Economic: Taxes: There is no federal or state income tax on working wages by law in this country.

[osan]

Can you smell it - that odor? The hallmark of American jurisprudence.

Ever notice how when a great stake of power lies in question, the courts resort to their unimaginably tortured logic in order to sustain what is so clearly the invalid, but heavily vested interests of that power?

Consider the old court case whose citation I can no longer recall, where the judge - pillar of everything dishonest in the human animal - so cleverly quipped that while he could not define pornography, he knew it when he saw it. And what was that nonsense about the "prurient interest"?

We could go on for days vomiting forth example upon example of this brand of bald-faced corruption. Few things raise my hackles. This one is near the top of the list.

Where vested interests are concerned in the US political system, I have noticed with some pain and nausea the consistency with which those in whom the nitwit public have placed their trust never follow the path blazed by clear and sound reason if it conflicts with their personal interests. They pick and cast about feverishly for some subtle twist of reason upon which to hang their unscrupulous decisions that fly in the face of everything rightful and decent. Sadder still, those twists of reason become solidly established legal principles in time, thereby serving as the foundations of further, often creeping, violations of good sense and human rights. It is nothing less than astounding to look back upon the history and further to witness it first hand as it happens today, only to see a pattern so consistent as to rival that of the daily rising and setting of the sun.

To spend a lifetime having such things so flagrantly rubbed onto our noses and then to remain passively by and do nothing to squelch it stands in mind-splitting testimony to the basic nature of the human beast - and here I use "beast" most deliberately.

 

[Weston White]

The courts aren't bound by the Internal Revenue Manual.

Then why are you quoting it, yet again?!?!?!

Absolute nonsense. The "taxable source" argument is another loser.

Not so much. Your circuit cases are not in compliance with either USSC or the hundreds-of-years of subject-matter experts—Turgot disagrees, Smith disagrees, Hamilton disagrees, Jefferson disagrees, Gallatin disagrees, Black disagrees, Marx disagrees, including many others, and even the Bible disagrees.

The income to be indirectly taxed cannot paradoxically provide both the source of the income and the income—which is what your (i.e., the status quo) misguided methodology calls to achieve; rather it is incomes that must emanate from whatever sources-in-law to remain constitutional.

Incidentally, Congress needn’t place such aforementioned limitations for the U.S. Constitution accomplished this feat for them—among others legal restrictions Congress cannot tax a right as if it were a privilege, i.e., a tax directly upon recompense is still a tax upon competence and thereby finds itself taxing as a capitation, without apportionment, and thus renders it unconstitutional.

Incidentally, there need not be an exchange of money in order that gross income be realized.

You are misconstruing the context of that; it simply means your fringe benefits are taxable as income because such are in-fact a gain above and beyond your basis in recompense.

 

[Weston White]

Re (see Stewart): https://www.law.cornell.edu/supremecourt/text/378/184

 

[Weston White]

A few days ago I came across a very compelling D.C. Circuit appellate case and was utterly blown away by it—it so completely substantiates many of the (logically sane) arguments made by the THM; noting that it is a case dealing with compensatory damages heard in 2006, the appellant had won however, 8-months later the same court and judges reheard and vacated their original findings based upon a new argument made by the government/appellees, opting to do a complete one-eighty from their prior opinion, vastly altering the scope of their dicta in the process. The case had originally found the taxing of currently disallowed compensatory damages as being unconstitutional and had even dared to delve into discussing aspects of exchanges of human capital and actually review the IRC' original statutes and debates. Very compelling, indeed. See: Murphy, Marrita, et al v. IRS, et al, No. 05-5139 (D.C. Cir. 2006).

2006 on appeal: http://law.justia.com/cases/federal/appellate-courts/cadc/05-5139/05-5139a-2011-03-24.html

2007 appeal on rehearing: http://law.justia.com/cases/federal/appellate-courts/cadc/05-5139/05-5139b-2011-03-24.html


For example, two of its many gems absolutely discounts the argument lovingly held by the status quo that all receipts from labor are gains because laboring, itself, possess zero value:

In an opinion rendered to the Secretary of the Treasury on the question whether proceeds from an accident insurance policy were income under the IRC as it stood prior to the 1918 Act, the Attorney General stated:

Without affirming that the human body is in a technical sense the "capital" invested in an accident policy, in a broad, natural sense the proceeds of the policy do but substitute, so far as they go, capital which is the source of future periodical income. They merely take the place of capital in human ability which was destroyed by the accident. They are therefore "capital" as distinguished from "income" receipts.
...
The IRS itself reached the same conclusion when it first addressed the question, expressly affirming that personal injuries included nonphysical personal injuries:

[T]here is no gain, and therefore no income, derived from the receipt of damages for alienation of affections or defamation of personal character .... If an individual is possessed of a personal right that is not assignable and not susceptible of any appraisal in relation to market values, and thereafter receives either damages or payment in compromise for an invasion of that right, it can not be held that he thereby derives any gain or profit.

