Inalienable rights:  In Butcher’s Union Co. v. Crescent City Co. 111 U.S. 762, Mr. Justice Bradley, in a concurring opinion, says:

     “The right to follow any of the common occupations of life is an inalienable right.  It was formulated as such under the phrase ‘pursuit of happiness’ in the Declaration of Independence, which commenced with the fundamental proposition that ‘all men are created equal; that they are endowed by their creator with certain unalienable rights; that among these are life, liberty and the pursuit of happiness.’  This right is a large ingredient in the civil liberty of the citizen.”  (U. S. v. Morris 125 F 322 @ 326)

       "Life is the gift of God, and the right to preserve it is the most sacred of the rights of man.  Liberty is freedom from all restraints but such as are justly imposed by law.  Property is everything which has an exchangeable value, and the right of property includes the power to dispose of it according to the will of the owner.  Labor is property, and as such merits protection.   The right to make it available is next in importance to the rights of life and liberty.  It lies to a large extent at the foundation of most other forms of property, and of all solid individual and national prosperty.  'Due process of law' is the application of the law as it exist in the fair and regular cource of administrative proceedure.   'The equal protection of the laws' places all upon a footing of legal equality and gives the same protection to all for the preservation of life, liberty, and property, and the pursuit of happiness."
[Chief Justice Swayne, dissenting opinion in The Slaughterhouse Cases (1872) 83 U.S. 36 @ 127]

       "For the preservation, exercise, and enjoyment of these rights the individual citizen, as a necessity, must be left free to adopt such calling, profession, or trade as may seem to him most conductive to that end.  Without this right he cannot be a freeman.  This right to choose one's calling is an essential part of that liberty which it is the object of government to protect; and a calling, when chosen, is a man's property and right.  Liberty and property are not protected where these rights are arbitrarily assailed."
[Justice Bradley, dissenting opinion in The Slaughterhouse Cases (1872) 83 U.S. 36 @ 116]

       "And when the Colonies separated from the mother country no privilege was more fully recognized or more completely incorporated into the fundamental law of the country than that every free subject in the British empire was entitled to pursue his happiness by following any of the known established trades and occupations of the country, subject only to such restraints as equally affected all others.  The immortal document which proclaimed the independence of the country declared as self-evident truths that the Creator had endowed all men 'with certain inalienable rights, and that among these are life, liberty, and the pursuit of happiness; and that to secure these rights governments are instituted among men.'"
[Justice Field, dissenting opinion in The Slaughterhouse Cases (1872) 83 U.S. 36 @ 105]

In the 1903 case of United States v. Morris 125 F 322, District Judge Trieber refers to the above case, as well as many others, as the basis for the court's opinion.  In this case he explores the history of the thirteenth Amendment and its relationship to the inalienable right to support oneself through labor.   Of these rights he quotes: includes the 'right to follow any of the common occupations of life' as declaired by Justice Bradley in the Butchers' Union v. Cresent City Case 111 U.S. 746 @ 762.  He begins with the general question: "Can there be any doubt that the right to purchase, lease, and cultivate lands, or to perform honest labor for wages with which to support himself and family, is among these rights thus declared to be 'inherent and inalienable', and concludes with the statement: "That the rights to lease lands and to accept employment as a laborer for hire are fundamental rights, inherent in every free citizen, is indisputable."  Notice the change from the broad catigory of 'any of the common occupations of life' to the very narrow conclusion of 'employment as a laborer for hire'.  Why?  Is there some distinction between the two?

Of course there is.   "Labor" is a general term referring to every form of physical and mental effort, it includes both the right to labor for others as well as the inherient right to employ others.  "Pursuit of Happiness" is also a very general term meaning not only the right to be employed but also of the right to acquiring those things which make us happy, such as status or property.  Judge Trieber makes the distinction between common occupations such as professions, trades and other business pursuits, which by their nature confer certain "privileges" upon the person so employed, and the basic right to earn a living by working for others.  Government can not guarantee that a person will be successful or own property, but, government can guarantee to the person the right to pursue such through personal labor.   Under the Federal Constitution this principle was recognized in the levying of taxes.  The ownership of property being the right protected through the requirement that "direct" taxes be apportioned.   Likewise, the right to labor, as an employee for hire, is the right protected through the requirement that "Capitation, and other direct, taxes" be apportioned.  The "use" of property and or the "employment" of others in producing "gains and profits" (income), while within the context of "pursuit of happiness", is a right which may be subjected to regulations.   The person using property or employing others to produce "gains and profits" does so by choice, thereby controlling the amount of taxes paid.   The laborer "for hire", has but one choice.

