Is There Hope?

April 5, 1999

Well, I suppose the answer has to be yes. Even as you're going down for the third time, with an anchor caught around your neck, and a shark noshing on your ankle, there's a glimmer of hope. But as a practical matter---look out!

What I'm talking about is not hope for individual salvation--that is not in question. But how about hope for the survival of the free-market economy in America? It looks pretty glum.

Most of the blame can be laid to the fact of ignorance: widespread, all-encompassing, smug ignorance. It is beautifully exemplified by a television commercial (and, indeed, television in general!) showing a fellow going to his mailbox. He opens it, removes an envelope, and begins to gyrate with joy, dancing about, and screaming in ecstasy. What's happened? He's gotten his income tax refund, thanks to the use of the sponsor's tax-preparation firm.

Let's take a closer look at this: The refund check was for taxes paid the preceding year. If it arrived in April, then it represents a refund of monies paid to the government, on average, at least eight months ago. Having had the use of his money for that time, the government is now refunding it--with no interest. By any reckoning, the fellow receiving the check should be furious: furious with the government for using his funds, to which it was not entitled, with no interest being paid, and furious with himself for sending the extra funds to Washington in the first place. That this disgraceful episode could be depicted as grounds for rejoicing by the firm which prepared the "return" is, perhaps, understandable; but that they should expect the general public to share their good feelings that a person's income could be kept by an organization which was not entitled to it, and did not return it until eight months later, without interest, is terribly depressing. Are we such damn fools? Do we glow with pleasure when the thief gives us our empty wallet back?

The economic consequences of the income tax are obviously important. Think of the things that could be accomplished by those billions in the hands of the people who earned and owned them. Yet the public apparently believes, like the oaf in the ad, that getting a bit of your own money back is the epitome of intelligent tax planning!

Who will tell you that there is no statute requiring the payment of an income tax, unless, of course, you are in that small group of persons to whom it applies? If you ask the IRS, will they tell you? No, not if you ask a hundred times. Will your tax attorney, or CPA, tell you? No, because they either don't know, or recognize the obvious advantages to themselves in having you believe that you have a "tax obligation." Will your congressman, state or federal, give you the truth? Almost certainly not. And yet, the IRS itself give you tantalizing information.

It insists, for example, that the system is based upon "voluntary compliance." The Supreme Court has so stated, as well. "Our system of taxation is based on voluntary assessment and payment, not upon distraint." U.S. v. Flora 362 U.S. 145, 176. The tax agent's handbook contains a foreword by the Commissioner reminding the agents that the mission of the IRS is to achieve the highest possible degree of voluntary compliance. Is this simply hypocrisy? Sure, but with a sound purpose.

Anything you put on a tax form can be used against you in court. Moreover, you sign, "under penalty of perjury" (although, not having taken an oath, you couldn't have committed perjury) that the information on the document is "true, correct, and complete," to the best of your knowledge and belief. You are, in effect, swearing that everything on that form complies with the innumerable and incomprehensible regulations of the IRS--an obvious impossibility. If you are accused of deliberately placing false data on the form, therefore, it is a felony. (Simply not filing is a misdemeanor). Given the complexity of the tax "laws," anybody, at any time, can be accused of providing false information on the form, and the burden is then upon him to prove himself innocent against the presumption of guilt.

Well, can you be forced to witness against yourself? Of course not--that's the Fifth Amendment. For that matter, can you be compelled to produce documents without just cause? No, that's the Fourth. Can you be forced to speak, when you wish to remain silent? No, that's the First. If, therefore, the filing of a tax return is compulsory, it requires you to waive your Constitutionally-guaranteed rights, and you cannot be forced to do that. Indeed, the government was instigated to protect those rights! Hence, the insistence upon the "voluntary" nature of the tax. If the government accuses you of a tax crime, it's not violating your rights---you volunteered!

Nonetheless, we all know of non-volunteers who have been sent to jail. How can this be, if there is no lawful requirement to file? Simple: massive, overwhelming corruption. Every federal judge, I have read, is under a sort of open-ended continuous criminal investigation by the IRS. Moreover, judges and lawyers--including defense lawyers--are as ignorant as most other people of the truth about the income tax.

