Tax Filing Time – 2017 – Lie To Us Again!

Donald Trump and Taxes

These foolish and ignorant socialist demonstrate their lack of education and therefore knowledge when they attack President Trump and his tax returns.  I have not seen or been made aware of any statute passed by Congress or written into the Constitution by the Founders.  The President and any other public official has no duty to submit their financial condition for public inspection.  It has been more of a courtesy far from a responsibility and for these uneducated to contend otherwise is an insult to the intellect.

As to the Constitution, there was not a liability for citizens at that time to either report or file a individual tax return.  This unique so called liability to file or pay the income tax did not arise until the Democrats conspired to impose this upon the citizens the “income” tax written into the Underwood-Simmons Tariff Act approved September 30, 1913.  The highly misunderstood Sixteenth Amendment was passed earlier that same year pushed by President Woodrow Wilson.  These two acts were orchestrated by the Democrats in Congress when they gained control of both the Presidency and Congress during the 63rd Congress, it assured the passage and implementation of the income tax.

To these foolish people, I would relay the message of former Vice President Joe Biden that we are adults so grow up and quit whining.  “Knowledge will forever govern ignorance; and a people who mean to be their own governors must arm themselves with the power which knowledge gives.”  (James Madison)

Tax Filing Time – Lie to Us Again

As that monumental landmark date fast approaches, we are flooded with media references to tax problems that some people are faced with.  It make me wonder sometimes if part of the Treasury’s budget is allocated to the tax services around the country as we are inundated with the many companies dedicated to helping us resolve these problems.  The Treasury department has in the past, publicized prominent people as they drag them through the “justice” system and the media in order to scare a misinformed populace to keep pouring the “fruits of their labors” into the pockets of the federal government.

Are you are having trouble with the IRS with taxes owed, penalties or returns not filed.  Save your money.  Instead of spending hundreds on attorneys and accountants, spend some time on educating yourself on a few fundamentals about taxation.

The fundamentals are easy to understand yet difficult at times to implement.  It is not easy, but when it comes to your liberty and protection of your property, it is well worth the effort.  Those who are in this seemingly difficult situation are on the threshold of this door to personal freedom and can start to visualize these fundamentals.

The fundamentals are imbedded in ancient history.  In christian history they were made manifest to Adam and Eve when the Creator made them “sovereign” over the earth, giving man the power to choose, man’s agency.  Mankind had the power to choose, and with that authority they received the benefits and responsibilities of those choices.  They were sovereign!  Except for their Creator there was no other superior.  They were subject to no other authority, except the Laws of Nature.

That sovereignty exists today and history teaches us that from time to time through the ages that sovereignty was lost, being exchanged for the power given to governments for security.  In the history of this Nation a “revolution” was contemplated to remove the chains of servitude that became “destructive” to the “unalienable rights” of life, liberty and property which are essential in the “pursuit of happiness.”

Whenever a people find it necessary to ” dissolve the political bonds which have connected them with another, and to assume among the powers of the earth, the separate and equal station to which the laws of nature and of nature’s God entitle them, . . . ” there is the other party that objects and as a result, these colonies found themselves in a revolution which separated their association with England.  Prior to the revolution, sovereignty belonged to English rule.  The Colonies were “subjects” to the sovereign rule of the King.

As a result of a successful separation, the title of sovereignty rested upon the People of the Colonies.  Each colony became an individual and separate Nation.  Cognizant of their sovereignty and of the necessity of uniting for their safety, “We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America.”

The Constitution, like the Magna Carta before, delegated (our second fundamental) certain defined powers to a central government.  Under this charter there are no “subjects” only citizens.  Sovereignty was, and always should be recognized as remaining with the People.  Under the principle of “delegation” the People have delegated the “external” affairs of the Nation to the central government as explained by James Madison in the Federalist letter No. 41: “That we may form a correct judgment on this subject, it will be proper to review the several powers conferred on the government of the Union; and that this may be the more conveniently done they may be reduced into different classes as they relate to the following different objects: 1. Security against foreign danger; 2. Regulation of the intercourse with foreign nations; 3. Maintenance of harmony and proper intercourse among the States; 4. Certain miscellaneous objects of general utility; 5. Restraint of the States from certain injurious acts; 6. Provisions for giving due efficacy to all these powers.”

