Constitution and taxes question?

Question

My understanding of the Constitution is that Congress is granted the power to levy taxes on 'income' which our founding fathers meant 'profit or capital gain' not a person's wages (I know that the 16th amendment changed this to include all income from whatever source (the worse thing we've ever approved)). Anyway, if we today were under the original law I assume that business owners would include their profit tax in the cost of their product or service that we buy, and then forward that tax to the government. Question: what if your income was from capital gain--would you be double taxed? Once as 'income' and again as a consumer?

Answer 1

A consumer of what?  I'm not quite sure what your question is asking.  If you have an income off of selling capital gains how are you the consumer?  Of capital gains or a consumer in the sense that every other American is.  If it's the second, we're all taxed twice...income tax and sales tax.  When you buy a capital asset they let you deduct it from you AGI, so it's only taxed once that way.

Answer 2

Capital gains tax is not double dipping like you think since you are making a profit from a company which is different than the taxes that they pay.

Answer 3

I believe that this question has been debated before:  everything we make, wages, salaries, investments(interest on them)etc.etc. is considered income and therefore taxable by congress....

Answer 4

true but,  all income is double or triple  taxed somewhere along the line.  Wages are taxed when you earned it, then again when you buy something.  same with property tax and school taxes.  The only difference is that capital gains, dividends and interest income are not originally "earned"' income. (weather they should be defined as unearned is a different story)

Answer 5

Congress can only levy "direct" or "indirect taxes" per the constitution.-----even the courts do not agree on whether the presently levied "income tax" is a direct or indirect tax. Most people and some courts have ruled that it is an "excise tax"

In order to fully understand what the congress did with the 16th amendment----you have to wade thru the Code to find definitions of--wages and income....the tax on income as you describe it is on profit and gain---the tax on the receipts of a person for his labor is not within the constitutional meaning of the 16th amendment---but is administered by regulations---the congress has never produced a statute that taxes a person on these receipts----bottom line is that ---all that comes in is not income.---the only place that "income" is defined is in the 1909 corporate tax law.