Why is this Important?

Indirect taxes need to be applied and collected indirectly. -- this page is under construction

Tax on Individuals

The Internal Revenue Code Subchapter A, PART I—TAX ON INDIVIDUALS (§§ 1 – 5) does not tax individuals as the title appears. Instead, IRS Code 26 U.S. Code § 1 imposes on the taxable income of persons, either married, head of household, unmarried persons, and married persons filing a seperate list or return. Recently however, the Supreme Court in Moore, (2024) upheld that direct taxes on persons and property remains subject to the apportionment clause.

The question arises whether wage and payroll taxes falls directly onto individuals, due the application of the Code, or rather than on the economic activity. Indirect taxes can be collected and paid at the time of the transaction, that is the key element of indirect taxes, the ability to pass or shift the tax onto the product or service. The ability to collect the tax as an indirect tax is one of those plenary powers, thus excusing the direct application onto the individual to provide the list and file forms; what a waste of power, resources, time, and person freedoms should the individual shoulder this liability.

Direct or Indirect Application of Wages

Applicable to employers, the tax is indirect, with the ability to pass and shift the tax onto the cost of the product or service. Applicable to employees, the tax is direct and personal, with liabilty under penalty and perjury, after the wages have been paid and became personal property.

Indirect Tax on Wages and salaries

The nations first income tax, the Revenue Act of 1861, Chap. XLV, 12 Stat. 292, (see Sec. 49) imposed an indirect income tax on wages and salaries, etc., and collected them at the source. This tax did not make the employee directly liable due to the fact that employers were required to deduct, withhold, and remit the tax.¹ The Civil War income tax (1962) was also recognized as an indirect tax “under the head of excises, duties and imposts.”, see Brushaber 240 U. S., at 15; see also Springer v. United States, 102 U.S. 586, 598, 602 (1881). The income tax placed a 3% tax on all individuals whose annual incomes were above $800 per year, ($800 in 1862 is worth $24,000 in 2025) which exemptioned most citizens due to lower average income.

Social Security 26 U.S. Code § 3101 - Rate of tax

(a)Old-age, survivors, and disability insurance In addition to other taxes, there is hereby imposed on the income of every individual a tax equal to 6.2 percent of the wages (as defined in section 3121(a)) received by the individual with respect to employment (as defined in section 3121(b)).

The Federal Insurance Contributions Act (FICA) (codified in the Internal Revenue Code) imposes a Social Security withholding tax equal to 6.20% of the gross wage amount, up to but not exceeding the Social Security Wage Base. The same 6.20% tax is imposed on employers. A separate payroll tax of 1.45% of an employee's income is paid directly by the employer, and an additional 1.45% deducted from the employee's paycheck, yielding a total tax rate of 2.90%

The Internal Revenue Code 26 U.S. Code § 3403 An indirect tax, collected from whatever source derived, such as the income tax and employment taxes can be applied and collected indirectly, onto those economic activities that are the sources of the income.

thus harmonizing with the great Constitutional principles that binding taxation and representation together; avoiding taxing citizens and families unfair taxation, lest this principle has no meaning.

in an indirect mannerdirectly, not only violates the Constitution, it is too costly and inefficient; spending millions of hours and billions of dollars needlessly. The income tax is an indirect tax, and the Constitution requires that it be applied and collected as an indirect tax.

When ooo IRS Code 26 U.S. Code § 1 imposes on the taxable income in varying types of persons, either married, head of household, unmarried persons, and married persons filing a seperate list or return.

Context

In each year from 2006 to 2012, at least two-thirds of all active corporations had no federal income tax liability.

Historical Context

Tax the Rich Schemes

Soon after the framing the new Constitution, Congress passed a tax on ownership of carriages, over James Madison’s objection that it was an unapportioned direct tax. Id., at 597. In context, at this time, carriages were few and owned only by wealthy individuals. Hylton v. United States, 3 U.S. 171 (1796)

To fund the Civil War, an act of August 5, 1861 (12 Stat. 292) levied a direct tax on property and an income tax.

In many historical Supreme Court decisions, the divided Court has bounced back and forth between the two interpretations of whether the income tax is a direct or indirect tax.