 

[Sonny Tufts]

Then why are you quoting it, yet again?!?!?!

I never quoted the IRM.

Your circuit cases are not in compliance with either USSC

Of course they are. SCOTUS has never accepted your arguments. Neither you nor any of the other crackpots has ever been able to produce a single case (SCOTUS or otherwise) where someone has avoided a tax liability by relying on your moronic arguments.

As far as your reliance on Hamilton is concerned, you overlook the fact that when SCOTUS upheld the constitutionality of the Civil War income tax against the claim that is was an unapportioned direct tax, it cited Hamilton's brief in the Hylton case, in which he argued that the only direct taxes under the Constitution were "capitation or poll taxes, and taxes on lands and buildings, and general assessments, whether on the whole property of individuals or on their whole real or personal estate. All else must, of necessity, be considered as indirect taxes." Based upon this, The Court concluded:

The tax here in question falls within neither of these categories. It is not a tax on the 'whole . . . personal estate' of the individual, but only on his income, gains, and profits during a year, which may have been but a small part of his personal estate, and in most cases would have been so...

Our conclusions are, that direct taxes, within the meaning of the Constitution, are only capitation taxes, as expressed in that instrument, and taxes on real estate; and that the tax of which the plaintiff in error complains is within the category of an excise or duty. Springer v. U.S., 102 U.S. 586 (1881)

Congress cannot tax a right as if it were a privilege

Wrong. Do you have a right to give your property to someone else? Of course. Can Congress impose an unapportioned tax on the transfer? Of course.

Do you have a right to hire someone to work for you? Sure. Can Congress impose a tax on your employing someone? Yes, and it's called FICA. As SCOTUS said in upholding this tax, "But natural rights, so called, are as much subject to taxation as rights of lesser importance. An excise is not limited to vocations or activities that may be prohibited altogether. It is not limited to those that are the outcome of a franchise. It extends to vocations or activities pursued as of common right.” Charles C. Steward Machine Co. v. Davis, 301 U.S. 548 (1937).

a tax directly upon recompense is still a tax upon competence and thereby finds itself taxing as a capitation, without apportionment, and thus renders it unconstitutional.

The 16th Amendment makes it clear to all but the terminally illiterate that income taxes don't have to be apportioned. Even before the 16th, SCOTUS held that a tax personal earnings wasn't a direct tax.

You are misconstruing the context of that; it simply means your fringe benefits are taxable as income because such are in-fact a gain above and beyond your basis in recompense.

Mr. White, you have a serious reading problem that you should seek help for. My comment was directed at the suggestion in the SEDM material (which is hopelessly wrong) that there has to be an exchange of money in order for income to be realized. It had nothing to do with fringe benefits.

 

[angelatc]

Because the people of this nation have been conditioned to believe that employment (working for someone else) is the equivalent of providing a service. It is not.

Uh yeah... it is. Unless you work for the government, I mean.

 

[Weston White]

I never quoted the IRM.

Yes you did, those are in reference to the IRS’ Frivolous Return Program (FRP) which is a Part of the IRM; and regardless, it is all from the IRS’ Website of equal weighing authority—and also to which you have claimed time and time again is meaningless (that is at least, whenever I remind you of the fact that the IRS’ own definition of direct and indirect taxes absolutely conflicts with the views of people such as you.)

Of course they are. SCOTUS has never accepted your arguments.

No, no they do not. Further, to date the USSC has been unwilling to take on any such cases—as pertaining to the general government forever seizing the greater portion of 1/5 of all self-competency from the majority of common laborers—which there have been plenty to choose from. Perhaps maintaining plausible deniability?

