Here’s another former GMU PhD student making great good sense. In particular, you can here see the Cato Institute’s Dan Mitchell discuss the merits of a flat-tax system.
Soaring Case for the Flat Tax
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Dan makes a good case. It's especially good to have empirical evidence, something that FairTaxers cannot provide.
Still…
He mentioned at one point that bedwetters need not fear, because 60% of people, the lower incomes, pay no taxes. How is that flat?
There is still some kind of corporate tax (double taxation?) from which revenues have doubled? ?!? For those who oppose a sales tax, please consider how corporations pay taxes — … — Right! They pass most of it on in the form of increased prices, a hidden sales tax.
But my biggest worry is here: how does a tax STAY flat? If there are no structural changes to make it difficult for exceptions to creep in, then the lobbyists go to work and we're soon right back where we were.
Took a few minutes but it was finally revealed that the discussion was about a flat RATE tax (%age) not a mere flat tax ($/head). That's the kind of imprecision that politicians love.
I'm also in favor of a flat tax. Every cent you make over $1,000,000 is taxed at a flat 100%. Don't worry, be happy, this proposal won't affect you poor slobs in the least, only your warped brain cells.
Trumpit,
I find your comment more evil than that of your soul mate: "Stick 'em up. Give me your wallet."
Disgusting!
This is a 2005 article with a calculation [example] of how the flat tax could be applied in the U.S.
http://hallofrecord.blogspot.com/2005/03/excessive-spending-taxes-and-shelters.html
I'm also in favor of a flat tax. Every cent you make over $1,000,000 is taxed at a flat 100%.
Does it hurt when you try to think?
There may be economic merits, but the political case will be difficult to make.
Using Estonia as a role model probably won't sell in the US.
George Bush has set back conservative politics probably for a decade, or until the Dems do something really stupid (which could be next year).
Let me preface these comments by saying that a universal flat rate tax would be preferable to our current tax code.
Having said that, I don't see the flat tax as a true long term solution. First, it is still an income tax and keeps the 16th amendment in place. Thus, it can always be revised, by simple majority vote, back into the mess we have now (Empirical evidence of this is that the original income tax form was only about 4 pages. More empirical evidence – look what has happened to the 1986 tax "simplification"). Second, based upon how we define income for tax purposes, a flat tax still requires all the same intrusive and expensive record keeping and reporting as our current tax system. Finally, any tax on income invites politicians to make promises to one group at the expense of another.
For these reasons, among others, I prefer repeal of the 16th amendment and implementation of a consumption based tax.
I am sorry gentlemen, but, not one of you can seriously and intelligently discuss personal income taxes in a comparative manner as not one of you has anything other than anecdotal and presumtive knowledge of the current USA income tax laws, Title 26 of the U.S. Code.
In your ignorance you are determined to jump from a position of freedom directly into a position of involuntary servitude vis-a-vis clamoring for a change in the income tax laws.
Given a second chance to enslave you, now that they have you properly enculturated and inculcated to believe that somehow you "owe" the state a tax on your income, the Congresassholes will not write a new income tax law and leave it voluntary as is the current one. It doesn't matter which of the two totally stupid ideas, flat tax or "fair" tax, that you support both make your situation worse.
In your position in the frying pan, try learning more about the fire before you clamor to jump.
Try putting some of your brain power to actually studying Title 26 of the U.S.Code and trying to find exactly where in its convolutions there is law that compells you to pay a personal income tax when you obtain all the fruits of your labor here within the 50 contiguous states.
I give you fair warning, a great many very intelligent and serious scholars have tried and failed to find it, and no one from the IRS or the Treasury department is willing to take the stand and make the attempt.
Here is the URL for Title 26:
http://www.law.cornell.edu/uscode/html/uscode26/usc_sup_01_26.html
Good luck.
Well the Cafe seems to have acquired a mental defective on the order of the proud tradition established by muirduck. Accordingly I have generously permitted him to share the list of shame:
Here you go, Trumpitduck.
MUIR(STU)PIDITY OF THE (muir) DUCK
All of these are stands alone stupidity. Context is not necessary to understand that the person who created these is mentally defective.
1. “The rising income discrepancy is what prevents people from obtaining affordable housing.”
Posted by: muirgeo Nov 2007
or
2. “If you are advocating a free market system say for schools you need to show one that works.”
Posted by: muirgeo | Mar 10, 2008 7:24:41 PM
or:
3. "Suffice it to say individualism where ever it surfaces is ultimately self-destructive.”
Posted by: muirgeo | Mar 15, 2008 11:29:41 AM"
or
4. “Planning and tinkering will definitely have a place in creating a strong competitive market. The invisible hand……YOU'RE FIRED!!!… well or at least demoted.”
Posted by: muirgeo | Mar 17, 2008 9:13:45 AM
or
5. “Natural cycles will often effect(sic) conditions on a short term basis but will not effect the larger man made trends.”
Posted by: muirgeo | Mar 18, 2008 10:15:41 AM
or
6. “I honestly believe the principles I support would increase our liberty not decrease it.”