In Madison’s letter No. 45, he shows the division of responsibilities of the central and State governments.  “The powers delegated to the federal government are few and defined. Those which are to remain in the state governments are numerous and indefinite. The former will be exercised principally on external objects as war, peace, negotiation, and foreign commerce; with which the last power of taxation will, for the most part, be connected. The powers relative to the several states will extend to all the objects which, in the ordinary course of affairs, concerns the lives, liberties and prosperity of the state.”

Thomas Jefferson recognized this division of powers as well as the Supreme Court in deciding cases that the central government would concentrate on the “external” interests of the Nation.

These two fundamentals, sovereignty and delegation go hand-in-hand making it evident that the sovereign, the People, can only delegate those authorities or powers they have.  This takes us to the question to be understood; what sovereign powers do the people possess?  The right to life, liberty and property when rightfully protected and lived, fulfill the object of the pursuit of happiness.  These fundamentals of life, liberty and property are three essentials in the Natural Rights of the individual.  There are other rights that attach to the individual as expressed in the Bill of Rights of the U.S. Constitution and the Declaration of Right as expressed in the several State Constitutions.

All of the powers delegated to the respective governments have one foremost responsibility and that is to secure and protect the People in the exercise of these Natural Rights.  This was not only noted by Thomas Jefferson in the Declaration of Independence, but has been emphasized and clarified several times by the Supreme Court.  Justice Field, concurring in Butcher’s Union v. Crescent City (1883): “[C]ertain inherent rights lie at the foundation of all action, and upon a recognition of them alone can free institutions be maintained.  (Speaking of fundamental principles)  These inherent rights have never been more happily expressed than in the declaration of independence, . . .  We hold these truths to be self-evident’ . . . ‘that all men are endowed’ – not by . . . acts of congress, . . .’ but ‘by their Creator with certain inalienable rights.’ – that is, right which cannot be bartered away, or given away, or taken away, . . .

In two separate cases, Chief Justice Earl Warren  brings out this point.  In a 1964 decision, Lucas v. 44th Gen. Assembly of Col., “As stated by this Court in West Virginia State Bd. of Educ. v. Barnette, 319 US 624, 638,  ‘One’s right to life, liberty, and property . . . and other fundamental rights may not be submitted to vote; they depend on the outcome of no elections.’

“A citizen’s constitutional rights can hardly be infringed simply because a majority of the people choose that it be.”

Again in 1966 in Miranda v. Arizona, (1966): “Where rights secured by the Constitution are involved, there can be no rule making or legislation which would abrogate them.”

There are three fundamental principles, or natural rights protected by the Constitution that help to define the limits of taxation.  Justice Miller expressed this quite clearly in writing the opinion in Loan Association v. Topeka (1874); “It must be conceded that there are such rights in every free government beyond the control of the state. A government which recognized no such rights, which held the lives, the liberty, and the property of its citizens subject at all times to the absolute disposition and unlimited control of even the most democratic depository of power, is after all but a despotism. It is true it is a despotism of the many, of the majority, if you choose to call it so, but it is nonetheless a despotism.”

Former Supreme Court Justice George Sutherland:  “Property, per se, has no rights, but the individual– the man — has three great rights, equally sacred from arbitrary interference; the right to life, the right to liberty, and the right to property.  The three rights are so bound together as to be essentially one right.  To give man his life, but deny him his liberty, is to take from him all that makes life worth living.  To give him liberty but take from him the property which is the fruit and badge of his liberty, is to still leave him a slave.”

