The Sixteenth Amendment (Amendment XVI) to the United States Constitution: allows the Congress to levy an income tax without apportioning it among the states or basing it on Census results. This amendment exempted income taxes from the constitutional requirements regarding direct taxes, after income taxes on rents, dividends, and interest were ruled to be direct taxes in Pollock v. Farmers' Loan & Trust Co. (1895). It was ratified on February 3, 1913.

“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.”

Other Constitutional provisions regarding taxes
1-The Congress shall have power To lay and collect Taxes, Duties, Imposts and Excises but all Duties, Imposts and Excises shall be uniform throughout the United States. . .
2-Representatives and direct Taxes shall be apportioned among the several States which may be included within this Union, according to their respective Numbers.
3-No Capitation, or other direct, Tax shall be laid, unless in proportion to the Census or Enumeration herein before directed to be taken.
4-Article I, § 8, Clause 1 grants to the Congress the power to impose taxes, but requires excise taxes to be geographically uniform.

The Constitution states that all direct taxes are required to be apportioned among the states according to population.[5] This basically refers to a tax on property, such as a tax based on the value of land,[6] as well as a capitation.

Income taxes pre-Pollock
To raise revenue to fund the Civil War, the income tax was introduced in the United States with the Revenue Act of 1861.[7] It was a flat tax of 3% on annual income above $800. The following year, this was replaced with a graduated tax of 3-5% on income above $600 in the Revenue Act of 1862, which specified a termination of income taxation in 1866. The Socialist Labor Party advocated a graduated income tax in 1887.[8] The Populist Party "demanded a graduated income tax" in its 1892 platform.[9] The Democratic Party, led by William Jennings Bryan, advocated the income tax law passed in 1894,[10] and proposed an income tax in its 1908 platform.[11]

Prior to the U.S. Supreme Court's decision in Pollock v. Farmers' Loan & Trust Co., all income taxes had been considered to be indirect taxes, required to be imposed with geographical uniformity, rather than direct taxes, required to be apportioned among the states according to population.[12][13]

The Wilson-Gorman Tariff Act of 1894 attempted to impose a federal tax of 2% on incomes over $4,000. Derided as "un-Democratic, inquisitorial, and wrong in principle,"[14] it was challenged in federal court.

The Pollock case
In Pollock v. Farmers' Loan & Trust Co. the Supreme Court declared certain taxes on incomes — such as those from property under the 1894 Act — to be unconstitutionally unapportioned direct taxes. The Court reasoned that a tax on income from property should be treated as a tax on "property by reason of its ownership" and so should be required to be apportioned. The reasoning was that taxes on the rents from land, the dividends from stocks and so on burdened the property generating the income in the same way that a tax on "property by reason of its ownership" burdened that property.

After Pollock, while income taxes on wages (as indirect taxes) were still not required to be apportioned by population, taxes on interest, dividends and rent income were required to be apportioned by population. The Pollock ruling made the source of the income (e.g., property versus labor, etc.) relevant in determining whether the tax imposed on that income was deemed to be "direct" (and thus required to be apportioned among the states according to population) or, alternatively, "indirect" (and thus required only to be imposed with geographical uniformity).[15]

In his dissent to the Pollock decision, Justice John Marshall Harlan stated:

When, therefore, this court adjudges, as it does now adjudge, that Congress cannot impose a duty or tax upon personal property, or upon income arising either from rents of real estate or from personal property, including invested personal property, bonds, stocks, and investments of all kinds, except by apportioning the sum to be so raised among the States according to population, it practically decides that, without an amendment of the Constitution — two-thirds of both Houses of Congress and three-fourths of the States concurring — such property and incomes can never be made to contribute to the support of the national government.[16]
The Congress reflected the concern of many elements of society that the wealthiest Americans had consolidated too much economic power.[17]

On June 16, 1909, President William Howard Taft, in an address to Congress, proposed a 2% federal income tax on corporations by way of an excise tax and a constitutional amendment to allow the previously enacted income tax.

