Constitutionality Of The Income Tax And Tax Avoidance Promoters         

As you use this book and become more familiar with the Web, you will undoubtedly run into books and Web sites where promoters will tell you that you legally do not have to pay your Federal income tax liability.  Typically the logic of these tax-avoidance promoters is that the Federal income tax is unconstitutional and/or the Federal income tax, as Congress has enacted it, allows us to voluntarily pay or not pay our income tax liability.

DO NOT get sucked into one of these tax-avoidance/tax protester groups.  I am telling you flat out, without any doubt or equivocation, that the income tax is constitutional and legal.  If you buy into one of these wacky tax-avoidance groups, you will either be intentionally or unintentionally breaking the law.  Tax fraud is potentially a criminal offense, and the fact that you were duped into engaging in tax fraud is generally no defense against your being prosecuted.  The people who promote these tax-avoidance schemes are either woefully ignorant of the law, con artists or simply nut cases.  Avoid them like the plague.

Why am I so emphatic about this?  Because the law with regard to the constitutionality of the income tax is so crystal clear.  Let me give you a quick history lesson.  Prior to 1913, it was a fact that the Federal government could not tax us the way it now does.  The Founding Fathers (in their wisdom) provided in Article I, Section 7 of the Constitution that if the Federal government was to levy a direct tax (like an income tax) on its citizens, the amount of the tax would have to be the same citizen by citizen.  In other words, the Founding Fathers were saying that all of us, as U.S. citizens, have the same constitutional rights and obligations.  If the government is to extract an obligation from us in the form of a tax, that tax should also be equal in amount.  Therefore, the U.S. Constitution, as originally written, did not authorize the Federal government to tax us on variable factors such as our income.

We literally had to amend the Constitution to permit the Federal government to income tax us as they now do.  In 1913, more than two-thirds of the States and Congress voted into law the Sixteenth Amendment to the U.S. Constitution.  The Sixteenth Amendment authorizes the Federal government to tax "income from any source derived."  In light of the incredibly broad breath of the Sixteenth Amendment (that we were stupid enough as a people to authorize), it is hard to give any credence to tax protester groups who claim the income tax is unconstitutional.

Incidentally, a fascinating footnote to this discussion is the fact that the promoters of the Sixteenth Amendment got it through the state ratification process with the following "class envy" pitch: the Federal income tax will only tax the extremely rich and not the middle-class.  As always happens, this "nail the rich guys" angle has backfired on the common man and woman with the result that the original 1913 income tax has grown from 9 to over 7,000 pages of statutory law and has significantly gotten into the back pockets of a majority of Americans.

There are scores of tax cases further confirming the constitutionality of the income tax. The Courts have been very harsh with the illegal tax avoiders and have readily doled out heavy civil and criminal penalties.  If you don't like the income tax the way it is, your only legal recourse is to vote for Congressional representatives and a President who will be serious about tax simplification and who will ultimately "rip the income tax code out by its roots."  Unfortunately, in order to accomplish the last-quoted goal of the influential (now retired) Texas Congressman Bill Archer, we would have to repeal the Sixteenth Amendment-not an easy task in modern America.

If you are interested in further educating yourself on legal ways of reforming the tax laws of this country, link to my Web site, click on Tax Planning and click on Tax Reform.

NOTE:  Remember what I told you earlier about deals that sound too good to be true.  Whether it's tax planning, purchasing commodity futures, investing in foreign businesses, lending money at 100% interest to foreign dignitaries or diplomats who you heard about through a chain letter, or anything else that sounds too good to be true-STAY ALERT. These good looking and well dressed hucksters will sound like the most intelligent people you've ever heard and generally will appeal to you as honest types who really want to help you. Some of these people may be hawking their snake oil at otherwise reputable gatherings.  People promoting things who you know from church, synagogue or mosque should likewise be approached cautiously.  You will naturally let down your guard since your religious affiliation with these people may have already influenced you that they are good folks.

Stay away from all of these people!  Use your common sense in these situations – there are no get rich quick schemes out there (unless you were born a Kennedy or a Rockefeller).  If it sounds too good to be true, IT IS!