Despite what most believe, the Federal Reserve isn’t a branch of the U.S. government. It is a private organization, which acts as the most immediate creditor of the U.S – a tool of foreign investors. Being a creditor, the Federal Reserve demands interest on what it loans. It controls how much interest it receives through two means. The primary tool is the IRS – the collection agency for the Federal Reserve, controlled through its Department of the Treasury (which is not the same as the U.S. Treasury) – which, also despite what many think, is a private organization, not a branch of the U.S. government. The second tool is forced inflation. Inflation is caused by the Feds printing extra money. As Federal Reserve notes aren’t backed by gold, the amount of notes available is directly related to a note’s true value on the market; and these notes are backed by the total mortgage on all of the homes and property of the American citizens. When more notes are printed, it devalues the notes already in people’s hands, which is fundamentally no different than direct taxation for those who must use the notes.
The 16th Amendment was ratified in order to allow the IRS to function: “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.” It was written for the purpose of overthrowing previous legislation which inhibited the government’s ability to declare a direct income tax in accordance with the Constitution.[1] [2] Within a year of the ratification of the 16th Amendment, the Federal Reserve came into existence.[3]
The 16th Amendment means not what many gather by quickly reading it over. Its use of the word “derived” exemplifies this. The Amendment reads “…from whatever source derived….” Derived means “separated from a source.” If something has value, like a baseball card, it has a set monetary equivalent, or trading value. Simply selling the baseball card at its monetary equivalent doesn’t constitute derived income, because there is no money being made as a result of it. When selling at its set value, one would simply be liquidating the value of the card, not making money off of it. This is an example of a zero sum transaction. One lost the value of the card and gained the exact same value back in money, making the net profit/loss zero in value. Something that most people don’t understand is that monetary compensation for labor is also a zero sum transaction. One is simply exchanging a service, which has a preset value, for the same value in money. One, by theory, can’t lose or gain from giving or receiving a service. Now, let’s say the baseball card was sold to someone for more than its actual worth. If this occurs, one has made a profit, a.k.a. income. If one’s service was paid for by more money than a contract designated its value, the serviceman gained an income. “Derived” is a key word in the Amendment because it establishes that the only thing that can be taxed is income, which isn’t any old monetary transaction or transaction on the account of labor. The way the 16th Amendment actually reads, it has more to do with inheritance than what it is incorrectly used for today.
Despite the ratification of the 16
th Amendment, the I.R.S. is still unconstitutional.
[4] Also, the 16
th Amendment wasn’t legally ratified.
[5] Furthermore, the Amendment gave Congress no new powers, nor did it extend its jurisdiction to new classes of Citizens.
[6] The 13
th through 18
th Amendments, with the only exception being the 16
th, all have written on them something that declares Congress’ authority to enforce the Amendment, called an
enabling clause. An example of an enabling clause is “The Congress shall have power to enforce this article by appropriate legislation.” The hidden reason for why Congress left this clause out of the 16
th Amendment is that Congress doesn’t actually control income taxes, because the I.R.S. isn’t controlled by Congress. Being a private organization and not a governmental one, no amendment can give it any rights to collect income from American citizens. The lack of an enabling clause makes the 16
th Amendment legally null and void. It is simply empty words, incorrectly used by a private organization to swindle money out of the hands of citizens who don’t know any better to pay interest on a national debt that they themselves didn’t incur. This is why Ron Paul doesn’t like the federal income tax.
[1] This legislation was the 1895 case of Pollock v. Farmers’ Loan & Trust Company,
157 U.S. 429;
158 U.S. 601. In this Supreme Court case, the court ruled that the unapportioned income taxes on interest, dividends and rents imposed by the Income Tax Act of 1894 were, in effect,
direct taxes, and were unconstitutional because they violated the rule that direct taxes be apportioned. This case is what stopped the first attempt to pose a flat rate income tax in 1894 (besides the ten year income tax instated in 1861, shortly after the beginning of Lincoln’s martial law, put in place to support the Union’s government during the Civil War.)
[2]Interestingly, the 16
th Amendment was fundamentally unnecessary for income taxation, anyway. The power to grant direct taxation like this was outlined in the earliest parts of the Constitution, and the 16
th Amendment did not introduce into American law any true new guidelines or direction. “The Congress shall have power… To exercise exclusive legislation in all cases whatsoever, over such district (not exceeding ten mile square) as may, by cession of particular States, and the acceptance of Congress, become the seat of government of the United States, and to exercise like authority over all places purchased by consent of the legislature of the state in which the same shall be, for the erection of forts, magazines, arsenals, dockyards, and other needful buildings….” (Article 1, Section 8, Clause 17) This gave Congress the power tax those who live in federal territories. Although it stated differently, the 16
th Amendment didn’t give the proper authority to tax the States until 1944 when the Buck Act was passed, making its working powers at the time no different than was already Constitutionally granted. The Buck Act, however, only tied the federal government to the state corporate fictions, not the sovereign States. For example, it applied to THE STATE OF INDIANA and not the sovereign State of Indiana.
[3] Income taxes, at the time, were collected by the government’s former income tax collection agency, called the Bureau of Internal Revenue. In 1913, the Bureau was assimilated by the Federal Reserve. By 1918, the Bureau began to change its name to the I.R.S., and by 1953 this name change was formalized.
[4] Due to Article 1, Sec. 2, Clause 3 and Article 1, Sec. 9, Clause 4
[5] See Beckman, M.J. and Bill Benson.
The Law that Never Was: The Fraud of the 16th Amendment and Personal Income Tax, Vol. 1. Constitutional Research Association, 1985.
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Jun 16, 2009 
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American Citizens, Apportionment, Census, Congress Shall Have Power, Creditor, Department Of The Treasury, Extra Money, Federal Income Tax, Federal Reserve, Feds, Foreign Investors, Incomes, Inflation, IRS, Private Organization, Ratification, Ron Paul, Th Amendment, True Value, U S Treasury