Income Tax Lineage and Purpose

By Dan Meador

In a letter of July 18, 1999, Earl O’Brien of Ohio outlined research pertaining to the Sixteenth Amendment never being ratified, the presidency of William Howard Taft being unconstitutional, Ohio’s status as a State of the Union being defective, and various other irregularities of United States government. In sum, the research demonstrates the, "I can, therefore I will," attitude of people who ascended to power throughout this century and much of the last.

Research of Brian March, David Dodge and others verifying disappearance of the original Thirteenth Amendment, which prescribes loss of citizenship for all who accept titles and honors, verifies another instance where entrenched powers tampered with the fundamental law of the land. To cause an amendment to simply vanish after it had been published as part of the Constitution for half a century gives some notion of sinister design that constitutes the platform for current government operation. It is difficult to imagine how present circumstance can be corrected for the benefit of Americans who comprise working and production classes. Or more succinctly, how can we restore limited constitutional government?

Mr. O’Brien’s three-page letter focused primarily on evidence that the Sixteenth Amendment was never properly ratified. Red Beckman and Bill Benson did much of the research in 1985. It has been verified and expanded since. However, there is a glitch that those responsible for the research failed to notice: Where what most people know as income tax is concerned, the Sixteenth Amendment is irrelevant. In a few decisions concerning income tax, the Supreme Court of the United States has told us that whether or not the amendment was properly ratified is a moot issue. Current understanding of the Internal Revenue Code and what is more properly called the "normal tax" verifies the conclusion.

I don’t care to minimize what Messieurs Beckman, Benson and others have unearthed, nor sacrifices they’ve respectively and collectively made to secure the information then take stands to defend obvious implications. The Internal Revenue Service subjected Mr. Beckman and his family to considerable hardship, and Mr. Benson served time in Federal prison. Yet they and others persist. Prosecution for unearthing and exposing truth isn’t uncommon. I was prosecuted for obstruction of justice supposedly because I helped people construct a defense motion, then they failed to respond to a summons for indictment. In my case, there was never an affidavit of complaint, required by the Fourth Amendment, a grand jury never returned an indictment in open court, required by the Fifth Amendment, and there is no letter of concurrence on file to verify that a grand jury ever voted to indict me. My real crime was publishing proof that the Internal Revenue Service is successor of the Bureau of Internal Revenue, Puerto Rico, and that no taxing statute in the current Internal Revenue Code has general application in the Union of several States. The motive behind my prosecution was simple: I was boldly exposing the fraud. In other words, Beckman, Benson, and I, and a multitude of others, have suffered loss of property, liberty, and in some cases, life, at the hands of criminals committed to perpetuating and defending what amounts to inland piracy.

To verify what may appear to be a bizarre allegation, it will serve to address the so-called income tax: The headings for Chapter 1 of the Internal Revenue Code, verifies that what most people call "income tax" is actually "normal tax." This is our point of demarcation.

The normal tax is a species of income tax in the same sense a Dalmatian is a species of dog. All income taxes are excise taxes. The normal tax is a privilege excise tax. Congress is fully aware of this. In the March 27, 1943 entry of the Congressional Record - House, a report by F. Morse Hubbard is published. Mr. Hubbard worked through the legislative drafting research fund at Columbia University, and was previously a legislative draftsman for the Treasury Department. On page 2580 of the Congressional Record for that date, Mr. Hubbard’s explanation of the so-called income tax appears:

The income tax is, therefore, not a tax on income as such. It is an excise tax with respect to certain activities and privileges which is measured by reference to the income which they produce. The income is not the subject of the tax: it is the basis for determining the amount of tax. A slight variation of this definition can be found in Part 31 of Title 26 of the Code of Federal Regulations.

The normal tax was first implemented during the Civil War via the revenue act of July 1, 1862. The original was 3% of income over $600 derived from government service. It was levied exclusively against officers and employees of the United States. The tax was repealed following the Civil War. In 1916 and 1917, Congress enacted individual income taxes, but the Supreme Court undermined the effort by concluding that the term "income" refers to profit and gain, not capital and labor. These decisions forced definition of the term "income" to apply as an indirect or excise tax rather than a direct tax. Justices relied to a certain extent on the fact that the Sixteenth Amendment was proposed to accommodate the corporate income tax of 1909, and without saying as much, relied on rights to life, liberty and property being unalienable rights that must be preserved to maintain a free society.

