
repealed by the Sixteenth Amendment as these footnotes indicate.
Interestingly, the IRS itself, in its own Treasury Decision 2313, acknowledges in a ruling published only a month
after the Brushaber decision that the Amendment authorized the withholding of tax on monies in the form of receipts from
investment profits or gains owing only to privileged, non-resident aliens-not the receipts of U.S. citizens! This Treasury
Department Ruling #2313 gave no indication that the Brushaber Court said that the Amendment had authorized any tax on
the earnings of U.S. citizens! It is also revealing, however, that this Treasury Decision also stated that the IRS Form 1040 is
to be used for reporting “income” (profit or gain) of these non-resident alien individuals who, unlike U.S. citizens, had no
constitutional protection against taxation of their investment earnings by Article 1, Section 9, Clause 4 of our Constitution.
Several years later, the Supreme Court, in the case of Eisner v. Macomber, 252 U.S. 189 (1919), took it upon itself
to define the meaning of the term “income” which is not defined in the I.R. Code because Congress has no power to define a
term (income) which is used, but not defined, in the Constitution. The Eisner Court, however, did define “income” as “gain
derived from capital, from labor or from both combined…”In this definition, the Eisner Court stated that their definition as
shown above was “…adopted in two cases arising under the Corporation Income Tax Act of 1909 (Stratton’s Independence
v. Howbert, 231 U.S. 399 (1913) and Doyle v. Mitchell Bros. Co., 247 U.S. 179 (1918), both of which related only to
corporate profit or gain which is revealing. Indeed, a corporation, utilizing capital and labor or both combined can, hopefully,
“derive” profit or gain as “income” from the privileged activities of the corporate form. It is this government-granted privilege
that is the subject of the “income” tax. The “profit or gain” is merely the measurement of the tax on the government-granted
corporate privilege of perpetual life and limited liability. Since non-resident aliens must obtain a similar privilege to do
business in the U.S. by purchasing U.S. securities, the law, as shown by the IRS’ own Treasury Decision 2313, also requires
a “return” (Form 1040) by such non-resident aliens or their fiduciary representative (Mr. Brushaber) as a tax on their
government-granted privileged activity of doing business in the U.S. as is also the case with corporations.
No mention is made, however, in the Eisner decision, Treasury Department Ruling #2313 or even any of the court
cases shown above of any new authority by reason of the Sixteenth Amendment to tax the constitutionally-protected
unalienable rights of U.S. citizens to earn a tas-free living by whatever means they desire. These rights include their right to
invest, buy and sell, or otherwise earn money by their own endeavors, be they brawn or brain, through their own skills,
investment or otherwise, none of which are government-privileged and thereby taxable activities such as enjoyed by
corporations. To the contrary, they are our citizen’s most valuable, tax-free constitutionally-protected rights. In Chapter I of
my book, Super Scam, I cite numerous cases showing that our Constitution was written primarily to protect all our citizens’
unalienable, non-taxable property rights, the most precious of which is their right to earn a living by whatever means
employed, including manual labor, brain labor, investment skills or whatever other lawful means employed!
I am confident that all lawyers would agree that any “change” or “modification” in a constitutional provision by
amendment requires an enforcement clause to implement the provision it affected. For instance, the Eighteenth
Amendment (creating prohibition) included an enforcement clause which read: “The Congress and the several states shall
have the concurrent power to enforce this article by appropriate legislation.” This enforcement clause was necessary to give
government the ability to enforce the “change” (prohibition) which was embodied in the Eighteenth Amendment. However,
no such enforcement clause was included in the Sixteenth Amendment because, as the Supreme Court stated in the several
decisions previously quoted, the Amendment created no new taxing power, but merely identified the tax on “income”
referred to in the Amendment as an indirect excise on the government-granted privileges of incorporation! Indirect excise
taxes have been authorized in our Constitution since it was written in 1787! The Supreme Court confirmed this fact in
Brushaber, Stanton, Peck and many other cases!
A review of the Congressional debates in 1909 which led to the enactment of the Sixteenth Amendment is both
important and revealing. Senators McLaurin of Mississippi and Bristow of Kansas both unsuccessfully proposed repeal of
Article 1, Section 2, Clause 3 and Article 1, Section 9, Clause 4 of the Constitution. Both proposals were soundly rejected.