Upon the privilege of doing business as an artificial entity and of freedom from a general partnership liability enjoyed by those who own the stock.[18][19]
The text of an amendment to the Constitution was first proposed by Senator Norris Brown of Nebraska. He submitted two attempts, Senate Resolutions Nos. 25 and 39. The amendment proposal finally accepted was Senate Joint Resolution No. 40, introduced by Senator Nelson Aldrich of Rhode Island, the Senate majority leader and Finance Committee Chairman.[20]

On July 12, 1909, the resolution proposing the Sixteenth Amendment was passed by the Sixty-first Congress and submitted to the state legislatures. Support for the income tax was strongest in the western states and opposition was strongest in the northeastern states.[21] New York Governor Charles Evans Hughes, who a few years later became a Supreme Court justice, opposed the income tax amendment. He believed "from whatever source derived" implied that the federal government would then have the power to tax state and municipal bonds, thus excessively centralize government power, and "would make it impossible for the state to keep any property".[22]

The presidential election of 1912 was contested between three advocates of an income tax.[23] On February 25, 1913, Secretary of State Philander Knox proclaimed that the amendment had been ratified by the necessary three-fourths of the states, and thus had become part of the Constitution.[24] Shortly thereafter, the Revenue Act of 1913 was enacted.

According to the United States Government Printing Office, the following states ratified the amendment:[25]

1.Alabama (August 10, 1909)
2.Kentucky (February 8, 1910)
3.South Carolina (February 19, 1910)
4.Illinois (March 1, 1910)
5.Mississippi (March 7, 1910)
6.Oklahoma (March 10, 1910)
7.Maryland (April 8, 1910)
8.Georgia (August 3, 1910)
9.Texas (August 16, 1910)
10.Ohio (January 19, 1911)
11.Idaho (January 20, 1911)
12.Oregon (January 23, 1911)
13.Washington (January 26, 1911)
14.Montana (January 27, 1911)
15.Indiana (January 30, 1911)
16.California (January 31, 1911)
17.Nevada (January 31, 1911)
18.South Dakota (February 1, 1911)
19.Nebraska (February 9, 1911)
20.North Carolina (February 11, 1911)
21.Colorado (February 15, 1911)
22.North Dakota (February 17, 1911)
23.Michigan (February 23, 1911)
24.Iowa (February 24, 1911)
25.Kansas (March 2, 1911)
26.Missouri (March 16, 1911)
27.Maine (March 31, 1911)
28.Tennessee (April 7, 1911)
29.Arkansas (April 22, 1911), after having previously rejected the amendment
30.Wisconsin (May 16, 1911)
31.New York (July 12, 1911)
32.Arizona (April 3, 1912)
33.Minnesota (June 11, 1912)
34.Louisiana (June 28, 1912)
35.West Virginia (January 31, 1913)
36.Delaware (February 3, 1913)

Ratification (by the requisite 36 states) was completed on February 3, 1913 with the ratification by Delaware. The amendment was subsequently ratified by the following states, bringing the total number of ratifying states to forty-two of the forty-eight then existing:

37. New Mexico (February 3, 1913)
38. Wyoming (February 3, 1913)
39. New Jersey (February 4, 1913)
40. Vermont (February 19, 1913)
41. Massachusetts (March 4, 1913)
42. New Hampshire (March 7, 1913), after rejecting the amendment on March 2, 1911

The legislatures of the following states rejected the amendment without ever subsequently ratifying it:

Rhode Island

The legislatures of the following states never considered the proposed amendment:


Pollock nullified
The Sixteenth Amendment nullified the effect of Pollock.[26][27] That means the Congress may impose taxes on income from any source without having to apportion the total dollar amount of tax collected from each state according to each state's population in relation to the total national population.[28] In Abrams v. Commissioner, the United States Tax Court stated:

Since the ratification of the Sixteenth Amendment, it is immaterial with respect to income taxes, whether the tax is a direct or indirect tax. The whole purpose of the Sixteenth Amendment was to relieve all income taxes when imposed from [the requirement of] apportionment and from [the requirement of] a consideration of the source whence the income was derived.[29]

Case law
The federal courts' interpretations of the Sixteenth Amendment have changed considerably over time and there have been many disputes about the applicability of the amendment.

