Is Income Tax a Federal Fraud?

By John Tiffany. Report on Internal Revenue Service: Is Income Tax a Federal Fraud?—The Continuing Scandal of 1935 to Present. The author argues that the whole so-called income tax system is a gigantic “con”—possibly the greatest swindle of the 20th and 21st centuries. Your income tax grows out of your Social Security registration, which was induced by fraud and coercion, says our writer. This timely article, as folks start to think about filing their income tax returns, is a significant development for the cause of “truth in taxation history.”

The “separation of powers” doctrine was regarded by the Founding Fathers as sacred. The doctrine has its roots in the structure of the U.S. Constitution and is the constitutional principle of dividing power among different parts of the government—the Congress, the executive and judiciary branches—granting each branch distinctive powers. There is supposed to be very little overlap in this distribution of power, so that each branch has its own well-defined area in which to operate.

When one branch usurps the power of another, or merely interferes with another branch in the exercise of its power, a separation problem arises. The separation of powers doctrine is designed to ensure that no one branch gets too much power, lest our painfully created republic disintegrate into a tyranny.

A levy is defined in law as “a seizure, the setting aside of specific property from the general property of the debtor and placing it under the control of the sheriff until it can be sold and applied to the payment of the execution.” An execution is defined as “a routine court order that attempts to enforce the judgment that has been granted to a plaintiff by authorizing a sheriff to carry it out.”

However, the Internal Revenue System (IRS) has violated the principle of separation of powers by usurping the power to seize the wages of any worker without bothering with a court order.

The secretary of treasury has what is called the power to levy. But strictly speaking and logically, a “notice of levy” is not the equivalent of a levy reduced to judgment by a judicial court.

It should be clear to all TBR readers that the Constitution is now very sick. It began in 1862, when the first federal income tax act was passed into law. That income tax was repealed—part of a two-steps-forward-and-one-step-back approach to enslaving the American people. In 1894, an income tax act was again passed into law. This time, to make it more palatable to the hoi polloi, it was supposedly aimed specifically at the titans of corporate wealth.

But in 1895 the Supreme Court decided, in the case of Pollock vs. Farmers Loan & Trust Co., 157 U.S. 429, that the new income tax was unconstitutional, based on a specious theory put forth by John D. Rockefeller’s corporate attorney, Joseph Choate. The theory reasoned that if you trace income from real estate back to its source, the income tax on the sale of land should be classified as a “direct” tax. According to the Constitution, a direct tax is subject to apportionment.

Many people today—in fact most people, including the media talking heads—misunderstand what a direct tax and an indirect tax are. These terms are technical ones—“terms of the legal art”—and do not mean what they sound like in “street English” (that the government can reach “directly” into your pocket for money). Instead, a direct tax in constitutional law is a tax on property by reason of its ownership, such as an ordinary real estate tax, or a tax on your slaves, imposed on the person owning the property, as well as a capitation, or head tax.

Legalese is very dangerous because most people do not know (and they are not told) when the language being used is “legal English” and when it is normal or street English, and the words may appear the same in spelling and pronunciation but have different or opposite meanings. One misconstrued word can result in a disaster if you find yourself in court. And the judge is not going to help you understand the language. Although supposed to be a neutral magistrate, he is clearly on the opposing side. How can he be neutral when the other side signs his paychecks?

You might be speaking one version of English—street English—while the judge is hearing you, or deliberately mishearing you, in another version of English—legalese. In our corrupt courtrooms, do not expect him to clarify the words being used.

An indirect tax is an “event” tax. It is also called an excise tax. If you don’t do anything, you don’t owe any indirect tax. A gift tax, or an estate tax, involves a transfer event, so these are indirect taxes. A tax on your labor, or what we call an income tax, would also be an indirect tax. Most people wrongly assume the income tax is a direct tax.

The Constitution says: “Representatives and direct Taxes shall be apportioned among the several States . . . but all Duties, Imposts and Excises shall be uniform throughout the United States.”

Thus, you could not have an indirect tax that is 2 percent in the North and 4 percent in the South, for example. That’s called the rule of uniformity for indirect tax. Direct tax must follow the rule of apportionment, which means each state contributes an amount proportional to its population; clearly this means that the tax is actually paid by the state (not the individual, nor by corporations) to the central government. It would not be paid by you the citizen, so “direct tax” means more or less the opposite of what almost everyone (even some “tax rebels,” who should know better) insists it does mean.