Posted by: muirgeo | Mar 18, 2008 6:57:16 PM
or
7. “5,000 year old vegetation has been found in multiple areas around the world in the paths of recently receding glaciers.”
Posted by: muirgeo | Mar 18, 2008 7:00:43 PM
or
8. “First , the idea of climates "natural course" is invalid. There's no magic here climate responds to things we understand pretty well.”
Posted by: muirgeo | Mar 20, 2008 9:02:34 AM
or
9. "When some one says the climate is warming because it is following its natural course they need to be more specific. That's all I'm saying. Is it warming from the Sun, El Nino…. what? And provide evidence."
Vidyohs… your ego so controls you. You should learn how to tame it. You'll be a happier person.
Posted by: muirgeo | Mar 20, 2008 10:28:10 AM"
or
10.”I compete with other doctors for my patients and market forces are somewhat in effect. A government single payor(sic) system could actually increase consumer choice and market competition.”
Posted by: muirgeo | Mar 21, 2008 9:10:06 PM
or
11. “ If I was(SIC) to summarize my position it would be that I believe we need more democracy not less ( ie. a government represents the needs of its people more then(SIC) of its economic institutions).
I believe in competitive markets but understand they work best with good regulation.
Posted by: muirgeo | Mar 26, 2008 12:56:01 PM
or
12. “Seriously, the only historical reference I can think of was back in the days of the feudal system. Then the markets were completely unencumbered. Property rights were strictly observed and all property was held by a minority of wealthy people with everyone else an indentured servant.”
Posted by: muirgeo | Mar 26, 2008 2:48:31 PM
or
13. “Poorly worded. Maybe qualifies for a murpidity but it's a fact that there is no "natural state" of climate. Indeed it's always changing.”
Posted by: muirgeo | Mar 28, 2008 1:30:17 PM
or
14. There will always be regulation. The key is to make it minimalist but effective. The biggest danger to effective regulation is allowing the regulated too near the process of making regulations and too near the process of enforcing them.
Posted by: muirgeo | Mar 31, 2008 1:41:01 PM
or
15. If I were a benevolent dictator, I would outlaw the use of gasoline & and other petroleum products. Demand in the U.S. would drop to zero and the price of a barrel of oil would plummet like a lead balloon. Not so easily would Iran be able to sponsor terrorism throughout the Middle East. Domestic oil companies would have to be outlawed as well. They would have to take their evil operations abroad. The goose that lays the golden oil egg must be cooked. The means by which you poor slobs get to work is of no interest to me.
Posted by: Trumpit | May 27, 2008 11:52:59 AM
or
16. I'm also in favor of a flat tax. Every cent you make over $1,000,000 is taxed at a flat 100%. Don't worry, be happy, this proposal won't affect you poor slobs in the least, only your warped brain cells.
Posted by: Trumpit | Jun 4, 2008 2:22:57 AM
Good lord, vidyohs, what great rhetorical skills you show, reaching out to people like this.
But more to the point — have you told Wesley Snipes about this? ?? What's that; you did! That's how he got in trouble?! Oh, my!
I'll admit that I don't understand Title 26 (no mere mortal could… and no god would want to). Whatever the law might say, the Feds will seize your stuff and put you in prison for not paying you "dues."
That's sorta the point here. A real tax reform has to make the tax law simple! If people can understand the law, they will find ways to deal with it. That automatically makes any simple law, flat tax or fairTax, much nearer to fair than the horrible thing we have now.
pipertom,
Don't you mean diplomatic skills vice rhetorical skills?
My rhetorical skills are actually quite good, thank you very much.
I intended to rhetorically slap you and others upside the rhetorical head because sometimes a sharp jolt is the only thing that puts the mechanisms in gear. It has long been obvious that suggestions doesn't do it.
Our founding fathers discovered just how difficult it is to stir people out of their anecdotal and presumtive comfort zones. They discovered what I know, that until the "king's men" kick that sixpack out of your hands, trash your TV, and drag you out the door, you aren't going to do any more than bitch as your comfort zone shrinks until it is gone. (oh, is it going to shrink more very soon? Think global warming, protection of the Polar Bear, and carbon taxes.)
You see, pipertom, it is not the "feds" that work so hard to prevent me from walking the earth as a truly free man, it is people like you that make it near impossible because regardless of the pain of your slavery you won't challenge what you think you know even when hard rational thinking tells you what you think can not be so.
Your quote of the Wesley Snipes case merely confirms my statement that you have only anecdotal and presumptive knowledge of the tax code, and you're entirely willing to live your life according to conventional wisdom instead of actually learning for yourself.
Freedom isn't easy, or for the faint of heart. There are those who are afraid to question, there are those who are afriad to talk to people who question, and there are those who are afraid to have it known that they even once thought about questioning. Which are you, pipertom?
I can tell you this: if you know the law and are willing to stand firm on demonstrating that knowledge, the "feds" can not seize your property without proving a debt in a court of law (not tax court) and obtaining the signature of a federal judge authorizing that levy. A Federal Notice of Tax Lien is not a levy. That's a fact.