However, the USSC has itself served to embed such arguments as principled maxims and immutable foundations throughout its history. Such as in the D.C. Circuit appeals case I had made earlier reference to:

Broad though the power granted in the Sixteenth Amendment is, the Supreme Court, as Murphy points out, has long recognized "the principle that a restoration of capital s not income; hence it [falls] outside the definition of `income' upon which the law impose a tax." [cit. omitted] (return of capital not income under IRC or Sixteenth Amendment). By analogy, Murphy contends a damage award for personal injuries—including nonphysical injuries—is not income but simply a return of capital—"human capital," as it were. See Gary S. Becker, Human Capital (1st ed.1964); Gary S. Becker, "The Economic Way of Looking at Life," 43-45 (Nobel Lecture, Dec. 9, 1992).

According to Murphy, the Supreme Court read the concept of "human capital" into the IRC in Glenshaw Glass. There, in holding that punitive damages for personal injury were "gross income" under the predecessor to § 61, the Court stated:

The long history of ... holding personal injury recoveries nontaxable on the theory that they roughly correspond to a return of capital cannot support exemption of punitive damages following injury to property .... Damages for personal injury are by definition compensatory only. Punitive damages, on the other hand, cannot be considered a restoration of capital for taxation purposes.

In Murphy's view, the Court thereby made clear that the recovery of compensatory damages for a "personal injury"—of whatever type—is analogous to a "return of capital" and therefore is not income under the IRC or the Sixteenth Amendment.
...
At the outset, we reject the Government's breathtakingly expansive claim of congressional power under the Sixteenth Amendment—upon which it founds the more far-reaching arguments it advances here. The Sixteenth Amendment simply does not authorize the Congress to tax as "incomes" every sort of revenue a taxpayer may receive. As the Supreme Court noted long ago, the "Congress cannot make a thing income which is not so in fact." [cit. omitted]. Indeed, because the "the power to tax involves the power to destroy," [cit. omitted], it would not be consistent with our constitutional government, and the sanctity of property in our system, merely to rely upon the legislature to decide what constitutes income.

O'Gilvie v. United States 519 U.S. 79, 84 (1996):

We also find the Government's reading more faithful to the history of the statutory provision as well as the basic tax-related purpose that the history reveals. That history begins in approximately 1918. At that time, this Court had recently decided several cases based on the principle that a restoration of capital was not income; hence it fell outside the definition of "income" upon which the law imposed a tax.

Neither you nor any of the other crackpots has ever been able to produce a single case (SCOTUS or otherwise) where someone has avoided a tax liability by relying on your moronic arguments.

The fact that you are so offended by such “moronic arguments” is very telling. Because the fact is such arguments are not the least bit moronic, despite your own personal conflicts in dealing with the matter at hand.

As far as your reliance on Hamilton is concerned, you overlook the fact that when SCOTUS upheld the constitutionality of the Civil War income tax against the claim that is was an unapportioned direct tax, it cited Hamilton's brief in the Hylton case…

Really, so how exactly have I overlooked that? Being that I haven’t. Regardless, both Hylton and Springer have little bearing to the present, as both are mostly irrelevant now. More pointedly, income taxes imposed upon employee’s, their recompense, is in effect a general assessment on their whole property for that present year (hence the all to commonly repeated phrase: living from paycheck-to-paycheck)—to be perpetually levied without a single exigency in existence.

And I could easily counter with the fact that you have overlooked Hylton wherein stating:

Apportionment is an operation on states, and involves valuations and assessments which are arbitrary and should not be resorted to but in case of necessity. Uniformity is an instant operation on individuals, without the intervention of assessments or any regard to states, and is at once easy, certain, and efficacious. All taxes on expenses or consumption are indirect taxes. …

Indirect taxes are circuitous modes of reaching the revenue of individuals, who generally live according to their income. In many cases of this nature the individual may be said to tax himself. I shall close the discourse with reading a passage or two from Smith's Wealth of Nations. …

Do you have a right to give your property to someone else? Of course. Can Congress impose an unapportioned tax on the transfer? Of course.

No, there is quite more to the matter that you are leaving out. You are of course referring to long established methods of indirect taxation that are clearly excises (e.g., gift and inheritance taxes that in effect transfer taxes imposed on the absolute gains of wealth to the recipients); merely another of your apples to oranges comparisons or a “red-herring” as they say in legalese.

More to the point, in consideration of personal and capitation taxes (and these are merely a few highlights):

So stated in Northwestern Mut. Life Ins. Co. v. Wisconsin, 275 U.S. 136, 140 (1927) and reaffirmed in National Life Ins. Co. v. United States, 277 U.S. 508, 521 (1928):

Certainly since Gillespie v. Oklahoma, 257 U. S. 501, 257 U. S. 505, it has been the settled doctrine here that, where the principal is absolutely immune, no valid tax can be laid upon income arising therefrom. To tax this would amount practically to laying a burden on the exempted principal. Accordingly, if the challenged Act, whatever called, really imposes a direct charge upon interest derived from United States bonds, it is pro tanto void.

