Saturday, October 15, 2011

THE FEDERAL INCOME TAX: 
UNCONSTITUTIONAL AS APPLIED




THE FEDERAL INCOME TAX: 
UNCONSTITUTIONAL AS APPLIED

Cynthia Hodges, JD, LLM, MA

A tax is a charge, a pecuniary burden, for the support of government. 1 The federal income tax applies to certain income and to certain entities. It is not unlimited in its scope and application. The Internal Revenue Code (“I.R.C.” or “Code”) imposes a tax on the “taxable income” of “taxpayers.” 2


Income “is the gain derived from capital, from labor, or from both combined.” 3 However,  Congress is not authorized to tax as "income" every sort of revenue a taxpayer may receive. 4 A tax on gross revenue, such as the federal income tax, taxes both capital and income, and is, therefore, not an income tax. 5 Insofar as it taxes capital, it is a direct tax that must be apportioned, the Sixteenth Amendment notwithstanding. 6 “Taxable income” is all gain from activities that are within the authority of the federal government to tax. The federal income tax “cannot be applied to any income which Congress has no power to tax.” 7 The right to work is an example of an activity that is outside of federal taxation authority because it is a fundamental right. 


The federal income tax is also limited as to whom it applies. It only applies to “taxpayers,” and not to “nontaxpayers.” 9 26 U.S.C. § 1 imposes a tax on the taxable income of certain individuals, such as partners, certain large partnerships, foreign corporations, withholders of taxes on nonresident aliens and foreign corporations and those employers required by Chapter 24 of Subtitle C to withhold taxes on employees.

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Direct Versus Indirect Taxes
The federal government can lay two types of taxes: direct taxes and indirect taxes. 10 “Direct taxes bear immediately upon persons, upon the possession and enjoyments of rights.” 11 A direct tax is laid on a person or on property, including income from real estate and personal property. 12 “[D]irect taxes have been limited to taxes on land and appurtenances, and taxes on polls, or capitation taxes.” 13


Direct taxes are subject to the Constitutional restraint of apportionment, the Sixteenth Amendment notwithstanding. 14 The U.S. Constitution art. I, § 2, cl. 3 mandates that “...direct Taxes shall be apportioned among the several States which may be included within this Union, according to their respective Numbers...” In addition, Art. I, § 9, cl. 4. “[n]o Capitation, or other direct, Tax shall be laid, unless in Proportion to the Census or Enumeration herein before directed to be taken...”


In contrast, “indirect taxes are levied upon the happening of an event or an exchange."15 It is voluntary upon and avoidable by the citizen, i.e. the tax can be avoided if one chooses not to engage in the taxed activity. 16 “[T]he requirement to pay such taxes [excises (indirect tax)] involves the exercise of privileges, and the element of absolute and unavoidable demand is lacking.” 17


Indirect taxes, including excise taxes, are required by the Constitution to be uniformly laid. 18 The Constitution Art. I, § 8, cl. 1 declares that “[t]he Congress shall have Power To lay and collect Taxes...and Excises... but all...Excises shall be uniform throughout the United States...” “Uniformity of taxation” is defined by Ballentine’s Law Dictionary as “[a] general principle that taxes should be levied in accord with some reasonable system of apportionment...it means that such taxes may only be levied with geographical uniformity...requiring the same plan and the same method to be operative throughout the United States.” 19


The federal income tax can be characterized as an indirect tax or an excise. An excise tax (or privilege tax) is a tax “laid upon the manufacture, sale or consumption of commodities within the country, upon licenses to pursue certain occupations, and upon corporate privileges.” 21 The first income tax, which was enacted in 1861, imposed a tax on all income derived from property. It was generally considered to be an indirect excise tax on the use of the property for gain. The tax was referred to in Brushaber v. Union P. R. Co., 240 U.S. 1 (1916) as an excise tax. 22
...[T]he conclusion reached in the Pollock Case did not in any degree involve holding that income taxes generically and necessarily came within the class of direct taxes on property, but on the contrary[,] recognized the fact that taxation on income was in its nature an excise... 23
Taxable Income
The Internal Revenue Code, 26 U.S.C. § 1, imposes a tax on “taxable income.” 24 “[I]ncome’ may be defined as the gain derived from capital, from labor, or from both combined...” 25 Eisner v. Macomber, 252 U.S. 189, 40 S.Ct. 189 (1920) attempted to refine this definition by adding “provided it be understood to include profit gained through a sale conversion of capital assets...” 26 The definition of income “imports... something entirely distinct from principal or capital either as a subject of taxation or as a measure of the tax; conveying rather the idea of gain or increase arising from corporate activities.” 27