The Brushaber case
In Brushaber v. Union Pacific Railroad, 240 U.S. 1 (1916), the Supreme Court ruled that (1) the Sixteenth Amendment removes the Pollock requirement that certain income taxes (such as taxes on income "derived from real property" that were the subject of the Pollock decision), be apportioned among the states according to population;[30] (2) the federal income tax statute does not violate the Fifth Amendment's prohibition against the government taking property without due process of law; (3) the federal income tax statute does not violate the Article I, Section 8's uniformity clause (relating to the requirement that excises, also known as indirect taxes, be imposed with geographical uniformity).

The Kerbaugh-Empire Co. case
In Bowers v. Kerbaugh-Empire Co., 271 U.S. 170 (1926), the Supreme Court, through Justice Pierce Butler, stated:

It was not the purpose or the effect of that amendment to bring any new subject within the taxing power. Congress already had the 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. [cites omitted] 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 derived". [cites omitted] "Income" has been taken to mean the same thing as used in the Corporation Excise Tax of 1909 (36 Stat. 112), in the Sixteenth Amendment, and in the various revenue acts subsequently passed. [cites omitted] After full consideration, this court declared that income may be defined as gain derived from capital, from labor, or from both combined, including profit gained through sale or conversion of capital.

The Glenshaw Glass case
In Commissioner v. Glenshaw Glass Co., 348 U.S. 426 (1955), the Supreme Court laid out what has become the modern understanding of what constitutes 'gross income' to which the Sixteenth Amendment applies, declaring that income taxes could be levied on "accessions to wealth, clearly realized, and over which the taxpayers have complete dominion." Under this definition, any increase in wealth — whether through wages, benefits, bonuses, sale of stock or other property at a profit, bets won, lucky finds, awards of punitive damages in a lawsuit, qui tam actions — are all within the definition of income, unless the Congress makes a specific exemption, as it has for items such as life insurance proceeds received by reason of the death of the insured party,[31] gifts, bequests, devises and inheritances,[32] and certain scholarships.[33]

[edit] Income taxation of wages, etc.
The courts have ruled that the Sixteenth Amendment allows a direct tax on "wages, salaries, commissions, etc. without apportionment."[34]

The Penn Mutual case
Although the Sixteenth Amendment is often cited as the "source" of the Congressional power to tax incomes, at least one court has reiterated the point made in Brushaber and other cases that the Sixteenth Amendment itself did not grant the Congress the power to tax incomes (a power the Congress has had since 1789), but only removed the requirement, if any, that any income tax be apportioned among the states according to their respective populations. In the Penn Mutual Indemnity case, the United States Tax Court stated:

In dealing with the scope of the taxing power the question has sometimes been framed in terms of whether something can be taxed as income under the Sixteenth Amendment. This is an inaccurate formulation [ . . . ] and has led to much loose thinking on the subject. The source of the taxing power is not the Sixteenth Amendment; it is Article I, Section 8, of the Constitution.[35]
In that same Penn Mutual Indemnity case, on appeal, the United States Court of Appeals for the Third Circuit agreed, stating:

It did not take a constitutional amendment to entitle the United States to impose an income tax. Pollock v. Farmers' Loan & Trust Co., 157 U. S. 429, 158 U. S. 601 (1895), only held that a tax on the income derived from real or personal property was so close to a tax on that property that it could not be imposed without apportionment. The Sixteenth Amendment removed that barrier. Indeed, the requirement for apportionment is pretty strictly limited to taxes on real and personal property and capitation taxes.

It is not necessary to uphold the validity of the tax imposed by the United States that the tax itself bear an accurate label. Indeed, the tax upon the distillation of spirits, imposed very early by federal authority, now reads and has read in terms of a tax upon the spirits themselves, yet the validity of this imposition has been upheld for a very great many years.