Congress abandoned ship on the direct income tax via the Revenue Act of 1918. In "Part II. - Individuals" (40 Stat. 1062), Congress resurrected the normal tax:

Sec. 210. That, in lieu of the taxes imposed by subdivision (a) of section 1 of the Revenue Act of 1916 and by section 1 of the Revenue Act of 1917, there shall be levied, collected, and paid for each taxable year upon the net income of every individual a normal tax… Application of the tax is found in the definition of "gross income", Sec. 213 (40 Stat. 1065): Sec. 213. That for the purposes of this title (except as otherwise provided in section 233) the term "gross income" -

(a) Includes gains, profits, and income derived from salaries, wages, or compensation for personal services (including in the case of the President of the United States, the judges of the Supreme and inferior courts of the United States, and all other officers and employees, whether elected or appointed, of the United States, Alaska, Hawaii, or any political subdivision thereof, or the District of Columbia, the compensation received as such)…

Limitation of application was probably most clearly disclosed via the Public Salary Tax Act of 1939. The title of the act is on page 574 of volume 50 of the Statutes at Large (50 Stat. 574): Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That this Act may be cited as the "Public Salary Tax Act of 1939". This act is important beyond its value in disclosing the nature and application of the normal tax as it provides a date of demarcation relative to the judicial branch of Federal government. Federal judges challenged and exempted themselves from the normal tax imposed in 1918 based on the provision in Article III, Sec. 1 of the Constitution prohibiting reduction in compensation for judges of the United States. The chief justice took a similar stand in 1862. However, in the Public Salary Tax Act of 1939, we find that Federal judges appointed after June 6, 1932 were subject to the normal tax: Sec. 209. In the case of the judges of the Supreme Court, and of the inferior courts of the United States created under article III of the Constitution, who took office on or before June 6, 1932, the compensation received as such shall not be subject to income tax under the Revenue Act of 1938 or any prior revenue Act. Something obviously happened in 1932 to compromise the judicial branch of United States government. We presently don’t know what, but we can demonstrate that those who today pose as Article III judges are operating what amounts to a system of private courts. United States District Courts situated in the several States are not courts of the United States as such. Congress did not create them. But the character of Federal courts goes beyond the scope of this response.

The normal tax was classified in Chapter 1 of the Internal Revenue Code of 1954 (Vol. 68A of the Statutes at Large), and remains as Chapter 1 of the current Code as amended in 1986. The heading for Chapter 1 of Title 26 of the United States Code, which is treated as the Internal Revenue Code, is, "Chapter 1. - Normal Taxes and Surtaxes."

Application is reasonably easy to demonstrate. Authority for withholding Subtitle A & C taxes at the source is in Subtitle C, with application prescribed by definition in Sec. 3401(c):

(c) Employee. For purposes of this chapter, the term "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. The nature of that which provides the measure of the normal tax is further particularized in the definition of "trade or business" found at 26 U.S.C. § 7701(a)(26): (26) Trade or business. The term "trade or business" includes the performance of the functions of a public office. It is important to understand limits of these definitions. Where a definition uses examples to define whatever is being defined, the definition can be expanded to include only other things in the class. In other words, if the term "animal" was defined by using Dalmatian, German Shepherd and Collie as examples, the term would apply only to canines. For purposes of the Internal Revenue Code, the general application definition of the terms "includes" and "including" at 26 U.S.C. § 7701(c) is useful: (c) Includes and including. The terms "includes" and "including" when used in a definition contained in this title shall not be deemed to exclude other things otherwise within the meaning of the term defined. A Latin principle of law speaks to the matter: Inclusio unius est exclusio alterius. The definition in Black’s Law Dictionary, 6th edition, provides greater clarity: Inclusio unius est exclusion alterius. The inclusion of one is the exclusion of another. The certain designation of one person is an absolute exclusion of all others. Burgin v. Forbes, 293 Ky. 456, 169 S.W. 2d 321, 325. This doctrine decrees that where law expressly describes particular situation to which it shall apply, an irrefutable inference must be drawn that what is omitted or excluded was intended to be omitted or excluded. Kevin McC v. Mary A, 123 Misc. 2d 148, 473 N.Y.S. 2d 116, 118. Public service is distinct and different from private enterprise. Performance of functions of public office differs from pursuits most Americans are engaged in. For most of us, work is a necessity, not a privilege, and we derive no special benefit beyond pay for our labors. We have the inalienable or unalienable right to do that which is necessary to support and enjoy life, and government cannot legitimately tax that which is necessary to support and enjoy life.

