The 16th Amendment income tax is an excise tax (tax on products) on corporations that exist as a privelege provided through the govenrment. And, income into those corporations is thus privileged income. The profits on such income is taxed, and the profits are determined by the revenue minus expenses.

As this pertains to corporations paying service compensation, the taxable amount on personal income is the amount earned over the market rate for the services (section 89 , which would come in to play in the scenario of owning an LLC which pays oneself. Further, it is assumed that:

  • direct government employment is probably considered a privilege
  • licensed work is probably considered a privilege
  • I also expect that, as a shareholder (an owner of a company), profits from such shares are taxable

The Amendment has been intentionally misinterpreted, and, given its ambiguous language, which was only made clear in its original context and the first few supreme court cases on the matter, it might be assumed it was the intent that the amendment would eventually take on a broader meaning once any initial opposition died down.


  • income tax provisions of the tariff act of October 3, 1913
  • Brushaber v. Union Pacific R.R. Co, 240 U.S. 1, 9 (1916)
  • Stanton v. Baltic Mining Co., 240 US 103, 112-113 (1916)
  • Eisner v. Macomber, 252 U.S. 189, 219-220 (1920)

Further, it appears the increasing outlawing of work (requiring a permit/license), is a method of ensuring that most people actually do owe an income tax from being granted the government privilege to work (license).