I'll do my best to give you an answer, but if you really
want to understand this and related topics, I highly recommend Dave Champion's "Income Tax: Shattering the Myths". This book, while a little pricey since it is self-published, covers everything from the history of Congress' constitutional income taxing authority, to the 16th Amendment, as well as many of the otherwise mistaken "Tax Honesty Movement" mishaps and misunderstandings... including the 861 argument that eventually got Wesley Snipes in trouble.
Congress has always had the power to tax income within its jurisdiction. This is an important part of the equation that the tax law mal-application advocates never address. There are two types of jurisdiction... geographic (meaning those places that physically fall within the legislative and regulatory authority of that governing body) and subject matter (meaning certain activities in which one can engage regardless of where they are located).
The income tax, being an excise tax (see Brushaber v. Union Pacific Railroad
), relies principally upon subject matter jurisdiction and then more specifically upon the class(es) of person described to be liable and upon what activities are taxed.
Indeed, as SCOTUS has ruled, Congress' power to tax is "plenary". Many tax law mal-application advocates like to claim this means that the federal Congress can tax anything it wants. This is simply not true. The word "planary" means complete, absolute, entire, etc. What SCOTUS was saying is that the tax authority that Congress has is all that is necessary and there is no other tax authority it can have. Within its jurisdiction (both), it can impose direct taxes (which has never happened) and excise taxes (which includes duties and tariffs, etc). Direct taxes are levied upon property, and within the scope of federal taxing authority, such a tax would have to be apportioned among the states according to population. As I said, this has never happened as it is horridly unpopular and would surely mean the end of a Congressman's career. The excise taxing power, however, is used for everything, and this is exactly the class of tax into which the income tax falls.
Excise means privilege. First, you must be among those upon whom Congress has imposed the tax. Second, and if that is true, you would have to engage in an activity against which the gains may be measured for calculating the amount of privilege enjoyed.
You have to remember that the federal government is not the supreme ruler of the states and their people. Rather, the federal government is the foreign agent of the states collectively with regard to international matters... trade, treaties, consulates, travel, outermost border defense, etc. Regulation of a small set of specific activities has been ceded to the federal government to create uniformity for just that purpose... regulation... but this is a very small class of items, such as firearms and ammunition manufacturing (for interstate resale), tobacco (for interstate resale), diesel/gasoline (for interstate resale), etc... see a pattern? Some would contend that this is an abuse of the interstate commerce clause, and I would agree, but that is a different subject entirely.
Given this narrow purpose of the federal government (international matters and certain interstate regulation), it is hard to conceive why so many people would believe that the income tax could ever apply to their exercise of what is arguably (and settled law) their right to contract their labor for an agreed remuneration. There is simply no substantial nexus with federal taxing authority created through this activity. The reason is because we are not "federal citizens", but rather citizens of the states in which we reside.
Moving onto the 16th Amendment...
It is true that SCOTUS has ruled that the 16th Amendment conferred no new power of taxation, nor did it extend Congress' taxing power to new or excepted subjects. The tax law mal-application advocates love to leave out that second part because it gives the truth away too easily. If you were not among those made liable before, you are not among those made liable after its ratification. As we can see from Brushaber, the 16th merely removed the occasion where certain enterprising individuals and companies were able to avoid liability by sheltering their otherwise taxable gains in property... think railroads and certain federal financial investments/instruments. After all, we're talking about the period between 1898 and 1913 here.
Also, we have to keep in mind the evolution of what we now know as the income tax. The 16th Amendment and the income tax were passed in 1913. Yet, it wasn't until 1954 that the Bureau of Internal Revenue (renamed IRS in the proceeding year) began its campaign of littering EVERY business across America with pamphlets and instructions about withholding and whatnot. Prior to this, hardly anyone filed federal tax forms... because no one was liable except those specific classes of person engaged in those specific activities (of a foreign nature). By 1954, the feds were confident that the People were ignorant enough to buy whatever bullshit they were selling, and with the restructuring of Title 26 of the United States Code, it was easy to manipulate perception by removing what they referred to then as "redundant language". This "redundant language" actually made the limited scope of the tax quite clear... just check out the original 1939 codification and you'll see what I mean.
In short, it is a lie. The IRS and Treasury has convinced private payers within the states that they must both withhold a portion of their worker's pay to satisfy a potential tax liability (via the W2 form) as well as submit information returns for contract workers (via the 1099 form). The People, being as ignorant as IRS and Treasury believe them to be, obediently file follow-up documentation in the form of a tax return. It is a fraud and a scam. The ONLY evidence, which is contrary to actual fact for the vast majority of Americans, that these workers are liable for the tax is the information returns submitted to the IRS.
Why do so many fall victim to charges of "willful failure to file" and similar criminal charges with regard to the federal income tax? The answer is simple. First, most people believe
they are liable, or at best do not understand (from a legal perspective) why they are not. Second, the IRS/Treasury and the courts are working within the confines of the law as it is written. This means that IF an information return is submitted claiming that the activity which generated the individual's pay is indeed taxable, the IRS must assume that is true... there is no regulatory method for vetting the information (shocking!). On top of that, there is no way to refute the basic claim of liability after-the-fact. If an information return is submitted, you are assumed liable... the amount for which you are liable is irrelevant at that point. To stop the lie, against you anyway, the only recourse is to stop your private payer from LYING about you and submitting FRAUDULENT data to the IRS. Actually, they shouldn't be submitting anything to the IRS, but again, that's a different matter altogether.