Many people who see the lineage of the normal tax are apt to be stunned, and will emotionally reject implications even though facts and the lineage are clear. Throughout our lives, we’ve been conditioned with the notion, "We all need to pay our fair share!" We are taught that government is our grand benefactor, and that we should all pitch something into the hat to help pay government bills. Consequently, rejection of the clear truth is common. The rejection comes from a condition psychologists refer to as cognitive dissonance. The phenomenon is common where there is sudden death of people close to us and other situations where truth is too painful to bear. It applies where the tax system is concerned because truth about the tax system amounts to evidence of general betrayal. Immediate response is a tendency to be forgiving, what amounts to acceptance and even endorsement of the fraud, rationalized by the notion that it is justified by the greater good. Consequently, it is necessary to go behind the scheme with fundamental questions. The first we will ask here goes to the heart of the matter.

Is it necessary to have a Federal tax system to pay the nation’s bills?

At first blush, the question may seem absurd, but Beardsley Ruml, former chairman of the Federal Reserve Bank of New York, both posed and answered it in a 1945 speech that was subsequently published in the January 1946 edition of American Affairs Magazine. Beginning in the third paragraph of Mr. Ruml’s speech, the true purpose of Federal tax is revealed:

It is sometimes instructive when faced with alternatives to ask the underlying question. If we are to understand the problems involved in the taxation of business, we must first ask: "Why does the government need to tax at all?" This seems to be a simple question, but, as is the case with simple questions, the obvious answer is likely to be a superficial one. The obvious answer is, of course, that taxes provide the revenue which the government needs in order to pay its bills.

If we look at the financial history of recent years it is apparent that nations have been able to pay their bills even though their tax revenues fell short of expenses. These countries whose expenses were greater than their receipts from taxes paid their bills by borrowing the necessary money. The borrowing of money, therefore, is an alternative which governments use to supplement the revenues from taxation in order to obtain the necessary means for the payment of their bills.

A government which depends on loans and on the refunding of its loans to get the money it requires for its operations is necessarily dependent on the sources from which the money can be obtained…

Final freedom from the domestic money market exists for every sovereign national state where there exists an institution which functions in the manner of a modern central bank, and whose currency is not convertible into gold or into some other commodity.

The United States is a national state which has a central banking system, the Federal Reserve System, and whose currency, for domestic purposes, is not convertible into any commodity. It follows that our Federal Government has final freedom from the money market in meeting its financial requirements. Accordingly, the inevitable social and economic consequences of any and all taxes have now become the prime consideration in the imposition of taxes. In general, it may be said that since all taxes have consequences of a social and economic character, the government should look to these consequences in formulating its tax policy. All federal taxes must meet the test of public policy and practical effect. The public purpose which is served should never be obscured in a tax program under the mask of raising revenue.

Federal taxes can be made to serve four principal purposes of a social and economic character. These purposes are:

    1. As an instrument of fiscal policy to help stabilize the purchasing power of the dollar;
    2. To express public policy in the distribution of wealth and of income, as in the case of the progressive income and estate taxes;
    3. To express public policy in subsidizing or in penalizing various industries and economic groups;
    4. To isolate and assess directly the costs of certain national benefits, such as highways and social security.
In the recent past, we have used our federal tax program consciously for each of these purposes. In serving these purposes, the tax program is a means to an end. The purposes themselves are matters of basic national policy which should be established, in the first instance, independently of any national tax programs… Is there a need for a Federal tax system? In 1945, Mr. Ruml told the American Bar Association the truth: Since promulgation of the Federal Reserve Act in 1913, Federal taxes have been unnecessary. Via this convoluted central banking scheme, government can finance whatever politicians want to do, and when payments come due, obligations can simply be rolled over and more borrowing added to existing debt.