Now go ye forth and study the code; find out how the feds can claim a debt when you have made no knowing, willing, intentional, and voluntary agreement or contract with them. Research the code and remember every word has an official defintion not found in a Webster's dictionary; what is "income" as defined in the code; what is "source" as defined in the code; what is the "United States" as defined in the code; who is a "taxpayer" as defined in the code; why are there no "enforcement" provisions in Title 26; why are any "enforcement" provisions regarding collection of taxes found in Title 27 – Alcohol, Tobacco,and Firearms? Do you sell any alcohol, tobacco or firearms?
I say again to you, no one from the IRS or the Treasury Dept. will get on the stand in court and attempt to show the law that obligates you to pay an income tax. They can't. They will claim that your request to prove their case is "frivolous" and the coerced judge will rule in their favor. Oh, and did I tell you that the "feds" are not above fabricating evidence and just plian out-right lying?
Just so much you don't know, pipertom, yet you offer up your wrists for the chains of economic slavery based on anecdotal and presumtive knowledge, and worse yet both of those come out of conventional wisdom.
None of this is anecdotal or presumtive knowledge to me, pipertom, I have studied the code, the efforts of dedicated researchers, and know the result to be accurate and massive. Weighed against that is the fraudulent and coercive "prima facie" and "frivolous" charges of the "feds".
I am not a mean or nasty person, pipertom, just a truthful one and the truth can be very rough at times. I haven't spared you and I give you permissiom to never spare me when I need the truth laid on me.
"I am sorry gentlemen, but, not one of you can seriously and intelligently discuss personal income taxes in a comparative manner as not one of you has anything other than anecdotal and presumtive knowledge of the current USA income tax laws, Title 26 of the U.S. Code."
Other than time as a tax CPA and tax professor I don't know all that much about Title 26 (chuckle).
The issues raised have been raised thousands of times and are just plain crapola. If you doubt that ask the people sitting in federal prison for income tax evasion.
vid: too much time on the internet? Are you buying to books sold by the tax evasion experts? The feds have refuted all of those arguments long ago.
This would all be funny, but evil people make lots of money selling books, tapes and seminars to the gullible.
The issue is not about whether or not the Federal government can impose income taxes… that's a red herring to avoid a discussion about the manner in which such taxes are imposed.
The proponents of a flat tax simply have to point out the obvious:
1. the present tax code is onerous in its complexity
2. the present tax code provides incredible opportunity for deceit and fraud
3. the present tax code is built around decades of special favors to special interests
Whether on not a flat tax could be enacted is another issue… give all of the special interests entrenched in the current code.
The old saying that "there is always an exception to the rule" is validated by the current tax code. Actually, exceptions are the rule. A simple, understandable, enforceable code would undermine the vast tax advisor/attorney/collector industry. Sure, the government might actually collect more and most individuals might actually pay less taxes, but where's the challenge in that?
Well Gee Whiz (chuckle)
STRB,
Other than time as a tax CPA and tax professor I don't know all that much about Title 26 (chuckle).
"The issues raised have been raised thousands of times and are just plain crapola. If you doubt that ask the people sitting in federal prison for income tax evasion.
vid: too much time on the internet? Are you buying to books sold by the tax evasion experts? The feds have refuted all of those arguments long ago.
This would all be funny, but evil people make lots of money selling books, tapes and seminars to the gullible.
Posted by: save_the_rustbelt | Jun 4, 2008 11:39:00 AM"
If this be the case you should be able to just lay it out for us: Show me the law, show us all the law.
Piece of cake for a tax professor, eh?
Yeah, I spend some time on the internet, that is where I find the U.S.Code, the UCC, the rules of Civil Procedure, case quotes from official sites, but this belies the point.
Just give us all the benefit of your knowledge and quote the law as if you were presenting your case in court.
To say, "everyone knows" as pipertom did, is saying "I don't know shit".
you said:
"The feds have refuted all of those arguments long ago.
This would all be funny,"
problem is that the "feds" haven't refuted anything, all they say is, "It's fivolous" and are never required by the coerced courts to actually make the case.
http://www.truthattack.org/ you read about the success of the IRS, now read about their failure. Then look at the Joe Bannister case, the Bobby Kahre case.
Sorry, STRB, show us the law.
I love it, STRB, my journey isn't over yet but the only thing that can derail it isn't law, just guns and fools that will sell their souls to the master and use the guns.
The law, please.
Bruce Hall,
You're dead wrong this:
"The issue is not about whether or not the Federal government can impose income taxes… that's a red herring to avoid a discussion about the manner in which such taxes are imposed."
is exactly the issue, and the only one any intelligent freedom loving man would be working on.
Your masters want you to think the way you do. Don't question, don't question, just accept "what every one knows".
I'll let the link speak for itself.
http://www.irs.gov/businesses/small/article/0,,id=106498,00.html
apparently, links don't post too well in this forum. Hopefully this provides the full address.
http://www.irs.gov/
businesses/small/article/
0,,id=106498,00.html
The url is all there, just partially off screen. To copy the whole link, click at the beginning of the line and press shift + end to highlight and ctrl + c to copy to clipboard.