It could well be argued that the tax involved here [an income tax] is an "excise tax" based upon the receipt of money by the taxpayer. It certainly is not a tax on property and it certainly is not a capitation tax; therefore, it need not be apportioned. We do not think it profitable, however, to make the label as precise as that required under the Food and Drug Act. Congress has the power to impose taxes generally, and if the particular imposition does not run afoul of any constitutional restrictions then the tax is lawful, call it what you will.[36]

The Murphy case
On December 22, 2006, a three-judge panel of the United States Court of Appeals for the District of Columbia Circuit vacated[37] its unanimous August 2006 opinion in Murphy v. Internal Revenue Service and United States.[38] In an unrelated matter, the court had also granted the government's motion to dismiss Murphy's suit against the "Internal Revenue Service." Under federal sovereign immunity, a taxpayer may sue the federal government, but not a government agency, officer, or employee (with few exceptions). The court stated:

Insofar as the Congress has waived sovereign immunity with respect to suits for tax refunds under 28 U.S.C. § 1346(a)(1), that provision specifically contemplates only actions against the 'United States.' Therefore, we hold the IRS, unlike the United States, may not be sued eo nomine in this case.
An exception to federal sovereign immunity is in the United States Tax Court, where a taxpayer may sue the Commissioner of Internal Revenue.[39] The original three judge panel then agreed to rehear the case itself. In its original decision, the Court had ruled that 26 U.S.C. § 104(a)(2) was unconstitutional under the Sixteenth Amendment to the extent that the statute purported to tax, as income, a recovery for a non-physical personal injury for mental distress and loss of reputation not received in lieu of taxable income such as lost wages or earnings.

Because the August 2006 opinion was vacated, the full court did not hear the case en banc.

On July 3, 2007, the Court (through the original three-judge panel) ruled (1) that the taxpayer's compensation was received on account of a non-physical injury or sickness; (2) that gross income under section 61 of the Internal Revenue Code[40] does include compensatory damages for non-physical injuries, even if the award is not an "accession to wealth," (3) that the income tax imposed on an award for non-physical injuries is an indirect tax, regardless of whether the recovery is restoration of "human capital," and therefore the tax does not violate the constitutional requirement of Article I, Section 9, Clause 4, that capitations or other direct taxes must be laid among the states only in proportion to the population; (4) that the income tax imposed on an award for non-physical injuries does not violate the constitutional requirement of Article I, Section 8, Clause 1, that all duties, imposts and excises be uniform throughout the United States; (5) that under the doctrine of sovereign immunity, the Internal Revenue Service may not be sued in its own name.[41]

The Court stated that "[a]lthough the 'Congress cannot make a thing income which is not so in fact,' [ . . . ] it can label a thing income and tax it, so long as it acts within its constitutional authority, which includes not only the Sixteenth Amendment but also Article I, Sections 8 and 9."[42] The court ruled that Ms. Murphy was not entitled to the tax refund she claimed, and that the personal injury award she received was "within the reach of the congressional power to tax under Article I, Section 8 of the Constitution" -- even if the award was "not income within the meaning of the Sixteenth Amendment".[43] See also the Penn Mutual case cited above.

On April 21, 2008, the Supreme Court declined to review the decision of the Court of Appeals.[44]

Sixteenth Amendment ratification
Many tax protesters contend that the Sixteenth Amendment to the United States Constitution was never properly ratified (see, e.g., Devvy Kidd).[5][6] A Sixteenth Amendment argument was mentioned in passing in Ex parte Tammen, a federal court case in May of 1977, some sixty-four years after the ratification.[7] In Tammen, the United States District Court for the Northern District of Texas noted testimony in the case to the effect that taxpayer Bob Tammen had become involved with a group called "United Tax Action Patriots," a group that took the position "that the Sixteenth Amendment was improperly passed and therefore invalid...."[8] The specific issue of the validity of the ratification of the Amendment was neither presented to nor decided by the court in the Tammen case.

