TAX IMPROPERLY ENFORCED ON EMPLOYEES AS A DIRECT TAX
October 25, 2004
1:05 AM Eastern
John Garrison is a prominent tax law historian and a legal specialist at Florida's Office of the Attorney General. Recently, Garrison made what some call a surprisingly candid statement about the income tax: it is being improperly enforced on employees as a direct tax rather than as the excise tax mandated by the Sixteenth Amendment to the U.S. Constitution. (Search). Garrison maintains that the improper enforcement of the income tax as a direct tax costs working Americans thousands of dollars over the period of their life time. He is currently writing about his findings in a new book titled "The New Income Tax Scandal." This book is being co-authored with Brian Stabley, J.D., an Assistant Attorney General at Florida's Office of the Attorney General. Garrison has been deeply involved with tax law research and reform for more than two decades.
"'The New Income Tax Scandal' is about the corruption that lies at the heart of the tax system," said Garrison. "As a result of my legal case against the IRS in 2000, the IRS now privately concedes that, in 1915, after the ratification of the Sixteenth Amendment, the U.S. Supreme Court ruled in the case of Brushaber v. Union Pacific that an income tax is an excise tax, and that it is to be enforced as such. An excise is not a direct tax on property, but an indirect tax. The critical difference is that a collection of income tax as an excise allows for the deduction of all living expenses since they are seen as necessary for the maintenance and conservation of one's income producing property, one's labor. With a direct tax, this is not possible. Given this, it appears that up to my legal case, the IRS had been operating as if it had no awareness of the Sixteenth Amendment's intent. Clearly, this revelation has enormous political and economic implications for every American employee and it is my hope that my book will compel policy makers to right this obvious injury to American workers."
Other tax experts like Joseph Banister, a former IRS Criminal Investigator, have been attempting to get the facts out to the American people for years regarding the income tax laws, their misapplication and what he calls out and out fraud. While the legion of former IRS employees speaking out continues to grow, neither Congress nor the White House seem to be paying any attention. Likewise, the dominant controlled media steadfastly refuse to give any fair and unbiased reporting on the issue of how the income tax laws are being applied. Garrison hopes his book will have an impact on bringing this issue to the attention of the American people in a big way.
NWVs sought the expert advice of Constitutional attorney Lowell Becraft, Jr. out of Hunstville, Alabama, who is considered one of the best legal minds on the income tax issue in the country, to help clarify this issue:
"On the IRS' web site, they have a glossary of terms. Under "direct tax" it states "A tax that cannot be shifted to others, such as the federal income tax." This definition is very general and what is meant by this statement depends upon further analysis and consideration of other factors. Let me explain.
"In Farmers' Loan & Trust Co., 157 U.S. 429, 15 S.Ct. 673, aff. reh., 158 U.S. 601, 15 S.Ct. 912 (1895), the U.S. Supreme Court declared that the 1894 federal income tax was unconstitutional. In so holding, the Court determined that a federal tax on the income from real or personal property could only be taxed via an apportioned direct tax, which the 1894 tax was not. After the alleged ratification of the 16th Amendment, the Court was required to determine the precise meaning of the 16th Amendment in Brushaber v. Union Pacific RR Co., 240 U.S. 1, 36 S.Ct. 236 (1916). In Brushaber, the Court declared that the federal income tax as authorized by the 16th Amendment was an excise tax.
"The decision in Brushaber has engendered lots of controversy regarding its meaning. This decision held that the 16th Amendment did not confer any new taxing powers, and many interpret this part of Brushaber as indicating that the federal income tax did not remove any requirement that direct income taxes must be apportioned. Under this view, the 16th Amendment only allows income taxes which can fall within the excise tax category.
"However, it appears that the above statement posted on the IRS website is most likely a policy statement, indicating the wish of the IRS that the public continue to think that the federal income tax, in a constitutional sense, is a direct tax, and that the 16th Amendment eliminated any requirement that this tax be apportioned. This is in conformity with the clear posture that the IRS takes in litigation of issues of this nature. However, it cannot be stated that there is agreement in the courts regarding the constitutional nature of the federal income tax as authorized by the 16th Amendment.
"For example, a minority of federal courts hold that the income tax as authorized by the amendment is an excise tax; see Cook v. Tait, 286 F. 409, 412 (D.Md. 1923)(“an income tax is never a direct tax”); White Packing Co. v. Robertson, 89 F.2d 775, 779 (4th Cir. 1937)("The tax is, of course, an excise tax, as are all taxes on income..."); Apache Bend Apts. Ltd. v. United States, 702 F.Supp. 1285, 1295 (N.D.Tex. 1988)(the tax is an excise); and United States v. Gaumer, 972 F.2d 723, 725 (6th Cir. 1992)("Brushaber and the Congressional Record excerpt do indeed state that for constitutional purposes, the income tax is an excise tax"). The vast majority of state courts that have examined the issue of the constitutional nature of an income tax have declared such to be an excise tax; see Dooley v. City of Detroit, 370 Mich. 194, 121 N.W.2d 724, 727 (1963)(all income taxes are excises); and Miles v. Dept. of Treasury, 209 Ind. 172, 199 N.E. 372, 377 (1935)(tax is an excise, quoting Brushaber).
"The truth of the matter is that the courts of this nation are divided on the issue, some holding that an income tax is a direct property tax while others hold that such a tax is an excise. This has created great uncertainty regarding the income tax laws that has a direct impact upon all Americans."
Back in 1945, then Chairman of the New York Federal Reserve Bank, Beardsley Ruml, gave an enlightening speech to the American Bar Association titled: "Taxes for revenue are obsolete." This speech was published in the periodical, American Affairs in January of 1946 for those interested in the subject of taxation (see blue link above).
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Other tax experts like Joseph Banister, a former IRS Criminal Investigator, have been attempting to get the facts out to the American people for years regarding the income tax laws, their misapplication and what he calls out and out fraud.