This process constantly expands what passes for money relative to current goods and services and existing wealth, including retirement funds, savings accounts and transaction accounts (checking accounts). The expansion is commonly known as inflation. Inflation is a direct tax on everyone. There is no need for Federal tax or agencies responsible for assessing and collecting tax.

Mr. Ruml clearly stated the motive. The object of the tax system is not government funding, but social and economic control.

Thurston Bell of California probably restates Mr. Ruml’s disclosure best: The normal tax is a vehicle for mass propaganda and terrorization, reinforced by random victimization.

At any given time, the Internal Revenue Service has some form of administrative contact with as many as 10 million people. Maybe as many as several hundred thousand are subjected to audits, installment payment agreements, administrative garnishments, and seizures of various sorts. Anywhere from a few hundred to a few thousand are prosecuted criminally for willful failure to file, interference with administration of internal revenue laws, etc. Yet in reality, not only is normal tax taxing authority misapplied, but there are no internal revenue districts of the United States in the Union of several States established under authority of 26 U.S.C. § 7621 and Executive Order #10289. When a Federal employee contests normal tax obligations, the General Accounting Office is responsible for determining liability, not IRS. If a Federal employee is entitled to a refund, he is supposed to bill his employer, not IRS.

The Communist Manifesto, devised by Karl Marx as a means for undermining Western capitalist nations, is the only serious political agenda that prescribes progressive direct tax. However, our tax system serves another purpose: It is used as a decoy to veil the fact that our credit and monetary systems have been debauched (morally corrupted). Our money is worthless, and virtually all credit is hypothecated on credit of the United States. No debt is ever truly paid; it is merely discharged by transfer of "credit." Both money and credit are mirages that have no intrinsic or inherent value. The scheme accommodates transfer of earned income and existing wealth to the privileged few postured to benefit from effects of compounding interest.

There is no need to recite many facts to demonstrate effects, but it wouldn’t hurt to consider a few: Since 1973, real inflation on essential goods and services has exceeded 400%. The inflation has reduced middle and upper middle income classes from 55% to fewer than 40% of the population while increasing low income and poor classes from 35% to over 50%. We suffer agonizing rural poverty, and the inner city ghetto enjoys cancerous growth. The scheme has undermined sovereignty and solvency of the nation. By 1990, the wealthiest one-percent of the population owned over 38% of the nation’s financial assets while the nation’s cities struggled to tend needs of the homeless, those dependent on the social welfare system, and the working poor.

In light of what is now known about Federal income tax, it is obvious why the Supreme Court has tacitly ruled that the Sixteenth Amendment is a moot issue. Where the normal tax is concerned, the Sixteenth Amendment is irrelevant. Normal tax is an excise tax that issues against Federal officers and employees as a tax on benefits and privileges derived from government employment. The tax has fraudulently and deceitfully been imposed on the American people at large in order to facilitate social and economic objectives Mr. Ruml itemized in his 1945 speech presented to the American Bar Association.

The question for the American people is, What can be done to correct the system?

The first important task is to share truth with others.

This is where research Mr. O’Brien, Red Beckman, Bill Benson and others have done is important. While ratification of the Sixteenth Amendment is irrelevant to the normal tax, the fact that the amendment was not ratified, and contemporary politicians refuse to do anything to correct the fraud, indicts the Federal political system. To one degree or another, legislative, administrative and judicial branches are involved in social and economic engineering that benefits entrenched powers while depriving the masses of life, liberty and property. Those who occupy these positions, yet fail to stand on the truth, are intent on reducing American working and production classes to third world status. The motive is self-enrichment and consolidation of power.

Fortunately, there are signs of significant resistance, and momentum is gathering.

On July 1 & 2 of this year, the National Press Club hosted what was billed as the Great IRS Showdown at its Washington, D.C. headquarters. The We the People Foundation of Albany, New York sponsored a panel that included a recent Internal Revenue Service defector who served as a criminal investigation officer, Joseph Banister, Alabama attorney Larry Becraft, Bill Benson, California activists Devvy Kidd, and several others. Internal Revenue Service and ranking administration officers were formally invited to rebut the various presentations, but none participated. Key presentations were nationally telecast on C-Span.

There is also response from inside the political community. On July 4, fourteen congressmen formally announced the Liberty Study Group ( These brave souls, chaired by Representative Ron Paul of Texas, have pledged to support the Constitution in all particulars.