After the Tammen case, two lines of court cases eventually developed. The first group of cases deals with the claims of William J. Benson, co-author of the book The Law That Never Was (1985). The second line of cases involves the contention that Ohio was not a state in 1913 at the time of the ratification.

Benson contentions
The William J. Benson contention is essentially that the legislatures of various states passed ratifying resolutions in which the quoted text of the Amendment differed from the text proposed by Congress in terms of capitalization, spelling of words, or punctuation marks (e.g. semi-colons instead of commas), and that these differences made the ratification invalid. Benson makes other assertions including claims that one or more states rejected the Amendment and that the state or states were falsely reported as having ratified the Amendment. As explained below, the Benson arguments have been rejected in every court case where they have been raised, and were explicitly ruled to be fraudulent in 2007.

The earliest reported court case where Benson's arguments were actually raised appears to be United States v. House,[9]. Benson testified in the House case to no avail. The Benson contention was comprehensively addressed by the Seventh Circuit Court of Appeals in United States v. Thomas:[10]

Thomas is a tax protester, and one of his arguments is that he did not need to file tax returns because the sixteenth amendment is not part of the constitution. It was not properly ratified, Thomas insists, repeating the argument of W. Benson & M. Beckman, The Law That Never Was (1985). Benson and Beckman review the documents concerning the states' ratification of the sixteenth amendment and conclude that only four states ratified the sixteenth amendment; they insist that the official promulgation of that amendment by Secretary of State Knox in 1913 is therefore void.
Benson and Beckman did not discover anything; they rediscovered something that Secretary Knox considered in 1913. Thirty-eight states ratified the sixteenth amendment, and thirty-seven sent formal instruments of ratification to the Secretary of State. (Minnesota notified the Secretary orally, and additional states ratified later; we consider only those Secretary Knox considered.[11]) Only four instruments repeat the language of the sixteenth amendment exactly as Congress approved it. The others contain errors of diction, capitalization, punctuation, and spelling. The text Congress transmitted to the states was: "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." Many of the instruments neglected to capitalize "States," and some capitalized other words instead. The instrument from Illinois had "remuneration" in place of "enumeration"; the instrument from Missouri substituted "levy" for "lay"; the instrument from Washington had "income" not "incomes"; others made similar blunders.

Thomas insists that because the states did not approve exactly the same text, the amendment did not go into effect. Secretary Knox considered this argument. The Solicitor of the Department of State drew up a list of the errors in the instruments and — taking into account both the triviality of the deviations and the treatment of earlier amendments that had experienced more substantial problems — advised the Secretary that he was authorized to declare the amendment adopted. The Secretary did so.

Although Thomas urges us to take the view of several state courts that only agreement on the literal text may make a legal document effective, the Supreme Court follows the "enrolled bill rule." If a legislative document is authenticated in regular form by the appropriate officials, the court treats that document as properly adopted. Field v. Clark, 143 U.S. 649, 36 L.Ed. 294, 12 S.Ct. 495 (1892). The principle is equally applicable to constitutional amendments. See Leser v. Garnett, 258 U.S. 130, 66 L.Ed. 505, 42 S.Ct. 217 (1922), which treats as conclusive the declaration of the Secretary of State that the nineteenth amendment had been adopted. In United States v. Foster, 789 F.2d. 457, 462-463, n.6 (7th Cir. 1986), we relied on Leser, as well as the inconsequential nature of the objections in the face of the 73-year acceptance of the effectiveness of the sixteenth amendment, to reject a claim similar to Thomas's. See also Coleman v. Miller, 307 U.S. 433, 83 L. Ed. 1385, 59 S. Ct. 972 (1939) (questions about ratification of amendments may be nonjusticiable). Secretary Knox declared that enough states had ratified the sixteenth amendment. The Secretary's decision is not transparently defective. We need not decide when, if ever, such a decision may be reviewed in order to know that Secretary Knox's decision is now beyond review.

