Plenary Powers of Income Taxation

Edited: 9/25/2017

Reply John O. McGinnis article: The Modern Constitution Empowers Redistribution, the Original One Not So Much

Liberty Law Form

September 19, 2017

An interesting article, however, I would take exception to the conclusion that Mr. McGinnis makes concerning the 16th Amendment, to wit: “After the 16th amendment . . ., the federal government has plenary powers of income taxation . . . .”  The majority of people accept this declaration as gospel, however, the Supreme Court is clear that the 16th Amendment gave the government NO new powers respecting taxation. One of the early cases decided by the Supreme Court in both Brushaber and Stanton [240 U.S. 103, 1916], both written by Chief Justice White, made it clear that “it was settled that the provisions of the Sixteenth Amendment conferred no new power of taxation, . . .” When Mr. McGinnis uses the word “plenary” to the use of government’s authority to tax, this disregards the well settled fact that the authority of Congress to tax IS LIMITED.

In Chief Justice Marshall’s opinion in M’Culloch [17 U.S. 316, 1819] he points out that “. . . the article of taxation itself, is subordinate to, and may be controlled by the constitution of the United States.” Justice Field, concurring in the opinion of the Chief Justice in the Pollock case [157 U.S. 429, 1895] writes: “As stated by counsel: ’There is no such thing in the theory of our national government as unlimited power of taxation in congress. There are limitations, as he justly observes, of its powers arising out of the essential nature of all free governments; there are reservations of individual rights, without which society could not exist, and which are respected by every government. The right of taxation is subject to these limitations.’”

Returning to Chief Justice Marshall’s opinion, he noted that taxation “. . . may be exercised upon every object brought within its jurisdiction. This is true. But to what source do we trace this right? It is obvious, that it is an incident of sovereignty, and is co-extensive with that to which it is an incident.” Marshall goes on to explain the limitations of “sovereign” authority and taxation. At page 421 he states “. . . that the powers of government are limited, and that its limits are not to be transcended.” The general tenor of M’Culloch deals with the relationship of federal vs. State authority in taxation, however, the Chief Justice explains a common law principle that applies to all agencies of government; “that the power of taxation . . . is an incident of sovereignty” and that “[i]t may be exercised upon every object brought within its jurisdiction. . . . “All subjects over which the sovereign power of a state extends, are objects of taxation; but those over which it does not extend, are, upon the soundest principles, exempt from taxation. This proposition may almost be pronounced self-evident.” He then explains the extent of sovereign powers: “The sovereignty of a state extends to everything which exists by its own authority, or is introduced by its permission; . . .” [429]

A third limitation of the power of taxation by the federal government is found in the Constitution Article I, Section 8, clause 17 and that is the legislative powers of the federal government, which again are limited. As directed by that contract, Congress is authorized “To exercise exclusive Legislation in all Cases whatsoever, over such District (not exceeding ten Miles square) as may, by Cession of particular States, and the Acceptance of Congress, become the Seat of the Government of the United States, and to exercise like Authority over all Places purchased by the Consent of the Legislature of the State in which the Same shall be, for the Erection of Forts, Magazines, Arsenals, dock-Yards, and other needful Buildings; . . .” So the legislative authority of Congress extends only over the District of Columbia and “all Places purchased by the Consent of the Legislature of the State. . . .” Simply put, unless authorized by the States, all legislation enacted by Congress has no application to persons or property within the States.  “The grant of comprehensive legislative power over certain areas of the Nation, when read in conjunction with the rest of the Constitution, further confirms that Congress was not ceded plenary authority over the whole Nation.”  Justice Thomas concurring in U.S. v. Lopez, (1995)

The Court has made it clear that “all legislation is prima facie territorial.” [Justice Holmes, American Banana Co. v. United Fruit Co., 213 U.S. 347, 1909] “Legislation is presumptively territorial and confined to limits over which the law-making power has jurisdiction.” Sandberg v. McDonald, 248 U.S. 628. “Exclusive legislation is consistent only with exclusive jurisdiction.” Surplus Trading Co. v. Cook, 281 U.S. 647, 652. Justice McLean made it clear that: “Special provision is made in the Constitution for the cession of jurisdiction from the states over places where the federal government shall establish forts or other military works. And it is only in these places or in the territories of the United States where it can exercise a general jurisdiction.” [New Orleans v. United States, 35 U.S. 662, 1836] “. . . the United States have no constitutional capacity to exercise municipal jurisdiction, sovereignty, or eminent domain, within the limits of a State or elsewhere, except in the cases in which it is expressly granted.” By the State!  (Article I, § 8, cl. 17) Pollard’s Lessee v. Hagan, 44 U.S. 212,223.; “Neither the Legislative, Executive and the Judicial departments of the Federal Government  can lawfully exercise  any authority beyond the limits marked out  by the Constitution.”  Dred Scott v. Sanford, 19 How. 393.

The Founding Fathers understood that the purpose of the union was limited to the external affairs of the colonies, now called States. Justice Gray’s opinion in the Legal Tender Cases refers to these as: “The sword and the purse, all external relations, . . ., are entrusted to its government.” Julliard v. Greenmen , [110 U.S. 438, 1871]. To which Thomas Jefferson added: “To the united nation belong our external and mutual relations; to each State, severally, the care of our persons, our property, our reputation and religious freedom.”

