Vivien Kellems: Giving the Taxman Hell
She wouldn't be pushed around.
JANUARY 03, 2012 by WENDY MCELROY
If principles are expressed through people, then Vivien Kellems’s life (1896-1975) shouts out that business is not the handmaiden of government.
For over 25 years the Westport, Connecticut industrialist battled the federal withholding tax, which she refused to collect from employees’ wages. If the government wanted her “to be their agent,” Kellems declared, they “have to pay me, and I want a badge.”
In For a New Liberty, economist Murray Rothbard discussed Kellems’s stance: “What moral principle justifies the government’s forcing employers to act as its unpaid tax collectors? The withholding principle, of course, is the linchpin of the whole federal income tax system. Without the steady and relatively painless process of deducting the tax from the worker’s paycheck, the government could never hope to raise the high levels of tax from the workers in one lump sum.”
The withholding tax on income had been introduced in 1943 as a temporary measure to finance World War II. Called “the Victory Tax,” it required businesses to use their own resources to withhold taxes, to maintain records, and to remit money; mistakes or noncomplaince could result in severe penalties. Thus businesses became unpaid accountants and tax collectors for the federal government.
After the war there was no sign of withholding’s repeal and so Kellems, who had master’s degree in economics and a nearly completed Ph.D, ceased to comply. Her rebellion was based on far more than the lack of a badge.
In her 1952 book, Toil, Taxes and Trouble, Kellems explained that her rebellion was based on constitutional grounds. Article I Section 2, Clause 3 of the U.S. Constitution declares, “Representatives and direct taxes shall be apportioned among the several States . . . according to their respective Numbers. . . .” Section 9, Clause 4 states, “No capitation, or other direct, Tax shall be laid, unless in proportion to the Census or Enumeration. . . .”
Kellems concluded, “[O]ur forefathers bound fast the hands of Congress and secured the liberty and freedom of the American people. How? By making it utterly impossible to levy an income tax. An income tax is certainly a direct tax [which] must be paid by the person receiving the income. By specifying that direct taxes must be levied in accordance with the number of people, not upon what they produced, as in the days of ancient Egypt, an income tax was simply out of the question.”
(Contrary to Kellems’s position, however, Americans courts have long held that the income tax is a constitutional indirect tax.)
Asked for Prosecution
In February 1948 Kellems publicly invited the government to prosecute her. Instead, four IRS agents arrived and demanded $1,685.40 even though her employees had been paying the correct amount. The rebuffed agents intimidated her bank into surrending that amount from her account.
The conflict became famous nationally when television shows such as “Meet the Press” interviewed Kellems. On Eleanor Roosevelt’s 1950s talk show, “Today With Mrs. Roosevelt,” Kellems explained, “As you know, Congress can pass all of the laws it wishes to. The President may sign all of the laws that he wishes to. But no law is a valid law in our country until it has been declared constitutional by the Supreme Court. Any citizen doubting the constitutionality of a law has the right, and in my opinion the duty, to break the law in order to provide a test case. That is all I did.”
Kellems also organized a nationwide group called the Liberty Belles and Boys to seek the repeal of the withholding tax.
Sues the Government
In 1949 tax agents demanded $6,100. Despite proof that her employees had paid their own withholding, the agents once again forced her bank to turn over the money. In January 1950 Kellems sued for its return in the federal district court in New Haven. She was not permitted to argue constitutional grounds, but she secured a full refund nonetheless.
Eventually Kellems abandoned her legal pursuit of the IRS because of its expense, but she never abandoned the fight. In 1969 she disobeyed a court order to produce financial records on the grounds that it violated her Fifth Amendment rights. According to some reports, she also refused to file tax returns; other reports claim she filed blank forms. In a 1975 interview with the Los Angeles Times — the same year as her death — Kellums declared, “Our tax law is a 1,598-page hydra-headed monster and I’m going to attack and attack and attack until I have ironed out every fault in it.”
This little known and indomitable crusader deserves a place in individualist history, standing proudly beside contemporaries such as Rose Wilder Lane and Isabel Paterson.