The “Income Tax” is not levied as a personal (Capitation) or other direct tax on labor, if it were, regardless of anything earned a tax would be due.   The Income Tax is, by its nature, levied as an Excise tax upon the “gain, profit or income” received from the sale or use of real and personal property (capital) and the operation of commercial and business activities (labor)*.  In essence, it is a Tax upon the “privilege” of receiving gain (income) from any or all-monetary transactions, measured by the amount of the gain (income) received*.  The Income Tax paid by individuals in business, i.e. trades, professions and occupations (privileges and employments), is a valid Excise Tax upon the “use, action or privilege” involved in the transaction, measured by the amount of gains and profits (income) received.  The Income Tax then, being levied directly upon those "gains, and profits" (income), is levied indirectly upon the capital or labor.    The same Tax, when levied upon the “wages” of employees (labor for hire) however, can be considered nothing other than a “Capitation, or other direct,” Tax.    Such taxes affect the employee directly, as they are measured by annual receipts and not “gains and profits”.   In other words, the tax is levied upon the employee “without regard to property, profession, employment or circumstance”, with the specific intention of taxing the employee, not the gains and profits derived from commercial transactions (business pursuits).

The Sixteenth Amendment says:

“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.”

Congress has always possessed the power to lay and collect taxes, whether or not they were direct or indirect.   The only restriction was that “Capitation, or other direct, taxes” must be apportioned, and indirect taxes (Excise, Imposts and Duties) must be uniform throughout the United States.  The Sixteenth Amendment did not change those requirements nor institute a new method of taxation.  By design, the Amendment did not repeal or modify those sections requiring apportionment and uniformity found within the Constitution.  The purpose of the Amendment was to clarify, i.e. to make a distinction between Congresses intention to tax people or the ownership of property (Capitation, or other direct tax), or their intention to tax the “use, action or privilege” (indirect) involved in transactions.   By the term “from whatever source derived”, Congress limited the operation of the tax to “use, action or privilege” through the exclusion of the source (capital or labor).  The question then, in light of the above cases, is; to whom does the “Income Tax” apply.

Chapter 61 of the Internal Revenue Code sets forth the requirements for filing information statements and tax returns.  Subsections 6001, 6011 and 6012 identify “who” is responsible for filing those statements and returns.  Section 6001 says: “Every person liable for any tax imposed by this title”.  Section 6011 says:  “When required by regulations prescribed by the Secretary any person made liable for any tax imposed by this title”.  And, Section 6012 “Persons required to make returns of income” says:  “Every individual having for the taxable year gross income…”

In order to understand the term “person made liable”, under Sections 6001 and 6011, you must refer to the definition of “Person” found in Chapter 79.   Section 7701 begins by making this statement: (a)  “When used in this title, where not otherwise distinctly expressed or manifestly incompatible with the intent thereof”.  What was Congresses intention by making this statement, other than to alert the reader that something is different in the interpretation of the words which follow.  In other words, because Congress distinctly defines a word, the standard dictionary definition for that word is not to be used, and where a word is defined by Congress, its definition must be consistent with the intent of the law (Constitution).

The term “Person” is the first word defined, but it too includes a specific warning as to its meaning within the Tax Code.  Remember, the 16th Amendment is not a “Capitation, or other direct, tax”, i.e. it is not based upon existence or ownership of property, it is a tax upon “income, from whatever source derived”.  The person may exist and own property without being subjected to the tax.  Read the following definition very carefully, the term “construed to mean and include” makes a distinction between the broad interpretation of “person” and the Tax Code’s meaning.

“The term “person” shall be construed to mean and include an individual, a trust, estate, partnership, association, company or corporation.”

That’s seems like a pretty straightforward definition, but, how many employees (labor for hire) are “expressly” identified by those terms?  None!  And rightly so, because this is not a “Capitation, or other direct, Tax” affecting “life, liberty or the pursuit of happiness”, it is an excise tax.   The closest you can get to imply that the term “Person” refers to an “employee” is through the term “individual”; so what is meant by that term?

Set your preconceived ideas aside and consider what the Income Tax is all about, and the relationship of the other six associated words to “individual”.  This is where the use of particular words cause misunderstandings and lead us to believe things which are not true.   The Tax Code must be interpreted within the “context” of the “words” used, the association of those words to each other (construed) and to the intent of the law implementing it. “Individual” is not separately defined within the Tax Code, probably for this very reason, therefore we must presume to know the answer or we must refer to a dictionary.  All bets are on the dictionary in this case.   Webster’s New Encyclopedic Dictionary (1993) gives us this definition:

“Individual- 1: a.  A particular being or thing as distinguished from a class, species or collection. 2: a. A particular person

From this definition it is almost impossible to tell which “individual” the Tax Code is referring to, for a particular person could be a “Natural Person” or an artificial person.  Then again, the individual might also be any particular being or thing (entity), which is recognized as having rights and duties such as a corporation or business.  Obviously, the context of the definition and the thought being projected (construed) must be considered in order to understand who or what the term “individual”, under the Tax Code, refers to.