You may also use standard hypertext protocol to create a link.
vid:
I'm taking my grandchildren to the park, so I won't argue with you much.
A quick look at the RIA electronic research data base yields about 2000 reported cases on tax law constitutionality, and guess what, the federal income tax law is constitutional. Really.
I've read all of the books on tax avoidance and evasion techniques, they are all very clever but they are all bull.
The more clever gurus combine several methods, ranging from unconstitutionality to the gold standard to illegality of the IMF to God only knows what to make a really interesting argument.
I hope you don't end up in jail because you follow some "guru" who makes money selling books and CDs to suckers.
It's in the code. Read below "There is hereby imposed…"
(a) Married individuals filing joint returns and surviving spouses
There is hereby imposed on the taxable income of—
(1) every married individual (as defined in section 7703) who makes a single return jointly with his spouse under section 6013, and
(2) every surviving spouse (as defined in section 2 (a)),
a tax determined in accordance with the following table:
If taxable income is: The tax is:
Not over $36,900 15% of taxable income.
Over $36,900 but not over $89,150 $5,535, plus 28% of the excess over $36,900.
Over $89,150 but not over $140,000 $20,165, plus 31% of the excess over $89,150.
Over $140,000 but not over $250,000 $35,928.50, plus 36% of the excess over $140,000.
Over $250,000 $75,528.50, plus 39.6% of the excess over $250,000.
It'd be funny vidyohs if the notion of 'you don't have to pay the income tax' amounts to 'you don't have to generate a high enough income to qualify for the income tax'. In Australia it'd amount to making no more than $6000 I think.
LOL,
"It's in the code. Read below "There is hereby imposed…"
"There is hereby imposed on the taxable income of—
Posted by: Earl Schlobodwicz | Jun 4, 2008 2:58:42 PM"
Okay Earl Schlobodwicz, try and follow the dubious and convoluted path to determine what is "taxable income".
I should think that you'd want to know what income of yours is taxable, don't you? I mean through the use of the code, not IRS phamplets.
Oh STRB,
BTW:
"If you doubt that ask the people sitting in federal prison for income tax evasion.
Posted by: save_the_rustbelt | Jun 4, 2008 11:39:00 AM
If I had the opportunity, I might ask them how they had income tax to evade. Seems to me to be a rational and objective question. Maybe that was their mistake, conventional wisdom, anecdotal, and presumptive knowledge can kill you every time.
In plain language STRB, law can not compel performance, so no law can compel you to work and produce for another. Not even for government, the 13th amendment to the Constitution, their constitution, specifically prohibts that. So, if there is no law existing that can compel you to turn over a portion of, or all of, the fruits of your labor, what is going on?
Is Title 26 constitutional, yes.
The Supreme Court finds no conflict between the 16th Amendment and the 13th nor Title 26. With that in mind, what is the only possible explanation for your filing a 1040, self incrimination, and sending in a check on your self assessed actions? There is only one possible answer.
Having mistakenly made that move then you have placed yourself in the jurisdiction of the IRS, made a committment to debt, and have placed yourself in jeopardy.
Oh, I know I am the intellectual rouge here, but that's no problem. I will wait with baited breath for your demonstration of tax professor knowledge of the law. Show me the law, don't quote IRS pubs or websites to me. they lie, STRB, is that plain enough for you.
To everyone,
Let me clarify myself and make what apology may be felt necessary.
I do not disrespect the average intelligence I see displayed on this blog, far from it. I am delighted to have the benfit of reading not only the hosts posts but the comments that they provoke. I figure that most of you have IQs at or above mine (which is not awe inspiring by any means). If anyone, and there are obviously some, took real offense at my inflamatory rhetoric, please accept my apologies.
It is the paradox that I see that causes me to express my wonderment in such direct and abrasive words. This is a blog about economics and certainly knowing the truth about the income tax qualifies as an appropriate subject for people interested in economics, does it not?
I make my case against the income tax in the manner I do, not out of contempt or disrespect, but because you all are just so damn average in your acceptance of your enculturation, your conventional wisdom, your willingness to bow down and kiss ass to the master based entirely on anecdotal and presumptive knowledge.
I slammed a brick wall in front of your collective faces and your reaction has been not to ask where I get my information, not to ask what my personal experience has been; no, you actually argue in defense of your own enslavement. To me, a genetic rebel, that is simply amazing.
I know none of you has had the opportunity to look at, study, and absorb the contents of the references I posted, yet you're back quoting IRS websites and publications for Christ's sakes! The IRS has you so terrified that you hate me for rocking your boat, not with lies but with truth.
How bright do you have to be to understand that the IRS is not going to give you a hint that you can shake off your chains through simple knowledge and balls. Do you actually think they are going to be honest and tell you how to get free? No. I know they will lie their asses off and use every dirty trick, legal and extra-legal, to keep you in willing bondage.
Look at the law itself, and make them do the same.
