Time: Tue Dec 16 16:40:30 1997
From: Paul Andrew Mitchell [address in tool bar]
Subject: SLS: MEMO to S-A-P, STILL unanswered (from "The Federal Zone")
Bcc: jamoon@hgo.net


TO:       Edward A. Ellison, Jr., J.D.
          John William Kurowski

FROM:     Paul Andrew Mitchell, Author
          "The Federal Zone"

DATE:     March 24, 1992

SUBJECT:  "Direct Taxation and the 1990 Census"
          your essay in Reasonable Action newsletter,
          Save-A-Patriot Fellowship, July/August 1991

     I  was   very  gratified   to  see   such  a   thorough  and
authoritative treatment  of "direct  taxation" in the July/August
1991 issue  of the  Reasonable Action  newsletter.   My  research
continues to convince me of the extreme constitutional importance
of the  apportionment rule  for direct  taxes levied  by Congress
within the  50 States  of the  Union.   I am writing this memo to
share with  you some  of my thoughts on the subject, and to offer
my challenge  to a  few points  which are  not necessarily beyond
dispute.   Please understand  that I am in general agreement with
most, but  not all  of your  essay.   Permit me  to play "devil's
advocate" as  I  focus  on  some  issues  which  deserve  greater
elaboration and substantiation.

     The so-called 16th Amendment remains highly relevant to this
subject, for  a number of important reasons.  First of all, since
1913, several  federal  courts  have  attempted  to  isolate  the
precise effects  of a ratified 16th Amendment.  Unfortunately for
us, when  all of  these cases  are  assembled  side-by-side,  the
rulings are not consistent.  We are forced to admit the existence
of separate groups of court decisions that flatly contradict each
other.   One group  puts income taxes into the class of indirect,
excise taxes.   Another group puts income taxes into the class of
direct taxes.   One  group argues  that a ratified 16th Amendment
did not  change or  repeal any  other clause of the Constitution.
Another group  argues that  a ratified  16th  Amendment  relieved
income taxes from the apportionment rule.  Even experts disagree.
To illustrate  the range  of  disagreement  on  such  fundamental
constitutional issues,  consider the  conclusion of legal scholar
Vern Holland:

     ...  [T]he   Sixteenth   Amendment   did   not   amend   the
     Constitution.   The United States Supreme Court by unanimous
     decisions determined  that the  amendment did  not grant any
     new powers  of taxation;    that  a  direct  tax  cannot  be
     relieved from  the constitutional  mandate of apportionment;
     and the  only effect  of the  amendment was  to overturn the
     theory advanced in the Pollock case which held that a tax on
     income, was  in legal  effect, a  tax on  the sources of the
                                  [The Law That Always, page 220]

Now consider  the opposing  view of  another  competent  scholar.
After much  research and  much litigation,  author  and  attorney
Jeffrey A. Dickstein offers the following concise clarification:

     A tax  imposed on all of a person's annual gross receipts is
     a direct  tax on personal property that must be apportioned.
     A tax  imposed on  the "income"  derived  from  those  gross
     receipts is  also a  direct tax on property, but as a result
     of the  Sixteenth Amendment, Congress no longer has to enact
     legislation calling  for the  apportionment of a tax on that
               [Judicial Income and Your Income Tax, pages 60-61]

The following  Appellate ruling  is unique among all the relevant
federal cases for its clarity and conciseness on this question:

     The  constitutional  limitation  upon  direct  taxation  was
     modified by  the Sixteenth  Amendment insofar as taxation of
     income was  concerned, but  the amendment  was restricted to
     income,  leaving   in  effect  the  limitation  upon  direct
     taxation of principal.