Clearly then an income tax must be an indirect tax, in the language of constitutional law (legalese).

The Pollock court, ignoring the overwhelming precedents, effectively exempted corporate wealth from supporting the government. This led to a commodities tax that proved to be a great burden on the middle class.

Choate ingeniously argued that the 1894 income tax act was unconstitutional, based on a theory of resorting to the “source” of the income, to move the income tax, inherently belonging in the category of indirect taxes, into the category of direct tax, in defiance of Supreme Court precedents, opinions of law professors and the tradition, practice and settled policy of the government.

But of course the income tax was not apportioned. Direct taxes must be apportioned. (No wonder everyone is confused.) So as a result, the income tax of 1894 was declared null and void, for want of apportionment, in accordance with the constitutional rule.

This may sound like a victory for the people, but it was not: The effect of Pollock was to move the burden of financial support of the central government from the rich to the workers, who were saddled with an oppressive national consumption tax (like a national sales tax) from 1895 to 1913. (Unfortunately many “populist politicians” today think this is a solution to the mess the income tax has gotten us into.)


It was not until the 16th Amendment was ratified in 1913—prompted, ironically, by Populist Party political pressure and fueled by the oppressive national commodities tax—that the situation changed, and not really for the better. But the amendment did correct the Supreme Court blunder which the court had refused to correct, and made it crystal clear for all time, at least to the few people who are canny, that the so-called income tax is an indirect tax, within the meaning of the constitutional terminology regarding direct and indirect taxes.

The corporate globalists were determined to find an occasion to throw the income tax onto the lower-earning classes—subsistence workers and the middle class—and this opportunity presented itself in the Economic Security Bill, which later became much better known as the Social Security (SS) Act, and which contained a disguised income tax, which was called a compulsory “employment tax.”

In 1935, the Railroad Retirement Act, a miniature version of the later Social Security scheme, was declared totally unconstitutional, for taking property from one class, namely working workers, and giving it to another class, retired workers—a clear violation of due process of law. The Railroad Retirement pension plan was the precursor and blueprint for the Social Security scheme.

In the 1936 Agricultural Adjustment Act case (U.S. vs. Butler, 297 U.S. 1), as well as both Railroad Retirement Board cases, the Supreme Court ruled that both supposed retirement benefit plans relied on an unconstitutional use of the power to tax.

The court in Butler reasoned that the taxing power could not be utilized if the prospective taxpayers were not first “interested in the matter.”

In plain English, the taxing power could not be imposed on anyone unless they were parties to the rights and advantages accruing from some “transaction” through which the government granted them special benefits and privileges.

It is a maxim of law—a principle universally admitted as being just and consonant with reason—that no one is obliged to accept a benefit against his consent. In Latin, Invito beneficium non datur.

Bear in mind that: “Due process of law in each particular case means such an exertion of the powers of government as the settled maxims of law sanction, and under such safeguards for the protection of individual rights as those maxims prescribe for the class of cases to which the one in question belongs.” (Thomas M. Cooley, A Treatise on the Constitutional Limitations, 1868, 356.)

The Supreme Court has referenced Cooley’s statement in at least three cases.

The gang of that diseased monster Franklin D. Roosevelt, without constitutional authority, used the SS legislation, after it was passed in 1935, to demand that the American people be compelled to register into this ponzi scheme. The FDR gangsters backed up their demands on the people with widely published threats of fines and imprisonment for failure to register.

Generations of Americans were told, “You cannot work without a Social Security number.” In recent years that lie has been replaced with an even bigger and worse one: “You cannot start life without a birth certificate (unless you are Barack Obama) and an SS number.” But it is, and always has been, a lie to say you must have an SS number to work for a living. There is still no law on the books that requires you as an American to have an SS number or card.

FDR and his fellow criminals reasoned that giving Americans a choice about registration into a contractual relationship with the central government through the SS scheme would ultimately cause the destruction of the whole scheme. Since the FDR gangsters forced Americans to register into the scheme by threat, force and coercion of brutal fines and imprisonment, and since there is no mutuality of agreement or obligation, the feds, through 13 successive administrations, have perpetrated a mega-fraud on the American people: the continuing crime of 1935.