Had their repeal proposals been approved, the Amendment would have had to include an enforcement clause and the IRS’
misapplication for the last one hundred-plus years of the Amendment’s existence against our citizen’s earnings would have
been lawful rather than the unlawful misapplication that the IRS successfully but unlawfully enforces. The prohibitions of
Articles, Sections, Clauses 1, 2, 3 and 1, 9, 4 are still in our Constitution protecting us against any such taxation of our
citizen’s earnings or other receipts, despite our government’s attempts, through the IRS’ propaganda, to try to tell us that the
Amendment authorized them to do something that our Constitution prohibits.
Sutherland’s Rules of Statutory Construction is a well-known, judicially-recognized authority on the subject of
statutory legislative history. In further support of my criticism, I call attention to the following quotation from Sutherland’s
Rules of Statutory Construction, Section 48.18 (5th Edition):
One of the most readily available extrinsic aids to the interpretation of statutes is the action of the legislature on
amendments which are proposed to be made during the course of consideration in the legislature. Both the state and
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federal courts will refer to proposed changes in a bill in order to interpret the statute as finally enacted. The journals of the
legislature are the usual source for this information. Generally, the rejection of an amendment indicates that the legislature
does not intend the bill to include the provisions embodied in the rejected amendment. (emphasis added)
Two other Supreme Court rulings also support Sutherland’s rules on this issue as follows:
It is plain, then, that Congress had this question (repeal of the Constitution’s prohibitions against unapportioned
direct taxation) presented to its attention in a most precise form. It has the issue clearly drawn. The first alternative was
rejected. All difficulties of construction vanish if we are willing to give to the words, deliberately adopted, their natural
meaning. U.S. v. Pfitsch, 256 U.S. 547 (1931)
When a court reviews an agency’s construction of the statute (or amendment) which it administers, it is confronted
with two questions: First, always, is the question whether Congress has already spoken to the question at issue. If the
intent of Congress is clear, that is the end of the matter; for the court, as well as the agency, must give effect to the
unambiguously expressed intent of the Congress. (emphasis added). Chevron U.S.A. v. Natural Resources Defense
Counsel, Inc. 467 U.S. 837 (1984) (parenthesis and underlining added for emphasis)
All of the above legislative history is obviously in full support of my primary premise-that the Supreme Court
decisions in Brushaber, Stanton and Peck (and others unnamed for brevity) which are all still law today and Sutherland’s
Rules quoted above, totally support President Taft’s limited proposal in his proposal speech to Congress of June 16, 1909
for a bill to tax only corporate profit or gain at 2%, and in order to insure the constitutionality of this 2% proposed tax he
simultaneously recommended the supporting Sixteenth Amendment.. In Chapter II of my book entitled THE SIXTEENTH
AMENDMENT-THE MYTH AND THE REALITY I relate a history of the Amendment, and I printed President Taft’s entire
revealing speech to Congress of June 16, 1909 in which he proposed both the Amendment and a 2% corporation income
tax. A simple reading of Taft’s proposal speech alone provides a clear confirmation of what he wanted from the
Amendment. And in the Amendment Congress gave him exactly what he asked for, which was an amendment only to
overturn the Supreme Court’s 1895 decision in the case of Pollock v. Farmers Loan & Trust Co, 158 U.S. 601. In that
decision, the Supreme Court had declared that the receipts earned from property was the same as taxing the property itself,
and that such a tax was direct and, therefore, unconstitutional because it lacked apportionment. Knowing that his proposed
corporation tax would also tax corporate profits or gains derived from property such as capital and labor, Taft was concerned
that, because of this Pollock decision fourteen years earlier (1895), the Supreme Court might declare unconstitutional his
Corporation Income Tax Act of 1909 which he was simultaneously proposing.
Taft’s proposed Amendment was recommended only to insure the constitutionality of his 1909 corporation excise
tax, and in order to guarantee that, Taft felt it necessary to have an amendment to overrule the Pollock decision. President
Taft had been elected as a trust-buster, promising to tax the corporations forming the trusts which, he felt at that time, were
fleecing the public. He had no intention whatsoever in proposing the Amendment to have it be misconstrued to authorize
taxation of our citizens or their earnings! And Congress gave him exactly what he asked for-authority in the Amendment to
tax privileged corporate profits only by over-turning the Pollock decision! The term “income”, as used in the Amendment,
had always been limited by the Supreme Court in previous taxing acts to refer only to corporate receipts or profits and gains.