               [Richardson v. United States, 294 F.2d 593 (1961)]
                                                 [emphasis added]

Granted, this  is not  a decision  by the  Supreme Court, but the
decision is  useful because  it is so clear and concise, and also
because it  is very representative of that group of rulings which
found that  a ratified  16th Amendment relieved income taxes from
the apportionment  rule.   By inference,  if  income  taxes  were
controlled by the apportionment rule prior to the 16th Amendment,
then they  must be  direct  taxes  (according  to  one  group  of

     Recall now  that 17,000  State-certified documents have been
assembled to  prove that  the 16th  Amendment was never ratified.
Congress has already been served with several official complaints
documenting the  evidence against the 16th Amendment, pursuant to
the  First   Amendment  guarantee   for  redress  of  grievances.
Congress has  now fallen silent.  I am the author of one of these
complaints (see  The Federal  Zone, Appendix  J).  Relying on one
group of rulings, the Pollock, Peck, Eisner and Shaffer decisions
leave absolutely  no doubt  about the  consequences of the failed
ratification:   the necessity  still exists  for an apportionment
among the  50 States  of all  direct taxes,  and income taxes are
direct taxes.

     Federal courts did not hesitate to identify the effects of a
ratified 16th  Amendment.   Now that  the  evidence  against  its
ratification is so overwhelming and incontrovertible, the federal
courts are  unwilling to  identify  the  effects  of  the  failed
ratification.   These courts  have opted to call it a "political"
question, even  though it  wasn't a  "political" question  in the
years immediately  after Philander  C. Knox declared it ratified.
I personally  find it hard to believe that the federal courts are
incapable of  exercising the  logic required to isolate the legal
effects of  the failed ratification.  Quite simply, if a ratified
16th Amendment  had effect  X, then  a failed ratification proves
that  X   did  not  happen.    What  is  X?    Their  "political"
unwillingness to  exercise basic  logic means  that  the  federal
courts have  abdicated their main responsibility -- to uphold the
constitution   -- and  that we  must now  do it for them instead.
That is  just one  of the  many reasons why I wrote and published
The Federal  Zone in the first place.  I believe I have succeeded
in accurately  situating the issue of the 16th Amendment inside a
much broader context.  What is that much broader context?

     Let me  begin my  answer to  that question  by first quoting
from your essay, in the section entitled "Documenting the Truth":

     The Constitution  still grants  to the Congress the power of
     laying an  "apportioned" direct  tax but notwithstanding the
     advent of  the 16th  Amendment all  "direct" taxes  must  be
     apportioned.  There is no exception to this rule.

                                                 [emphasis added]

     In a  strictly normative sense, I would certainly agree that
this is  the way it should be.  But, in a practical and empirical
sense, is  this really  the way  it is?  I say no.  In exercising
its exclusive  authority over  the federal  zone, Congress is not
subject to  the same constitutional limitations that exist inside
the 50  States.   For this  reason, the areas that are inside and
outside the  federal zone  are heterogeneous with respect to each
other.   This difference  results in  a principle  of territorial
heterogeneity:  the areas within (or inside) the federal zone are
subject to  one set of rules;  the areas without (or outside) the
federal zone  are subject  to a  different set  of  rules.    The
Constitution rules  outside the  zone and  inside the  50 States.
The Congress  rules inside  the zone  and outside  the 50 States.
The 50  States are,  therefore, in one general class, because all
constitutional restraints  upon Congress  are in force throughout
the 50  States, without  prejudice to  any one  State.  The areas
within the federal zone are in a different general class, because
these same constitutional restraints simply do not limit Congress
inside that zone (see The Federal Zone, chapters 12 and 13).

     I  would   never  ask   you  to  accept  this  principle  of
territorial heterogeneity  simply on  faith.  There is solid case
law to  substantiate it.   You  may recall, it is the Hooven case
which officially defined the three separate and distinct meanings
of the  term "United  States".   This same definition can also be
found in  Black's Law  Dictionary, Sixth  Edition.   The  Supreme
Court ruled  that this  case would  be the  last  time  it  would
address  official   definitions  of  the  term  "United  States".
Therefore, this  ruling must  be judicially noticed by the entire
American legal  (and paralegal)  community.   In my  opinion, the
most significant  holding in  Hooven has  to do  with territorial
heterogeneity, as follows:

     ... [T]he  United States** may acquire territory by conquest
     or by  treaty, and may govern it through the exercise of the
     power of  Congress conferred  by Section  3 of Article IV of
     the Constitution ....

