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Historical Perspectives on the Federal Income Tax










THE TRANSITION FROM AN INDIRECT INCOME TAX TO A DIRECT PERSONAL TAX (In less than 5 years)

     

"IN THE PRESENT CASE THERE IS NO LACK OF UNIFORMITY AS BETWEEN CORPORATIONS AND INDIVIDUALS. THE EXEMPTION OF $4,000 IN THE CASE OF THE INDIVIDUAL OR FAMILIES, AS WILL BE SHOWN, IS INTENDED AS A COMPENSATION FOR THE NECESSARILY EXCESSIVE BURDEN OF CONSUMPTION TAXES UPON SMALL AND MODERATE INCOMES.

THERE IS NO SUCH SITUATION IN THE CASE OF A BUSINESS CORPORATION. EVERY CENT WHICH IT EXPENDS IS ALLOWED IT. IT IS TAXED ONLY ON ITS NET PROFITS, DEDUCTING THE WAGES ACCOUNT; WHICH CORRESPONDS TO THE LIVING EXPENSES OF THE INDIVIDUAL." (Attorney General Olney, in the 1895 Pollock Cases at 157 US 427, page 778)

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PETITION for WRIT of CERTIORARI DENIED

Docket Number 06-141

Filed 07/26/06 denied 10/02/06

Rehearing denied 11/27/06

 

For those common law (not "in business") employees who are interested in tax justice, we would suggest you find something else to be interested in; because you will not find that which does not exist for the American laborer. What we have learned from our 10 years of experience with the Federal bureaucracy is this. Do not question Congresses assumed authority to tax your paycheck (wages); and then be thankful that government allows you to keep just enough of that paycheck to pay your yearly living expenses. For Congress, according to the Supreme Court, has the Constitutional authority to take your entire paycheck (wages). Their reasoning is not because the Sixteenth Amendment allows it, because it does not. It is because the Treasury Department said that as a laborer you have "no cost basis" in your own labor (property), therefore your wages are surplus (gains and profits). Read: http://www.taxhistory.com/crs/09.html and: Pittsburgh v. Alco Parking Corp., 417 U.S. 369 (1974) http://caselaw.lp.findlaw.com/scripts/getcase.pl?navby=case&court=us&vol=417&page=369.

If you donít like it, quit your paying job and apply for welfare; because apparently the Supreme Court considers that to be the American laborerís inalienable right to Life, Liberty and the Pursuit of Happiness.

Yes, the 16th Amendment is Constitutional and if you donít believe that, convince your State Legislatures that it was not properly ratified by them; and let them deal with it. In reality, it really doesnít matter whether anyone ratified it or not. The income tax is an excise, impost or duty tax imposed under Article 1, Section 8, not Article 1, Section 9, clause 4 of the United States Constitution. The problem is not with the power to tax, but, to enforce the "income" tax as an excise tax, not as a "capitation" tax as it is now applied to the common laborer. (Brushaber, 240 U.S. 1, 16-19). http://caselaw.lp.findlaw.com/scripts/getcase.pl?navby=case&court=us&vol=240&page=1.

Our contention is this. If you are not "in business," what, in fact, is the excise, impost, or duty imposed upon? It certainly is not the property (source), whether that property is capital, labor, or money; as that would be a "capitation, or other direct, tax" requiring apportionment. United States v. Wells Fargo Bank, 485 U.S. 351 (1988) http://caselaw.lp.findlaw.com/scripts/getcase.pl?navby=case&court=us&vol=485&page=355#355

The rest of our story is at www.taxhistory.com/denied.html

Disclaimer: Taxhistory.com does not provide legal advice, nor do we encourage tax protesting. Our sole purpose is to point the reader to historical information concerning the application of the federal income tax to the "wages" of the common law (labor only) employee. Our point is to raise the questions, and then provide the documentation supporting our conclusions. This is a free site, we offer nothing for sale, nor do we ask for contributions to support our effort.

Honest Mistakes
26 USC 6401 (C)

26 USC 6401 (C)

[26] Conference Report, H.R. 2570, "Current Tax Payment Act of 1943," page 48

Rule where no tax liability

Section 4 (d) of the Senate bill adds new subsection (c) to section 3770 of the code. Under this provision an amount paid as tax shall not be considered not to constitute an overpayment solely because there was no tax liability in respect of which that amount was paid.

The income-tax law requires the taxpayer to make a return of his tax and to pay the tax so returned. These requirements contemplate that in the discharge of these duties at the time, place, and manner prescribed, honest mistakes will occurómistakes both as to the amount of the tax and as to the existence of any tax liability; and that such honest mistakes made incident to the bona fide orderly compliance with the actual or reasonably apparent duties of the taxpayer are to be corrected under the provisions of law governing overpayments. It is believed that existing law so provides. The language of certain court decisions (holding that certain payments, not made incident to a bona fide and orderly discharge of actual or reasonably apparent duties imposed by law, are not overpayments and accordingly that interest is not payable) has been read by some as meaning that no payment can result in an overpayment if no tax liability actually existed. It is not believed that such reading is in any way a statement of existing law. The provisions of the bill, however, emphasize the need for clarity in this regard.

Under the bill as passed by the Senate, two requirements became basic features of the income tax: (1) The declaration and payment of the estimated tax; and (2) the withholding and collection by the employer of tax from the wages of employees, and the return and payment as such of the amount by the employer to the Government. Honest mistakes incident to faithful and orderly compliance will, of course, occur, just as they have in the older procedures of the law.(More)


TWO PERSPECTIVES/Pre 1940 and Post 1944

 

 

"The Treasury regulations soon to be prepared will make it clear to every taxpayer the requirements of the law and its application to income derived from the various kinds of business. To any person who keeps familiar with his business affairs during the year to the extent that at its end he known with reasonable accuracy the amount of his aggregate annual profits, the matter of executing his tax return would be both simple and convenient."

 

 

 

 

 

A Treatise on the Federal Income Tax Law of 1913 by Thomas Gold Frost (1913). Section 37, page 28:

"The purpose of the framers of the Act in only permitting deductions for the expenses actually incurred in carrying on any business, and excluding personal, living and family expenses, was for the reason that the specific exemption of $4,000 from taxable income was supposed to be sufficient to provide personal, living and family expenses."

 

 

 

 

 

 

The above graphs show the change in application, between the "income tax" originally instituted under the statutes of 1913, and how the tax is applied today. This change began in 1940 with a shuffle in the wording of section 51 of the 1939 Tax Code and ended in 1944 with the creation of section 22(n) "adjusted gross income". Both changes were slight, but their combined impact devastated the original intentions of both the Founding Fathers of our Country and those responsible for implementing the income tax system in 1913.

The purpose of this web-site is not to cast stones or encourage outrage against the "system", but to show that the change occurred in a natural progression in reaction to the economic and political climate of the times. Is the "tax" wrong? Not necessarily. Is it right? Not totally. Can it be fixed? We believe it can be.

The following Correspondence, addressing these issues, has been presented to Congress, as well as the Treasury Department and Internal Revenue Service, over the past several years. Whereas we have received responses from our California Representative and State Senators, we have not received any answers to our questions. The problem, as we perceive it to be, is not what constitutes "income", but rather what creates "income". For the term "income", according to Legislative Attorney John R. Luckey, is synonymous with the terms gain, or surplus [CRS Report for Congress, 92-303A, CRS-11].more


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11/16/2009