The Court has rejected “the broad contention submitted in behalf of the Government that all receipts -- everything that comes in -- are income within the proper definition of the term ‘gross income,’ and that the entire proceeds of a conversion of capital assets, in whatever form and under whatever circumstances accomplished, should be treated as gross income.” 28 Income is “not gain accruing to capital, not growth or increment of value in the investment; but a gain, a profit, something of exchangeable value... severed from capital however invested or employed and coming in, being ‘derived’, that is received or drawn by the recipient for his separate use, benefit and disposal - that is the income derived from property. Nothing else answers the description...” 29



“...[A] mere conversion of capital assets [is] not to be treated as income.” 30 In Eisner v. Macomber, 252 U.S. 189, 40 S.Ct. 189 (1920), Defendant United States treated Plaintiff’s stock dividends as income. The Plaintiff paid under protest, and then sued the Defendant to recover the tax contending that, in imposing such a tax, the Revenue Act of 1916, ch. 463, 39 Stat. 756, et seq., violated U.S. Constitution Article I, § 9, Clause 4, and Article I, § 2, Clause 3, which require direct taxes to be apportioned according to population. The Court held that by treating the dividends as income, the Defendant had failed to correctly appraise the term “income” as used in the Sixteenth Amendment, because the mere issuance of a stock dividend made the Plaintiff no richer than before, and was thus, not gain or profit. 31 The Court explained that “...the stock dividend in question cannot be reached by the Income Tax Act, and could not, even though Congress expressly declared it to be taxable as income, unless it is in fact income.” 32 The Court held that

...[N]either 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 [successor of the 1913 income tax], in so far as it imposes a tax upon the stockholder because of such dividend, contravenes the provisions of Article I, § cl. 3, and Article I, § 9, cl. 4, of the Constitution, and to this extent is invalid notwithstanding the Sixteenth Amendment. 33

In order to be income, there must first be a gain or profit. Wages and salaries are not “income” within the meaning of the Constitution. A man's labor is his property, or the capital. 34 Capital is not income, and is, therefore, not taxable as income. 35 The purchase price for the labor, which requires time and energy, is his wage.  The wage-earner trades a wage in return for labor. This is a quid pro quo exchange and not a “profit.”

The next issue is to determine what is “taxable.” The common usage for the term "taxable" is “able to be taxed,” i.e., within the authority of a government to tax. Any law enacted by Congress must be based on a power enumerated in the Constitution.” 36 Article I, § 8 grants the federal government the authority to “lay and collect Taxes, Duties, Imposts and Excises.” McCulloch established three principles: 1) “the power to tax is co-extensive with the jurisdiction of the taxing authority,” 2) “all things outside of that jurisdiction are exempt from taxation by the taxing authority,” and 3) “the jurisdiction of a sovereignty extends to all things that exist by its authority or are introduced with its permission.” Because of the Tenth Amendment, which states that “’[t]he powers not delegated to the United States are reserved to the States respectively, or, to the people,’ [t]he government of the United States... can claim no powers which are not granted to it by the Constitution...” 37 The Tenth Amendment states that “[t]he powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.”  “It is the high duty and function of [the Court]... to decline to recognize or enforce seeming laws of Congress, dealing with subjects not entrusted to Congress but left or committed by the supreme law of the land to the control of the States.” 38

In Bailey v. Drexel Furniture Company, 259 U.S. 20, 42 S.Ct. 449 (1922), the Court struck down a federal tax on the employment of children, holding that the federal government could not tax those activities that were under the sole and exclusive realm of the States. 39 Hill v. Wallace, 259 U.S. 44, 42 S.Ct. 453 (1922) struck down a federal tax on grain contracts, reiterating the principle that State sovereignty cannot be invaded through a so-called exercise of taxing authority.