Quoting from Citizen’s Savings Loan Ass’n v. Topeka (1895) Justice Field, concurring in the Pollock case, endorsed these limitations; “There is no such thing in the theory of our national government as unlimited power of taxation in Congress. There are limitations of its powers arising out of the essential nature of all free government; there are reservations of individual rights, without which society could not exist, and which are respected by every government. The right of taxation is subject to these limitations.”

Another fundamental principle coming to light concerns the limitation of federal legislative jurisdiction.  In simple terms, federal authority.  Again, that authority is defined and delegated to the federal government in Article I, Section 8, clause 17 of the United States Constitution: “To exercise exclusive Legislation in all Cases whatsoever, over such District (not exceeding ten Miles square) as may, by Cession of particular States, and the Acceptance of Congress, become the Seat of the Government of the United States, and to exercise like Authority over all Places purchased by the Consent of the Legislature of the State in which the Same shall be, for the Erection of Forts, Magazines, Arsenals, dock-Yards, and other needful Buildings; . . .”

Both the States and the central government have separate and distinct jurisdictions.  Although they live together they are different and each are supreme within their sphere.  As to taxation in the separate jurisdictions the Court pointed out that:  “The difficulties arising out of our dual form of government and the opportunities for differing opinions concerning the relative rights of state and national governments are many; but for a very long time this court has steadfastly adhered to the doctrine that the taxing power of Congress does not extend to the states or their political subdivisions.”  Ashton v. Cameron County Water Imp. 298 U.S. 513, 523 [1936]

Here the Supreme Court enters the conversation.  Supreme Court Chief Justice Fuller, speaking for the Court: “Nothing can be clearer than that what the constitution intended to guard against was the exercise by the general government of the power of directly taxing persons and property within any state . . .”  [Pollock v. Farmers’ Loan & Trust Co., (1895)]

Remember, that unless you are employed in a “privileged” occupation you are not a subject.  As a general rule, there are NO subjects only citizens within the Union.  Let me back up here a little.  I take it back, there are “subjects”.  I would call them “subject citizens”; that is by their own actions, they have made themselves subject to the sovereign powers of government, which includes taxation.  Although being a citizen of one of the Union States, they have entered into a “privileged” occupation or position with the Federal Government.

The 10th Amendment of the Constitution; “The powers not delegated to the United States by the Constitution, nor prohibited by it to the states, are reserved to the states respectively, or to the people.”  The reason we are not taught these principles is because it cuts into the power structure of the federal government and the  legal profession and they do not like it.  Having presented these principles to our friends, they have NEVER been  rebutted, or challenged with facts that would support their contrary conclusions.

It is a scary situation.  We want to keep what is lawfully ours, yet on the other hand support for the operations of the government is crucial.  The challenge is to find the operational medium between the two extremes.  It’s like trying the find the balance point between no government and total government.  Now we did that in developing a Republic.  Why can’t the same be accomplished with the support of government without draining the natural resources of the people or the country.

One of the problems we are faced with is that when we find the happy medium we have to implant individuals into the mix, and with our weaknesses we always drift to the extreme because we have made our “posts of honor, at the same time, places of profit.” (Refer to my post on “Why I Voted for Donald Trump)  The tendency we have has been warned about, to paraphrase; “We have learned by sad experience that once one has been placed in a position of authority, they immediately set about to exercise an unlawful dominion upon others.”  We like the power.  Akin to getting behind the wheel of a car, you become a different person.  If you don’t like the way I drive, get off the sidewalk.

Ezra Taft Benson, in an address, said that there was nothing wrong with taxation, the problem is that government is to big.  Almost from its inception, the Republic came under attack from the forces of democracy.  The opposition began to infuse concepts into the Republic, however appealing to the eye and ear, slowly eroded the principles basic to the Republic.  The people enjoying a great deal of success, the Nation expanding into new territories and then States.  Then the government expanded its authority into areas and conflicts beyond its constitutional limits.  Instead of being a servant to the people it has become a “big brother”.  Instead of having a defensive posture in the world, it has become aggressive as it becomes involved in “tangled” alliances.  Setting up a monetary debt system of currency controlled by a “federal” reserve which isn’t federal by any stretch of the imagination.  And we reward our legislators and bureaucrats with enormous salaries and perks.