What is the grammatical relationship between an “individual” and the other six named “entities” in this definition?   Could the term “individual”, within the context of the Tax Code, refer to both the artificial entity (business related human being) and the “labor for hire” employee (non-business related human being)?  If so, what is the point of the phrase “construed to mean and include”, why not just say that the term “person” includes all of the others?   This is a specific definition, as none of the other definition includes the term: “shall be construed to mean”.  Congress, in order to clarify their intention to tax “use, action or privilege [excise tax], specifically excluded “labor for hire” by removing the “employee” from the definition of “person” within the Tax Code.  By doing so, they automatically restrict the Tax Code’s operation to that of an indirect Excise Tax upon  "use, action and privileges” (transactions), in compliance with the requirement of the Constitution.  In order to maintain the context of the term “person”, within the prescribed definition; “individual”, in this case, must only refer to a “person” or entity employing “use, action or privilege”.

What about the employee (labor for hire), wouldn’t they be excluded by this definition?  No.   They just cannot be included, within the context of that definition, unless they fall within the requirement of “use, action or privilege.  Unless “People” are actually conducting “business, privileges or employments”, which are subject to an Excise Tax, they cannot be made liable for filing Income Tax Returns under the definition given by the Tax Code.

Let’s take this one step further and look at the requirements of “uniformity” under Section 8.  As an example; corporations are created by law and therefore artificial in nature, but treated as living “persons”.   They exist, just like you and me, yet, they are assessed “Income Taxes” based strictly upon their net profits.  Why?

This quote is from Pollock v. Farmers Loan and Trust (1895) 157 US 427 page 778 of text (briefs).  It is attributed to Edward B. Whitley, Assistant Attorney General and Richard Olney the Attorney General of the United States.  This is their answer to the above question:

“In the present case there is no lack of uniformity as between corporations and individuals.  The exemption of $4,000 a year in the case of individuals or families, as will be shown, is intended as a compensation for the necessarily excessive burden of consumption taxes upon small and moderate incomes.
There is no such situation in the case of a business corporation.  Every cent which it expends is allowed it.  It is taxed only upon its net profits, deducting the wages account; which corresponds to the living expenses of the individual.”

To further dramatize this picture, Justice Harlan, in his dissenting opinion 158 US 601 @ 675-6 gives us this food for thought:

“The statute allows corporations, when making returns of their net profits or income, to deduct actual operating and business expenses.  Upon like grounds, as I suppose, Congress exempted incomes under $4,000.”

Corporations are classified as artificial “persons” under the Tax Code, but even they are not objects of a “Capitation, or other direct, Tax” because of the inalienable right to exist.   They are allowed to deduct all of their recovered capital as well as the expenses incurred in the operations and maintenance of their “business” from their “annual receipts”, because such capital and expenses are not “taxable income” under the 16th Amendment.   They are tax only upon their net profits (net income), thus prohibiting the tax from being “direct” upon their existence.  The Tax, by being levied upon net income is paid out of net profits, not out of capital or other annual receipts representing expenses.  In other words; the Tax does not affect them directly, but only indirectly.

Here is the difference between corporations and other “persons” under the Tax Code, and why uniformity is required in the levying of an Income Tax.   Under the Tax Code the “individual”(artificial entity just like a corporation) is not allowed to deduct “personal, living, and family expenses” (Chapter 1, Subchapter B, Part IX, section 262) from their annual receipts, because such expenses have nothing to do with the operation of “business” and or the acquisition of “gains, profits and income”.   The gains and profits (income) derived from the receipts are then transferred to the Natural Person during the year in the form of compensation, fees, commissions or wages.  At the end of the year the individual (business related “person) accounts for all of the receipts acquired during the year, deducts all of the expenses incurred and capital recovered and determines the amount of gain or loss attributed to the operation of business.  This gain or loss is then transferred to the Natural Person and certain specified exemptions and deductions allowed from that “adjusted gross income” in order to establish the “taxable income” of the human individual.   At this point the two “persons” are not treated the same, and therefore are not treated “uniformly” upon the object “taxable income” (Sections 1 and 11), except by the operation of the personal “exemption”.   The purpose of the exemption is to cover the actual “personal, living and family expenses” of the Natural Person, thereby preventing the Tax from becoming a “Capitation, or other direct, Tax” upon labor.