Another example of an activity outside federal jurisdiction is the practice of law, which is exclusively within the jurisdiction of the State. The regulation of the practice of law is “one of the great number of subjects of public interest, jurisdiction of which the States have never parted with, and which are reserved to them by the Tenth Amendment.” 40 Because the practice of law is within that “sphere of action where the authority of the national government may not intrude,” 41 it is outside the taxing authority of the federal government and not subject to the federal income tax. 42

Fundamental rights are also outside of the federal government’s authority to tax, as they are not granted by the federal government, but by the “Creator.” 43 They are protected and secured by the Constitution. 44 One of these rights is the right to pursue happiness, which means “the right to pursue any lawful business or vocation." 45

The right to follow any of the common occupations of life is an inalienable right; it was formulated as such under the phrase “pursuit of happiness” in the Declaration of Independence, which commenced with the fundamental proposition that “all men are created equal, that they are endowed by their Creator with certain inalienable rights; that among these are life, liberty, and the pursuit of happiness.” This right is a large ingredient in the civil liberty of the citizen. 46

“[T]he right to work for a living in the common occupations of the community is of the very essence of the personal freedom and opportunity that it was the purpose of the [14th] Amendment to secure.” 47 Personal liberty rights and Fifth Amendment property rights include the right to make contracts for the purchase of the labor of others and the right to make contracts for the sale of one's own labor. 48 “The right to ... sell labor is part of the liberty protected by [the 14th] amendment.” 49 “The liberty mentioned in [the 14th] amendment means ... to live and work where he will; to earn his livelihood by any lawful calling; to pursue any livelihood or avocation.” 50 “Included in the right of personal liberty…is the right to make contracts for the acquisition of property. Chief among such contracts is that of personal employment, by which labor and other services are exchanged for money and other forms of property.” 51

The property that every man has is his personal labor, as it is the original foundation of all other property so it is the most sacred and inviolable…to hinder his employing [it]…in what manner he thinks proper... is a plain violation of the most sacred property. It is a manifest encroachment upon the just liberty both of the workman and of those who might be disposed to employ him... 52

 In Butchers' Union Co. v. Crescent City Co., 111 U.S. 746, 4 S.Ct. 652 (1884) and Yick Wo v. Hopkins, 118 U.S. 356 (1886), the Court recognized the right to work as a fundamental right and part of the freedom to pursue happiness. In Meyer v. Nebraska, 262 U.S. 390, 43 S.Ct. 625 (1923), the Court held that the term “liberty” “denotes ... the right of the individual to contract [and] to engage in any of the common occupations of life.” 53 The right to work is a basic and fundamental right that the federal government may not impinge.

If revenue stems from the exercise of a fundamental right, then it is exempt from federal excise taxation because it is outside the taxing authority of the federal government. 54 “The individual... cannot be taxed for the mere privilege of existing... [T]he individuals' right to live and own property are natural rights for the enjoyment of which an excise cannot be imposed.” 55 These natural rights cannot be taxed because “the power to tax the exercise of a privilege is the power to control or suppress its enjoyment.” 56

The Court has held that fundamental rights cannot be abridged by taxation. For example, the Court struck down a Virginia poll tax in Harper v. Virginia Bd. Of Elections, 383 U.S. 663, 86 S.Ct. 1079 (1966) for being a tax on the right to vote. 57 In Grosjean v. American Press Co., 297 U.S. 233 (1936), the Court struck down an excise tax on publishers of newspapers and magazines as an abridgment of a fundamental right, namely the freedom of speech. The Court stated that 

[F]reedom of speech and of the press are rights of...fundamental character, safeguarded by the due process of law clause of the Fourteenth Amendment against abridgment by state legislation,... The word "liberty" contained in that amendment embraces... the right to be free in the enjoyment of all his faculties as well. 58

Murdock v. Pennsylvania, 319 U.S. 105, 63 S.Ct. 870 (1943) struck down a license fee for distributing religious material door to door because it abridged the freedom of speech, press and religion. 59 The Court did so because

The First Amendment, which the Fourteenth makes applicable to the states, declares that “Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press,,,” It could hardly be denied that a tax laid specifically on the exercise of those freedoms would be unconstitutional. 60