Now in order to feed the “monster” we, or those in control with authority have to devise a ways to conceal measures to extract money out of the  people.  I think they are called “entitlements.”   Well, if we cannot tax the rights of the people, let’s change the definition of the terms used and start calling some of these rights, “privileges.”  This will enable us to tax the privilege, so you no longer have a right to work, it is now a privilege.  Government granted privileges are taxable.  Now we will tax the privilege and use the income as a measure of the tax.

Now that the discussion is coming around about the difference between a “democracy” and a “republic” it causes the bureaucrats to regroup and take a look at their plan.  We’ve been through the points found in a republic being a respect for the natural rights of the individual.  The government is going to have to revaluate their approach to taxing and spending.  The need for a balanced budget amendment has strong support in getting the Nation turned around and heading in the right direction.  Put the “monster” back in the cage bound by “chains of the Constitution” and the light at the end of the tunnel won’t be a train.  If not then the fears expressed by former President Franklin Pierce that we will see the “beginning of the end;” this will be our fate as we move toward Communism.

As you examine the tax structure and your responsibility to comply with the demands of the federal government, remember to listen and learn objectively and do not throw the baby out with the bath water.  As you read through the several articles I and others have written also remember that these principles are to many, new and will conflict with what you have been taught by the government.  The government has directed our education in the area of taxation without presenting the facts or principles upon which this authority is based.  The danger to the general public arrises when the facts are presented, that they will conflict with the theories we have been taught and therefore we tend to disregard the facts and base our decisions founded upon theory.  This is very unscientific.  Always do the genealogy when it comes to the government’s authority, keeping in the fore-front the fundamental principle that their authority comes from you.  DELEGATION OF AUTHORITY.   Not from a group of THEM!

Unless you work for the government or a government licensed corporation (privilege) you own nothing to the government as far as your employment in the private sector.  You have a “right” to work.  To carry on a business to support your family.  You owe nothing to government to exercise that right.  The government can tax that enormous bureaucracy and as it exercises its duties under the Constitution, it can collect revenue for that service.  As former Chief Justice John Marshall set in M’Cullock; “. . . the power of taxation is not confined to the people and property of a state. It may be exercised upon every object brought within its jurisdiction. This is true. But to what source do we trace this right? It is obvious, that it is an incident of sovereignty, and is co-extensive with that to which it is an incident. All subjects over which the sovereign power of a state extends, are objects of taxation; but those over which it does not extend, are, upon the soundest principles, exempt from taxation.” (17 U.S. 316, p. 429)

Granted, Marshall’s comments are directed to the States, however, the principle is applicable the federal government as well.  Since we, for the most part, do not live within the legislative jurisdiction of the federal government, and they are not the sovereign over free Americans, they have no authority to tax our employment or the exercise of our inherent natural rights.

Maybe that is why tax day comes in April and who is the April Fool.

Liability for the Income Tax 

Always Challenge the Jurisdiction

“It is the first responsibility of every citizen to question authority.”   Benjamin Franklin

Many pages have been written showing facts contesting one’s liability for the income tax.  In fact this could apply to any tax which the federal government would want to impose upon an individual.  (Individual used in its common law usage.)  I would like to condense this into some what of a nut shell.