The fundamental question often presented in cases similar to these is whether, by the true construction of the statute, the assessment must be regarded as a tax upon property or one on privileges or franchise of the corporation.

Mr. Lincoln: Labor is prior to and independent of capital. Capital is only the fruit of labor, and could never have existed if labor had not first existed. Labor is the superior of capital, and deserves much the higher consideration. Capital has its rights, which are as worthy of protection as any other rights.

Mr. Taft: This is an excise tax upon the privilege of doing business as an artificial entity and of freedom from a general partnership liability enjoyed by those who own the stock. . . . seems clearly to establish the principle that such a tax as this is an excise tax upon privilege and not a direct tax on property…

Mr. Hubbard: It is still fundamentally an excise or duty with respect to the privilege of carrying on any activity or owning any property which produces income.

Enunciated in United States v. Whitridge, 231 U.S. 144, 147 (1913):

As repeatedly pointed out by this Court, the Corporation Tax Law of 1909 ... imposed an excise or privilege tax, and not in any sense a tax upon property or upon income merely as income.

Exemplified in Butcher’s Union Co. v. Crescent City Co., 111 U.S. 746, 757, 762 (1884) in quoting from Dr. Adam Smith’s “Wealth of Nations” (1776):

It has been well said that “the property which every man has in his own labor, as it is the original foundation of all other property, so it is the most sacred and inviolable. … The right to follow any of the common occupations of life is an inalienable right, it was formulated as such under the phrase “pursuit of happiness” in the declaration of independence... This right is a large ingredient in the civil liberty of the citizen.

And Coppage v. Kansas, 236 U.S. 1, 14 (1915):

The principle is fundamental and vital. Included in the right of personal liberty and the right of private property -- partaking of the nature of each -- is the right to make contracts for the acquisition of property. Chief among such contracts is that of personal employment, by which labor and other services are exchanged for money or other forms of property.

If this right be struck down or arbitrarily interfered with, there is a substantial impairment of liberty in the long established constitutional sense. The right is as essential to the laborer as to the capitalist, to the poor as to the rich, for the vast majority of persons have no other honest way to begin to acquire property save by working for money.

In Knowlton v. Moore, 178 U.S. 41, 47 (1900): Direct taxes bear immediately upon persons, upon the possession and enjoyments of rights; indirect taxes are levied upon the happening of an event or an exchange.

And so then, either way the same principle applies:

Justice Sutherland in delivering the opinion of the Court in Macallan Co. v. Massachusetts, 279 U.S. 620, 626 (1929), referenced Brown v. Maryland, 25 U.S. 419, 444 (1827):

It is true the state may tax occupations generally, but this tax must be paid by those who employ the individual or is a tax on his business. The lawyer, the physician, or the mechanic must either charge more on the article in which he deals or the thing itself is taxed through his person. This the state has a right to do because no constitutional prohibition extends to it. So a tax on the occupation of an importer is in like manner a tax on importation. It must add to the price of the article and be paid by the consumer or by the importer himself in like manner as a direct duty on the article itself would be made. This the state has not a right to do, because it is prohibited by the Constitution.

* The above is also quoted in-part “in words that have been repeatedly approved in subsequent decisions of this Court” as the DISSENTING opinion of Mr. Justice Sutherland in Bromley v. McCaughn, 280 U.S. 124, 140 (1929)

Do you have a right to hire someone to work for you? Sure. Can Congress impose a tax on your employing someone? Yes, and it's called FICA. As SCOTUS said in upholding this tax, "But natural rights, so called, are as much subject to taxation as rights of lesser importance. An excise is not limited to vocations or activities that may be prohibited altogether. It is not limited to those that are the outcome of a franchise. It extends to vocations or activities pursued as of common right.” Charles C. Steward Machine Co. v. Davis, 301 U.S. 548 (1937).

Employees of businesses are not business entities and neither are they subject to the legal obligations or duties that are governmentally imposed upon such entities. An obtuse comparison.

