Time: Fri Nov 14 06:30:32 1997
by primenet.com (8.8.5/8.8.5) with ESMTP id GAA18016;
Fri, 14 Nov 1997 06:08:27 -0700 (MST)
by usr01.primenet.com (8.8.5/8.8.5) with SMTP id GAA24411;
Fri, 14 Nov 1997 06:07:20 -0700 (MST)
Date: Fri, 14 Nov 1997 06:07:46 -0800
To: (Recipient list suppressed)
From: Paul Andrew Mitchell [address in tool bar]
Subject: SLS: Income - 1 (fwd)
<snip>
>
> INCOME IN A CONSTITUTIONAL SENSE - Part 1
>
> by Tony Bator
>
>
>The government's own official publication number 21, "Understanding Taxes",
>issued by the Internal Revenue Service in 1982 states that "you must decide
>whether the law requires you to file a return."
>
>That being the case, one should ask themselves, "why don't they tell me the
>law -- or laws -- that require me to file a return?" Well, if the
>government ever did, it would become perfectly clear to a large segment of
>the American people that they are not required to file pieces of paper with
>the government.
>
>An individual that would like to know if they are required to file a piece
>of paper (a return, if you will) with the government must educate himself
>and become aware of the factors that determine whether they are an
>individual required to file an income tax statement. This education process
>must be found in the following factors:
>
> A) Our dual system of government.
> B) Sovereignty.
> C) Citizenship.
> D) Direct taxes.
> E) Indirect taxes.
> F) General power of concurrent taxation.
> G) The Corporation Excise Tax Act of 1909.
> H) The Sixteenth Amendment.
> I) Intergovernmental Tax immunity.
> J) Withholding.
> K) The Internal Revenue Code of 1954 pertaining to:
> 1) Normal taxes.
> 2) Surtaxes.
> 3) Definition of income as contained in congressional reports
> dealing with the Internal Revenue Code of 1954.
> L) The Declaration of Independence and Unalienable Rights.
>
>
> The Declaration of Independence
> and Unalienable Rights.
>
>The Declaration of Independence is our country's first organic document. It
>has bestowed upon us a non-taxable right to an occupation of common right.
>The second paragraph of that document states as follows:
>
> We hold these truths to be self-evident, that all men are created
> equal, that they are endowed by their Creator with certain unalienable
> Rights, that among these are Life, Liberty and the pursuit of
> Happiness. That to secure these rights, Governments are instituted
> among Men, deriving their just powers from the consent of the governed
> ...
>
>An occupation of common right does not come within the sovereignty of a
>State or the sovereignty of the Government of the United States.
>Additionally, the Supreme Court of the United States has stated on several
>occasions what these unalienable rights are as demonstrated by the following
>citations:
>
> Butchers Union v. Crescent City Co., 111 US 746.
>
> The right to follow any of the common occupations of life is an
> unalienable right. It was formulated as such under the phrase `pursuit
> of Happiness' in the Declaration of Independence which commenced with
> the fundamental proposition that `all men are created equal, that they
> are endowed by their Creator with certain Unalienable rights, that
> among these are Life, Liberty, and the pursuit of Happiness'. This
> right is a large ingredient in the civil liberty of the citizen ... I
> hold the liberty of pursuit -- the right to follow any of the ordinary
> callings of life -- is one of the privileges of a citizen of the United
> States.
>
>What do these words and phrases such as unalienable and civil liberty mean?
>
> Unalienable -- A word denoting the condition of those things the
> property in which cannot be lawfully transferred from one person to
> another. Public highways and rivers are unalienable, there are also
> many rights which are unalienable, such as the rights of liberty or of
> free speech.
>
> Civil liberty -- The great end of all human society and government is
> that state in which each individual has the power to pursue his own
> happiness according to his conscience, unrestrained, except by equal,
> just and impartial laws.
>
>And again the Supreme Court of the United States stated in the below cited
>cases as follows:
>
> Meyer v. Nebraska, 262 US 390, 399, 400.
