From: "Dr. Tom" Date: Sat, 27 Aug 2005 Subject: [Lex_Rex] No alternatives to the current income tax for ALL commerce Jon Roland wrote: “The proposed Fair Tax would be constitutional, unlike the income tax, and the constitutionalists among us should support it for that reason. The personal income tax is unconstitutional precisely because it is a tax on labor, the fruits of which are a natural right. The estimates of 30% are only valid if services are not included.” I disagree. The personal income tax is NOT unconstitutional; it is a tax on the commerce that produces the income. But the only commerce that is taxable by Congress is that which crosses country borders (in addition to possessions commerce, separately under federal jurisdiction). President Bush signed the Executive Order to create an advisory committee "to assist in reforming the Federal Internal Revenue Code to benefit all Americans," giving the impression to the public that there are a host of alternatives to the current income tax. In fact, there are virtually no alternatives; the Constitution and Supreme Court having already decided the matter. The Supreme Court made it quite clear in Stanton v. Baltic Mining, 240 U.S. 103 1916 that some things are "entirely beyond the scope of the taxing power of Congress," so that Congress has "no authority to impose a burden, either direct or indirect." The Constitution allows for two types of taxes: 1. "Direct" taxes (which must be apportioned), which are per capita taxes or taxes on property. 2. "Indirect" taxes (which must be uniform), which are taxes imposed upon the "importation, consumption, manufacture, and sale of certain commodities, privileges, particular business transactions, vocations, occupations, and the like" (Flint v. Stone Tracy, 220 U.S. 107 (1911)). An all-encompassing tax, applicable to nearly all commerce (including purely domestic commerce), is NOT permissible in EITHER of these categories. In other words, it is not possible to impose a broad federal tax on domestic commerce, no matter what form it takes or what it is called (national sales tax, flat tax, VAT tax, etc.). In addition to the specific limits found in the taxing clauses of the Constitution, there are also "virtual limitations, arising from the principles of the Constitution itself," preventing Congress from using a so-called "tax" in order to achieve "ends inconsistent with the limited grants of power in the Constitution" (Bailey v. Drexel Furniture (259 U.S. 20 (1920))). Congress cannot acquire jurisdiction over all commerce within the 50 states simply by exerting such power via "tax" legislation. "To give such magic to the word 'tax' would be to break down all constitutional limitation of the powers of Congress and completely wipe out the sovereignty of the states" (Bailey, supra), and such "cannot be sustained as an exercise of the taxing power of Congress conferred by section 8, article 1" (Hill v. Wallace, 259 U.S. 44). A law whose purpose is "to establish a regulation applicable to all trade; to commerce at all points, especially if it is apparent that it is designed to govern the commerce wholly between citizens of the same State, is obviously the exercise of a power not confided to Congress" (United States v. Steffens, 100 U.S. 82 (1879)). Therefore an all-encompassing tax, applicable to nearly all trade (including purely domestic trade), is not authorized by the Constitution in EITHER category of tax (direct or indirect). Regardless of its name or how it is presented, no tax may be constitutionally imposed upon all commerce (including purely domestic). On the other hand, the commerce clause makes it so that Congress can impose a fairly broad income tax application to income derived from "commerce with foreign nations" (see Peck v. Lowe, 247 U.S. 165 (1918)). And as the law shows (see Subchapter N of Title 26 and the regulations thereunder), that is precisely what Congress did, whether every member of Congress knows it or not. The only way to impose a broad tax on domestic commerce is via a constitutional amendment, but that is unlikely to happen as the public learns it has been defrauded for generations. The federal government must be downsized and brought back to the Constitutional limits that it has been ignoring all these years. Tom Clayton, MD