Come on, how many of you have read the quote of a former IRS commissioner who said, "If the public ever finds out the we operate on 100% bluff, there will be a revolution." That statement was made to a Congresasshole committee back in the 50s. Ok, now you know. Ready to revolt? I didn't think so.
The real underlying concern I have for America is that this blog reflects what is happening in general in the nation. You and I bitch about how our money is spent, the many and copious ways it is squandered on really really stupid stuff, and yet you, not I, fight to defend the mechanism that puts more of your money in their hands?
You won't even ask an intelligent question about the subject.
Talk about terrorist, no one can operate on the level of the government.
Ok vidyohs, I'll bite.
Share with us how you have successfully been able to never pay your income taxes ever since you read this stuff so we can do the same thing. Show us the way. Make us see the light. Make it as simple as the IRS makes it complicated.
A flat income tax rate is great. How will a politician hike tax rates, when the rate he is hiking, will affect all productive people in society? Who is going to vote for such a politician? In the current system, a politician can just hike the top bracket rate, because this group doesn't represent a large voting block…
It wouldn't have something do with military pay and benefits being considered 'non-taxable' would it?
I'd support this tax if it exempted investment.
"Flat tax" proposals, like the "Laffer curve" rhetoric of nominal "supply siders", are just more arguments for higher state revenue. Is it "fair" to tax the rich more than the poor? That's the wrong question. Is it useful to tax "the rich" (individuals with substantial income to invest) at all? That's the question.
As Adam Smith recognized centuries ago, we want a progressive consumption tax. We want to cut taxes on the rich entirely as long as the rich agree to remain rich by reinvesting the yield of their riches. We also want to limit their entitlement exclusively to consume the fruits of vast resources, because this entitlement is an artifact of the state's forcible propriety.
In other words, we don't want the lord of an estate entitled to sell every possible grain grown by his serfs to expand his castle at the center of the estate while leaving the serfs with a bare subsistence. We don't the lord handing this yield to the king to expand the king's castle either. We want the yield reinvested to improve the productivity of the estate, because this policy benefits everyone on and off of the estate, and it does the lords no harm, because they don't need their castles at all and are probably better off without them, just like the other welfare queens.
Correction: We don't want the lord handing this yield to the king to expand the king's castle either.
No Chris,
Not yet:
"Ok vidyohs, I'll bite.
Share with us how you have successfully been able to never pay your income taxes ever since you read this stuff so we can do the same thing. Show us the way. Make us see the light. Make it as simple as the IRS makes it complicated.
Posted by: Chris M. | Jun 4, 2008 10:23:07 PM"
Let's wait until STRB, (chuckle) tax professor, shows us the law that clearly can create an obligation on you to perform involuntary servitude.
You may find it surprising that the government that we all know and love as the warm cuddling tender nourishing thing it is has said, via Supreme Court decisions, that the government has no obligation to teach or instruct you in the law. They clearly lay that responsibility on you, and if you suffer for ignorance then that is your fault not theirs.
What that says in real speech is that they constructed the trap and it's your fault you fell into it, and now you're in they have no desire or duty to help you find a way out. The government is quite content to keep you in the trap and suck you dry. Knowledge will show you the path out, but it is knowledge you have to make some effort to obtain.
You have to understand one thing about STRB's response, he is an admitted participant in the scheme and so has a lot invested in the status quo of you believing that you owe even though you never made a contract and that you'll stay ignorant and need his services. This explains his attempts to ridicule me and those who are working hard to reveal the "trap" for what it is. There is a wealth of information on the internet, official and unofficial, that will help anyone to learn. All of the good information is free for the reseacher.
For instance, everthing Attorney Tom Cryer, did in whipping the IRS is free on his website http://www.truthattack.org, and he cautions you that using his exact wording may not be appropriate for your particular situation. However, an intelligent person can read, think, and work to modify his basic template. But, essentially that is not the real key to understanding the contstruction of the "trap" and how you got into it.
The important thing is learning how the trap is laid and how you got into it.
In the meantime, let's wait for the tax professor to show us the law.
What I find revealing about we Americans is how easily we miss the obvious. I know I missed it because I never had the impetus to think about it, but:
On this Cafe, Don posted an article about sweatshops, at the same time this thread was posted. In that article the gentleman made the case that labor has value and that that value is different from place to place and from individual to individual. I totally agree with that, and I suspect most if not all of us do.
Now here is the question. If Mr. A. and Mr. B. exchange things of equal value, which one has gain?
I suggest that those with the imagination sufficient enough to be curious by now, work to find the Supreme Court's decision on what constitutes "income".
vidyohs,
If I read your post correctly, you are making the argument relating to the definition of income. More specifically, you seem to be making the exchange argument which says that the wages I earn from my employer are, in fact, an equal exchange for the time and service I provide. Thus, I have no gain and no "income". The IRS addresses this argument at the link I provided above. I will copy and paste their response:
Anti-Tax Law Evasion Schemes – Law and Arguments (Section II)
II. The Meaning of Income: Taxable Income and Gross Income
A. Contention: Wages, tips, and other compensation received for personal services are not income.
This argument asserts that wages, tips, and other compensation received for personal services are not income, because there is allegedly no taxable gain when a person "exchanges" labor for money. Under this theory, wages are not taxable income because people have basis in their labor equal to the fair market value of the wages they receive; thus, there is no gain to be taxed. Some take a different approach and argue that the Sixteenth Amendment to the United States Constitution did not authorize a tax on wages and salaries, but only on gain or profit.
