Is this deception intentional and, if so, who is in on it?
The deception is, without doubt, intentional. The income tax law is carefully drafted to "appear" to tax everyone and everything, and the provisions of the law that admit that neither everyone nor everything is subject to the tax are hidden deep within regulations and carefully worded to avoid disclosing exactly what income "cannot" be included as income and what income is exempt. In both cases they only tell you what "can" be included as income and what is not exempt.
The average, street-grade IRS agent, who can't read his GED certificate without moving his lips, is probably incapable of understanding that he is carrying out a deception and is more likely motivated by his need to compensate for feelings of inadequacy and inferiority by abusing and dominating others. But with that exception, all of those involved are aware of the fact that the income tax law, as applied to personal earnings, is not only unauthorized by the law, but is prohibited by the Constitution.
Exceptions to that general rule would be the number of IRS agents and officials who, upon learning of the deception, refused to continue in the fraud. People of principle, like Joseph R. Banister, a CPA and former IRS-CID Special Agent; Clifton Beale, CEP, A.S., B.S., MS-Taxation and former IRS Revenue Agent and Appeals Officer; Paul Chappell, Attorney and former U.S. Tax Court Clerk and IRS Chief Counsel; Sherry P. Jackson, CPA, CFE and former IRS Revenue Agent; and John Turner, E.A. and former IRS Revenue Officer. All sacrificed their careers rather than participate in the fraudulent taking of hard-earned personal wages and salaries. All have been relentlessly pursued and punished by the IRS for their honesty.
Congress' cunning draftsmanship, deceiving through omission and misdirection, the treasury department's and IRS's refusal to answer questions about the law and the refusal by federal judges, both district and appellate, to even read, much less apply, the law, clearly implicate all as accomplices and accessories to theft by fraud and extortion.