Because inducement into the SS scheme was consummated by fraud and coercion and continues to be imposed by and through intimidation and fraudulent misrepresentation, any obligation under this scheme is, de jure, null and void ab initio, i.e., from the outset.

This infernal scheme, deceptively dubbed Social Security, can basically be likened to a shotgun wedding, capable of being nullified in an honest court of law when proof of the fraud and coercion is documented and presented in a legally sufficient manner.

Prof. J. Douglas Brown of Princeton University, a member of the Committee on Economic Security, and one of the architects of SS, made the brazen statement to the House Committee on Ways and Means, recorded at page 244 of the transcripts on the hearings on Social Security, that the SS plan would “relieve the rich through taxes on lower incomes.”

The startling comments immediately preceding the above statement by Prof. Brown reveal that it was the position of the committee that the accumulation of huge surplus reserves that would surely accrue under the scheme should not, in any way, be passed on to the American worker coming under the SS scheme’s so-called pension contracts, but should be used instead to reduce other taxes that would effectively “relieve the rich through taxes on lower incomes.”

This position clearly documents that the covert aim of the SS scheme, for the record, was to “relieve the rich,” by exploiting wage earners who scrape by from paycheck to paycheck, and often cannot keep a proper roof over their families’ heads and must choose between food and medicine for sick family members.

SS was, and still is, a perverse departure from the original intent of the 16th Amendment, which (unless there was a hidden agenda) sought to correct the scandalous blunder made by the Supremes in the 1895 Pollock decision, which effectively exempted the rich from taxation.

The SS Act, in fact, represents a shameful turnaround on subsistence workers, by imposing what was supposed to be a rich man’s tax (income tax) on the lower earning brackets, and by relieving the rich and super-rich plutocrats from taxation.


Certified government documents, retrieved from the National Archives, chronicle the discussions of FDR operatives in their efforts to justify the use of coercive force and threats to make the American people believe they could be compelled to register for Social Security. Under such circumstances, every lawyer allied or associated with the FBR gang playing a part in the development and imposition of the SS scheme knew, or should have known, that forced registration of workers into the scheme effectively removed any claim that SS was any sort of contract, and provided the government with a future “legal escape clause” to deny any assumed or perceived rights to insurance annuities.

As an aside: Logically this should equally (or more) give the worker the right to “opt out” of the bogus pseudo contract of SS membership. However, the system is rigged so that you cannot opt out, contrary to the claims of some fast-talking “tax rebellion leaders,” who, if you follow their advice, will get you into serious hot water.

A certified government memorandum from 1935 documents the search for what FDR and his lawyers and operatives openly deemed “legal outs” regarding the implementation of the perverted, and grossly illegal, SS scheme. They operated in full knowledge that the nexus created by forced SS registration would establish indirect tax liability for those least able to pay such taxes.

While the FDR gangsters were conspiring to rob American workers through the SS scheme, revered and so-called learned professors of economics, wittingly or unwittingly, were doing the bidding of a gang of thieves who were, in essence and ultimately, the big banks that privately own the misnamed Federal Reserve.

Certified government interoffice memos inquiring into the use of coercive measures to force registration into the scheme prompted the Treasury Department’s Office of General Counsel in 1935 to actually clarify and identify the fact for the record, that the acquisition of the requisite legal authority to employ coercive measures to force registration into the SS scheme was “more than doubtful,” and that such drastic measures would create “constitutional implications.”

The gangsters disregarded competent legal advice. With eager assistance from the mass media, big business and Postal Service, FBR ordered a massive campaign of fraud between November 16, 1936 and January 1, 1937 to induce millions of Americans to join SS. As sardonically phrased by a bureaucrat in a certified government memo, FDR’s gangsters began a nationwide campaign of threats and intimidation wherein over 22 million American citizens were “bagged” for the SS scam.

The Roosevelt gangsters relied on brazen lies in a deceitful propaganda campaign to compel Americans to register for enrolment into the SS old-age benefits racket, under heavy threats of mass dragnets and fines and imprisonment for those failing to sign up.