It appears that our “all seeing government” understands that the 16th Amendment confers a sovereign power upon the federal government over the property of the citizens.  This can not be further from the truth.  Then Chief Justice John Marshall, in his opinion delivered in M’Cullock vs. Maryland (1819), discussed the power of taxation conferred by the people upon both the States and the federal government.  As to the authority of the individual States;  “The sovereignty of a state extends to everything which exists by its own authority, or is introduced by its permission; . . .”  State legislatures and governors, can you read english?  Can you understand this?  “The sovereignty of a state extends to everything which exists by its own authority, or is introduced by its permission; . . .”  M’Cullock v. Maryland, 17 U.S. 316

Given this principle as quoted, and going back to a previous declaration made by Chief Justice Marshall on the same page, puts this all in perspective; “All subjects over which the sovereign power of a state extends, are objects of taxation; but those over which it does not extend, are, upon the soundest principles, exempt from taxation. This proposition may almost be pronounced self-evident.”  Again, State legislatures and governors, can you read english?  Can you understand this?

Returning and carrying this principle to the federal government he continues; “. . . but does it extend to those means which are employed by congress to carry into execution powers conferred on that body by the people of the United States? We think it demonstrable, that it does not. . . .”  As the Chief Justice points out; “. . . Those powers are not given by the people of a single state. They are given by the people of the United States, to a government whose laws, made in pursuance of the constitution, are declared to be supreme. Consequently, the people of a single state cannot confer a sovereignty which will extend over them. ” (p. 429)

The last statement by the Chief Justice answers the question about the assumption by some today that the 16th Amendment conferred a ‘blanket’ authority to tax all the citizens, in all the unified States.  To repeat it; “. . . the people of a single state cannot confer a sovereignty which will extend over them.”  Meaning the other sovereign States.  It will be remembered that the 16th Amendment was not passed by all the States.  Because the citizens of State ‘A’ approved the 16th Amendment, does not mean that by their action that a sovereignty is imposed upon the citizens of State ‘B’ which did not approve the Amendment.  When writing on these issues, I always remember the words of Chief Justice Marshall; ” The right never existed, and the question whether it has been surrendered, cannot arise.” (p. 430)

To understand more about the 16th Amendment and its purpose read the Brushaber case (240 U.S. 1), and the Stanton (240 U.S. 103) opinions delivered by Chief Justice White (1916).  Considering these two landmark decisions, Chief Justice White makes clear that the contentions in the two cases;  “. . . manifestly disregards the fact that by the previous ruling (Brushaber) it was settled that the provisions of the 16th Amendment conferred no new power of taxation, . . . .” (Stanton at p. 112)  The Tax Court in Penn Mutual expressed this same opinion;  “In dealing with the scope of the taxing power the question has been framed in terms of whether something can be taxed as income under the 16th Amendment. This is an inaccurate formulation of the question and has led to much loose thinking on the subject. The source of the taxing power is not the 16th Amendment; it is Article I, section 8, of the Constitution.” Penn Mutual Indemnity Co. vs. Commissioner, 32 Tax Court 659 Again, can you “lawyer politicians” understand english?

One other point raised by the Chief Justice on page 428, about State authority to tax, he lays out:  “. . .   a few considerations on the nature and extent of this original right of taxation, which is acknowledged to remain with the states. . . .”  He goes on to state; “. . ., that the power of taxing the people and their property, is essential to the very existence of government, . . .” and I agree.  Going on; “. . . and may be legitimately exercised on the objects to which it is applicable, to the utmost extent to which the government may choose to carry it.”

What I wish to point out is the term “applicable” objects.  And what are “applicable” objects?  We have already shown what Madison felt were applicable objects of congressional power: “. . . will be exercised principally on external objects as war, peace, negotiation, and foreign commerce; with which the last power of taxation will, for the most part, be connected.”  Also, the powers itemized in Article I, section 8.  And Chief Justice Marshall answered that when he stated;  “”All subjects over which the sovereign power of a state extends, are objects of taxation; . . . .”  And those objects are?   “. . . [e]verything which exists by [the State’s] own authority, or is introduced by its permission; . . .”

Chief Justice Marshall addresses this opinion basically to the States,  however, the principle of sovereignty as the foundation platform for government’s (any government) is its position as sovereign over the objects to be taxed.