Effect of the Sixteenth Amendment on the Federal Taxation Authority

The Sixteenth Amendment 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 impetus for the Sixteenth Amendment was Pollock v. Farmers' Loan and T. Co., 157 U.S. 429 (1894), which challenged the Income Tax Act of 1894. This act imposed a tax on income from real estate and investments. The Court held it to be a direct tax, which was invalid because it was not apportioned. In response, the Sixteenth Amendment was adopted in 1913 to overrule Pollock. However, the Supreme Court seems to have overruled Pollock in so far as it held that state bond interest is not immune from a nondiscriminatory federal tax. 61 Because the federal income is more properly characterized as an indirect tax, the Sixteenth Amendment has little, if any, effect on it. This is because the Constitutional requirements of apportionment and enumeration only affect direct taxes, not indirect. 62 Even if the federal income tax is found to be a direct tax, the Sixteenth Amendment still does not authorize a tax on a salary. 63

The purpose of the Sixteenth Amendment was to eliminate all occasion for an apportionment of direct taxes because of the source from which the income came, -- a change in no wise affecting the power to tax but only the mode of exercising it. 64 “[T]he Sixteenth Amendment did not confer any additional authority to tax on the federal government, and ... its sole purpose and effect was to preclude the consideration of the source of income in order to reclassify the tax as a direct tax, requiring apportionment.” 65 “[T]he conclusion that the 16th Amendment provides for a hitherto unknown power of taxation” is “erroneous.” 66 Neither did the Sixteenth Amendment “extend the taxing power to new subjects, [it] merely removed the necessity which otherwise might exist for an apportionment among the States of taxes laid on income.” 67 In holding that the Sixteenth Amendment did not grant new powers to Congress, the Brushaber Court stated:

It is clear on the face of this text [16th Amendment] that it does not purport to confer power to levy income taxes in a generic sense — an authority already possessed and never questioned — or to limit and distinguish between one kind of income taxes and another, but that the whole purpose of the [16th] Amendment was to relieve all income taxes when imposed from apportionment from a consideration of the source whence the income was derived. 68

The Court did not recognize federal authority to lay a direct tax not requiring apportionment.

We are of opinion... that the confusion ... arises from the conclusion that the Sixteenth Amendment provides for a hitherto unknown power of taxation, that is, a power to levy an income tax which although direct should not be subject to the regulation of apportionment applicable to all other direct taxes. And the far-reaching effect of this erroneous assumption will be made clear by generalizing the many contentions advanced in argument to support it, as follows: (a) The Amendment authorizes only a particular character of direct tax without apportionment, and therefore if a tax is levied under its assumed authority which does not partake of the characteristics exacted by the Amendment, it is outside of the Amendment and is void as a direct tax in the general constitutional sense because not apportioned. (b) As the Amendment authorizes a tax only upon incomes “from whatever source derived,” the exclusion from taxation of some income of designated persons and classes is not authorized and hence the constitutionality of the law must be tested by the general provisions of the Constitution as to taxation, and thus again the tax is void for want of apportionment. (c) As the right to tax “incomes from whatever source derived” for which the Amendment provides must be considered as exacting intrinsic uniformity, therefore no tax comes under the authority of the Amendment not conforming to such standard, and hence all the provisions of the assailed statute must once more be tested solely under the general and preexisting provisions of the Constitution, causing the statute again to be void in the absence of apportionment... 69

Therefore, an unapportioned direct tax such as the income tax still cannot be legal. 70
 Several cases reinforce the Brushaber opinion that the Sixteenth Amendment did not grant Congress any additional power of taxation. The Court held in Stanton v. Baltic Mining Co., 240 U.S. 103 (1916), that

The provisions of 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 and being placed in the category of direct taxation subject to apportionment by a consideration of the sources from which the income was derived... 71

In Peck & Co. v. Lowe, 247 U.S. 165 (1918), a federal income tax on the net revenue of a corporation involved in international shipping was upheld. The Court opined that 

The Sixteenth Amendment... has no real bearing and may be put out of view... [I]t does not extend the taxing power to new or excepted subjects, but merely removes all occasion, which otherwise might exist, for an apportionment among the States of taxes laid on income, whether it be derived from one source or another. 72

As should be clear by now, “[t]he sixteenth [amendment] does not justify the taxation of persons or things previously immune... it does not extend taxing power to new or excepted citizens… it is intended only to remove all occasions from any apportionment of income taxes among the states...” 73