Soon after the framing, Congress passed a tax on ownership of carriages, over James Madison’s objection that it was an unapportioned direct tax. Id., at 597.
The Civil War income tax was recognized as an indirect tax “under the head of excises, duties and imposts.” Brushaber, 240 U. S., at 15; see also Springer v. United States, 102 U.S. 586, 598, 602 (1881).
In Springer v. United States, 102 U.S. 586 (1881), the Court upheld the federal income tax imposed under the Revenue Act of 1864 as an indirect tax.
In Pollock v. Farmers' Loan & Trust Co., 157 U.S. 429 (1895), the Court held that income from property was a direct tax requiring apportionment. ¹

Congress and the States responded to Pollock by approving a new constitutional amendment.

The Amendment provides: “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., Amdt. 16 (emphasis added). Therefore, the Sixteenth Amendment expressly confirmed what had been the understanding of the Constitution before Pollock: Taxes on income—including taxes on income from property—are indirect taxes that need not be apportioned. Brushaber, 240 U. S., at 15, 18. Meanwhile, property taxes remain direct taxes that must be apportioned. Moore v. United States, 602 U.S. 572 (2024).

In Brushaber v. Union Pacific Railroad Co., 240 U.S. 1 (1916), the Court held that the income tax was an indirect tax.

In Stanton v. Baltic Mining Co., 240 U.S. 103 (1916), the Court held that the income tax was a direct tax.

In Peck & Co. v. Lowe, 247 U.S. 165 (1918), Sixteenth Amendment does not extend the power of taxation, but removes occasion for apportioning taxes on income.

This page is under construction .... should be finished by 2/23/25

In Eisner v. Macomber, 252 U.S. 189 (1920), In Bowers v. Kerbaugh-Empire Co., 271 U.S. 170 (1926), In United States v. Whitridge, 231 U.S. 144 (1913), In United States v. Constantine, 296 U.S. 287 (1935), In Graves v. New York ex rel. O'Keefe, 306 U.S. 466 (1939), In Helvering v. Davis, 301 U.S. 619 (1937), In Helvering v. St. Louis Union Trust Co., 296 U.S. 39 (1935), In Helvering v. Independent Life Ins. Co., 292 U.S. 371 (1934), In Helvering v. Clifford, 309 U.S. 331 (1940), In Helvering v. Horst, 311 U.S. 112 (1940), In Helvering v. Eubank, 311 U.S. 122 (1940), In Helvering v. Hammel, 311 U.S. 504 (1941), In Helvering v. Stockholms Enskilda Bank, 293 U.S. 84 (1934), In Helvering v. Bruun, 309 U.S. 461 (1940), In Helvering v. Gowran, 302 U.S. 238 (1937), In Helvering v. Wilshire Oil Co., 308 U.S. 90 (1939), In Helvering v. Safe Deposit & Trust Co., 316 U.S. 56 (1942), National Federation of Independent Business v. Sebelius, 567 U.S. 519, 570–571 (2012)

the Court has held that the Sixteenth Amendment did not grant Congress any new powers of taxation.

The only provision in the Constitution that is inserted twice specifically addresses the apportionment of taxes.

The Revenue Act of 1861 levied a 3% flat rate income tax on those with an annual income at or exceeding $800 (the corresponding income in 2021 is $384K). In 1861, only 3% of the population had an annual income of at least $800;

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William M. Springer had filed a federal income tax return for the tax year 1865 showing $50,798 in income and $4,799 in income tax, but he refused to pay the tax. His income was from two sources: income in his profession as an attorney at law and interest income on United States bonds.

Hylton v. United States, 3 U.S. 171 (1796), in limiting direct taxes to capitation and real estate taxes were dicta.

The Tariff Act of 1894, ch. 349, 28 Stat. 509, 553. "Of the 12 million American households in 1894, only 46,000? 85,000 had incomes over $4,000, well under 1 percent."

imposed a 2% tax on income over $4,000, which the Supreme Court struck down in Pollock v. Farmers' Loan & Trust Co., 157 U. S. 429 (1895).

Under Pollock, a tax on the interest income derived from any state bond was considered a direct tax on the State, and thus unconstitutional. Pollock v. Farmers' Loan & Trust Co., 157 U. S. 429 (1895), which held that any interest earned on a state bond was immune from federal taxation.