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It's Pop Quiz Time Again!

Take this NEW little test to see just how tuned-up you are with the realities of the federal tax structure as laid out by the framers and amenders of the United States Constitution, interpreted by the Supreme Court, and implemented in current law.

 

CtC Quiz IV: What Led To The Sixteenth Amendment?

 

1. The tax on federal income first went dormant at the end of:
1776.

1941.
1933.
1872.
 

2. The income tax was first revived in:
1894.

1787.
1812.
2001.

 

3. The chief reason for the revival of the tax was:
To buy Grover Cleveland a presidential yacht.
Because American's felt guilty about having too much money.
Congressional indolence had become a national scandal.
To recover for the public treasury a portion of the enormous profits in rent and dividends being enjoyed by beneficiaries of corruption-ridden publicly-subsidized projects like the trans-continental railroads.

 

4. The revived tax was quickly challenged in court on the argument that:
Income taxes were unconstitutional.
Insofar as the tax was applied to otherwise excisable rent and dividends, it took on the legal character of a property tax by virtue of the relationship between real estate and rent and stock and dividends, and thus these two federally-connected types of gains could only be taxed by the rule of apportionment.
Rates were too low.
The tax lacked progressivity.

 

5. The Supreme Court ruled that:
Income taxes are just unconstitutional unless apportioned, period.
Presidential yachts are decadent luxuries.
While apportionment is irrelevant to all other objects of the tax because they are unambiguously proper objects of an excise tax, when applied to rent and dividends the tax amounts to a property tax requiring apportionment, and therefore the revival act, which included these things in its list of objects to be taxed without apportionment, was unconstitutional.
What does it matter? This is ancient history.

 

6. Congress responded to this ruling by:
Re-enacting the tax revival without the rent and dividend applications, since half a loaf is better than none.
Buying Cleveland a yacht using personal funds.
Shutting down the government.
Enacting a series of alternative measures aimed at those rents and dividends in hopes of getting around the Supreme Court ruling-- most notably the Corporate Excise Tax Act of 1909-- while paying no attention whatever to other objects of the income tax.

 

7. The Sixteenth Amendment was designed to:
Launch the United States income tax.
Create a hybrid tax, which falls on undistinguished activities or the revenue they produce-- as in a capitation-- but is spared the rule of apportionment, as in an excise.
Keep the government from shutting down.
Overrule the Supreme Court's decision protecting the profits of crony-capitalists realized in the form of rents and dividends from the tax, and do nothing else, since nothing else needed to be done-- all other objects of the income tax had always been taxable without apportionment.

 

8. Upon the declared adoption of the Sixteenth Amendment, the income tax was revived for the second time in:
1909.
1913.
September.
Saskatchewan.

 

9. When subsidized-railroad investor Frank Brushaber challenged the re-revived income tax in 1916 on various grounds based on taking the Sixteenth Amendment as having authorized an unapportioned capitation, a unanimous Supreme Court:
Ruled that Brushaber was correct; Article 1, section 9 of the U.S. Constitution was toast and all restraints on the taxing power of the federal government were undone; rubbed its hands together maniacally and went, "Bwuahahahahahaha!"
Went into recess and joined President Wilson for some kick-back time on the presidential yacht.
Danced around the issue in a Texas Two-Step, issuing a weasel-worded the-"Obamacare"-mandate-is-a-tax-not-a-mandate ruling.
Simply and squarely ruled that the only thing the amendment is for, and the only effect it has, is to overrule the earlier Supreme Court reasoning that because of the personal property sources through which they arise, otherwise excisable activities whose gains are realized as rent or dividends require apportionment in order to be Constitutionally taxed.

 

10. After the adoption of the Sixteenth Amendment, and especially during and immediately after World War I during which the U.S. government went hugely in debt, the United States began collecting income tax from:
93% of the working population, just like during World War II a generation later.
From a relatively modest fraction of the population, but this was only because for some inexplicable reason exemption rates were set so high as to exclude the majority from any liability.
The same percentage of households on average as had been the average during the 1860s and early 1870s-- a bit less than 10%, even though the dollar amounts of the available exemptions were well below most household earnings.
The yacht-building industry.

 

11. The statutory structure of the re-revived income tax as enacted after the Sixteenth Amendment-- including what is taxed and how:
a. Is completely different from any earlier versions reflecting the fact that the tax is a new breed, falling on things previously untaxable without apportionment.
b. Generated much fear and trembling in the yacht-making industry and among its customers, who began a sustained campaign to subvert general understanding of the tax as having been transformed by the amendment into a tax reaching non-federal-beneficiaries, both in hope of marshaling broad political opposition to the tax and to eventually divert some of the burden of public finance which would otherwise fall predominantly on them alone onto ignorant others.

c. Is virtually word-for-word identical to the 1862 and 1894 statutory structure of the tax, including the specifications of what is taxed and how-- in fact, a great deal of the structure still in use to day IS the structure enacted during the 1860s.
d. Both b and c.

 

12. In the early 1940s the portion of American households affected by the income tax-- which had previously averaged less than 10% over all years in which the tax was in force from 1862 on, including the 30 years since the Sixteenth Amendment-- leapt to more than 90% (and has stayed in that area ever since). During the couple of years in which this dramatic change occurred:
Exemption rates were correspondingly lowered (or earnings levels correspondingly rose above existing rates).
Another Constitutional amendment was adopted broadening the application of the tax to areas it had not been able to reach before.
A change was made in the statutory application of the tax so as to apply it more broadly than before.
None of the above. All that happened during that transforming period was that the taxing entities, having concluded that understanding of the tax and the effect of the Sixteenth Amendment had been successfully compromised over the previous thirty years, suddenly sent tax forms to more-or-less everyone, on which recipients were instructed to declare "wages" and so forth, and calculate tax liabilities accordingly, with the definitions of these terms omitted. A masterful play by a venal community of folks who have ever since been living large by "the political means", just dreading the time when enough Americans learn the truth and resume control of their wealth and power.