“But to what source do we trace this right?  (The right of taxation) It is obvious, that it is an incident of sovereignty, and is co-extensive with that to which it is an incident.”  M’Culloch v. State, 17 U.S. 316, 429

“The power to tax is an incident of sovereignty and is coextensive with sovereignty.”  Curry vs. McCanless, 307 U.S. 357; See also, 26 R.C.L., Taxation (1920), 12. Power of Taxation Inherent in Sovereignty.

The question always is and should be, in this Nation, in this Republic, who is the sovereign?

If we can agree upon this one principle, that the “sovereign” has the inherent right to tax its subjects, then we can proceed to determine by what actions can the American citizen be drawn into a relationship that would make them subject to the sovereign?  The Constitution recognizes only one sovereign and that is the people.  Before any proceeding can take place there are at least four categories that I can think of which the government must at least affirmatively show jurisdiction, or sovereignty, in at least one of them in their favor.  They are: (1) Territory; (2) Privileged Occupation; (3) Contractual Agreement; and (4) Delegated Authority; and all;  “All persons born or naturalized in the United States, and subject to the jurisdiction thereof, . . .”  “Fourteenth Amendment citizens.”  To simplify, you are either one of “The People”, a sovereign, or you are a “citizen” subject to the jurisdiction of the federal government.

Any one of these would give the government “sovereign” authority over the party.  Only if one finds that they are within one of the classes, do the other arguments then find a place.

1.  Territory.  As far as the federal government is concerned, Article I, Section 8, clause 17 defines the territorial jurisdiction of the federal government.

“To exercise exclusive Legislation in all Cases whatsoever, over such District (not exceeding ten Miles square) as may, by Cession of particular States, and the Acceptance of Congress, become the Seat of the Government of the United States, and to exercise like Authority over all Places purchased by the Consent of the Legislature of the State in which the Same shall be, for the Erection of Forts, Magazines, Arsenals, dock-Yards, and other needful Buildings;–”

We also find in Article IV, Section 3 the second clause that:  “Congress shall have power to . . . make all needful rules and regulations respecting the Territory or other property belonging to the United States; . . .”

2.  Privileged Occupation.  One must be an “employee”, as that term is defined under the civil law, that is it must be a “legal” relationship, one that is created by and under the civil law.  “Lawful” employee relationships are by natural right, and exist and protected by the common law, not a creation of the civil law.   Federal/State employees are privileged occupations, created by law (Constitution).

3.  Contractual Agreements.  When you take a trip on an airline, boat, train etc., you enter into an agreement to follow the rules of the conveyance.  Under the law of Admiralty, of which the civil law is an off shoot, jurisdiction is given by entering into voluntary contracts (stipulations).  When one voluntarily signs the 1040, it is an admission that they are subject to the income tax.  The same goes for privileged employment with the government.  You enter into an agreement under Admiralty rules and you have opted by your stipulation to ride with the circus.  You seek corporate license from the government, that is a taxable event and the income is the measure of the tax.

4.  Delegated Authority.  There is a principle that is unique to our Republic, and that is the principle of delegated authority.  It is well documented that from the foundation of this Republic that governmental authority comes from the people.  “We the People . . .”  It is an axiom of the principle of delegation, that one can only delegate what one has, conversely, one cannot delegate what one does not have.  NO ONE has the right to take another persons life, liberty or property.  The Supreme Court understood this principle when is said;  “… The governments are but trustees acting under derived authority and have no power to delegate what is not delegated to them.” Yick Wo v. Hopkins, 118 US 356, page 370

“Whenever government is doing anything that is forbidden to the citizen, that function is illegitimate, according to our theory of government…. Our government is founded squarely on this ‘theory of delegation’.  One cannot delegate what he doesn’t have.” [Dean Russell, Letter to Compiler, March 19, 1964]  To conclude this principle; “The right never existed, and the question whether it has been surrendered, can not arise.” (M’Cullock vs. Maryland, 17 U.S. 316, at p. 431)

As Madison explained, the delegated powers of government “. . . will be exercised principally on external objects as war, peace, negotiation, and foreign commerce; with which the power of taxation will, for the most part, be connected.”

