The American Wisdom Series

Presents
Pamphlet #632

Direct v. Indirect Taxation

The issue of direct v. indirect taxes has been debated in Congress since not long after the constitutional ink had
dried. From page 1898 of The Annals of Congress (the 4th Congress, 1797) Representative Williams from New
York was recorded as reminding Congress of the Roman example of direct v. indirect taxation.

                                 "History, Mr. W. said, informed them of the annihilation of nations by means of
                              direct taxation. He referred gentlemen to the situation of the Roman Empire in its
                              innocence, and asked them whether they had any direct taxes? No. Indirect taxes
                              and taxes upon the luxuries and spices from the Indies were their sources of
                              revenue but, as soon as they changed their system to direct taxation, it operated to
                              their ruin; their children were sold as slaves, and the Roman Empire fell from its
                              splendor. Shall we then follow this system? He trusted not."

 By the late 1800s and up until the passage of the 16th Amendment in 1913 the people of this country demanded
 their legislators levy an income tax on accumulated wealth. This was because families such as the Camegies and the
 Morgans were virtually untaxed and controlling national politics with their vast and ever-increasing fortunes. By reading
 the Congressional Record, House and Senate documents, newspapers, magazines, law journal articles of the time and
 the writings of the people who were intimately involved in the development of the 16th Amendment, we will find that
 the intent was to tax the annual profit from unincorporated businesses and the net annual income from personal
 property. Wages and salaries from labor were not considered income within the original meaning and intent of the 16th
 Amendment.

Taxes on labor, as currently collected by the IRS as an "income" tax, cannot be described as anything other than a
direct tax.

Senator Norris Brown from Nebraska, the man who wrote the 16th Amendment, defined clearly what income was
and what the income tax was intended to accomplish. Not once did Sen. Brown mention that Congress intended to
pass an amendment that would grant the federal government a new power to directly tax the wages or salaries of
working people.

The historical record shows that the Republicans, acting as agents for those who had monopolized the American
economy, set the wages-are-income concept into motion by creating a tax code after the 16th Amendment was
passed that, benevolently, would "exempt" the first $4,000 of a person's "income." Since the average family's earned
income was about $500 a year at the time, it wasn't until after World War II, when this nation's economy was really
booming and national pride was peaking, that Americans, as a nation of millions of working people, really began
paying taxes on their wages. Back then Americans took for granted that they could trust the federal government, and
the average person had long since forgotten the debates of the income tax issue and what was included in "income"
and what was not. They certainly did not see how "paying their fair share" of taxes deducted from their labor was
analogous to conditions that contributed to the fall of the Roman Empire.

We have been conditioned since kindergarten to believe that wages and salaries generated from our labors are
income for tax purposes when the opposite, as borne out in the written history leading up to the passage of the 16th
Amendment, is actually the truth.

The government knew what it was doing then and it knows what its doing today. The U.S. Constitution recognizes
two kinds of taxes: direct and indirect. Congress does not have the constitutional right to lay direct taxes against the
people unless the tax burden is equally apportioned by population among the several States. Congress does have the
right to lay indirect taxes on privileges, events and activities. Taxes on cigarettes, alcohol and gasoline are examples of
constitutional indirect taxes.

There is no intelligent way to argue that a tax on a man's wages or salary is anything but a direct tax. We work, get
paid for our work and then get taxed according to the amount of money we are paid. If you don't work, you don't eat
and you die. Whereas you can choose not to consume cigarettes, alcohol or gasoline, you have no choice in whether
to pay the taxes that are calculated and summarily deducted from your wages - unless you choose to go to prison

Such a tax on wages is a tax on our right to exist. It is a feudal system. It is a direct tax - as direct as any tax can be.
An unapportioned federal income tax on our wages is unconstitutional and the federal government knows it. Well, this
only a half truth. If you live in Puerto Rico, Guam, or the U.S. Virgin Islands an unapportioned direct tax on your
wages is constitutional; if you live in the several States of the Union it is not.

Although the income tax statutes are constitutional, they don't mean what you think they mean. The fraud has been
accomplished by clever wordsmithing. The original intent of the 16th Amendment was to tax accumulated wealth and
not the wages of working Americans.

Through threats and coercion, and brown shirt tactics, the federal government has by deceptive means taken what,
by now, must be in the trillions of dollars from the American people in what has to be the most profitable extortion
scheme in world history. We are being Taxed without Our Consent.

It is my hope as an American, as a man who has dedicated his life to the pursuit of truth and the return of justice and
decency to our embattled Republic, and as a man who has tremendous respect for the author of Constitutional
Income: Do You Have Any?, that the American people will stand up against their servant, the federal government, and
demand to be treated in a manner consistent with the laws of this land. It is my hope that millions of Americans will
realize that they are paying unconstitutional taxes when they allow their wages to be diminished by the income tax.

I have spent my journalism career encouraging Americans, who have learned truths such as those contained in this
book to stand up for those inalienable rights, those principles of natural law that gave birth to this most magnificent
country: the right for all good people to have life, liberty and to pursue happiness.

                                                                                 Don Harkins, The Idaho Observer
                                                                                 Spirit Lake, Idaho, April 13, 2001