Employment Taxes

Wage and payroll taxes, indirectly collected from the source, is within the plenary taxing power of Congress limited by the 16th Amendment. ¹, ², ³

Wage and payroll taxes, when imposed on the payment of wages and salaries and collected by the employer, function as indirect taxes. However, once wages are paid to the employee after deducting these taxes, the remaining amount becomes the employee's property. Any subsequent tax on this possessed property is no longer an indirect tax, but a direct tax on property. Such a direct tax must be collected by the rule of apportionment; otherwise, it ceases to be an indirect tax and becomes a direct tax on property.

Employers, it logicly follows, are the "source" of the income being taxed; without the payment of wages there is no money or tax to collect.

Withholding

The Social Security Act of 1935 created the Social Security program and imposed a payroll tax to pay

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;

Petition

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

What is or is not "income" within the meaning of the Amendment must be determined in each case according to truth and substance, without regard to form.

³⁴⁵⁶⁷

Footnotes

1. Eisner v. Macomber, 252 U.S. 189 (1920): '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, and that the latter also may have proper effect, it becomes essential to distinguish between what is and what is not 'income', as the term is there used, and to apply the distinction, as cases arise, according to truth and substance, without regard to form. Congress cannot by any definition it may adopt conclude the matter, since it cannot by legislation alter the Constitution, from which alone it derives its power to legislate, and within whose limitations alone that power can be lawfully exercised.

   ↩

2. Eisner v. Macomber, 252 U.S. 189 (1920): '... As repeatedly held, (16th Amendment) this did not extend the taxing power to new subjects, but merely removed the necessity which otherwise might exist for an apportionment among the states of taxes laid on income. Brushaber v. Union Pacific R. Co., 240 U. S. 1, 240 U. S. 17-19; Stanton v. Baltic Mining Co., 240 U. S. 103, 240 U. S. 112 et seq.; Peck & Co. v. Lowe, 247 U. S. 165, 247 U. S. 172-173.

   ↩

3. Stanton v. Baltic Mining Co., 240 U.S. 103 (1916), In other words, we are here dealing solely with the restriction imposed by the Sixteenth Amendment on the right to resort to the source whence an income is derived in a case where there is power to tax for the purpose of taking the income tax out of the class of indirect, to which it generically belongs, and putting it in the class of direct, to which it would not otherwise belong, in order to subject it to the regulation of apportionment

   ↩ ↩²

4. Learn more about

   ↩

5. Learn more about

   ↩

6. Learn more about

   ↩

7. Learn more about

   ↩