Is the income tax legal – Taxation immoral and Unconstitutional?

I turn my ear up to a 45 degree angle to hear better when someone say “the income tax is unconstitutional or illegal”. I listen to their arguments, but they never convince me on legal grounds. Further, I find it curious when intelligent people do not file tax returns and get caught. Lastly I take an interest in those who offshore their income and assets to hide money from the IRS.  I think it is a dangerous game these tax protestors play. That being said, it is worth to read about the arguments that have been raised against the 16th Amendment and taxes. But heed this warning:

Morpheus: I won’t lie to you, Neo. Every single man or woman who has stood their ground, everyone who has fought an agent (has lost) – The Matrix

0% tax rate is the best via a legal repeal of the 16th Amendment

Now, do not get me wrong, I am against the income tax in the United States, however, if you want to practice that type of civil disobedience or you are just avoiding taxes for monetary reasons, you need to be willing to pay the price. I believe the only thing a US citizen can do is keep their head down and  pay your taxes like we all do. However, with every election vote for the candidates that are for fiscal sanity and maybe even a repel of the tax laws including the 16th Amendment. Further, there are a number of legal and honest ways to keep your take bill down, but that is the subject of another post.

We could simply cut the budget 50% (many working Americans have had to do this with their own budget, why should the g-men and fat cats in Washington not have to?). Have more non punitive tariffs and excises taxes, like the first 150 years of America, which lead us to be ‘the land of opportunity and liberty’. It would be a questionable assessment to make that bold statement today. I believe it is possible to repeal the 16th Amendment through the political process.

John Bull being approached with new taxes
  • Here is a resource that is worth reading –  Are taxes moral? –  Taxes the root of all Evil –  By Frank Chodorov

Is the income tax legal? The income tax is written in the US constitution and there are many laws written and passed by congress. The income tax is legal. However, the question about, is it right and does it agree with idea of individual property rights, the founding fathers what is good and moral in the world?  Does it help the poor and middle class live better lives? Does it help productivity and work incentives? Do taxes make American great? Does it make a civilization advance? No.

The fringe arguments against the legality of the 16th Amendment and  US income tax:

  • non ratification argument – A book called  “the Law that never was” by William Benson and Martin Beckman put forth this argument, but I do not agree with their arguments and frankly I do not think the book was well researched. Maybe I am wrong. He argues passionately that many of the 38 states that ratified the 16th Amendment did not. For example, Secretary of State Philander Knox who proclaimed the 16th Amendment ratified ignored such things as California never voted on it, or Kentucky rejected the Amendment nine in favor, twenty-two opposed. These are a few examples, William Benson cites based on his personal research. However, I do not believe it and would have to research it myself and believe his book and argument was proven in court to be not correct.
  • The fact that Ohio was not a State until 1953 argument does not hold water either since President Eisenhower retro actively sign a law allowing Ohio to be a State since 1803, even though the constitution forbids such things ex post facto. Porth v. Brodrick did not really address that issue so technically the argument is correct. However, the income tax is legal because the under common sense and practicality.
  • 16th Amendment argument against taxes – You can also read about the case of Trohimovich v. Commissioner – I think they through this guy in the clink.
  •  16th Amendment was ratified legally. You can read about other more fringe tax protestor cases like, Stanton v. Baltic Mining Co

Constitutional arguments against the income tax are stronger, but to date none have been successful challenges:

  •  religious objection to the income tax – This is about the first amendment (there is also a free speech argument). Basically if people pay homage to a state not God this is wrong and against their religion, but in 1878 Reynolds Vs. the USA cased struck down this argument. Give to Caesar what is Caesars.
  • fifth amendment argument against taxes – filing a tax return with could lead to self-incrimination (United States v. Sullivan), or it is taking without compensation (Brushaber v. Union Pacific Railroad).  As a follow-up up to this, the IRS really does not care too much, how you make your money as long as you pay taxes. If you are a ‘working girl’ just pay taxes on income generated. It is interested to note that in Europe this profession is non taxed and tax evaders said they were ‘professional girls’ when questioned about income sources reported but not taxed.
  • income tax is discriminatory  – it is progressive and therefore in conflict with the 14th amendment which guarantees equal treatment under the law. I think this is a weak argument, we are not talking about race or anything just earnings.
  • Taxes are servitude – Paying taxes enslaves one and is therefore unconstitutional. Porth v. Brodrick argued this based on the 13th Amendment and lost. Considering tax payer liberation day is sometime in August, which means you work a good part of the year to the feudal state, it has merit as a moral argument. I mean a serf in the Middle Ages only worked three days for his master and three days for himself, while you work for.
  • You can be a citizen of the state you live – It goes something like if you are a sovereign citizen in the state where you live you do not have to pay Federal taxes, for example, you could be a citizen of Texas and only answer to Texas. But you can not use US dollars or anything to do with the US government.  This is based on an argument around the 14th amendment. – The court ruled ‘while the Fourteenth Amendment does not create a national citizenship, it has the effect of making that citizenship ‘paramount and dominant’ instead of ‘derivative and dependent’ upon state citizenship.’ Therefore you still have to pay your taxes.
  • FYI- trying to argue (assert an argument on your tax return) that the income tax is illegal with the IRS based on various reasons why not to file can result in a $5,000 frivolous tax return penalty IRS section 6702(a).

Other arguments against the legality of taxes on specific individuals rather than universal is it a law that agrees with the constitution of the United States

  • “natural individuals’ or sovereigns individuals argument (similar to the 14th amendment argument), people renouncing US citizenship so as not to pay taxes, titles of nobility (not allowed in the USA by the way), Federal zones outside the USA such as military bases.
  • Definitions of income arguments are many.

Think about it the difference between legal and moral. Slavery was perfectly codified and legitimate at one time, but does that mean it was right? Of course not. You need to separate the idea of legal and moral in your mind. The law is a reflection of the collective unconsciousness of the people at a point in time, and if you study history sometimes this can be out of line with that is universally good. People need to work peacefully within the system though the political process via voting change the systems so legal and moral are more congruent. The purpose of this post if to raise one’s awareness about the fact that the USA did not have direct taxation most of its history.therefore, it not a necessary evil, but rather just a break on the economy, that in a global competitive world the USA can no longer afford.

People tolerate taxes for a while because they have previously accumulated wealth. As the tax burden grows and productivity falls, tax revenue falls and the only answer seems to be higher taxes. If the people can no longer tolerate higher taxes, government merely borrows and creates new money, and then the inflation tax is paid with higher prices. The whole system destabilizes and eventually becomes a threat to civilized progress. – Liberty Defined – Ron Paul

 History of Taxes in the USA

  • The USA prospered – The United States had no direct tax from 1776 to 1861.  Zero,  nothing, and people thought it absurd that an income tax might exist.
  • The USA really did not have an income tax from 1776 to 1913 and not in large measure until the 1950s.
  • Crisis and war brings emergency powers to government so to help pay for the civil war the USA saw its first personal income tax, on August 5, 1861 – the rate was 3% on income over 800 dollars ( This is about 20,000 dollars in todays income). After the war the tax was repealed.
  • Tax the rich – the Revenue Act or Wilson-Gorman Tariff of 1894. The Democrats imposed a 2% on income over 4,000 dollars or 90,000 dollars in todays terms. It was to be a tax on the rich, the top 10% to compensate for lost revenues of tariff reduction.
  • Surprise –  the US supreme court rules  direct tax to be unconstitutional on April 8, 1895, with Chief Justice Melville Fuller residing basically argued that it was a violation of the idea of individual property rights and the State had no right to limit this through taxation, an income tax.
  • Start of the road to serfdom – 1913 the Sixteenth Amendment to the United States constitution was passed “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 USA rested on its laurals until 2007.
  • 2021 the USA started to have problems no one could foresee –  as it was too top-heavy fiscally – We will see.