Otherwise, taxation is entirely subject to constitutional constraints. Ergo, taxing the core recompense of employees, directly as if indirect is not constitutional; however, to tax the gains of the core recompense of employees (including fringe benefits, etc.), indirectly is completely constitutional. Then the obverse applies to day-laborers (i.e., their basis in laboring and recompense) from South Carolina v. Baker, 485 U. S. 505, 522-523 (1988):

A tax is considered to be directly on the Federal Government only “when the levy falls on the United States itself, or on an agency or instrumentality so closely connected to the Government that the two cannot realistically be viewed as separate entities.

Even before the 16th, SCOTUS held that a tax personal earnings wasn't a direct tax.

Wrong on all counts.

Correctly, it is that the taxing of income D-E-R-I-V-E-D from personal earnings is not a direct tax, which is not the same thing a taxing one’s base personal earnings—for the latter is clearly a personal tax or capitation.

...Gee whiz, speaking to reading comprehension problems...

Mr. White, you have a serious reading problem that you should seek help for. My comment was directed at the suggestion in the SEDM material (which is hopelessly wrong) that there has to be an exchange of money in order for income to be realized. It had nothing to do with fringe benefits.

Are you drunk on gin right now? My response was to the quotation you had provided in your own prior post, you dumbass. Which was exactly as follows and directly speaks to fringe benefits:

[The tax code] is broad enough to include in taxable income any economic or financial benefit conferred on the employee as compensation, whatever the form or mode by which it is effected. C.I.R. v. Smith, 324 U.S. 177 (1945).

So no, my reading comprehension is perfectly fine.

 

[Wheeljack]

For example, two of its many gems absolutely discounts the argument lovingly held by the status quo that all receipts from labor are gains because laboring, itself, possess zero value:

That is the difference between personal services and labor.

When an individual sells his personal services via a personal services contract, the labor he expends has no value because he is laboring for himself to fulfill the results stipulated in the contract. He is not being paid for laboring, he is being paid for the results of his labor.

From this the government tries to maintain that all laboring has no value.

When an individual labors for an employer, he is being paid for the time spent doing the work, not the result of the work. The labor has the value assigned to it by the employer, not the employee. Thus the paycheck is the return of value given to the employer.

 

[Sonny Tufts]

No one is claiming that labor has no value. That is a strawman dreamed up by tax protesters who are too stupid to understand that in tax law the gain from the sale or exchange of property is NOT value received minus value given up; rather, it's value received minus the cost of what was given up.

In any event, Section 61(a) distinguishes between gain from sales and exchanges of property and pay-for-work. The latter is includable in full in gross income.

 

[Wheeljack]

No one is claiming that labor has no value. That is a strawman dreamed up by tax protesters who are too stupid to understand that in tax law the gain from the sale or exchange of property is NOT value received minus value given up; rather, it's value received minus the cost of what was given up.

In any event, Section 61(a) distinguishes between gain from sales and exchanges of property and pay-for-work. The latter is includable in full in gross income.

No Sonny, the former (personal services) is what qualifies for Section 61(a) as it is income derived from labor.

Cost only applies to something that is acquired. The laborer does not acquire the labor, he is the source of it. Thus cost has no bearing on labor.

You have absolutely no problem returning capital to an investor, without asking what the cost of the capital was.
Value of capital returned minus value of capital given up.

But ultimately the return of capital is not income derived from a source. And the return of labor is also not income derived from a source.

Thus why do you have such a problem with labor, when the Supreme Court has repeatedly given capital and labor the same treatment.

 

[Sonny Tufts]

You have absolutely no problem returning capital to an investor, without asking what the cost of the capital was.
Value of capital returned minus value of capital given up.

Not quite. Suppose I invest in a 50-50 partnership by contributing land worth $500,000 but which cost me only $100,000. My partner invests $500,000 in cash, and the partnership erects a building on the property, after which the land and building are sold for $1.5 million. We liquidate the partnership, with each of us receiving $750,000.

What is my gain? I can assure you it's not $250,000, which is the excess of what I received over the value of my invested capital. In fact, my gain is $650,000, representing the excess of what I received over the cost of what I invested. I can no more escape the tax on the built-in appreciation in the land than I could fly to the moon.

Of course, a similar result would apply if I invested the land and $500,000 in cash without a partner. When I sell the project for $1.5 million, my gain is $900,000, equal to the $1.5 mm proceeds minus my $600K cost basis.

Thus why do you have such a problem with labor, when the Supreme Court has repeatedly given capital and labor the same treatment.

The Court has consistently and without exception held that pay-for-work is includable gross income, without regard to whether it is received by an employee or a sole proprietor.