>
> While this court has not attempted to define with exactness the liberty
> thus guaranteed, the term has received much consideration and some of
> the included things have been definately stated without doubt, it
> denotes not merely freedom from bodily restraint but also the right of
> the individual to contract, to engage in any of the common occupations
> of life, to acquire useful knowledge, to marry, to establish a home and
> bring up children, to worship God according to the dictates of his own
> conscience, and generally to enjoy those privileges long recognized at
> common law as essential to the orderly pursuit of happiness by free men
> ... the established doctrine is that this liberty may not be interfered
> with, under the guise of protecting the public interest, by legislative
> action which is arbitrary or without reasonable relation to some
> purpose within the competence of the State to effect.
>
> Lynch v. Household Finance Corp.
>
> ... the dichotomy between personal liberty and property rights is a
> false one. The right to enjoy property without unlawful deprivation,
> no less than the right to speak or the right to travel, is in truth a
> `personal' right, whether the `property' in question is a welfare
> check, a home, or a savings account. In fact, a fundamental
> interdependence exists between the person's right to liberty and the
> personal right to property. Neither could have meaning without the
> other. The rights in property as basic civil rights has long been
> recognized. J. Lock, of Civil Government 82-85 (1924); J. Adams, A
> Defense of the Constitutions of Government of the United States of
> America, in F. Coker, Democracy, Liberty and Property 121-132 (1942); 1
> W. Blackstone, Commentaries 138-140.
>
> Miranda v. Arizona, 384 US 491.
>
> Where rights secured by the Constitution are involved, there can be no
> rule making or legislation which would abrogate them.
>
>A wonderful example of how your civil liberty is being affected by unequal,
>unjust and partial laws can be obtained by reading the decision made in
>Amidon v. Kane, 279 A.2d 53. In this case the Supreme Court of the State of
>Pennsylvania declared the Pennsylvania Personal Income Tax, which was a
>replica of the Federal Income Tax System, unconstitutional. The comments
>and illustrations by the Pennsylvania Supreme Court are excellent examples
>that show how your civil liberty, unalienable, constitutional, and civil
>rights are being violated.
>
>
> The Internal Revenue Code of 1954
>
>The table of contents of the Internal Revenue Code of 1954, under Subtitle A
>-- Income Taxes, has listed as Chapter 1, Normal Taxes and Surtaxes.
>
>In the U.S. Code, Legislative History of the Internal Revenue Code of 1954,
>Volume 3, Page 4028, under Item III, Tax on Individuals and Corporations, we
>find the following:
>
> A. Combination of Normal Tax and Surtax (Sec.1) Under present law the
> individual income tax rate structure consists of a 3 percent normal tax
> and a graduated surtax.
>
> Since the definition of income subject to the normal tax and the surtax
> is the same for the vast majority of taxpayers, your committee believes
> that the retention of the separate normal tax and surtax represents an
> unnecessary complication.
>
> Accordingly, the normal tax and the surtax rates have been combined
> into a single rate schedule. This simplification is made possible by
> providing a credit against tax (in a subsequent provision) equal to
> three percent of the interest received on Federal Government bonds,
> exempt from normal tax but subject to the surtax.
>
>What this states is that there still exists a Normal Tax and a Surtax both
>being subject to the same tax rate schedule. And that income associated
>with both types of tax are defined in the same way.
>
>Nowhere in the definitions associated with the Internal Revenue Code of 1954
>is there a definition or information as to whom or what a Normal Tax applies
>to.
>
>Additionally -- nowhere in the IRC of 1954 is there a definition of the word
>income as stated in the legislative history of that code, however, in the
>committee reports of both the Senate Finance Committee and the House Ways
>and Means Committee, we find the definition of income referred to in the
>Legislative History of the Internal Revenue Code of 1954. Here are the
>appropriate portions of those committee reports:
>
> Senate Finance Committee Report No. 1622
> of the 83rd Congress 2d Session, Page 168.
>
> Subchapter B -- Computation of Taxable Income
>
> Part 1 -- Definitions
>
> Section 61(a) provides that gross income includes "all income from
> whatever source derived," This definition is based on the 16th
> Amendment and the word "income" is used in section 22(a) in its
> constitutional sense. It is not intended to change the concept of
> income that obtains under section 22(a).