Score =

SCORING

0 - 24% correct: I'm afraid you've gotten your "education" exclusively from the IRS.

25 - 49% correct: Your heart's in the right place, but you haven't yet started down the path to knowledge.

50 - 74% correct: You're well on the path, but still have some studying to do.

75 - 99% correct: You're on the very verge of self-empowerment...

100% correct: Hello, CtC Warrior!

 

The Answer Key and Notes:

 

Question 1. The tax on federal income first went dormant at the end of:

1872.

Question 2. The income tax was first revived in:

1894.

Question 3. The chief reason for the revival of the tax was:

To recover for the public treasury a portion of the enormous profits in rent and dividends being enjoyed by beneficiaries of corruption-ridden publicly-subsidized projects like the trans-continental railroads.

 

NOTE: During the Lincoln administration and subsequent Republican administrations, corruption in administration of publicly-funded projects like the railroads became epidemic. By the time of the second Cleveland administration the public was sick of the scandal and the exploitation of the public purse, and chose to revive the dormant income tax-- which is designed to capture a portion of private profits gained by exploitation of public privilege (and also to suction excess fiat currency out of circulation so as to conceal the true extent of the "inflation tax" being imposed by the state).  See more on this here.

Question 4. The revived tax was quickly challenged in court on the argument that:

Insofar as the tax was applied to otherwise excisable rent and dividends, it took on the legal character of a property tax by virtue of the relationship between real estate and rent and stock and dividends, and thus these two federally-connected types of gains could only be taxed by the rule of apportionment.

Question 5. The Supreme Court ruled that:

While apportionment is irrelevant to all other objects of the tax because they are unambiguously proper objects of an excise tax, when applied to rent and dividends the tax amounts to a property tax requiring apportionment, and therefore the revival act, which included these things in its list of objects to be taxed without apportionment, was unconstitutional.

Question 6. Congress responded to this ruling by:

Enacting a series of alternative measures aimed at those rents and dividends in hopes of getting around the Supreme Court ruling-- most notably the Corporate Excise Tax Act of 1909-- while paying no attention whatever to other objects of the income tax.

Question 7. The Sixteenth Amendment was designed to:

Overrule the Supreme Court's decision protecting the profits of crony-capitalists realized in the form of rents and dividends from the tax, and do nothing else, since nothing else needed to be done-- all other objects of the income tax had always been taxable without apportionment.

 

NOTE: It is by virtue of the fact that all other objects of the income tax have always been taxable without apportionment that we can see revealed what those things are (and can only be). Since capitations and other direct taxes require apportionment, these "income tax-able" things must be other than the proper subjects of those apportionment-required taxes, which include (among other things) activities engaged-in by right, and the revenues they produce. "Income tax-able" objects then, can only be activities engaged-in by privilege, and the revenues they produce-- which not coincidentally are the proper objects of an excise such as the "income tax" is uniformly acknowledged to be.

Question 8. Upon the declared adoption of the Sixteenth Amendment, the income tax was revived for the second time in:

1913.

Question 9. When subsidized-railroad investor Frank Brushaber challenged the re-revived income tax in 1916 on various grounds based on taking the Sixteenth Amendment as having authorized an unapportioned capitation, a unanimous Supreme Court:

Simply and squarely ruled that the only thing the amendment is for, and the only effect it has, is to overrule the earlier Supreme Court reasoning that because of the personal property sources through which they arise, otherwise excisable activities whose gains are realized as rent or dividends require apportionment in order to be Constitutionally taxed.

Question 10. After the adoption of the Sixteenth Amendment, and especially during and immediately after World War I during which the U.S. government went hugely in debt, the United States began collecting income tax from:

The same percentage of households on average as had been the average during the 1860s and early 1870s-- a bit less than 10%, even though the dollar amounts of the available exemptions were well below most household earnings.

Question 11. The statutory structure of the re-revived income tax as enacted after the Sixteenth Amendment-- including what is taxed and how:

Is virtually word-for-word identical to the 1862 and 1894 statutory structure of the tax, including the specifications of what is taxed and how-- in fact, a great deal of the structure still in use to day IS the structure enacted during the 1860s. That structure also generated much fear and trembling in the yacht-making industry and among its customers, who began a sustained campaign to subvert general understanding of the tax as having been transformed by the amendment into a tax reaching non-federal-beneficiaries, both in hope of marshaling broad political opposition to the tax and to eventually divert some of the burden of public finance which would otherwise fall predominantly on them alone onto ignorant others.

Question 12. In the early 1940s the portion of American households affected by the income tax-- which had previously averaged less than 10% over all years in which the tax was in force from 1862 on, including the 30 years since the Sixteenth Amendment-- leapt to more than 90% (and has stayed in that area ever since). During the couple of years in which this dramatic change occurred:

Exemption rates didn't dramatically change, there was no Constitutional amendment expanding the tax, and there was no statutory expansion of what was subject to the tax. All that happened during that transforming period was that the taxing entities, having concluded that understanding of the tax and the effect of the Sixteenth Amendment had been successfully compromised over the previous thirty years, suddenly sent tax forms to more-or-less everyone, on which recipients were instructed to declare "wages" and so forth, and calculate tax liabilities accordingly, with the definitions of these terms omitted.

 

It was a masterful play by a venal community of folks who have ever since been living large by "the political means", while dreading the time when enough Americans learn the truth and resume control of their wealth and power.

Quiz I

Quiz II

Quiz III