For those few who might be within the scope of the IR code, what is the “legal” definition of “income” for taxation?

FYI: The footnote at the end of §61 states:  “Source: Sec. 22(a), 1939 Code, substantially unchanged”.  [Legislative History] The language of §61 finds its authority in the 1939 Revenue Code §22(a), which reads: “Gross Income – (a) General Definition.  ‘Gross income’ includes gains, profits, and income derived from salaries, wages, or compensation . . .”  The House Report on the proposed legislation for Section 61 notes that:  “[t]his section (§61) corresponds to section 22(a) and the 1939 Code. While the language in existing section 22 (a) has been simplified, the all-inclusive nature of statutory gross income has not been affected thereby.  Section 61 (a) is as broad in scope as section 22(a).”

The Senate Report affirms the House Report:  “Section 61(a) provides that gross income includes ‘all income from whatever source derived.’ This definition is based upon the sixteenth amendment and the word ‘income’ is used as in section 22(a) in its constitutional sense.  It is not intended to change the concept of income that obtains under section 22 (a).”

Code section 22 reads: ‘income includes gains — derived from — salaries’.  After congress restructured section 22 into section 61 it read: ‘Income — from any source — derived’.  It does not require an accounting or a law degree to notice the subtle change in the code, notwithstanding, there was to be no change in substance.

Representative Hull states: “Paragraph B (Statutes at Large, 63rd Congress, Sess. I, ch. 16, Income tax, [1913]) defines the net income of a taxable individual or person.  Income as thus defined does not embrace capital or principle, but only such gains or profits as may be realized from rent, interest, salaries, trade, commerce, or sales of any kind of property, and so forth, or profits or gains derived from any other source.”  CR-House, April 26, 1913, p. 506  (Emphasis added)

In the Supreme Court decision, Eisner v. Macomber (252 U.S. 189 [1920]), Justice Pitney discussing §22(a) of the Code, made clear that: “The government, although basing its argument upon the definition as quoted, placed chief emphasis upon the word ‘gain,’ which was extended to include a variety of meanings; while the significance of the next three words was either overlooked or misconceived. ‘Derived-from- capital’; ‘the gain-derived-from-capital,’ etc. Here we have the essential matter: not a gain accruing to capital; not a growth or increment of value in the investment; but a gain, a profit, something of exchangeable value, proceeding from the property, severed from the capital, however invested or employed, and coming in, being ‘derived’-that is, received or drawn by the recipient (the taxpayer) for his separate use, benefit and disposal- that is income derived from property. Nothing else answers the description.” (p. 207)

Justice Pitney explained this in writing his decision in Stratton’s Ind., Ltd v. Howbert (231 U.S.399 [1913]) as “a manufacturing process, . . . and the gains derived from it are properly and strictly the income from that business; for ‘income’ may be defined as the gain derived from capital, from labor, or from both combined, and here we have combined operations of capital and labor.”  The Court was discussing a corporate tax and the “income” was the measure of the tax, being an indirect tax and not on the source.

Roswell Magill, professor of law, Columbia University, Member of the New York Bar, comments: “That it is reasonable to tax a salary to the man who earns it, even in the case of an assignment, is a proposition readily accepted.  It is not so clear that the federal statute in fact so provides any compelling form. The language …., occurring in the definition  of gross income, (IRC 22a) … seems rather to state that salary is a source from which taxable income arises, than to allocate such income for the purpose of taxation to the owner.”  (Taxable Income, pp. 283, 284)  (emphasis added)

Section 61 as read, makes salary, wages, etc. being the “source” a direct violation of the finding of the Court in Pollock and the Constitution as to direct taxes.  Then who derives “income” from the source?  The employer! Not the employee! The Pollock decision has never been over turned.  It is still controlling, any tax upon the source is a direct tax and requires apportionment, Sixteenth Amendment notwithstanding.

