Ron Paul believes that we need to repeal the 16th Amendment so that working people can take home 100% of their paycheck. This action is not necessary, and as the Supreme Court ruled the 16th Amendment did not give the Congress any new power of taxation. So, to repeal the 16th Amendment would not take away any power of taxation from the Congress.
The purpose of the 16th Amendment was to lay down a protection for the people on their investments, in regards to the return of their capital, whether it be monetary or physical in nature.
Working people did not pay an income tax on their wages or salaries until 1943 when the Current Tax Payment Act was passed.
Why did they suddenly start? We are led to believe that the Victory Tax Act of 1942 brought the income levels down to $624, which encompassed many workers. Then with the passage of the Current Tax Payment Act the determination of wages, and the withholding of taxes on them, was given to the employers. Who then, because they had been withholding for Social Security for 5 yrs., promptly did not comprehend the difference between employment and services.
The Current Tax Payment Act was championed by Randolph E. Paul, General Counsel of the Treasury.
In an address to the Philadelphia Bar Association, on June 14,1943, Mr. Paul stated the following; (Copied from text of his speech)
The duty to withhold an amount for income and victory taxes is net imposed on all persons making payments of compensation for personal services rendered. First, there must exist, as in the Social Security tax, the employer-employee relationship, as distinguished from the relationship of independent contractors. Then even where this relationship exists, wage payments in certain enumerated types of occupations, are excepted from the withholding requirement. The three main peacetime groups to which this exception applies are (1) agricultural laborers, (2) domestic servants in private homes, college clubs or fraternities, and (3) casual laborers not engaged in the course of the employer's trade or business. In addition, the service pay of members of the military or naval forces is excluded from the withholding provisions. Services performed for a foreign government or instrumentality and services performed while outside of the United States, where a major part of the services for an employer during the calendar year is to be performed outside of the continental limits, are also excluded. In this regard, however, the law specifically states that services performed on or in connection with an American vessel, or as an employee of the War Shipping Administration, are not services performed outside the United States. A further exception, new to withholding, is made in the case of remuneration paid for Services performed by a minister of the gospel.
From the letters we have received at the Treasury while this Act was under consideration, I know that many persons, particularly in the lower wage levels, have been greatly alarmed at the prospect of having 20 percent of their salaries withheld from them. Much of this alarm arises from an inaccurate conception of the withholding provisions. For the most part these persons fail to recognize that withholding does not result in the imposition of any new tax but is merely a convenient method of paying the tax liability which existing law imposes.
Where Obama and the Democrats want to tout that Warren Buffet's secretary pays a higher tax rate on her salary than he pays on his capital gains, and thus the rates should be raised on capital gains, the issue to be raised should be that his secretary is being taxed on much more income than she should be according to the law.
I welcome any discussion.