In Eisner v. Macomber, 252 U.S. 189 (1920), the Court held that a stock dividend was not to be included in the government's definition of income subject to the tax. The Court explained that the stock dividend was a conversion of capital from one form to another, and, therefore, was not income, regardless of whether the Government's definition included such conversions in its definition. “[N]either 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.” 74 The Treasury Department cannot, by interpretative regulations, make income of that which is not income within the meaning of the revenue acts of Congress, nor can Congress, without apportionment, tax as income that which is not income within the meaning of the Sixteenth Amendment. 75

The effect of the Sixteenth Amendment was not to extend the federal taxing power to new people or subjects, but rather to remove the necessity for an apportionment among the States of taxes laid on income. 76 The Sixteenth Amendment does not authorize a tax on a salary. 77 There is no federal authority to lay an unapportioned direct tax, which is how the federal income tax is applied. Such a tax is not legal. 78

The Federal Income Tax Code

The Federal Income Tax is laid upon “taxable income” of certain parties under 26 U.S.C. § 1. Therefore,
only “taxable income” is subject to the federal income tax, which was discussed above.

In addition, the Federal Income Tax does not apply to everyone. “[[T]he revenue laws] relate to 
taxpayers, and not to nontaxpayers. The latter are without their scope. No procedure is prescribed for
nontaxpayers, and no attempt is made to annul any of their rights and remedies in due course of law.”79

Subtitle A of the Tax Code designates partners as liable for the taxes on income of a partnership. 80 Foreign corporations are also liable for payment of the “Branch profits tax” imposed by 26 U.S.C. § 884. 26 U.S.C. § 1461 states that “[e]very person required to deduct and withhold any tax under this chapter [Chapter 3] is hereby made liable for such tax...”81 Chapter 3 deals with “Withholding Tax on Nonresident Aliens and Foreign Corporations.” Therefore, “the liable party in this instance is anyone withholding tax on nonresident aliens and foreign corporations.” Subtitle C identifies the only other party that is liable for the income tax. 26 U.S.C. § 3403 states: “The employer shall be liable for the payment of the tax required to be deducted and withheld under this chapter [Chapter 24 – Collection of Income Tax at Source on Wages]...” 82 For the purposes of Chapter 24, “the term ‘employer’ means the person for whom an individual performs or performed any service, of whatever nature, as the employee of such person.” 83 An employee “...includes an officer, employee, or elected official of the United States, a State, or any political subdivision thereof, or the District of Columbia, or any agency or instrumentality of any one or more of the foregoing. The term ‘employee’ also includes an officer of a corporation.” 84
Therefore, the employer of an “employee” as defined by 26 USCS § 3401(c) is liable for the payment of the tax as stated in 26 USC § 3403.

One may conclude that the only parties liable for the income tax imposed by 26 U.S.C. § 1 are partners, certain large partnerships, foreign corporations, withholders of taxes on nonresident aliens and foreign corporations and those employers required by Chapter 24 of Subtitle C to withhold taxes on employees.

Conclusion

The federal income tax only applies to the “taxable” income of “taxpayers.” “Taxable income” has been found to mean all gain from activities that are within the authority of the federal government to tax. Revenue made from working is exempt from the federal income tax because the right to work is a fundamental right. The federal government does not have authority to tax the exercise of a fundamental right. Therefore, revenue made from working is not “taxable income.” The Sixteenth Amendment did not authorize a tax on fundamental rights; it did not authorize a tax on salaries. 85

In addition, the federal income tax only applies to “taxpayers,” and not to “nontaxpayers.” A “taxpayer” is “any person subject to any internal revenue tax. ” 86 Taxpayers are partners, certain large partnerships, foreign corporations, withholders of taxes on nonresident aliens and foreign corporations, and those employers required by Chapter 24 of Subtitle C to withhold taxes on employees. Nontaxpayers are not required to pay the federal income tax. 