The Law: For federal income tax purposes, "gross income" means all income from whatever source derived and includes compensation for services. I.R.C. § 61. Any income, from whatever source, is presumed to be income under section 61, unless the taxpayer can establish that it is specifically exempted or excluded. In Reese v. United States, 24 F.3d 228, 231 (Fed. Cir. 1994), the court stated, "an abiding principle of federal tax law is that, absent an enumerated exception, gross income means all income from whatever source derived."
All compensation for personal services, no matter what the form of payment, must be included in gross income. This includes salary or wages paid in cash, as well as the value of property and other economic benefits received because of services performed, or to be performed in the future. Furthermore, criminal and civil penalties have been imposed against individuals relying upon this frivolous argument.
Relevant Case Law:
Commissioner v. Glenshaw Glass Co., 348 U.S. 426, 429-30 (1955) – Referring to the statute's words "income derived from any source whatever," the Supreme Court stated, "this language was used by Congress to exert in this field 'the full measure of its taxing power.' . . . And the Court has given a liberal construction to this broad phraseology in recognition of the intention of Congress to tax all gains except those specifically exempted."
Commissioner v. Kowalski, 434 U.S. 77 (1977) – The Supreme Court found that payments are considered income where the payments are undeniably accessions to wealth, clearly realized, and over which a taxpayer has complete dominion.
United States v. Connor, 898 F.2d 942, 943-44 (3d Cir.), cert. denied, 497 U.S. 1029 (1990) – The court stated, "[e]very court which has ever considered the issue has unequivocally rejected the argument that wages are not income."
Lonsdale v. Commissioner, 661 F.2d 71, 72 (5 th Cir. 1981) – The court rejected as "meritless" the taxpayer's contention that the "exchange of services for money is a zero-sum transaction . . . ." Reading v. Commissioner, 70 T.C. 730 (1978), aff'd, 614 F.2d 159 (8 th Cir. 980) – The court said the entire amount received from the sale of one's services constitutes income within the meaning of the Sixteenth Amendment. United States v. Richards, 723 F.2d 646, 648 (8 th Cir. 1983) – The court upheld conviction and fines imposed for willfully failing to file tax returns, stating that the taxpayer's contention that wages and salaries are not income within the meaning of the Sixteenth Amendment is "totally lacking in merit."
United States v. Romero, 640 F.2d 1014, 1016 (9 th Cir. 1981) – The court affirmed Romero's conviction for willfully failing to file tax returns, finding, in part, that "[t]he trial judge properly instructed the jury on the meaning of ['income' and 'person']. Romero's proclaimed belief that he was not a 'person' and that the wages he earned as a carpenter were not 'income' is fatuous as well as obviously incorrect." Abrams v. Commissioner, 82 T.C. 403, 413 (1984) – The court rejected the argument that wages are not income, sustained the failure to file penalty, and awarded damages of $5,000 for pursuing a position that was "frivolous and groundless . . . and maintained primarily for delay."
Cullinane v. Commissioner, T.C. Memo. 1999-2, 77 T.C.M. (CCH) 1192, 1193 (1999) – Noting that "[c]ourts have consistently held that compensation for services rendered constitutes taxable income and that taxpayers have no tax basis in their labor," the court found Cullinane liable for the failure to file penalty, stating, "[his] argument that he is not required to pay tax on compensation for services does not constitute reasonable cause."
B. Contention: Only foreign-source income is taxable.
Some maintain that there is no federal statute imposing a tax on income derived from sources within the United States by citizens or residents of the United States. They argue instead that federal income taxes are excise taxes imposed only on nonresident aliens and foreign corporations for the privilege of receiving income from sources within the United States. The premise for this argument is a misreading of sections 861, et seq., and 911, et seq., as well as the regulations under those sections.
The Law: As stated above, for federal income tax purposes, "gross income" means all income from whatever source derived and includes compensation for services. I.R.C. § 61. Further, Treasury Regulation § 1.1-1(b) provides, "[i]n general, all citizens of the United States, wherever resident, and all resident alien individuals are liable to the income taxes imposed by the Code whether the income is received from sources within or without the United States." I.R.C. sections 861 and 911 define the sources of income (U.S. versus non-U.S. source income) for such purposes as the prevention of double taxation of income that is subject to tax by more than one country. These sections neither specify whether income is taxable, nor do they determine or define gross income. Further, these frivolous assertions are clearly contrary to well-established legal precedent. "Recently the IRS explained its position on the I.R.C. 861 argument in Rev. Rul. 2004-30 and on the I.R.C. 911 argument in Rev. Rul. 2004-28."
Relevant Case Law:
Williams v. Commissioner, 114 T.C. 136, 138 (2000) – The court rejected the taxpayer's argument that his income was not from any of the sources listed in Treas. Reg. § 1.861-8(a), characterizing it as "reminiscent of tax-protester rhetoric that has been universally rejected by this and other courts."