Federal courts have cited differing sections of the Internal Revenue Code as imposing the tax. Moreover, the sections cited, even upon casual reading, are not applicable. They are the same sections cited by the IRS itself in the Privacy Act information furnished to taxpayers, in these words, "Our legal right to ask for information is Internal Revenue Code section 6001, 6011 and 6012(a) and their regulations. They say that you must file a return or statement with us for any tax you are liable for. Your response is mandatory under these sections." In other words, the IRS says that the person who must file a return is the person liable for the tax. But who is that? That's the question we asked in the first place. Well, what does 6001 say? "Every person liable for any tax imposed by this title, or for the collection thereof, shall keep such records, render such statement,----." Double talk again. Who is liable? That's what we're trying to find out, and the IRS keeps telling us that the person liable is---the person liable. Does 6011 give us better information? It says, "When required by regulations prescribed by the Secretary, any person made liable for any tax imposed by this title, or with respect to the collection thereof, shall make a return---." More doubletalk. Maybe 6012 will give us the answer. "Returns with respect to income taxes --shall be made by the following: every individual having for the taxable year gross income which equals or exceeds the exemption amount---." Aha! But we run into trouble with terms of art. What, for example, is an "individual?" In 6001 and 6011, we read "persons." Why "individual" here? And does "shall" mean "must?" Courts have ruled on that: "Shall" in a statute may be construed to mean "may" to avoid constitutional doubt." Geo. Williams College v Village of Williams Bay 7 NW2nd 891. Or how about "As against the government, the word 'shall' when used in statutes is to be construed as 'may,' unless a contrary intention is manifest." Cairo and Fulton R.R. Co v Hecht, 95 US 168. And what about that term "taxable year?" The Internal Revenue Code defines it thusly, "For purposes of this subtitle, the term 'taxable year' means---(1) the taxpayer's annual accounting period." So who is a "taxpayer?" "The term 'taxpayer' means any person subject to any internal revenue tax." So we're back where we began: a taxpayer is a person liable for the tax. And who is that? Who's on first? Let's not start that again! Just as a matter of common sense (admittedly out of place when discussing federal tax law) the term "every individual" in Sec. 6012 is obviously not true. Even if you assume that "individual" means "person," it still fails. My son-in-law, for example, is a person, a human being, who is not bound in any way by our income-tax laws. Why? Because he was born, lives, and works in Spain, and is, of course, a Spanish citizen. Hence, "every individual" can only mean those to whom the law applies. And you can see how easy it is to figure that out! If the income tax was owed by ordinary Americans, don't you believe those bright people in Washington could find a few simple sentences to tell us that? Yet, in the millions of words of the tax code, the only ones they offer as imposing the tax liability are the ones quoted above.

Is the income tax an excise or a property tax? Yes. It is. The Supreme Court has ruled, on the basis of the Brushaber decision, that it is an excise; except that the Supreme Court has ruled, again on the basis of Brushaber, that it's a property tax. Can't the judges--our best and brightest--agree? Obviously not. They can't determine what kind of tax it is, or what statute imposes it. But you're to swear that you owe it, and send the government money!

I'm not an attorney, nor an accountant. Most of the people reading these pages are seeking economic information. My reason for placing this article here is to remind such readers of the awesome economic significance of the income tax. Your investment plans and economic planning would be different, I am sure, if you did not have to take taxes into account whenever spending more than $1.25. The reason that you do take them into account, however, ought to be clear. Better to have your eyes open, even if the vista is grim. It is not a matter of law, but of intimidation, fraud, and lying by the government. Let me buttress that with a quote from the Supreme Court: "Because of what appears to be a lawful command on the surface, many citizens, because of their respect for what only appears to be law, are cunningly coerced into waiving their rights due to ignorance." U.S. v. Minker, 350 U.S. 179, 187. Take it from the horse's er, mouth!

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