United States v. Thomas
Benson was unsuccessful with his Sixteenth Amendment argument when he had his own legal problems. He was prosecuted for tax evasion and willful failure to file tax returns. The court rejected his Sixteenth Amendment "non-ratification" argument in United States v. Benson.[12] William J. Benson was convicted of tax evasion and willful failure to file tax returns in connection with over $100,000 of unreported income, and his conviction was upheld on appeal. He was sentenced to four years in prison and five years of probation.[13]

On December 17, 2007, the United States District Court for the Northern District of Illinois ruled that Benson's non-ratification argument constituted a "fraud perpetrated by Benson" that had "caused needless confusion and a waste of the customers' and the IRS' time and resources."[14] The court stated: "Benson has failed to point to evidence that would create a genuinely disputed fact regarding whether the Sixteenth Amendment was properly ratified or whether United States Citizens are legally obligated to pay federal taxes."[15] The court ruled that "Benson's position has no merit and he has used his fraudulent tax advice to deceive other citizens and profit from it" in violation of 26 U.S.C. § 6700.[16] The court granted an injunction under 26 U.S.C. § 7408 prohibiting Benson from promoting the theories in Benson's "Reliance Defense Package" (containing the non-ratification argument), which the court referred to as "false and fraudulent advice concerning the payment of federal taxes."[17][18]

Benson appealed that decision, and the United States Court of Appeals for the Seventh Circuit also ruled against Benson. The Court of Appeals stated:

Benson knew or had reason to know that his statements were false or fraudulent. 26 U.S.C. [section] 6700(a)(2)(A). Benson's claim to have discovered that the Sixteenth Amendment was not ratified has been rejected by this Court in Benson's own criminal appeal.... Benson knows that his claim that he can rely on his book to prevent federal prosecution is equally false because his attempt to rely on his book in his own criminal case was ineffective.[19]
The Court of Appeals also ruled that the government could obtain a ruling ordering Benson to turn his customer list over to the government.[20] Benson petitioned the United States Supreme Court, and the Supreme Court rejected his petition on November 30, 2009.[21]

Similar Sixteenth Amendment arguments have been uniformly rejected by other United States Circuit courts in other cases including Sisk v. Commissioner;[22] United States v. Sitka;[23] and United States v. Stahl.[24] The non-ratification argument has been specifically deemed legally frivolous in Brown v. Commissioner;[25] Lysiak v. Commissioner;[26] and Miller v. United States.[27]

Ohio's statehood
Another argument made by some tax protesters is that because the United States Congress did not pass an official proclamation (Pub. L. 204) recognizing the date of Ohio's 1803 admission to statehood until 1953 (see Ohio and the Constitution), Ohio was not a state until 1953 and therefore the Sixteenth Amendment was not properly ratified.[6] The earliest reported court case where this argument was raised appears to be Ivey v. United States,[28] some sixty-three years after the ratification and 173 years after Ohio's admission as a state. This argument was rejected in the Ivey case, and has been uniformly rejected by the courts. See also McMullen v. United States,[29] McCoy v. Alexander,[30] Lorre v. Alexander,[31] McKenney v. Blumenthal[32] and Knoblauch v. Commissioner.[33]

In Baker v. Commissioner, the court stated:

Petitioner's theory [that Ohio was not a state until 1953 and that the Sixteenth Amendment was not properly ratified] is based on the enactment of Pub. L. 204, ch. 337, 67 Stat. 407 (1953) relating to Ohio's Admission into the Union. As the legislative history of this Act makes clear, its purpose was to settle a burning debate as to the precise date upon which Ohio became one of the United States. S. Rept. No. 720 to accompany H.J. Res. 121 (Pub. L. 204), 82d Cong. 2d Sess. (1953). We have been cited to no authorities which indicate that Ohio became a state later than March 1, 1803, irrespective of Pub. L. 204.[34]
The argument that the Sixteenth Amendment was not ratified and variations of this argument have been officially identified as legally frivolous federal tax return positions for purposes of the $5,000 frivolous tax return penalty imposed under Internal Revenue Code section 6702(a).[35]

Sixteenth Amendment effectiveness

Repeal clause

Some protesters have argued that because the Sixteenth Amendment does not contain the words "repeal" or "repealed", the Amendment is ineffective to change the law.[36] According to legal commentator Daniel B. Evans:

There is nothing in the Constitution that says that an amendment must specifically repeal another provision of the Constitution. In fact, there are 27 amendments to the Constitution, and only one of them specifically repeals an earlier provision. (The 21st Amendment, which ended Prohibition, specifically repeals the 18th Amendment, which started Prohibition.)
If this argument were correct, then the losing presidential candidate would be the vice-president of the United States, because the 12th Amendment did not expressly repeal Article II, Section 1, clause 3 of the Constitution. And Senators would still be selected by state legislatures, because the 17th Amendment did not expressly repeal any part of Article I, section 3, of the Constitution.[37]

Daniel B. Evans
In Buchbinder v. Commissioner, the taxpayers cited the case of Eisner v. Macomber and argued that "the Sixteenth Amendment must be interpreted so as not to 'repeal or modify' the original Articles of the Constitution."[38] The United States Tax Court rejected that and all other arguments by Bruce and Elaine Buchbinder (the taxpayer-petitioners), stating: "We will not dress petitioners' frivolous tax-protester ramblings with a cloak of respectability.... We find that petitioners in this case have pursued a frivolous cause of action. We find that they are liable for a penalty in the amount of $250.00 under the provisions of [Internal Revenue Code] section 6673."[39] The actual statement by the United States Supreme Court in Eisner v. Macomber is that the Sixteenth Amendment "shall not be extended by loose construction, so as to repeal or modify, except as applied to income, those provisions of the Constitution that require an apportionment according to population for direct taxes upon property, real and personal ... In order, therefore, that the clauses cited from Article I of the Constitution may have proper force and effect, save only as modified by the Amendment ... it becomes essential to distinguish between what is and what is not 'income'...."[40]

Stanton v. Baltic Mining Co.
In Parker v. Commissioner, tax protester Alton M. Parker, Sr.,[41] challenged the levying of tax upon individual income, based on language in the U.S. Supreme Court decision in Stanton v. Baltic Mining Co.,[42] to the effect that the Sixteenth Amendment "conferred no new power of taxation, but simply prohibited the previous complete and plenary power of income taxation possessed by Congress from the beginning from being taken out of the category of indirect taxation to which it inherently belonged [. . . .]"[43] The United States Court of Appeals for the Fifth Circuit rejected Parker's argument, and stated that Parker's proposition is "only partially correct, and in its critical aspect, is incorrect.[44] The Court of Appeals re-affirmed that the Congress has the power to impose the income tax, and stated that the Sixteenth Amendment "merely eliminates the requirement that the direct income tax be apportioned among the states."[45] The court ruled that Parker had raised a "frivolous" appeal.[46]

Tax protesters argue that in light of this language, the income tax is unconstitutional in that it is a direct tax and that the tax should be apportioned (divided equally amongst the population of the various states).[6][47]

The above quoted language in Stanton v. Baltic Mining Co. is not a holding of law in the case. (Compare Ratio decidendi, Precedent, Stare decisis and Obiter dictum for a fuller explanation.)

The quoted language regarding the "complete and plenary power of income taxation possessed by Congress from the beginning" is a reference to the power granted to Congress by the original text of Article I of the U.S. Constitution. The reference to "being taken out of the category of indirect taxation to which it [the income tax] belonged" is a reference to the effect of the 1895 Court decision in Pollock v. Farmers' Loan & Trust Co.,[48] where taxes on income from property (such as interest income and dividend income) — which, like taxes on income from labor, had always been considered indirect taxes (and therefore not subject to the apportionment rule) — were, beginning in 1895, treated as direct taxes. The Sixteenth Amendment overruled the effect of Pollock,[49] making the source of the income irrelevant with respect to the apportionment rule, and thereby placing taxes on income from property back into the category of indirect taxes such as income from labor (the Sixteenth Amendment expressly stating that Congress has power to impose income taxes regardless of the source of the income, without apportionment among the states, and without regard to any census or enumeration).