As previously shown, the Supreme Court stated in many subsequent decisions that this was still true; i.e., that “income” as
used in the Amendment was still limited to mean corporate profit or gain! President Taft was an accomplished lawyer and
jurist who served seven years as Chief Justice of the Supreme Court after his presidency.
A quotation from the Supreme Court’s decision in Bowers, Collector of Internal Revenue v. Kerbaugh-Empire Co.,
271 U.S. 170 (1926) best summarizes and confirms all of the foregoing as follows:
The Sixteenth Amendment declares that Congress shall have the power to levy and collect taxes on income, ‘from
whatever source derived’ without apportionment among the several states, and without regard to any census or
enumeration. It was not the purpose or effect of that amendment to bring any new subject within the taxing power.
Congress already had power to tax all incomes. But taxes on incomes from some sources had been held to be ‘direct taxes’
within the meaning of the constitutional requirement as to apportionment. Art. 1, Sec. 2, Clause 3, Article 1, Sec. 9, Clause
4; Pollock v. Farmers Loan & Trust Co., 158 U.S. 601. The Amendment relieved from that requirement and obliterated the
distinction in that respect between taxes on income that are direct taxes and those that are not, and so put on the same
basis all incomes ‘from whatever source’. Brushaber v. Union Pacific R.R. Co., 240 U.S. 1. ‘Income’ has been taken to
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mean the same thing as used in the Corporation Excise Tax Act of 1909 in the Sixteenth Amendment, and in the various
revenue acts subsequently passed. Pacific Co. v. Lowe, 247 U.S. 330, Merchants Loan & Trust Co. v. Smietanka, 255 U.S.
509, after full consideration this court declared that income may be defined as gain derived from capital, from labor, from
both combined, including profit gained through sale or conversion of capital (a reference to corporate sale or conversion-see
following cases). Stratton’s Independence v. Howbert, 231 U.S. 399; Doyle v. Mitchell Bros. Co., 247 U.S. 179, Eisner v.
Macomber, 252 U.S. 189. and that definition has been adhered to and applied repeatedly. See e.g., Merchants Loan &
Trust Co. v. Smietanka, supra; Goodrich v. Edwards, 255 U.S. 527, United States v. Phellis, 257 U.S. 156, Miles v. Safe
Deposit Co., 259 U.S. 247, United States v. Supplee-Biddle Co., 265 U.S. 189, Irwin v. Gavit, 258 U.S. 161, Edwards v.
Cuba Railroad, 268 U.S. 628. (emphasis added)
It is noteworthy that all these court decisions were related to government-privileged corporation activity, lending
even more support to the true, limited meaning of the term “income” as used in the Sixteenth Amendment to be corporate
profit or gain.
As I point out in my book, Super Scam, the IRS has been successful in unlawfully and forcefully misapplying the
provisions of the Sixteenth Amendment for almost 100 years to our citizens who have always been constitutionally protected
against any tax on their earnings or other receipts. Countless numbers of patriotic Americans, including this writer, have
been falsely prosecuted for “failure to file” or “evasion” when they act on this truth as previously revealed.
Totally aside from the IRS’ criminal activity in misapplication of the tax, simply from a practical standpoint, statistical
history proves that over the past thirty years, for every $1.00 government has taxed, they have spent $1.58. In other words,
taxes cause not only spending but over-spending by more than 50%! It is indeed a travesty that our Supreme Court has
allowed the IRS to continue in their almost 100 year misapplication of the corporation income tax authorized by the
Amendment to our citizen’s personal earnings. This is an unquestioned dereliction of duty, particularly considering that, if
this misapplication of the tax were to cease, and our people were allowed to keep 100% of the fruits of their labor to which
they are entitled, as the Constitution mandates, the billions saved would be spent and/or invested in the marketplace,
providing a massive NON-INFLATIONARY stimulus to our current economic woes. How much more effective would this
solution be, rather than the HYPER-INFALTIONARY remedy our current administration is pursuing with multi-billions in new
spending for bail-outs and stimuli, fresh off the printing press! Interestingly, totally eliminating the income tax is currently
recommended by former Congressman Ron Paul and others. Unfortunately, his elimination advocacy seems also to be
predicated on a COMMON misunderstanding of the limited meaning of the Sixteenth Amendment. This widespread, almost
universal similar misunderstanding of the limited meaning of “income” as used in the amendment, has given rise to many socalled “tax reform” proposals such as the FAIR tax, the FLAT tax and a NATIONAL SALES tax. However, all of these wellmeaning proposals are predicated on an ERRONEOUS assumption that the Sixteenth Amendment authorized our
government to tax our citizen’s wages, salaries and other earnings! So, because enactment of any of these proposals would
also place the burden of a new, legitimate tax on the shoulders of our citizens, they would simply substitute one new, also
unconstitutional tax, for another! The far better solution is to make our government obey the limited meaning of the current
law.