 

[Weston White]

No one is claiming that labor has no value. That is a strawman dreamed up by tax protesters who are too stupid to understand that in tax law the gain from the sale or exchange of property is NOT value received minus value given up; rather, it's value received minus the cost of what was given up.

You are the one that is too stupid to realize that most of us here (myself included) are not tax protesters, not to any degree—and still you fail to realize that cost is relative to value or price, charge or expense, including fair market value or market value. See:

cost: the price of something : the amount of money that is needed to pay for or buy something

value: the amount of money that something is worth : the price or cost of something

price: the amount of money that you pay for something or that something costs

http://www.merriam-webster.com/thesaurus/cost
http://www.merriam-webster.com/dictionary/value
http://www.merriam-webster.com/dictionary/cost
http://www.merriam-webster.com/dictionary/price

And still, you again lie. You have made numerous prior posts about this very issue, for example (your post from 2009): quatloos.com/Q-Forum/viewtopic.php?f=27&t=3059&start=30#p47611

And from Wikipedia:

Another tax protester argument is that income from labor should not be taxable because any amount the worker receives in exchange for his or her labor is received in an exchange of "equal value," although an exchange in any true "arm's length" fair market value transaction is, essentially by definition, an exchange of equal value. See, for example, the decision of the United States Court of Appeals for the Ninth Circuit in United States v. Buras, in which the taxpayer's theory — that wages were not taxable because (1) "only profit or gain, such as that from the sale of a capital asset, constituted income subject to federal tax" and (2) "[w]ages could not constitute gain or profit because wages merely represent an equivalent exchange for one's labor" — was rejected. … In Boggs v. Commissioner, a penalty of $8,000 was imposed by the United States Court of Appeals for the Sixth Circuit on the taxpayers for filing a frivolous appeal using the argument that a portion of a wage amount was not taxable as a return on "human capital."

Further, under the U.S. federal tax laws, even if labor were considered "property" the gain or income from "labor property" would be defined as the excess of the amount realized (for example, the money received) by the taxpayer over the amount of the taxpayer's "adjusted basis" in the "property" (see 26 U.S.C. § 1001). Since the taxpayer can have only a zero "basis" amount in his or her own labor — Cullinane v. Commissioner, 77 T.C.M. (CCH) 1192, T.C. Memo 1999-2, CCH Dec. 53,203(M) (1999), the personal living expenses incurred to generate labor being both non-capitalizable and, under 26 U.S.C. § 262, non-deductible — the "gain" would thus be equal to the amount of compensation received by the taxpayer. Compare Carter v. Commissioner, where the United States Court of Appeals for the Ninth Circuit stated: "The assertion that proceeds received for personal services cannot be given a 'zero-basis for the purpose of the assessment of taxation,' is frivolous. This is a variation of the 'wages are not income' theme, which has been rejected repeatedly by this court." See also Reading v. Commissioner (taxpayer's argument — that gain from labor of self-employed individual cannot be determined until the "cost of doing labor" has been subtracted from the amount received — was rejected; validity of 26 U.S.C. § 262, disallowing deductions for personal living expenses, was upheld). See also Burnett v. Commissioner (taxpayer's argument — that wages represent an equal exchange of property and, therefore, are not taxable income — was rejected). See also In re Myrland (ruling that a taxpayer is not entitled to deduct the value of his labor from his income in calculating his taxes).

(Also see: Kelly v. United States, 789 F.2d 94, 97 (1st Cir. 1986):

...his attempt to deduct as a cost of labor expense on Schedule C an amount almost identical to the amount of wages on Form W-2” established that his position (that compensation for his labor was not “wages” or taxable income) was both incorrect and frivolous.

For which the sum of these cases neglect to address is that employment labor agreements or contracts are no more a “personal, living or family expense”, as those terms are intended, than is a corporation’s contracts for contractor work or supply orders, or leasing business equipment. Furthermore, that there is no need to deduct one’s core recompense in the first place for the fact that it is constitutionally exempt from income taxation—as it is simply inapplicable to the context of the Sixteenth Amendment.

In any event, Section 61(a) distinguishes between gain from sales and exchanges of property and pay-for-work. The latter is includable in full in gross income.

Well, not exactly. Wages and salaries were intentionally omitted from the amended (non-positive law) revision of 'net income' (Sec. 22); to wit, neither are similar items of: “fees, commissions, fringe benefits, and similar items”.