The Court noted that the case "was commenced by the appellant [John R. Stanton] as a stockholder of the Baltic Mining Company, the appellee, to enjoin [i.e., prevent] the voluntary payment by the corporation and its officers of the tax assessed against it under the income tax section of the tariff act of October 3, 1913." On a direct appeal from the trial court, the U.S. Supreme Court affirmed the lower court's decision, which had dismissed Stanton's motion (i.e., had rejected Stanton's request) for a court order to prevent Baltic Mining Company from paying the income tax.

Stanton argued that the tax law was unconstitutional and void under the Fifth Amendment to the United States Constitution in that the law denied "to mining companies and their stockholders equal protection of the laws and deprive[d] them of their property without due process of law." The Court rejected that argument. Stanton also argued that the Sixteenth Amendment "authorizes only an exceptional direct income tax without apportionment, to which the tax in question does not conform" and that therefore the income tax was "not within the authority of that Amendment." The Court also rejected this argument. Thus, the U.S. Supreme Court, in upholding the constitutionality of the income tax under the 1913 Act, contradicts those tax protesters arguments that the income tax is unconstitutional under either the Fifth Amendment or the Sixteenth Amendment.


Tax lawyer Alan O. Dixler has written:

Each year some misguided souls refuse to pay their federal income tax liability on the theory that the 16th Amendment was never properly ratified, or on the theory that the 16th Amendment lacks an enabling clause. Not surprisingly, neither the IRS nor the courts have exhibited much patience for that sort of thing. If, strictly for the purposes of this discussion, the 16th Amendment could be disregarded, the taxpayers making those frivolous claims would still be subject to the income tax. In the first place, income from personal services is taxable without apportionment in the absence of the 16th Amendment. Pollock specifically endorsed Springer's holding that such income could be taxed without apportionment. The second Pollock decision invalidated the entire 1894 income tax act, including its tax on personal services income, due to inseverability; but, unlike the 1894 act, the current code contains a severability provision. Also, given the teaching of Graves [v. New York ex rel. O'Keefe, 306 U.S. 466 (1939)] -- that the theory that taxing income from a particular source is, in effect, taxing the source itself is untenable -- the holding in Pollock that taxing income from property is the same thing as taxing the property as such cannot be viewed as good law.[50]
In Abrams v. Commissioner, the United States Tax Court stated: "Since the ratification of the Sixteenth Amendment, it is immaterial with respect to income taxes, whether the tax is a direct or indirect tax. The whole purpose of the Sixteenth Amendment was to relieve all income taxes when imposed from [the requirement of] apportionment and from [the requirement of] a consideration of the source whence the income was derived."[51]

or that the amendment provides no power to tax income. Proper ratification of the Sixteenth Amendment is disputed by tax protesters who argue that the quoted text of the Amendment differed from the text proposed by Congress, or that Ohio was not a State during ratification.[2] Sixteenth Amendment ratification arguments have been rejected in every court case where they have been raised and have been identified as legally frivolous.

Some protesters have argued that because the Sixteenth Amendment does not contain the words "repeal" or "repealed", the Amendment is ineffective to change the law. Others argue that due to language in Stanton v. Baltic Mining Co., the income tax is an unconstitutional direct tax that should be apportioned (divided equally amongst the population of the various states). Several tax protesters assert that the Congress has no constitutional power to tax labor or income from labor,[3] citing a variety of court cases. These arguments include claims that the word "income" as used in the Sixteenth Amendment cannot be interpreted as applying to wages; that wages are not income because labor is exchanged for them; that taxing wages violates individuals' right to property,[4] and several others. Another argument raised is that because the federal income tax is progressive, the discriminations and inequalities created by the tax should render the tax unconstitutional under the 14th Amendment, which guarantees equal protection under the law. Such arguments have been ruled without merit under contemporary jurisprudence; evading taxes is a serious criminal offense.

Tax protester Sixteenth Amendment arguments: are assertions that the imposition of the U.S. federal income tax is illegal because the Sixteenth Amendment to the United States Constitution was never properly ratified,[1]



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