Footnotes

1 United States v. R.R. Co., 84 U.S. 322, 326.
2 26 U.S.C. § 1 states: "There is hereby imposed on the taxable income of...”; “The term ‘taxpayer’ means any person subject to any internal revenue tax.” 26 U.S.C. § 7701(a)(14).
3 Stratton's Independence v. Howbert, 231 U.S. 399, 41, 34 S.Ct. 136 (1913).
4 Murphy v. IRS, 373 U.S. App. D.C. 143, 460 F.3d 79, 87 (D.C. Cir. 2006). See also Burk-Waggoner Oil Ass'n v. Hopkins, 269 U.S. 110, 114 (U.S. 1925) (“Congress cannot make a thing income which is not so in fact.”)
5 See Philadelphia & S. Mail S. S. Co. v. Pennsylvania, 122 U.S. 326, 344-45, 30 L. Ed. 1200 (1887); State Tax on R. Gross Receipts, 15 Wall. 284, 21 L. Ed. 164 (1872); Maine v. Grand Trunk R. Co., 142 U.S. 217, 35 L. Ed. 994 (1891).
6 See U.S. CONST. amend. XVI (“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.”); U.S. CONST. art. I, § 2, cl. 3, and U.S. CONST. art. I, § 9, cl. 4. 
7 William E. Peck & Co. v. Lowe, 247 U.S. 165, 174 (1918).
8 See Butchers' Union Co. v. Crescent City Co., 111 U.S. 746, 762, 4 S.Ct. 652 (1884).
9 Economy Plumbing and Heating Co. v. United States, 470 F. 2d 585, 589, 200 Ct. Cl. 31, 37 (1972).
10 Thomas v. United States, 192 U.S. 363, 369 (1904); Pollock v. Farmers' L, & T. Co., 157 U.S. 557, 558.
11 Knowlton v. Moore, 178 U.S. 41, 47 (1900),
12 See Flint v. Stone Tracy Co., 220 U.S. at 149. See also Springer v United States, 102 US 586, 26 L Ed 253 (1880) (direct taxes are capitation or poll taxes levied without regard to property, profession or other circumstances; direct taxes can be levied on land); Pollock v Farmers' Loan & T. Co. 157 US 429, 39 L Ed 759, 15 S Ct 673 (1895) (direct taxes are taxes levied directly on personal property because of ownership).
13 Veazie Bank v. Fenno, 75 U.S. 533 at 544.
14 Brushaber, 240 U.S. at 13l; Flint v. Stone Tracy Co., 220 U.S. at 153; U.S. CONST. art. I, § 2, cl. 3. 
15 Knowlton v. Moore, 178 U.S. at 47.
16 Ballentine’s Law Dictionary defines an indirect tax as “...a tax other than one imposed directly upon property according to its value, for example, an occupation tax. Foster & Creighton Co. v Graham, 154 Tenn 412, 285 SW 570, 47 ALR 971, 975 ...a tax paid by a person who can shift the burden to another person or who is not under legal compulsion to pay.”
17 Flint v. Stone Tracy Co., 220 U.S. at 151 ( “...[E]xcises are generally treated as embracing the indirect forms of taxation contemplated by the Constitution"). 
18 Brushaber, 240 U.S. at 13. See also Flint v. Stone Tracy Co., 220 U.S. 107, 153 (“The Constitution contains only two limitations on the right of Congress to levy excise taxes; they must be levied for the public welfare and are required to be uniform throughout the United States...Congress must impose indirect taxes by the rule of uniformity.”) 
19 See Knowlton, 178 U.S. at 106.
20 See Brushaber v. Union Pac. R.R., 240 U.S. 1, 11, 16-19, 60 L. Ed. 493, 36 S. Ct. 236 (1916); In re Stern, 1997 U.S. App. LEXIS 14960 at *2 (4th Cir. 1997); Veazie Bank v. Fenno, 75 U.S. 533, 543 (1868) (“[P]ersonal property, contracts, occupations, and the like, have never been regarded by Congress as proper subjects of direct tax”); United States v. Gaumer, 972 F.2d 723, 725 (“Brushaber and the Congressional Record excerpt [pages 2578-81 of the Congressional Record of March 27, 1943] do indeed state that for constitutional purposes, the income tax is an excise tax.”)
21 Flint v. Stone Tracy Co., 220 U.S. 107, 31 S.Ct. 342, 349 (1911); American Airways, Inc. v. Wallace, 57 F.2d 877, 880 (D. Tenn. 1932),
22 See Brushaber, 240 U.S. at 15-17.
23 Id. at 16-17.
24 26 U.S.C. § 1 states: "There is hereby imposed on the taxable income of...”
25 Stratton's Independence, Ltd. v. Howbert, 231 U.S. 399, 415 (1913). 