In the meantime, there have been significant breakthroughs that enable people to force compliance with statutory and regulatory mandates relating to administration of internal revenue laws. The breakthroughs are enabling increasing numbers to use reliable process to check out of the fraudulent Federal tax system without risking reprisal common in the past. Thanks in part to stricter compliance and disclosure requirements enacted by Congress in 1998, garnishments and other unilateral administrative enforcement is down by 75% or more. Since Mr. Banister defected and took his highly visible position in early 1999, there are numerous reports of other ranking people defecting from the Internal Revenue Service.

I’m not suggesting that the work is done. It has only begun. Disposing of the fraudulent Federal tax system will be a minor task compared to correcting fiat credit and monetary systems. That must be accomplished before sovereignty and solvency of the nation can be restored, and restoring limited constitutional government will be necessary if we hope to avoid calamity.

The de facto umbrella scheme we are confronted with is known as Federalism, sometimes as Cooperative Federalism. It involves state and national public servants and the financial community in general.

In the early part of the century, state and local officers began aligning the states and their respective political subdivisions as though the several states party to the Constitution are on a par with insular possessions subject to sovereignty of the United States under the territorial clause of the Constitution. The alignment was formalized via declarations of intergovernmental dependence effected in 1935 & 1937. Through these agreements, officers of the several states created a third tier of government that is described as "nonconstitutional." The Council of State Governments, which has headquarters in Lexington, Kentucky, is the primary vehicle. To employ a technical legal term, the Council of State Governments is the transmitting utility for uniform laws legislatures of the several states implement. These uniform laws draw the several states into a system of private international law that operates outside the Constitution of the United States and constitutions of the several states. The Uniform Commercial Code, adopted by all state legislatures by the early 1960’s, is the Federalism centerpiece.

The UCC is patently unconstitutional as it endorses "money" adopted by international convention or agreement. Via the UCC, financial institutions step beyond Federal law to float what amount to private bills of credit. Where the Constitution prohibits the several states from making anything but gold and silver coin a tender for payment of debt, or emitting bills of credit, it obviously prohibits them from endorsing and enforcing private bills of credit. (Article I § 10)

It is a mathematically impossible scheme. The system relies on constant expansion of public and private debt. The perpetual expansion devalues all existing wealth. By way of interest, tax and default, all significant wealth is methodically transferred to the select few postured to benefit from the compounding interest effect.

A psychologist friend used the Musical Chairs game as a metaphor to describe current circumstance. We have increasing numbers competing for fewer and fewer resources. More people are constantly added to the game while the number of chairs is constantly decreased. It isn’t that resources aren’t adequate to need. The problem is concentration of wealth by political means to monopolize production and distribution of essential resources.

The eventual consequence is obvious. Competition for limited resources will ultimately manifest in violent confrontation.

This is the reason sharing truth is vitally important. If sufficient numbers are informed, there is a possibility of mobilizing on political, judicial and administrative fronts to peacefully correct the system so it benefits the nation at large. The alternative is delay to the point the mathematically impossible scheme achieves critical mass resulting in catastrophic collapse.

In Decline of the West, Oswald Spengler formulated what is known as the law of nations: No nation or society has voluntarily changed unless or until it suffered economic collapse severe enough that key social institutions failed, or unless or until defeated at war [on home ground]. Through 1935, 19 of 21 known empires collapsed from within. Only two were defeated by invading forces while in ascendancy.

The law of nations restates the cultural side of the law of entropy: All systems tend to degenerate, and ultimately fail, unless or until infused by new energy from some outside force.

Knowing the dynamics of our current situation, and the historically proven consequence of inaction, is sufficient motive. We cannot defy the laws of physical economy, nor any other natural law, and expect to escape unscathed. Denying the historical record and physical law is comparable to denying that the sun comes up in the east. Therefore, responsible people must act to correct the system or suffer epochal consequence. Proof that the Sixteenth Amendment was never ratified, that Ohio was never properly admitted to the Union, and that the original Thirteenth Amendment simply vanished, has conceptual and political value. The evidence demonstrates the scope of fraud the American people are confronted with. The fact that the Sixteenth Amendment has little or nothing to do with the normal tax most people know as income tax speaks to the character and craft of those responsible for perpetrating the fraud.