Supreme Court decisions of that time have clearly stated,  “it was settled that the provisions of the 16th Amendment conferred no new power of taxation, . . . .” Stanton v. Baltic Mining; Brushaber v. Union Pac. RR, [1915]; Bower v. Kerbaugh-Empire Co.;[1926].  Even the Tax Court agreed, “The source of the taxing power is not the 16th Amendment;  it is Article I, section 8, of the Constitution.”  Penn Mutual Indemnity Co. vs. Commissioner, 32 Tax Court 659; U.S. Court of Appeals for the third circuit agrees.

“…[I]t often happens that those closer in time to the enactment of a statute or the handing down of a precedent know best what it really stands for.  Frequently changes in social and political beliefs cause later courts to put glosses on statutes and precedents which do not really belong there.” (Ewing v. U.S., 711 F. Supp. 265 [1989])  And so administrative agencies and the courts have added a definition not found in law as demonstrated here by the Utah State Tax Commission.

The Best Defense is the Challenge the Jurisdiction

When one deals with the IRS they should first make sure that their property and the access to property (employment) is safe guarded.  Secondly, they should not have filed the Form 1040 or any other document showing a voluntary contract with government.  If you knowingly volunteer into an agreement, signing the 1040 then one must back out of the contract or show that the document was signed under duress or threat by the IRS, this is one of the elements of a valid contract, that it was voluntary and not compelled.  For the most part all administrative documents are compelled by the government against the party.

Always challenge jurisdiction.  The defense against IRS actions in court are found in the fundamentals of Admiralty law.  The best and most respected reference to Admiralty is from the writings of Erastus C. Benedict, LL.D.  The first step in the court proceedings, the court should agree that the works of Erastus Benedict is a qualified authority on the subject of Admiralty.

“Benedict on Admiralty is the most complete research tool in the field. All the materials you need to practice maritime law are in this one set, . . .”   Lexis Nexis

Secondly, the Supreme Court has laid out the fact that Justice Johnson, quoting Brown in Ramsay v. Allegree, (25 US 611[1827]) starts the discussion out by saying:

“I think it high time to check this silent and stealing progress of the admiralty in acquiring jurisdiction to which it has no pretensions. . . .

“Brown, 2 vol., p. 100, lays down the rule in these terms:  “The general rule, however, at present is that the admiralty acts only in rem, and that no person can be subject to that jurisdiction but by his consent, expressed by his entering into a stipulation.

“And even this mode of subjecting the person, through the medium of a stipulation, it is well known was itself resisted at first, and acquiesced in only on the ground of its being an indispensable incident to the exercise of the jurisdiction in rem.

“In Keble’s Reports, p. 500, quoted by Brown, it is expressly said “that without a stipulation, the admiralty has no jurisdiction at all over the person.”

Here is the principle;  “that without a stipulation, the admiralty has no jurisdiction at all over the person.”  That being established, then the previous declarations  by the Court come into play, showing that the Civil law is an extension of Admiralty and not the ‘law of the land.’  The government now has the obligation to produce to the Court the stipulation in order to continue.  Absent any evidence of a stipulation the Court must dismiss any action against the People for lack of jurisdiction.

“[W]here the common law was the of the land, the civil law was held to be the law of the admiralty, . . . .”  (Benedict on Admiralty)

Let the words of Thomas Paine be our strength:

“I once felt all that kind of anger, which a man ought to feel, against the mean principles that are held by the  Tories; A noted one, who kept a tavern at Amboy, was standing at his door, with a pretty a child in his hand, about eight or nine years old, as most I ever saw, and after speaking his mind as freely as he thought was prudent, finished with this unfatherly expression, ‘Well, give me peace in my day.’  Not a man lives on the Continent but fully believes that a separation must some time or other finally take place, and a generous parent would have said, ‘if there must be trouble, let it be in my day, that my child may have peace.”

L.S. Glazier

lsglazier@icloud.com

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