Taxing the truth

Local Libertarian offers cash for proof that income taxes are legal, but good luck convincing him

Gerald Klaas: a man on a mission.

Gerald Klaas: a man on a mission.

Photo by Jill Wagner

Gerald Klaas believes that the federal income tax is unconstitutional, that the government acts illegally in collecting it, and he says he’ll pay you $53 if you can prove him wrong.

This computer science instructor at American River College has created a Web site,, in the hope of spearheading a national movement that inspires his fellow Americans to ask their congressional representatives this “simple question": “Was the 16th Amendment properly ratified?”

Klaas joins a long line of anti-government skeptics who try to alter modern realities with detailed dissections of history and the U.S. Constitution. Some brand themselves “patriots” or “constitutionalists,” and they range from benign members of the Libertarian Party to dangerous extremists like infamous bomber Timothy McVeigh.

But the common thread is the belief that the federal government is illegally usurping our civil liberties through things such as the 16th Amendment to the Constitution, which created the federal income tax, and which Klaas believes is a smokescreen the government uses to repress the populace.

Their income tax argument is almost as old as the 1913 amendment itself. These tax protesters have always lost in the federal courts, but Klaas isn’t convinced, and says he will regularly increase his reward for convincing evidence to the contrary until New Year’s Day 2005, when he will use the unclaimed cash for a foreign vacation.

For the record, Klaas says he obediently pays his taxes. “I’m a Boy Scout with my taxes,” he said, before taking another bite of his Hungarian goulash. Sitting in a Midtown Sacramento restaurant, the Carmichael native took a lunch break from his day job as a computer security technician to explain why he joined the income tax protest movement.

Klaas never liked the federal income tax, but his reasons go beyond most of ours. “The 16th Amendment is used to justify the trampling of other civil liberties,” he explained. To Klaas and most self-proclaimed patriots, the Internal Revenue Service is a corrupt entity that freely ignores the Constitution by violating our right to privacy. It demands personal information on tax returns, then uses those records to prosecute you in court, often without benefit of a trial by jury.

When the 16th Amendment was signed into law, Congress passed a federal income tax that only affected the wealthiest 7 percent of Americans. As the government’s size grew during World War II, so did the tax, as it gradually extended to the middle and working classes and onto our kitchen tables every April.

Long before his current crusade, Klaas was a prolific letter writer to local newspapers, excoriating the IRS for being the “judge, jury and executioner for our spend-happy representatives.” Jean Fraiser, California chair for the Libertarian Party, caught wind of these rants in 1998 and offered Klaas a run for state Senate on his party’s ticket. The self-described “non-politician” took the call to duty and told voters that “paying taxes is more like being extorted.” He garnered just 3 percent of the vote.

Now, he’s purporting to put his money where his mouth is. Klaas’ “Up the Ante” Web site even caught the attention of the IRS, which answered the challenge by mailing Klaas its standard response to “common tax protester fallacies.” The single sheet declared that the U.S. Supreme Court ruled the 16th Amendment to be completely constitutional and listed a few federal court cases where tax protesters lost on such “frivolous arguments.”

Klaas was unimpressed.

He believes that all questions about an amendment’s validity must go before lawmakers, not law interpreters like judges and federal prosecutors. “Court rulings are invalid. … If the courts find the amendment to be improperly ratified, they cannot question the Constitution and change it. That is the Legislature’s job,” he argued.

But that’s an interpretation with which the courts haven’t agreed. In 1922, there was another dispute about the validity of the 19th Amendment’s (women’s suffrage) ratification and the Supreme Court ruled that all such “political questions” about the Constitution must be concluded in court. Yet, Klaas will not budge.

Asked about his cash prize, Klaas smirked and dabbed his mouth with his napkin. “The reward is just a token and an attention-grabber,” he explained. His theory is that Joe Six Pack will wonder about some Libertarian’s cash reward and go investigate the 16th Amendment for himself. If the federal government cannot prove that the amendment was properly ratified, then Klaas believes more and more average Americans will disbelieve that the government obeys its own laws.