     In exercising  this power,  Congress is  not subject  to the
     same constitutional  limitations, as  when it is legislating
     for the  United States***. ... And in general the guaranties
     [sic] of the Constitution, save as they are limitations upon
     the exercise of executive and legislative power when exerted
     for or  over our insular possessions, extend to them only as
     Congress, in  the exercise  of its  legislative  power  over
     territory belonging  to the  United States**, has made those
     guarantees applicable.

             [Hooven & Allison Co. v. Evatt, 324 U.S. 652 (1945)]
                                                 [emphasis added]

I have  taken the liberty of adding asterisks ("**","***") to the
above, in  order to  identify which meaning of "United States" is
being used in each occurrence of the term.  Computer users prefer
the term "stars" over "asterisks" because it has fewer syllables.

     Return now  to your statement that "there is no exception to
this rule"  that all direct taxes must be apportioned.  Using the
Hooven case  and others  as our guide, it is more accurate to say
that all  direct taxes  must be  apportioned  whenever  they  are
levied inside  the 50  States of  the Union.   On the other hand,
direct taxes  need NOT  be apportioned  whenever they  are levied
outside the  50 States of the Union, and inside the areas of land
over which  Congress has exclusive legislative jurisdiction.  The
authorities  for  this  exclusive  legislative  jurisdiction  are
1:8:17 and 4:3:2 in the U.S. Constitution.  You may disagree with
this interpretation  of the  term "exclusive",  and that  is your
right, but  in doing  so you  are disagreeing  with  the  Supreme
Court.   Evidently, this was not the first, nor the last time the
high Court has differed with the Framers of the Constitution.

     As it  turns out,  the pivotal  case law  on  this  question
predates Hooven  by 44  years, and  predates the  so-called  16th
Amendment by  12 years.   In  Downes v.  Bidwell,  182  U.S.  244
(1901), the  issue was a discriminatory tariff which Congress had
levied on  goods imported from Puerto Rico (or "Porto Rico" as it
was spelled  then).   Congress had  recently  obtained  exclusive
legislative jurisdiction  over this  territory by  virtue of  the
treaty of  peace with  Spain.   The import duty was obviously not
uniform, as  required by 1:8:1 in the U.S. Constitution, since it
was levied specifically against goods originating in Puerto Rico.
In a  5-to-4 decision,  the Supreme Court upheld the import duty,
even though  it was  not  uniform,  on  the  principle  that  the
uniformity rule  applied only  to the  48 States  and not  to the
areas of  land, i.e., enclaves, territories and possessions, over
which Congress has exclusive legislative authority.

     The  controversy  that  surrounded  Downes  v.  Bidwell  was
intense, as  evidenced  by  the  flurry  of  articles  that  were
published in  the Harvard  Law Review  on  the  subject  of  "The
Insular Cases"  as they  were called.   Perhaps  the  most  lucid
criticism of the Downes majority can be found in Justice Harlan's

     The idea prevails with some  --  indeed, it found expression
     in arguments  at the  bar   --  that we have in this country
     substantially or practically two national governments;  one,
     to be  maintained  under  the  Constitution,  with  all  its
     restrictions;   the  other  to  be  maintained  by  Congress
     outside and  independently of that instrument, by exercising
     such powers  as other nations of the earth are accustomed to
                         [Downes v. Bidwell, 182 U.S. 244 (1901)]
                                                 [emphasis added]

To appreciate  how alarmed  Justice Harlan had become as a result
of this new "theory", consider the following from his dissent:

     I take  leave to  say that  if the principles thus announced
     should ever  receive the  sanction of  a  majority  of  this
     court, a  radical and  mischievous change  in our  system of
     government will be the result.  We will, in that event, pass
     from the era of constitutional liberty guarded and protected
     by  a  written  constitution  into  an  era  of  legislative
     absolutism. ...