Expat taxes and giving up US citizenship

As a former expat many people have told me because they live abroad they do not have to pay income taxes. This is wrong too. Taxes need to be paid and they are legal, even if you renounce your US citizenship believe it or not. There is no way around it. Just because you live in another country or have a dual citizen means nothing to the Internal revenue service. Do not fool yourself or play think about trying to play naive, they do not care.

Can people challenged the 16th Amendment?  You can read about any number of cases like, Marrita Murphy and Daniel J. Leveille, Appellants v. Internal Revenue Service and United States of America, Penn Mutual Indemnity case, Brushaber case etc. Not a chance to win on legal grounds in my opinion, the amendment has to be repealed by an act of congress.

Do some people just not pay taxes? I highly recommend you do not try. Even if you earn a pittance, I recommend you file a tax return as you do not want to be on the wrong side of the law. Rich and famous from Wesly Snipes to Richard Hatch, the first survivor winner to entrepreneurs like Barrie Konicov have been pursued for tax evasion and their money and fame could not protect them. If you off shore your money you have to be very clever as the IRS is getting sophisticated. I would rather just pay what I owe than try to evade taxes, too much risk.

Is the IRS filled with bad people? Nope. I call the IRS often to ask for clarification as my tax situation is complex living in two countries, having my own business and trading stock. In every case they are normal nice people with a human face. They have checked me several times with a mini audit, and as long as your documentation and prove you’re doing things right you are OK. If you are not, you get a penalty. But the people themselves are not bad per say.

Why is the income tax bad? The income tax in the US might be legal but it places people on the road to serfdom. This law turns extracts your hard work and creativity  to the United feudal States of America.

Does the income tax help or hurt the United States? It is a penalty on productivity and innovation.  It hurts America and US citizens. It allows the US to be an imperial power to engage in countless ‘preventative wars’ secret and public. The income tax along with the Federal Reserve is a blank check that leads the road to serfdom. Can you imagine if someone gave you a blank check and said write any amount you want on this check. It is trouble. You might have to work for him for the rest of your life. This is what the 16th amendment to the US constitution did.

Do not be fooled, taxes hurt our society, destroy the work ethic, have people using their intellectual creativity to try to avoid taxes instead of creating a better mouse trap (think of all the large accounting firms out there doing taxes, I used to do this for PWC).

Taxes are the price we pay for civilization – Oliver Wendel Homes

This is the opposite of what taxes do. They de-civilize people and Oliver Wendel Homes was brainless supreme court judge with a long mustache.

My assessment of taxation?

The more taxes, the more need for government management mismanagement. If you think it is legit or not, it does hurts Americans. I think it is wrong and unpatriotic to advocate more taxes over less. It is anti-american to want tax increases. Duty (which is duty), custom, tribute, levying revenue so the king President can levy an army with continued overseas wars. It makes the country of liberty, the country of socialism.

If we as a society continue to believe that paying for civilization through taxation is a wise purchase and the only way to achieve civilization, we are doomed. It’s a bad idea for the cause of liberty. -Ron Paul – Liberty Defined.

10 Replies to “Is the income tax legal – Taxation immoral and Unconstitutional?”

  1. If the majority has enough anger and envy then confiscating private property of individuals by way of the tax system and transferring it to another is not only sanctioned, but hail as just. This in its essence is what taxation is.

    This is what happened in Russia in 1917 and a few other historical examples could be referenced, but you can use your own imagination.

    1. Mark Biernat says:

      Many Americans believe America can be the policeman of the world and at the same time take care of its citizens at home. Considering the US government does not produce anything, no really nothing; then neither reality or dillusion can come true.

      The government is the largest employer in the US, but a completely non producing sector in the economy.

      When the government takes action in Libya or anywhere else in the world, it must first steal or extract or tax (depending on your point of view) from someone who is producing and creating things for their family and other families. It is not just the guns or butter argument it goes deeper. This is a violation of individual liberty.