For the first time, American workers were illegally (through “fraud in the inducement”) brought into the ambit of the liabilities and responsibilities associated with the exercise of government-granted rights, privileges or franchises. This is how the worker’s wages were converted into “taxable income” subject to the imposition of an indirect tax, in the nature of an excise, as confirmed in the reasoning of several Supreme Court decisions.

In a document found in the National Archives, dated January 28, 1943, in a plan entitled Streamlined Social Security Income and Tax,” the technical advisers to the SS Board, along with the general counsel, revealed a plan to make a requirement for all SS registrants to file a yearly income tax return based on receipt of SS income.

Prior to this time, 95 percent of all American workers never filed an income tax return.

Today, ignorant of the fiscal chicanery of the New Deal era, American workers now pay two income taxes, instead of just the SS tax.

It should be noted that the British banking establishment had much to gain by encouraging “deliberate budget deficits,” as the Brit banking houses were major shareholders in the Federal Reserve Bank Corporation, and stood to gain immense profits from the resultant compounded debt interest.

We Americans do not have a tax problem; we have a monetary problem. Excessive taxation is just a symptom of a diseased monetary system, suffering from the cancer that is bankster usury.

All Americans (with the exception of a mere handful of determined freethinkers and possibly some Amish folks) have been fraudulently induced into registration for enrollment in the SS scheme. Consequently, in accordance with the spirit of American jurisprudence, with a proper presentation of the facts, the injury of unlawfully shanghaiing millions of subsistence wage earners into the scope of the taxing power, inflicted by the U.S. central government through misrepresentation and fraud in the presentation of SS registration as mandatory, can now be challenged.

Thus there is some very good news.

If desired, it can now be convincingly established and demonstrated that the SS scheme is bottomed on fraud. In the final analysis, the government cannot legally compel performance, nor impose any legally enforceable obligations on that segment of the American people who would be so bold as to challenge the “presumption of liability” created by registration into the SS system. The rest will be up to the jury.

Social Security Board Gloated Over Supreme Court Win

Putting the Social Security (SS) scheme into operation was a massive undertaking of fraud and coercion. In many respects it was unprecedented in American history. The recordkeeping involved was on a scale never before attempted.

The SS Board felt it could ill afford to wait for definitive Supreme Court ruling before starting to work. Forcing and fooling American workers into registering into the SS system, collection of payroll taxes and payment of the first lump-sum benefits all “had” to start by January 1937. The board would have to hire staff, acquire facilities, set up recordkeeping procedures and many other things before then—all of which it did, without knowing for sure whether its actions would be held to be unconstitutional, as in the parallel case of the Railroad Retirement Act scheme.

By the time of the court’s ruling in May 1937, more than 26 million SSNs had been issued; around $150 million in taxes had been collected; a dozen or so benefit claims had already been paid, and there were about 150 local field offices in operation around the nation.

Some tension was felt by the board’s employees as the court assembled on a Monday morning in late May to hand down its rulings.

The board’s general counsel, Thomas Eliot, has given us a description of the moment:

“Finally came the great Monday—Monday was the court’s ‘decision day’—when the chief justice announced the name of the first case to be decided [Helvering vs. Davis, in which the constitutionality of SS ‘insurance’ was challenged] and, signaling that the court’s opinion was to be read by its author, nodded to Justice Cardozo. Victory! My letter of May 25 began:

‘Dear Ma‘n’Pa:

“‘Yesterday was a big day! I hadn’t really expected the decision until next week. The result itself was not so surprising, but gratifying nevertheless. Late yesterday afternoon Lois and I went down to see Miss Perkins and split a bottle of (domestic) champagne with her.’”

Above: Shown leaving the Supreme Court Building after the rulings are a gloating group of administrators (left to right): Murray Latimer, Railroad Retirement Board chairman; R. Gordon Wagenet, unemployment compensation director; Arthur J. Altmeyer, chairman of the Social Security Board; and Frank Bane, executive director of the SS Board.

Disclaimer: This article is not intended as legal advice. Before taking on the “900-pound gorilla” called the privately owned Federal Reserve Bank and its kept government, consult an accredited advisor, and remember strength is in numbers, so please share this information with your kith, kin and neighbors.

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