26 Macomber, 252 U.S. at 207. But see Commissioner v. Glenshaw Glass Co., 348 U.S. 426, 430 (1955) (“...the definition [of income in Macomber] served a useful purpose. But it was not meant to provide a touchstone to all future gross income questions.”)
27 Doyle v. Mitchell Bros. Co., 247 U.S. 179, 185 (1918).
28 Southern Pacific Co. v. Lowe, 247 U.S. 330, 335 (1918).
29 Macomber, 252 U.S at 207.
30 Doyle at 184-5.
31 See Macomber, 252 U.S. 189, 213.
32 Macomber at 202.
33 Id. at 219.
34 Butcher's Union Co. v. Cresent City Co., 111 US 746, 757 (1884).
35 O'Gilvie v. United States, 519 U.S. 79, 84 (1996) (“a restoration of capital was not income; hence it fell outside the definition of ‘income’ upon which the law imposed a tax.”)
36 United States v. Morrison, 529 U.S. 598, 607 (2000).
37 Collector v. Day, 78 U.S. 113, 124 (1871) (overruled in part by Graves v. New York, 306 U.S. 466 (1939)) (Graves v. New York overrules Collector v. Day “so far as [it] recognize[s] an implied constitutional immunity from income taxation of the salaries of officers or employees of the national or a state government or their instrumentalities”).
38 Child Labor Tax Case, 259 U.S. 20, 37 (1922).
39 Id.
40 Bailey v. Drexel Furniture Company, 259 U.S. 20, 38. See also South Carolina v. Baker, 485 U.S. 505, 511 (1988) (“We use ‘the Tenth Amendment’ to encompass any implied constitutional limitation on Congress' authority to regulate state activities, whether grounded in the Tenth Amendment itself or in principles of federalism derived generally from the Constitution.”)
41 Farrington v. Tennessee, 95 U.S. 679, 685.
42 See Railroad Trainmen v. Virginia Bar, 377 U.S. 1, 6 (1964) (states have broad powers to regulate the practice of law within their borders); Mine Workers v. Illinois Bar Association,  389 U.S. 217, 222 (1967) (stating “That the States have broad power to regulate the practice of law is, of course, beyond question”).
43 See Butchers' Union Co., 111 U.S. at 756-7 (“’...all men are  endowed’ -- not by edicts of Emperors, or decrees of Parliament, or acts of Congress, but ‘by their Creator with certain inalienable rights’ -- that is, rights which cannot be bartered away, or given away, or taken away except in punishment of crime...”)
44 Fundamental rights are protected by the 5th and 14th Amendments. See Truax v. Raich, 239 U.S. 33, 41 (1915); Adair v. United States, 208 U.S. 161, 172 (1908).
45 Butchers' Union Co., 111 U.S. at 757 (“Among these inalienable rights,... is the right of men to pursue their happiness, by which is meant the right to pursue any lawful business or vocation, in any manner not inconsistent with the equal rights of others, which may increase their prosperity or develop their faculties, so as to give to them their highest enjoyment.”) See also Yick Wo v. Hopkins, 118 U.S. 356 at 370 (fundamental rights are life, liberty, and the pursuit of happiness).
46 Butchers' Union Co., 111 U.S. at 762 (concurring opinion). See also Allgeyer v. Louisiana, 165 U.S. 578, 590 (1897) (“It is true that these remarks were made in regard to questions of monopoly, but they well describe the rights which are covered by the word ‘liberty’ as contained in the Fourteenth Amendment.”)
47 “...No state shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States; nor shall any state deprive any person of life, liberty, or property, without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws...” U.S. CONST. amend. XIV Sect. 1; Truax v. Raich, 239 U.S. 33, 41 (1915). See also Adams v. Tanner, 244 U.S. 590, 596 (1917) (“The Fourteenth Amendment protects the citizen in his right to engage in any lawful business.”)