Aiello v. Commissioner, T.C. Memo. 1995-40, 69 T.C.M. (CCH) 1765 (1995) – The court rejected the taxpayer's argument that the only sources of income for purposes of section 61 are listed in section 861.
Madge v. Commissioner, T.C. Memo. 2000-370, 80 T.C.M. (CCH) 804 (2000) – The court labeled as "frivolous" the position that only foreign income is taxable.
Solomon v. Commissioner, T.C. Memo. 1993-509, 66 T.C.M. (CCH) 1201, 1202 (1993) – The court rejected the taxpayer's argument that his income was exempt from tax by operation of sections 861 and 911, noting that he had no foreign income and that section 861 provides that "compensation for labor or personal services performed in the United States . . . are items of gross income."
The fear gentlemen, the fear to even have it known, or discoverable, that you had an intelligent curious discussion about the legitimacy of the income tax as applied by the IRS. The fear of being tainted by honest inquery?
I smell it over the cables coming into my computer.
Once you know the truth, the last thing you'd ever want is to have the current income tax structure (Title 26) changed. It is structured in your favor, you just don't want to know about it.
Yawn. Poor ol' vidyohsgoose! "I didn't make a contract with the Guvmint!". So what? Everyone didn't make any agreements with everyone else about private property yet we can still all get shot for trespassing. And does a private property owner have to 'reasonably inform someone else that they're about to enter a private residence. Tough luck if the private owner uses an arcane method of boundary markings such as notches in trees? It's still the old argument "does the government have the right to exist, to make laws and to be the primary landowner over the nation". Quite frankly when someone envisions a world of "I'm a sovereign landowner and I rule myself" then you have the same risks and responsibilities as someone else out in the sea in international waters, someone who could be attacked by pirates at any moment – you're on your own, period.
vid:
By structuring your argument with the canard that everyone in the government is lying you effectively prevent anyone from having a serious discussion with you.
I've read a lot more tax evasion materials than you have, and I've read the top lawyers and accountants, and none of your arguments work. I file my tax return and pay my taxes, and I complain and call my Congressman, but I know the system is legal.
If you have more time you might want to look into U.S. v. Thomas et. al., a current case in the U.S. District Court, Northern Ohio.
The defendants, who convinced a couple of hundred people to create phony trusts and file bogus tax returns, are now sitting in jail trying to convince the judge they cannot be tried because they are crazy. I doubt they succeed.
(Interesting subplot, they argued there was no such thing as the income tax, and then charged the suckers hundreds of dollars a piece to file phony income tax returns!)
The real debate is how to restructure the system.
STRB,
You've got the "round the mulberry bush blues" and are being deliberately obtuse.
I said that Title 26 is valid law, I said that the Supreme court made that ruling, as well as the 16th amendment.
I agree with you that there are a lot of scam artists selling phony schemes to gullible people and I have nothing to do with them. I am not selling anything. I have honor enough to not sell freedom; but if I can help you think you're way to it I'll certqainly do it.
Show us the law that requires a man, who labors in the 50 states of the USA and gets his entire compensation from within the 50 states, to file a 1040 and pay an income tax.
Pure and simple thing for a tax professor and you're back pedaling. My attitude towards the government is meaningless, irrelevant, to your ability to (chuckle) show us the law that you know so well.
It is an obvious fact that everything on the IRS website, their regs, and their phamplets are supposedly based upon the law in Title 26, so why try and mess with the middleman when the middleman is a proven liar?
Title 26 has all the law necessary for you to try and make your case, go for it big guy!
Oh, and BTW STRB,
Remember as you twist in the wind, it is a fact that law can not compel performance. That pesky 13th Amendment prevents that.
Compelled performance is slavery/involuntary servitude. 13th Amendment.
Yes Title 26 is valid law and yes some people in specific circumstances are required to pay a tax. But, if you and I only exchange things of equal value…..well tell us what the Supreme Court said about "income", the defintion and interpretation as used in Title 26.
But, then when you get that far if you ever do, we will bring up the fact of 12 million Amish in the USA and how they relate to Title 26. Curious thing, eh? Or, were you even aware of the Amish situation?
The more you dig the more you discover that it isn't just a cut and dried thing like the IRS website, regs, phamplets, anecdotal wisdom, presumptive wisdom, and conventional wisdom would like you to believe.
So vidyohs are you saying you have been able to earn an everyday income, paid no tax and done it all legal-like? You haven't been paying any income tax yet know tax collectors can't legally touch you? But STRB seems to say the income tax pertain to 'income' not 'capital gains'.
Well in a closing note, this went exactly where I said it would back at the beginning.
STRB (chuckle) can not produce or document the exact law requiring an income tax to paid upon your even exchange of service for fruits of labor no more than, as I said, can any other tax professional, IRS agent, or Treasury dept. official.