     It will be an evil day for American liberty if the theory of
     a government  outside of  the supreme  law of the land finds
     lodgment in  our constitutional  jurisprudence.   No  higher
     duty rests  upon this court than to exert its full authority
     to  prevent   all  violation   of  the   principles  of  the
                         [Downes v. Bidwell, 182 U.S. 244 (1901)]
                                                 [emphasis added]

This theory has been documented by patriot John Knox as follows:

     This  theory   of  a   government  operating   outside   the
     Constitution over  its own  territory with  citizens of  the
     United States  belonging thereto under Article 4, Section 3,
     Clause 2  of the  Constitution was further confirmed in 1922
     by the  Supreme Court  in Balzac v. Porto Rico, 258 U.S. 300
     (EXHIBIT #4) where that Court affirmed that the Constitution
     does not  apply outside  the limits  of the 50 States of the
     Union at  page 305 quoting Downes, supra and De Lima, supra.
     That under  Article IV,  section 3  the "United  States" was
     given  exclusive   power  over  the  territories  and  their
     citizens of the "United States" residing therein.

This quote  is from  an unpublished brief entitled "Memorandum in
Support of  Request for the District Court to Consider the T.R.O.
and Injunction  by the  Magistrate" by  John Knox,  Knox v. U.S.,
United States  District Court  for the Western District of Texas,
San Antonio, Texas, Case #SA-89-CA-1308 (see Appendix A supra).

     People will  not fully  appreciate a  central thesis  of The
Federal Zone  if they  believe that  I  agree  with  the  minimal
majority by  which Downes  was decided.   I  don't agree with the
majority;  I agree with Harlan.  I have simply tried to describe,
in lucid  language, how  Congress is now able to pass legislation
which is  not restrained  by the U.S. Constitution as we know it.
This type  of legislation  is  also  known  as  "municipal"  law,
because Congress  is the  municipal authority  inside the federal
zone.   When I  visited the District of Columbia during my senior
year at  UCLA as  a summer intern in political science, I asked a
Capitol guard  where I could find city hall.  We were standing on
the Capitol  lawn when  he pointed  to the  Capitol Building  and
said, "THAT is City Hall!"

     The Downes  decision  sent  many  shock  waves  through  the
American legal  community, as  evidenced by the deep concern that
is expressed  by author  Littlefield in  "The Insular  Cases", 15
Harvard Law  Review 169,  281.   He points out how the dissenting
minority were  of a  single mind,  while the  assenting  majority
exploited a multiplicity of conflicting and mutually incompatible
themes.  Just one vote turned the tide.  Littlefield's words jump
off the page like grease popping off a sizzling griddle.

     Accordingly, I now believe that we must go back further than
1913  to   isolate  the  major  turn  in  the  tide  of  American
constitutional integrity  and continuity.   Medina  in The Silver
Bulletin traces  the fork  to the  tragic American  Civil War  --
the counter  revolution   --   when Lincoln  was  murdered  by  a
Rothschild  agent,   clearing  the  stage  for  resurrecting  the
federalists' heartthrob  --  a central bank.  For example, in the
context   of   everything   we   now   know   about   territorial
heterogeneity, to  the extent  that it  was a "municipal" statute
for the  federal zone, the Federal Reserve Act was constitutional
under the rubric of the Downes doctrine.

     The consequences  of this  doctrine have  been profound  and
far-reaching, just  as Harlan predicted.  One of Lyndon Johnson's
first  official   acts  was  to  rescind  JFK's  executive  order
authorizing the  circulation of  $4.5  billion  in  interest-free
"United  States   Notes"  instead  of  interest-bearing  "Federal
Reserve Notes".   It  is a  shame that Oliver Stone did not cover
this motive  in his  movie JFK.  All we need to do is connect the
dots, and the picture will emerge, clear as day.

     Specifically, Title  26 is a municipal statute and, as such,
it is  not subject  to the  apportionment rule.   The territorial
scope of  Title 26  is the  federal zone;  the political scope of
Title 26  is the  set of "persons" who are either citizens and/or
residents of that zone: "U.S.** citizens" and "U.S.** residents".
The term  "U.S.**" in  this context  refers to  the second of the
three Hooven  definitions, namely,  the territory  over which the
sovereignty  of   Congress  extends,   i.e.,  the  federal  zone.
Incidentally, the  flat tax  provisions in Title 26 do conform to
the uniformity rule because the tax rate is uniform across the 50
States (see A Ticket To Liberty, by Lori Jacques).