48 “No person shall...be deprived of life, liberty, or property, without due process of law...” U.S. CONST. amend. V. See also A. Magnano Co. v. Hamilton, 292 U.S. 40, 44 (1934) ( in some instances, the due process of law clause contained in the Fifth Amendment is a limitation upon the taxing power conferred upon Congress by the Constitution); Adair v. United States, 208 U.S. 161, 172 (1908).
49 Adair v. United States, 208 U.S. 161, 173 (1908).
50 Allgeyer v. Louisiana, 165 U.S. 578, 589 (1897).
51 Coppage v. Kansas, 236 US 1 (1915) (overruled in part). See also Adair v. United States, 208 U.S. 161, 173 (1908).
52 Butchers’ Union Co., 111 US 746 at 756-757 (quoting Adam Smith's Wealth of Nations, Bk. I. Chap. 10).
53 Meyer v. Nebraska, 262 U.S. 390, 399, 43 S.Ct. 625 (1923).
54 See McCulloch, 17 U.S. at 429; 1940 Code of Federal Regulations § 19.22(b), 
55 Redfield v. Fisher, 292 P 813, 819 (1930). 
56 Murdock v. Pennsylvania, 319 U.S. 105, 112, 63 S.Ct. 870 (1943). 
57 Harper v. Virginia Bd. Of Elections, 383 U.S. 663, 665, 86 S.Ct. 1079 (1966).
58 Grosjean v. American Press Co., 297 U.S. 233, 244 (1936). 
59 Memorandum in Support of Defendant’s Fourth Motion to Dismiss Indictment at 63, Cryer (No. 06-50164-01).
60 Murdock v. Pennsylvania, 319 U.S. 105, 108.
61 See South Carolina v. Baker, 485 U.S. 505, 524 (1988).
62 U.S. CONST. art. I, § 2, cl. 3 (“...direct Taxes shall be apportioned among the several States which may be included within this Union, according to their respective Numbers...”); See U.S. CONST. art. § 9, cl. 4 (“No Capitation, or other direct, Tax shall be laid, unless in Proportion to the Census or Enumeration herein before directed to be taken.”)
63 Evans v. Gore, 253 U.S. 245, 263 (1920) (overruled in part). See also United States v. Hatter, 532 U.S. 557, 567 (2001) (overruled Evans insofar as it holds that the Compensation Clause forbids Congress to apply a generally applicable, nondiscriminatory tax to the salaries of federal judges).
64 Evans v. Gore, 253 U.S. at 261 (overruled in part by United States v. Hatter, 532 U.S. 557 (2001)).
65 Brushaber, 240 U.S. at 36.
66 Brushaber at 10-11.
67 Macomber, 252 U.S. at 206. 
68 Brushaber, 240 U.S. at 17-18.
69 Brushaber at 11.
70 Brushaber, 240 U.S. at 11.
71 Stanton v. Baltic Mining Co., 240 U.S. 103 at 112-13.
72 Peck & Co. v. Lowe, 247 U.S. 165, 172-73 (1918).
73 Evans v. Gore, 253 US 245 (1920) (overruled in part by United States v. Hatter, 532 U.S. 557 (2001))
74 Macomber, 252 U.S. at 219.
75 Helvering v. Edison Bros. Stores, Inc., 133 F.2d 575, 579 (8th Cir. 1943) (citing Eisner v. Macomber, 252 U.S. 189, 40 S. Ct. 189, 64 L. Ed. 521, 9 A.L.R. 1570; M. E. Blatt Co. v. United States, 305 U.S. 267, 59 S. Ct. 186, 83 L. Ed. 167).
76 Eisner v. Macomber, 252 U.S. at 206.
77 Evans v. Gore, 253 U.S. 245, 263 (overruled in part by United States v. Hatter, 532 U.S. 557 (2001) (Hatter overrules “Evans insofar as it holds that the Compensation Clause forbids Congress to apply a generally applicable, nondiscriminatory tax to the salaries of federal judges.”) (The Sixteenth Amendment does not authorize or support the tax on the salary of federal judges). 
78 Brushaber v. Union P. R. Co., 240 U.S. 1, 11 (1916).
79 Economy Plumbing and Heating Co., 470 F. 2d at 589, 200 Ct. Cl. at 37; A “taxpayer” is a person subject to any internal revenue tax 26 U.S.C. § 7701(a)(14).
80 Partners are only in their "individual" capacities. Id. at 8 (citing 26 U.S.C. § 701, which states: “A partnership as such shall not be subject to the income tax imposed by this chapter. Persons carrying on business as partners shall be liable for income tax only in their separate or individual capacities.”)
81 26 U.S.C. § 1461.
82  26 U.S.C. Sec. 3403. 
83 26 U.S.C. § 3401(d).
84 26 U.S.C. § 3401(c).
85 Evans, 253 U.S. 245.
86 26 U.S.C. § 7701(a)(14).



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