  2. “because they live abroad they do not have to pay income taxes.”
    Marc: I think you have an $85,000 income tax exemption as an expatriate.

    Taxes need to be paid “even if you renounce your US citizenship”.
    Only two other countries treat their citizens that way.
    One is the Philippines, the other is Eritrea.

    Taxes is based on residency in all other countries.

    1. Mark Biernat says:

      You are right you can exclude income up to a certain limit, I think it is up to $90,000 dollars if you live abroad. However, after that you get into double taxation.

      However, for all the back packing ESL teachers out there I would highly recommend that you file and report all income. I think there is less than 1% chance anyone would ever audit such small wage earners, the government is not out to get you. Further if you make under a certain limit you do not have to file I think.

      However, I have heard stories or urban legends of the IRS nailing people living on a shoe string in such situations. A friend of mine went so far, after hearing about this is getting a tax attorney and writing a letter to the IRS. He said most mistakes are about penalties but unreported income is the one cardinal sin of the IRS.

      Further that is interesting there are two other countries that do this, that is tax you based on citizenship rather than residence. However, it is interesting to not that neither of those countries are ‘developed advanced countries’.

      I actually looked into actually renouncing my US citizenship for tax purposed at once time. I am an EU citizen, which is not that bad and there are many ways in Europe to set up companies to avoid the burden of taxation. However, when I took an initial look at it was not worth it. Being an US citizen has far too many benefits, like living in Florida for example, and renouncing citizenship does little for about ten years to cut off tax obligations from the USA.

      They want their money and in the words of the commenter above they are ‘sophisticated in confiscation’.

      Further I make sure I report all assets of any value (over 10,000 dollars) even if for 3 days they crossed the 10k limit because of currency fluctuations. The IRS is targeting European bank accounts.

      And no by the way Switzerland is not a place to keep you money if you are rich and famous and want to avoid US taxes. The US has agents working inside banks there I believe and that type of tax evasion is very retro.

      I think Asian online banks and even places like Russia is where people are going. I personally operate under the premise it is not worth it to try to avoid taxes. Not worth it anyway you look at it.

      Maybe I am just paranoid of the IRS so I would rather focus on the income generation side of my life then worry about the inevitable – taxes.

      That being said I think there are a lot of legal and recommended ways to reduce one’s taxes.

      I do think taxes are one of the greatest threats to the USA as it steps on individual liberties like no other law.

      I think people accept gradualism and incrementalism.

      This is why taxes tend to go up and not down. The problem is the USA must now compete with lean and hungry countries it did not have to compete with 40 years ago.

      Anyone that supports more taxes is Anti-American in my opinion.

  3. Correction from my last post. I did not pay attention to your wording “renounce”

    Taxes need to be paid even if you expatriate and maintain your US citizenship. All countries other than the Philippines and Eritrea collect income from there citizens based on residency.

    Marc, Yes, U.S. citizenship carries with it the global tax obligation for a person’s entire life but once a person properly and formerly renounce citizenship in the United States he or she need no longer pay income taxes.

    First, such a person would needs to get a second citizenship in another country, obviously leave the US. “Appear before the US Consul in that country to renounce his or her US citizenship”. (Cost $450,00) then file the form 8854, Expatriation Information Statement and finally but not least “Pay the “exit tax”.

    Its an immediate tax called “exit tax” on unrealized gains on “all” the ex-pat assets in the US “and worldwide”. The tax payment is due within 90 days after giving up your US citizenship. There are more taxes such as 30% withholding tax on any differed income etc….

    There are very few people that actually do this but some do…

    1. Mark Biernat says:

      Yes I think a lot of people dream of this, but few people have the means or know how to legally free themselves from the yoke of US taxes.

      A better solution would be if people voted in the politicians that would balance the budget and reduce spending. Few to none elected official actually do that, they just reduce the rate of growth.

