I’ve watched my fair share of courtroom drama, both television and movies, over the years, and this argument creeps into the dialogue once in a while.
I suppose real people still talk about this when they get together socially on some occasions as well.
Being the season we think about taxes the most (I’m kind of stuck with that, I’m afraid), I woke up bemused by this recently, and wanted to share some of my thoughts.
There seems to be this undercurrent of thought, promoted by self-proclaimed advocates and theorists, that the United States does not have a right to tax our income.
Oh, if wishing made it so.
How many of you are old enough to remember when Dick Nixon, while still the Chief Executive of our land, took America off the gold standard?
It happened in August of 1971, and it shocked the Wall Street pundits, though history shows that the market did not crash as they all predicted.
But…cash basically become an idea at that point, measurable only against the value of other world currencies (aka FOREX), and basically worthless as a stand-alone tangible concept.
Ray Dalio, the world’s most successful hedge fund manager, is quoted as saying, “cash is trash.”
How do you like thinking about that, anyway? Cash itself is basically worthless. Ironic, right?
Anyhow…shortly after this, in 1974 and 1975 an infamous fellow by the name of Irwin Schiff decided that he wasn’t going to pay income taxes anymore.
He came up with some plausible-sounding arguments to support his position, too.
The fun part that I like is that in he sent unsigned 1040 forms to the Internal Revenue Service with the title “U.S. Individual Income Tax Return” changed to read “U.S. Individual Income Confession.”
Instead of disclosing income, he included assertions of various constitutional rights on the forms, claiming essentially that under the rights enumerated under eight separate Amendments he would not be an “involuntary serf” of the U.S. government.
Schiff contended that because Federal Reserve notes were not backed by gold, they were not “income” for purposes of the Federal income tax. (United States vs Schiff, 1979)
He’s not the only conspiracy theorist propounding sophistic arguments claiming the income tax is illegal, and refusing to pay, either.
This has been tested numerous times in the 20th century with a number of court cases, and without fail the courts side with the Sixteenth Amendment. That’s the one that put the federal income tax into place in March of 1913 for good.
Some people may believe that paying taxes is unconstitutional for a variety of reasons, but their arguments are generally not supported by legal precedent.
One argument is that the income tax is a form of forced labor, which violates the 13th Amendment to the U.S. Constitution that prohibits slavery and involuntary servitude.
Another argument is that income tax is unconstitutional because it violates the Fifth Amendment’s protection against self-incrimination. This argument is based on the idea that income tax requires taxpayers to disclose potentially incriminating information about their finances.
Some people argue that the income tax is unconstitutional because it is not apportioned among the states in accordance with the Constitution’s requirement for direct taxes.
The Ugly Truth
Courts have consistently rejected the 13th Amendment argument, holding that taxes are a necessary part of the government’s power to raise revenue for public purposes and that paying taxes is not equivalent to forced labor.
Courts have also held that the Fifth Amendment does not apply to tax returns, and that taxpayers are required to file accurate returns.
The argument against federal income tax not being apportioned to the states was rejected by the Supreme Court in 1927 when it upheld the constitutionality of the income tax.
Sorry folks, but the main point to keep in mind is the Sixteenth Amendment.
Forgive me if I am amused when someone makes the statement, “taxes are unconstitutional,” but despite how I feel about this (and I do feel strongly about it, make no mistake!), they are.
Constitutional, that is. See the Sixteenth Amendment, and all of the failures to overturn it since then.
We maintain, nevertheless, that you should pay the absolute bare minimum possible.
We are all mandated to pay taxes if we meet certain minimum income requirements, but we are NOT mandated to pay more than we have to.
If you are sick and tired of paying excess taxes, and crave the kind of partnership with your accountant that provides proactive strategies instead of after-the-fact reporting?
Let’s talk! Soon!
Tax season is in its final month, so there’s still time to win the day over the dastardly villain, and get the girl.
Villain = Congress and the IRS.
The girl = your own hard-earned money, back in your own pocket. Where it belongs!