• Peter E. Hendrickson: Cracking The Code: The Fascinating Truth About Taxation in America; Lost Horizons; 2003; 232 pp; $19.95
Any student of liberty and of the founding of the United States has to know intuitively that the current tax code of our federal government could have never been the intention of our Founding Fathers. One can take it as a given that the Founders would be disheartened and outraged by the growth and perversion of the federal government — and the abuse of power it employs in collecting taxes from the people.
I have often wondered how much different the course of American history would be if an economist such as Milton Friedman or James Buchanan, with 200 years of hindsight, could be transported back in time to advise the Founders on constitutional issues such as taxation. Perhaps they could provide the Founders with insights that would have made the Constitution impervious to time and the “factions” that so troubled them.
In his recently published book, Cracking The Code: The Fascinating Truth About Taxation In America, libertarian author Peter Eric Hendrickson makes it clear that the Founders were very much aware of the dangers associated with the federal government’s power to tax. Accordingly, they established a viable system of checks and balances within the Constitution to prevent the federal government from abusing its taxing power. Hendrickson also points out that the Founders actually had a renowned economist (if indirectly) advising them: a capable Scotsman by the name of Adam Smith.
The Constitution calls for direct taxes (i.e., those that are unavoidable) to be apportioned according to each state’s population. Even the Sixteenth Amendment, which allegedly established an “income” tax and calls for the end of apportionment practices, does not change the Constitution’s restriction on direct taxation. The income tax that we have all come to accept as our responsibility evolved by implication, says Hendrickson, not by law.
It’s Hendrickson’s contention that the only people for whom the federal government can legally assess an “income” tax are those who are direct beneficiaries of the federal government. Such parties would include federal employees, military personnel, and those who benefit from government licensing. In other words, if you are a private citizen who earns a salary, Hendrickson claims that you do not have to pay income taxes, including FICA, to the federal government.
Don’t believe him? Then go to Hendrickson’s website (LostHorizons.com) and bear witness to the unthinkable: multiple letters from the IRS acknowledging that the claim of “money improperly withheld” is valid. But don’t expect your accountant or lawyer to jump on Hendrickson’s bandwagon any time soon. Their jobs, and those of millions of others, depend on your confusion and fear when it comes to the IRS and the bewildering tax code it enforces.
Cracking The Code is a product of the information age. The Internet and its search engines allowed Hendrickson to not only read the entire tax code, but to investigate and cross-reference its content: all 3,413,780 words of it.
What Hendrickson found is that the tax code, regardless of its confusing and misleading language, is consistent with the Constitution’s original restriction on direct taxes — and that there is no legal way for the federal government to enforce an income tax on the labor or earnings of private citizens. Hendrickson cites clear and consistent case law throughout the book to back his claim, including a plethora from the U.S. Supreme Court.
Readers of Cracking The Code will undoubtedly experience a paradigm shift in their thinking as they make their way through its pages. Skepticism and doubt will slowly be replaced with certainty and conviction as Hendrickson systematically walks his readers through the law and the tax code’s maze of confusion. But it won’t come easy.
As Thomas Paine wrote in Common Sense, “ …a long habit of not thinking something wrong, gives it the superficial appearance of being right, and raises at first a formidable outcry in defense of custom.” Paine’s wisdom undoubtedly applies to the sentiments most Americans have when it comes to the way income taxes are imposed upon them.
There’s no shortage of frivolous books on the market that make the claim that you can avoid taxes. Cracking The Code is not one of them. It is a judicious and thoughtful work written by an American patriot deeply dedicated to the rule of law. Hopefully, this book will find its way into the hands of concerned citizens, legal scholars, and federal judges who truly believe in upholding the Constitution, and who are sympathetic to the cause of liberty.
Steve Thomas is a freelance writer and businessman in Detroit.