      About being paranoid about the IRS, that is why I try to be an excellent record keeper and when in doubt, do not take the deduction. I am not making what I made a few years ago because I have been focused on some creative endeavors, so I think I am too small a fish to be worth anything, and being I am an honest person they would not find something other than if I made a math mistake or something, but still I want to sleep at night.

      I was dragging my feet to even write a post about taxes as it could be a red flag, but as long as it is an intellectual discussion in the abstract about US history, I think it is OK. I was even hesitant to register libertarian as I think there is a disproportional focus on libertarians and taxes. I might be wrong on this, just a pet theory. They are considered a high risk for tax funny business because of their political views.

      If this is true it is scandal but the reality is it probably is true in an unwritten rule. Something that everyone knows and acts on but not spoken. If that were true that means people’s political believes open them up to harassment even if they are peaceful and law abiding.

      How knows I would like to see the statistics of Libertarians vs. Democrats and see if there is a meaningful statistical difference in audits.

      If there was we do not live in a free democracy.

      When I really make a lot of money, and am totally free, I would consider giving up citizenship, but in the end I do not think I would. As much as I have traveled the world and live abroad for many years, I still love being in the USA.

      Many people are sick of the USA because of all the politics. I am not one of those.

      As much as I complain, it is more to raise awareness as this website is starting to get a lot of traffic. I am not one turned off by political infighting as it is actually a good thing, at least better than ‘yes we can’ and ‘lets come together’.

      Bipartisanship is not good policy (unless they see the light :)). With bipartisanship Washington is free from restraints and often ignores the US Constitution, like in Iraq for example.

      Or the Obama expansion of government which was achieved with some degree of bipartisanship. With the mantra of lets work together, they are stopping us, the country’s debt blew up and caused more damage than… fill in the blanks.

      Moderates somehow tell themselves that they save the USA. They are the rational ones and the ones that are sane and good for the country.

      I disagree I think what is healthy and why I do not mind the political debate, many people tune out is that philosophical difference and the quagmire of government remind citizens that individual liberties not government progress is at the heart of the idea of the USA.

      So basically as much as I complain I will still always pay my taxes, love America and enjoy the political debate.

      1. In Russia fear and taxes is the way political parties consolidate power. Think about how many Russians have been jailed on various charges. And yes is is getting to a one party system in Russia, which means human rights and freedom is lower and lower. That is why the tax system is a danergous tool not only to collect revenue but to infleunce people.

        On a side note off the topic, do you really think patriot Yulia Tymoshenko is spending many years in a Ukrainian prison for any other reason but politics?

        1. “That is why the tax system is a danergous tool not only to collect revenue but to influence people.” and take them to wars.

          “A democratic government is the only one in which those who vote for a tax can escape the obligation to pay it.”
          Alexis de Tocqueville

  4. “Maybe I am just paranoid of the IRS”
    I don’t think so they are all over.

    You are correct about Switzerland and I would include the Caribbean Island. Those days are definitively over. No serious Bank will actually even consider opening an US Beneficial owner accounts even if its all income tax W9 declare they are paranoid of any thing from the US.

    There new clients are probably coming from the South American prosperity. One thing is sure Drugs are all over the US and the money is going somewhere is it not? The stupid regulations are use to harass millions of honest investors instead of focusing on the real crooks. That is the inefficiency of the bureaucratic leviathan state at its best.

  5. Mark.
    The US still offers very good income tax advantages.
    A)In your sate Florida as I am 100% sure you are aware there are no taxes. Interest on mortgage are deductible in the US that is very advantageous, Some Municipal Bond are tax free, Oil Royalties ,Partnerships etc..

    If one is careful taxes are no big deal in some areas of the US.
    Also in Tax havens there are very high duty taxes, Property tax at cost can run at about 12%, Cars up to 85% and several US investments are subject to a 30% withholding tax. So at the end of the day its not always what most people think it is. It can be good for some interest income but they are now so low that its no longer a benefit.

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