In order to avoid the possibility of the courts holding that the taxes levied upon the income derived from business transactions were direct upon the “natural person”, Congress set these previous “exemptions” well above the wages (annual receipts) earned by the average American employee.  The purpose was to separate the taxable “income” of the “Natural Person” from the “gains and profits” of the “artificial person”, by the allowance of an “exemption” which would cover “personal, living and family expenses”.   In this way the “Income Tax” would be confined to that of an indirect Excise Tax upon “use, action and privilege”, measured by the actual gain or profit (income) received by either the artificial person  (corporations, individuals and business related entities) or the Natural Person.

Maybe it’s possible to think this all changed with the adoption of the Sixteenth Amendment; perhaps this will help clarify that assumption.  Again from the Congressional Record of April 26, 1913 (Sixteenth Amendment was adopted in February 1913) pages 505-506, the remarks of Congressman Hull:

“In any event, the proposed tax is measured by net profits or gains, and not imposed upon gross income nor capital nor other property.  If a citizen has not been successful in his effort to accumulate profits he is not required to pay the tax, but if he has prospered he is required to contribute to his Government, not a scriptural tithe, but a small percentage of his net profits.”

Perhaps if Congress would recognize that we are the “People”, and that the Constitution was written for our protection not that of business and corporations, we could return to the principles which made this Country strong.  What is a guarantee of “Life, Liberty and Pursuit of Happiness” worth, without the inherent benefits which go with them?   The “exemption” was our guarantee of those principles and the incentive which drove our economy.  Raising the “exemption” to cover the reasonable cost of living and providing for our families takes nothing away from anyone.  It allows everyone to compete on the same level and shows no discrimination between wealth and poverty.

These are the remarks of Senator O’Mahoney of Wyoming, made June 18, 1935 as found in the Appendix of the Congressional Record.   It is titled “The Constitution A Charter Of Liberty”.  It is a timeless statement we would do well to remember:

“Most of the political and economic difficulties from which our country is now suffering have resulted from the fact that we have forgotten the distinction between natural persons and the artificial persons created by the States, which are called corporations.  Thomas Jefferson was not thinking about corporations when he wrote ‘all men are created equal’.  The framers of the Constitution were not thinking about corporations when they wrote the preamble.  Abraham Lincoln was not thinking about corporations when he delivered the Gettysburg Address and when he went into the valley of death to preserve the union.  They were all thinking about people- about men and women of flesh and blood and their human rights.

The Constitution deals with people and government, and the concept of inherent sovereignty.   The word “direct”, in the Constitutional sense, is in relationship to that principle.  “People” in our Country are not subjects of their government as in other countries, they are equal sovereigns coexisting for the benefit of “the people”. (OK, that’s how it was supposed to be)  The term “direct”, in its Constitutional meaning, is intention, not movement, direction or “without intervening steps or agencies”.  The words used in the Constitution are not “direct taxation”, referring to the collection of the tax, but rather “direct taxes”, referring to the intention of the Tax.   In other words the intention of Congress, by implementing the “direct” tax, is to extract a tribute (tax) from each and every person living in this Country, in order to pay for the cost of protection the Federal Government provides.   It is because the Constitution recognizes “that all people are created equal”, that it was required that each one’s share of this cost should also be equal. Therefore, the requirement of “apportionment”, according to population, was assigned to “direct” Taxes as their method of collection and to Representatives as their method of election.    This was done to prevent the wealthy northern States from levying taxes on heavily populated poorer States and to keep the poorer States from levying taxes upon the wealth of the northern States, so that the taxation of “People” would be equal.  This also prevented the Federal Government from spending money they did not have, and then raising taxes to cover the deficit.

The Court made this meaning clear in 1895, when they established that a tax laid upon the annual receipts of real and personal property was, in fact, a tax levied with the intention of taxing “People” or the ownership of property, therefore “direct”.   Accordingly, the Court ruled that the income tax levied by the Act of 1894 was unconstitutional because it was not apportioned.  The Sixteenth Amendment specifically deals with the intention of the tax being levied, and does not change or remove the Constitutional requirements of the method used in either “direct” or “indirect” taxes.   The Amendment, by restricting the operation of the tax to “income, from whatever source derived”, in effect, places the source (capital and or labor) beyond the reach of the tax and therefore outside the intention of Congress.  The removal of the requirement of apportionment was to restrict the classification of the “Income Tax” to that of the existing Excise Tax, levied upon the “gains and profits” derived from business and commercial activities (transactions).  If the intention of Congress is to tax the “People” or the ownership of property, they certainly have the power to do so, but the tax still must be apportioned.  If their intention however is to tax “use, action or privilege”, then it may be done without apportionment, even though it effects the “income” derived from the “use” (rents, interest and dividends) or sale of capital (capital gains) and or the gains and profits derived form business and commercial activities.