If you want Klaas’ 53 bucks, here is what he says you have to do: First off, you cannot use any court decisions as evidence. Instead, he said, you must prove that the 16th Amendment was properly ratified by showing him a copy of then-Secretary of State Philander Knox’s certificate that listed the states that ratified the 16th Amendment in the exact language as the same bill that was approved by Congress.

Like his fellow protesters, Klaas believes that Knox committed fraud by counting more than 28 states that “illegally” ratified versions of the amendment that had grammatical errors or missing small words like “The.” Such errors, he believes, are enough to invalidate the whole process. He also believes that some non-ratifying states were counted as “yeas” by Knox.

“Back in those days, the specific instructions went out, ‘You may not alter these wordings, it must come back exact’ … and Knox did not follow the rules and committed fraud,” he explained. Klaas adds that several states like Texas also broke their own constitutions by ratifying a bill that would impose more federal taxes.

Klaas admitted that he is no constitutional scholar and did not even do any research for his argument. All of his legwork was done by his “hero,” Bob Schultz, founder of the We the People Foundation, a libertarian advocacy group. In February, Schultz even staged a “Truth-in-Taxation” trial of the 16th Amendment, where he brought in current IRS employees and retired judges as “witnesses” to testify that the federal income tax was unconstitutional all along. Schultz packaged the whole event into a $30 CD-ROM set, which Klaas bought and was convinced that it spoke the truth.

The majority of Schultz’s evidence came from the bible of income tax protesters, The Law That Never Was. Written by Bill Benson in 1985, a former investigator for the Illinois Department of Revenue, the book argues that only 12 states properly ratified the 16th Amendment, (instead of the required two-thirds of the states). President Woodrow Wilson appointed Knox to forward the bill to the governors to ask for legislative approval.

Benson drove to all the 48 states that voted on the 16th Amendment. He claimed to have obtained more than 17,000 documents from their legislative archives that prove that Knox schemed to certify that 38 states approved the law, even though only 12 states ratified the original version of the bill that passed in Congress.

Crucial to his argument is a memo that Benson found in the National Archives. Written to Knox by then-State Department Solicitor J. Rueben Clark, the legal adviser recommended that the 16th Amendment be certified for Wilson to sign into law, even though he reported that more than 28 states approved typo-riddled versions of the bill and three non-ratifying states were mistakenly counted by Knox as ratifiers. After receiving this memo, Knox went ahead and certified that 38 states approved the Amendment, before leaving office.

Tax protesters appeared in dozens of federal court cases and used Benson’s book as their defense. On his Web site, Benson sells $3,500 defense packages of documents and videotapes to support any income tax challenger in court. Yet all of Benson’s main arguments got labeled by the Supreme Court as “frivolous” and unworthy of review.

In the court cases, the federal judges and prosecutors argued that the 16th Amendment was properly ratified by 38 states as Knox declared. If Clark’s memo is correct, then Klaas’ requested list of states that approved the amendment in the exact language as the bill given to Congress may not exist.

Which is gonna make it difficult for you to get Klaas’ cash.

However, the courts have ruled that unless any error in a bill’s language substantially alters its meaning, then the ratification still counts and those 38 states legitimately approved the amendment. As for the states that supposedly broke their constitutions by ratifying a federal tax bill, the Supreme Court ruled that the ratification process is a federal function and cannot let additional state procedural limits interfere with Article V’s amendment policy. Legal researchers also found that even if the five falsely counted ratifiers were discredited, over two-thirds of the states would have still passed the bill.

So on one side, there’s the federal government that approved the 16th Amendment, the states that ratified it and have never contested its authority, and the many courts that have concluded that it was legally ratified and constitutional.

And on the other side, there’s Klaas: resolute, unconvinced, offering his $53, but serving as the sole judge of who’s really right. Good luck, people.