Also, here is a very compelling article written during ratification of the 16th Amendment, taking into consideration various concerns about the Federal Income Tax scheme and the danger for it to creep in overreach, becoming motivated by “hundreds of men in public life wormy with schemes”:

The poor man does not regard his wages or salary as ‘an income.’

The Sixteenth or Income Tax Amendment to the United States Constitution, now before the State Legislatures for ratification, gives Congress the power to levy a tax on the profits of farms, factories, stores; on the earnings of all men and women in whatever work or calling, and on all other kinds of income.

Under our present system of taxation it is the mass of the people who bear the burden, not the multi-millionaires. Under a Federal Income tax the same condition would exist. . . . The poor man or the man in moderate circumstances does not regard his wages or salary as an income that would have to pay its proportionate tax under this new system.

—Kentucky Governor Augustus E. Willson

Gov. A.E. Willson on the Income Tax Amendment, New York Times, February 26, 1911


ETA (this is also interesting, addressing the Minimum Wage Act of Sept.19, 1918 within the District of Columbia):

Adkins v. Children's Hosp., 261 U.S. 525, 558-559 (1923):

Certainly the employer, by paying a fair equivalent for the service rendered, though not sufficient to support the employee, has neither caused nor contributed to her poverty. On the contrary, to the extent of what he pays, he has relieved it. In principle, there can be no difference between the case of selling labor and the case of selling goods. If one goes to the butcher, the baker or grocer to buy food, he is morally entitled to obtain the worth of his money, but he is not entitled to more. If what he gets is worth what he pays, he is not justified in demanding more simply because he needs more, and the shopkeeper, having dealt fairly and honestly in that transaction, is not concerned in any peculiar sense with the question of his customer's necessities. Should a statute undertake to vest in a commission power to determine the quantity of food necessary for individual support and require the shopkeeper, if he sell to the individual at all, to furnish that quantity at not more than a fixed maximum, it would undoubtedly fall before the constitutional test. The fallacy of any argument in support of the validity of such a statute would be quickly exposed. The argument in support of that now being considered is equally fallacious, though the weakness of it may not be so plain. A statute requiring an employer to pay in money, to pay at prescribed and regular intervals, to pay the value of the services rendered, even to pay with fair relation to the extent of the benefit obtained from the service, would be understandable. But a statute which prescribes payment without regard to any of these things and solely with relation to circumstances apart from the contract of employment, the business affected by it and the work done under it, is so clearly the product of a naked, arbitrary exercise of power that it cannot be allowed to stand under the Constitution of the United States.

 

[Weston White]

Not quite. Suppose I invest in a 50-50 partnership by contributing land worth $500,000 but which cost me only $100,000. My partner invests $500,000 in cash, and the partnership erects a building on the property, after which the land and building are sold for $1.5 million. We liquidate the partnership, with each of us receiving $750,000.

What is my gain? I can assure you it's not $250,000, which is the excess of what I received over the value of my invested capital. In fact, my gain is $650,000, representing the excess of what I received over the cost of what I invested. I can no more escape the tax on the built-in appreciation in the land than I could fly to the moon.

Of course, a similar result would apply if I invested the land and $500,000 in cash without a partner. When I sell the project for $1.5 million, my gain is $900,000, equal to the $1.5 mm proceeds minus my $600K cost basis.

This argument does not aid your notions in the least, as you are exactly describing profit, which is taxable; and had you incurred a loss, you would be capable of deducting based upon the sum of your principal (further, you still get to deduct all related expenses from your profit), for the laborer they are merely compensated, compensation is neither gain nor profit and permits for no such deductions (with exception to what is permitted by public statutes)--as has been described to you only a few posts ago--and is thereby not constitutional income to be directly levied upon.

Conner v. United States, 303 F. Supp. 1187 (S.D. Tex. 1969):

Congress has taxed income, not compensation.

The Court has consistently and without exception held that pay-for-work is includable gross income, without regard to whether it is received by an employee or a sole proprietor.

No, to date the USSC has never been willing to hear cases framing employees in their individual capacity as an employee. Also you are trying to debate Subtitle-C (i.e., FICA and FUTA, etc.) not Subtitle-A, which the former is not relevant without the latter.

 

[mrsat_98]

IS THE FEDERAL INCOME TAX CODE UNCONSTITUTIONALLY VAGUE?

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2395514

IS THE FEDERAL INCOME TAX CODE UNCONSTITUTIONALLY VAGUE?