Bruce,
for you. You might try looking at:
http://caselaw.lp.findlaw.com/scripts/getcase.pl?court=US&vol=252&invol=189
and
http://caselaw.lp.findlaw.com/scripts/getcase.pl?court=US&vol=247&invol=179
and
http://caselaw.lp.findlaw.com/scripts/getcase.pl?navby=case&court=us&vol=111&page=746
Bruce, you have to realize one thing, the IRS is not going to tell you or give you a hint of anything that contradicts your anecdotal, presumptive, and conventional wisdom belief that you owe an income tax. Not on their website or in their phamptlets and you won't find anything on sites sycophantic to the IRS, H.R.Block et. al.
Again you might also go to truthattack.org and look at Tom Cryer's winning arguments.
I am not telling anyone not to pay a lawful tax, I am only saying we should all know and understand what is lawful and what is fraudulent.
Vidyohs – could you seriously believe you and a handful of others have found the way to legally not pay any income tax? That news headlines around the world tomorrow would say "U.S. CITIZENS NOT LEGALLY OBLIGED TO PAY INCOME TAX – U.S. GOVERNMENT IN TURMOIL!"? I mean seriously!?!?
Gilduckie,
I will deign this one time to answer you only because it enables me to point out once again that you can neither read intelligently or write intelligently.
Your answers are in past communications to STRB and Bruce. Title 26 is legal and constitutional, the 16th Amendment is legal and constitutional(some question about the proper ratification which seems to be fraudulant), and I told you that the Supreme Court has ruled that Title 26 in its proper application and in its anecdotal, presumptive, and conventional wisdom application does not violate the 13th Amendment.
An intelligent person would understand then that I am obviously saying that U.S. citizens are "liable" for an income tax.
What I have also told you is that the "liable" part can't be determined until the "income" part is settled, and that is another Supreme Court ruling (found in the links I posted above). There is also the fact that Title 26 only applies to U. S. Citizens and foreigners who produce "income" in the 50 States.
I will close with this. You're entirely too naive to be allowed to possess or handle sharp objects if you think for one moment the socialist press is ever going to publicize the facts about the fraud practiced by the IRS. That will only happen with the death of the IRS.
Actually I think it's a simple question vidyohsgoose – have you seriously found a way in which a U.S. citizen does not legally have to pay income tax? Yes or no? You talking in a wonderfully vague way that might as well say you have found an illegal strategy but know it's very difficult for the IRS to get payment. Or you're not paying any income taxes period are waiting with your guns for when the SWAT crew to arrive? Or at least talking of some case where you roll over the money of a transaction into a larger investment without legally paying taxes?
"That will only happen with the death of the IRS." – Vidyohs
That does have a nice ring to it :p
Vidyohs,
I've still been reading and studying the information you've provided here and privately. Fascinating stuff, and I'm always looking forward to more. Thanks again for your time, and the links to all the information.
That should be "neither read intelligently nor write intelligently."
Vidyohs
Perhaps you might want to reread the cases you cited. They are all off point. One was decided 30 years prior to passage of the 16th amendment. The other two both pertained to arguments regarding revenues earned prior to passage of the 16th amendment. Haven't gotten to Cryer yet, but I'm sure I'll find it interesting.
Bruce,
I bet you will.
You will find that the Supreme court views the constitutionality of the income tax the same way after the 16th amendment. It all hinges on the unchanging definition of what constitutes "income".
Read Tom's memorandum all the way through, it is worth the time it takes.
Bruce, I have to say I personally find it frightening to find one who would work so hard to aid and abet the slave master with such diligence. Work so hard to kill curiosity and to cement anecdotal, presumptive, and conventional wisdom. Live a little, work to find out if you "need to" instead of working to justify why you do.
Tom makes the same basic argument you saw in the case sites I posted, the IRS lost.
Vidyohs
Looking at Cryer's case, he was found not guilty of willfully failing to file a tax return. His defense had nothing to do with the legality of the income tax. The actual defense was that he believed he had properly set up a series of tax exempt trusts which were not required to file tax returns. Thus, he lacked any criminal intent and did not willfully (the operative word in a mens rea defense) fail to file. The jury acquitted on that basis. Cryer, after the verdict, was still required to file the delinquent returns and pay any tax, penalty and interest to the IRS.
As to my defense of the tax system, I just want to keep people from making large and costly mistakes.
Bruce,
I do not want anyone to make costly mistakes either, that is why I told my own children to not follow in my steps until they knew for certain that was the way they wanted to go and were on solid ground.
But, this all begs the orginal point and question. Show the law in Title 26 that requires a free man to pay an income tax on the fruits of his labor.
I stated that no attorney, no IRS agent, no Tax preparer, and no court has ever done so; and though he pooh poohed me (chuckle) STRB did not and could not. I don't believe you can either, Bruce.
I say again, IRS regulations apply to IRS employees, not to you and I.
There is a lot of wording in Title 26 that tells you how the code will be administered and what will and will not happen when and if a person required to pay an income tax does not do so; but it all still hinges on exactly who is required to pay and how that is determined.
I will look again at Cryer's case and see what I missed, but that does not alter what I just said.
Show me the law, somebody please.
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