Knowledge of the true limited legal meaning of the amendment points instantly to the simpler, better, more effective
solution which is to make our government, through the IRS, obey the written law-meaning require them to limit their income
tax collection activities to the representatives of the corporations and other foreign entities or their agents who are those
statutorily liable for the tax. And to accomplish this requires public education of the constitutional and statutory limitation of
the law as shown in this paper. The vast majority of Americans and even many in Congress are still unaware that the
Sixteenth Amendment created NO NEW TAXING AUTHORITY, much less one for government to tax the wages, salaries or
other earnings of American citizens! Consequently, the frequently heard demand for repeal of the Sixteenth Amendment
would provide the WRONG solution because it would restore the Supreme Court’s ruling in the 1895 decision in Pollock v.
Farmers Loan & Trust Co. and would eliminate our government’s ability to tax corporate profit and gain. This would
obviously be an unintended result. All of this is apparent from a simple reading of President Taft’s proposal speech to the
Sixteenth Amendment which I reproduced in its entirety at the end of Chapter II of SUPER SCAM. Fortunately, both our
Constitution and the Internal Revenue Code itself, when carefully read, confirm in the statutory law, the prohibitions against
taxation of our citizen’s wages, salaries or other earnings.
To their everlasting shame, however, most of our judiciary, from lower level District Courts all the way to and
including the Supreme Court are, unfortunately, seemingly in bed with the IRS in their rubber-stamping of the erroneous
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authority of the Sixteenth Amendment to tax our citizen’s earnings directly. Most, if not all, federal judges elect voluntarily to
file and pay income taxes on their salaries. No doubt at least some of these judges are also uninformed about the limited
legal meaning of the Sixteenth Amendment, but most, in this writer’s opinion, are aware. However, out of fear of the IRS,
they make the political decision to adopt the IRS’ lie in order to assure their own judicial security! This is, indeed, a sad
commentary on both the power of the IRS and on human nature, albeit true! Even our Supreme Court has taken the
deceptive, but cowardly way out when they have denied certiorari (refusal to hear) appeals on this issue that have been
brought up from courts below for their consideration. The Supreme Court has the authority and the power to force all inferior
courts to obey the law if they would only choose to do so. In this writer’s opinion, their decision not to do so is crystal-clear
political cowardice borne of the trillions in unlawful fiat-monetary tax receipts that the IRS collects from our citizens through
continuance of the IRS’ misapplication of the amendment’s taxing authority. This writer is of the opinion that only a massive
educational effort, such as in this paper, can create the essential, huge public hue and cry for correction that would politically
motivate both an honest president, who has, in his executive capacity, the right and, indeed, the duty to require obedience of
the written law and our Supreme Court to correct the lower court’s errors. In fact, if they were so inspired, through either
public pressure or their own embarrassment, the Supreme Court could issue a ruling in agreement with this paper on their
own initiative. Hope springs eternal.
Thomas Jefferson said, in agreement with Holy Scripture in Matthew 17:25 & 26:
“A wise and frugal government which shall restrain men from injuring one another…shall not take from the mouth of
labor the bread it has earned. This is the sum of good government.”
“If a law is unjust, a man is not only right to disobey, he is obligated to do so.”
“Two Enemies of the People are criminals and government, so let us tie the second down with the chains of the
Constitution so the second will not become the legalized version of the first…”
“And ye shall know the truth and the truth shall make you free.” John 8:32 (KJV)
SUPER SCAM
480 Nottingham Rd.W.
Gaylord, MI 49735
(989) 448-8592
www.super-scam.com
joann.golds@gmail.com
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