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16th Amendment and The Grace Commission (Reddit Bitcoin)
We have previously encountered Senator Nelson Aldrich in the context of the formation of the Federal Reserve in 1913:
Well, it turns out he played a pivotal role in another significant piece of legislation.
The 16th Amendment...
The 16th Amendment states that:
"The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration."
Now an income tax amendment to the Constitution was first proposed by Senator Norris Brown of Nebraska.
He submitted two proposals, Senate Resolutions Nos. 25 and 39.
However, the amendment proposal finally accepted was Senate Joint Resolution No. 40, introduced by Senator Nelson W. Aldrich of Rhode Island, the Senate majority leader and Finance Committee Chairman.
Clearly, as we have seen in the Federal Reserve story, Aldrich was a man of significance with some pretty powerful friends. The 16th Amendment became part of the Constitution on February 25, 1913. This is the same year in which the Federal Reserve Act was passed, on December 23rd 1913.
The Sixteenth Amendment exempted income taxes from the constitutional requirements regarding direct taxes, after income taxes on rents, dividends, and interests were considered direct taxes and ruled to be illegal.
Some would say that Federal income tax on labour has been unlawfully imposed on the American people and kept in place for over a century, contrary to various rulings by the U.S. Supreme Court.
But why? And where does the money go?
Well, it exists such that successive federal governments can continue to pay the interest on money which, since 1913, they have been obligated to keep borrowing from central bankers, and which the government previously could print independently.
Now of course: the Federal Reserve is the Independent Agency that controls the money supply. Don't just take my word for it, this is confirmed by former Chair of the Federal Reserve Alan Greenspan.
In 1984, US President Ronald Reagan requested an investigation, authorized in Executive Order 12369 on June 30, 1982.
President Reagan used the now famous phrase, "Drain the swamp".
The focus was waste and inefficiency in the US Federal government, and became known as The Grace Commission.
Its head, businessman J. Peter Grace, asked the members of that commission to "Be bold and work like tireless bloodhounds, don't leave any stone unturned in your search to root out inefficiency."
Members of his team included one hundred and sixty-one top executives, assisted by 2,000 volunteers from the private sector.
They contributed more than $75 million worth of their time and resources to examine all major federal programs and agencies.
In January 1984, the Grace Commission’s work culminated in a report.
The conclusion of that report?
"One third of all income taxes is consumed by waste and inefficiency; one third is not collected due to the underground economy; and 100% of all income taxes are absorbed by interest plus government contributions to transfer payments."
In other words, all individual income tax revenues are gone before one nickel is spent on the services that taxpayers expect from their government...