James Madison stated in a letter reported in the Federalist Papers, No. 45: “The powers delegated to the federal government are few and defined. Those which are to remain in the state governments are numerous and indefinite. The former will be exercised principally on external objects as war, peace, negotiation, and foreign commerce; with which the last power of taxation will, for the most part, be connected. The powers relative to the several states will extend to all the objects which, in the ordinary course of affairs, concerns the lives, liberties and prosperity of the state.”

In Madison’s letter (#41) also reported in the Federalist Papers: “That we may form a correct judgment on this subject, it will be proper to review the several powers conferred on the government of the Union; and that this may be the more conveniently done they may be reduced into different classes as they relate to the following different objects: 1. Security against foreign danger; 2. Regulation of the intercourse with foreign nations; 3. Maintenance of harmony and proper intercourse among the States; 4. Certain miscellaneous objects of general utility; 5. Restraint of the States from certain injurious acts; 6. Provisions for giving due efficacy to all these powers.” During the debates in the Federal Convention of 1787 as reported by Madison, Mr. Sherman stated that; “[T]he objects of the Union, he thought were few, 1. Defence against foreign danger, 2. against internal disputes and a resort to force, 3. treaties with foreign nations, 4. regulating foreign commerce, and drawing revenues from it . . . .” These are sovereign powers held by the People delegated to the federal government.

Delegation and Natural Rights

“It must be conceded that there are such rights in every free government beyond the control of the state. A government which recognized no such rights, which held the lives, the liberty, and the property of its citizens subject at all times to the absolute disposition and unlimited control of even the most democratic depository of power, is after all but a despotism. It is true it is a despotism of the many, of the majority, if you choose to call it so, but it is nonetheless a despotism.” Justice Miller,  Loan Association v. Topeka (1874)

“There is no such thing in the theory of our national government as unlimited power of taxation in Congress.  There are limitations of its powers arising out of the essential nature of all free government; there are reservations of individual rights, without which society could not exist, and which are respected by every government.  The right of taxation is subject to these limitations.”  Justice Field concurring in Pollock v. Farmers’ Loan & Trust, 1895

A fourth Common law fundamental in found in the principle of “delegation”, that is one can only delegate what one has, nothing more.  Returning to Chief Justice Marshall’s opinion in M’Culloch as he touches on this fundamental: “If we measure the power of taxation residing in a state, by the extent of sovereignty which the people of a single state possess, and can confer on its government, we have an intelligible standard, applicable to every case to which the power may be applied.”

Since the People are the ultimate sovereign and as such are the source of all governmental authority and the power of taxation is in the sovereign and adjusting the wording of Chief Justice Marshall, we can apply this principle to the proper sovereign.  “If we measure the power of taxation residing in [the People], by the extent of sovereignty which the people . . . possess, and can confer on its government, we have an intelligible standard, applicable to every case to which the power may be applied.” So we ask the question, as a sovereign, do I have the power to take the property from my neighbor and give that property to another?  The logical answer to this is no!  Justice Samuel Chase spoke to this in his noted opinion in Calder v. Bull (1798):  “The obligation of a law in governments established on express compact, and on republican principles, must be determined by the nature of the power, on which it is founded.  A few instances will suffice to explain what I mean. . .,  a law that takes property from A. and gives it to B.  It is against all reason and justice, for a people to entrust a Legislature with such powers; and, therefore, it cannot be presumed that they have done it. . . .”

Following the principle in “delegation” that one cannot give, what one does not have, and that the Constitution is a contract composed of delegated sovereign powers, that assumed authority exercised by government is absent any support from the language and intent of the Constitution.  In our Republic, one’s life, liberty, and property exists only in the individual and none other.  Just a few thoughts from the Court on the subject of the Common law Natural Rights of the People.

“One’s right to life, liberty, and property . . . and other fundamental rights may not be submitted to vote; they depend on the outcome of no elections.

“A citizen’s constitutional rights can hardly be infringed simply because a majority of the people choose that it be.”  Lucas v. Forty-Fourth Gen. Assembly of Colorado, (1964)

“That every man has a natural right to the fruits of his own labor is generally admitted, and that no other person can rightfully deprive him of those fruits and appropriate them against his will. . . .”  The Antelope (1825)

As to taxation, the one fundamental that governments have ignored was recited by Samuel Adams: “. . . that it is an essential, unalterable right, in nature, engrafted into the British constitution, as a fundamental law, and ever held sacred and irrevocable by the subjects within the realm, that what a man has honestly acquired is absolutely his own, which he may freely give, but cannot be taken from him without his consent; . . .”  (Massachusetts Circular Letter, 1768)

In that well-known decision that gave us the Miranda Warning, comes a fundamental that is over looked: “ Where rights secured by the Constitution are involved, there can be no rule making or legislation which would abrogate them.”  Miranda v. Arizona, Chief Justice Warren, 1966.

Let’s start correcting our thinking about the rule of law by applying the fundamentals of the Common law which is the birth-right of the citizens of this Nation.  It would be a start in correcting the ills that now face society.

L. Sherwood Glazier       Sandy, Utah

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