 

[Sonny Tufts]

And still, you again lie. You have made numerous prior posts about this very issue, for example (your post from 2009): quatloos.com/Q-Forum/viewtopic.php?f=27&t=3059&start=30#p47611

Mr. White, you are a paranoid fool. I am not Famspear.

Well, not exactly. Wages and salaries were intentionally omitted from the amended (non-positive law) revision of 'net income' (Sec. 22); to wit, neither are similar items of: “fees, commissions, fringe benefits, and similar items”.

Wages and salaries are included in "Compensation for services". See also Reg. §1.61-2(a)(1):

Wages, salaries, commissions paid salesmen, compensation for services on the basis of a percentage of profits, commissions on insurance premiums, tips, bonuses (including Christmas bonuses), termination or severance pay, rewards, jury fees, marriage fees and other contributions received by a clergyman for services, pay of persons in the military or naval forces of the United States, retired pay of employees, pensions, and retirement allowances are income to the recipients unless excluded by law.

 

[Weston White]

Mr. White, you are a paranoid fool. I am not Famspear.

Absolutely you are. Pointedly, you debate and act exactly like that yahoo, including using silly handles that are usually based on actual people. …Oh yea, and you are scared to reveal your true identity, Mr. Adkisson.

Wages and salaries are included in "Compensation for services". See also Reg. §1.61-2(a)(1)

Regulations are subordinate to statutes; Sec. 61 was amended from Secs. 22(a) and II B, which merely omitted--so as ensconce its lawful breath—meaning the original statutes remain in play within the non-positive Internal Revenue Code, to wit the pari materia principle further applies.

Furthermore, the U.S. Constitution, our Nation’s highest law, auto-exempts all non-constitutional incomes, such as an indirect tax, attempting to be imposed directly upon an individual’s capital.

Even still:

26 CFR § 1.312-6(b) Earnings and profits.

Among the items entering into the computation of corporate earnings and profits for a particular period are all income exempted by statute, income not taxable by the Federal Government under the Constitution, as well as all items includible in gross income under section 61 or corresponding provisions of prior revenue acts.

https://www.law.cornell.edu/cfr/text/26/1.312-6

26 CFR 29.21-1(a): “Meaning of net income. The tax imposed by chapter 1 is upon income. Neither income exempted by statute or fundamental law, nor expenses incurred in connection therewith, other than interest, enter into the computation of net income as defined by section 21. … In the computation of the tax various classes of income must be considered: (1) income (in the broad sense), meaning all wealth which flows in to the taxpayer other than as a mere return of capital. It includes the forms of income specifically described as gains and profits, including gains derived from the sale or other disposition of capital assets. Cash receipts alone do not always accurately reflect income…” 26 CFR, p. 167, 1949 Ed.

 

[Sonny Tufts]

Furthermore, the U.S. Constitution, our Nation’s highest law, auto-exempts all non-constitutional incomes

Of course, your problem (which is insurmountable) is that you cannot point to anything in the Constitution or in applicable caselaw that exempts any particular kind of income that an individual might earn. At the time the regulations you cited were drafted there was only one kind of exempt income: interest on state and local bonds. But that court-created exemption disappeared when South Carolina v. Baker was decided in 1987.

 

[Weston White]

Of course, your problem (which is insurmountable) is that you cannot point to anything in the Constitution or in applicable caselaw that exempts any particular kind of income that an individual might earn. At the time the regulations you cited were drafted there was only one kind of exempt income: interest on state and local bonds. But that court-created exemption disappeared when South Carolina v. Baker was decided in 1987.

Of course we can, silly bear. Capitations and personal taxes.

ETA:

Aside from the obvious fact that it is staring you right in your face: "other than as a mere return of capital."

 

[Sonny Tufts]

Of course we can, silly bear. Capitations and personal taxes.

Nonresponsive, Mr. White. A capitation is perfectly legal and doesn't involve income (exempt or otherwise) at all. And the last time I looked, the term "personal taxes" isn't in the Constitution.

 

[Weston White]

Nonresponsive, Mr. White. A capitation is perfectly legal and doesn't involve income (exempt or otherwise) at all. And the last time I looked, the term "personal taxes" isn't in the Constitution.

lolz, nonresponsive... Oh yes, howdy there Mr. Pot.

One guess where this is from:

No capitation, or other direct, tax shall be laid, unless in proportion to the census or enumeration herein before directed to be taken.

Aside from that you have already been informed on the complete definitions for both capitations and personal taxes. To wit, both involve assessing taxation directly at the source, or the capital, including the person and the like.