     Since involuntary  servitude is  now forbidden everywhere in
this land, it is possible under law to acquire citizenship in the
federal zone at will via naturalization, even if one is a natural
born Sovereign  State Citizen  by birth.   It is also possible to
abandon  citizenship   in  the   federal  zone   at   will,   via
expatriation.  In this context, it is revealing that the Internal
Revenue Code  has provisions  for dealing  with "U.S.** citizens"
who expatriate  to avoid  the tax.  Similarly, Americans are free
to reside  wherever they  want, under  the law.  If you choose to
reside in the federal zone, you are liable for the income tax, by
definition (see  26 U.S.C. 7701(b)(1)(A) and 26 C.F.R. 1.1-1(b)).
Finally, if  you are  a "nonresident  alien" with  respect to the
"United States**"  as those  terms are defined in Title 26 and in
Title 42,  you are  only liable  for taxes  on  income  which  is
effectively connected  with a  U.S.** trade  or business,  and on
income which  derives from  U.S.** sources.  All other income for
nonresident aliens  is excluded  from the  computation of  "gross
income" as defined (see 26 U.S.C. 872(a)).

     I hope  this discussion  has provided you with some valuable
feedback  concerning   the  16th  Amendment,  direct  taxes,  the
apportionment rule,  Title 26 and The Federal Zone.  You have, no
doubt, heard  several references  to  the  "secret  jurisdiction"
under which  the IRS has been operating.  I now believe that this
jurisdiction is  no longer  totally a  secret;   it  issues  from
1:8:17 and  4:3:2 in the Constitution.  Contrary to the statement
quoted above  from  your  essay,  there  are  exceptions  to  the
apportionment rule  for direct taxes, and there are exceptions to
the uniformity rule for indirect taxes.  Inside the federal zone,
Congress is  free to  do pretty  much whatever  it wants, per the
Downes doctrine.   Inside  the federal  zone, it is a legislative
democracy, with  majority rule.  If you want to change the rules,
then change the majority.  Our best hope for changing those rules
rests, therefore,  in changing  the membership  in the  House and
Senate.   As a Sovereign State Citizen, however, I am not subject
to those  rules,  primarily  and  most  importantly  because  the
Constitution created  the legislature  and We  Sovereigns created
the Constitution.   A  Sovereign is  never  subject  to  his  own
creation, unless  he volunteers  himself into  that  status,  for
whatever reason  (e.g., the  security of  socialism a/k/a  Social

     For your edification, the following is a list of Harvard Law
Review articles which discuss the insular cases in some detail:

     Langdell, "The Status of Our New Territories"
     12 Harvard Law Review, 365, 371

     Thayer, "Our New Possessions"
     12 Harvard Law Review, 464

     Thayer, "The Insular Tariff Cases in the Supreme Court"
     15 Harvard Law Review 164

     Littlefield, "The Insular Cases"
     15 Harvard Law Review, 169, 281

                             #  #  #

Paul Andrew Mitchell, Sui Juris      : Counselor at Law, federal witness 01
B.A.: Political Science, UCLA;   M.S.: Public Administration, U.C.Irvine 02
tel:     (520) 320-1514: machine; fax: (520) 320-1256: 24-hour/day-night 03
email:   [address in toolbar]        : using Eudora Pro 3.0.3 on 586 CPU 04
website: http://supremelaw.com       : visit the Supreme Law Library now 05
ship to: c/o 2509 N. Campbell, #1776 : this is free speech,  at its best 06
             Tucson, Arizona state   : state zone,  not the federal zone 07
             Postal Zone 85719/tdc   : USPS delays first class  w/o this 08
_____________________________________: Law is authority in written words 09
As agents of the Most High, we came here to establish justice.  We shall 10
not leave, until our mission is accomplished and justice reigns eternal. 11
======================================================================== 12
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