>
>
> House Report No 1337 of the 83rd Congress 2d Session, Page a18.
>
> Subchapter B -- Computation of Taxable Income
>
> Part 1 -- Definitions
>
> Section 61A provides that gross income includes "all income from
> whatever source derived." This definition is based on the 16th
> Amendment and the word "income" is used in its constitutional sense.
>
>Now it must be obvious that we have a situation wherein a statute -- the IRC
>of 1954 -- does not supply the meaning of a Normal Tax, and who or what it
>applies to, and additionally states that the word "income" is to be used in
>its constitutional sense. This indicates that the definition of the term
>has to be determined by the courts. The courts have provided for just this
>type of situation when they stated as follows:
>
> United States v. Collier, Fed,Cas.No. 14833.
>
> In the construction of a statute, the court will look out of it to
> other statutes in pari materia, or of a similar purport, especially in
> respect to revenue laws, which, although made up of independent
> enactments, are regarded as one system, in which the construction of
> any separate act may be aided by the examination of other provisions
> which compose the system.
>
>So, as permitted by law, looking out of the Internal Revenue Code of 1954,
>and referring back to Title 26 -- Internal Revenue of 1926, we can determine
>what a Normal Tax is and who or what it applies to. We see in section 951,
>the following:
>
> Section 951. Normal Tax Rates: alien residents of contiguous
> countries. (a) There shall be levied, collected and paid for each
> taxable year upon the net income of every individual (except as
> provided in subdivision [b] of this section) a normal tax of 6 per
> centum of the amount of the net income in excess of the credits
> provided in section 957 of this title, except that in the case of a
> citizen or resident of the United States the rate upon the first $4,000
> of such excess amount shall be 2 per centum, and upon the next $4,000
> of such excess amount shall be 4 per centum.
>
>Now it is obvious from the above section of Title 26 - Internal Revenue of
>1926, that the Normal Tax applies to the following people:
>
> A) Aliens.
> B) Residents of contiguous countries working in the United States while
> still living in their native country.
> C) Citizens of the United States.
>
>It is also obvious that this is a direct tax and therefore requires an
>understanding of who is a citizen of the United States, what direct taxes
>are, how they are to be applied to the citizens of the United States and to
>Citizens of the States, and to what income it taxes.
>
>First, aliens and citizens of contiguous countries come within the purview
>of Congress and therefore are subject to the sovereignty of Congress and
>therefore can be taxed on their wages and salaries along with income from
>real and personal property by a direct tax.
>
>Second, with respect to citizenship, the following court cases should make
>quite clear an adequate understanding as to how this applies with respect to
>taxation:
>
> Prentiss v. Brennan, Fed.Cas.No. 11358.
>
> A person may be a citizen of the United States and not a citizen of any
> particular State. This is the condition of citizens residing in the
> District of Columbia and in the territories of the United States and a
> citizen of a State, but his rights of citizenship under one of those
> governments will be different from those he has under the other.
>
>There is one additional citation that is of some importance with regards to
>the legislative power of Congress and this cited below as follows:
>
> American Insurance Co. v. 356 Bales of Cotton, 26 US 511.
>
> In legislating for territories Congress exercises the combined powers
> of the general and of a State Government.
>
>Now when Congress lays a direct tax on the citizens of the United States as
>distinguished from the citizens of the States, it has been determined by the
>Supreme Court of the United States that the rule of apportionment does not
>apply. This is found in the following:
>
> Loughborough v. Blake, 12 Pet 733.
>
> Congress has authority to impose a direct tax on the District of
> Columbia, in proportion to the census directed to be taken by the
> Constitution.
>
> If an enumeration be taken of the population in the district and
> territories, on the same principles on which enumeration of the
> respective States is made, then the information is acquired by which a
> direct tax may be imposed on the district and territories, `in
> proportion to the census or enumeration' which the Constitution directs
> to be taken.
>
>Now, it then becomes necessary to know what ii to be taxed when a direct tax
>is levied. This has been determined by the Supreme Court:
>
> Pollock v. Farmers Loan & Trust, 158 US 601, 637.
>
> Our conclusions therefore, may be summed up as follows:
>
> First. We adhere to the opinion already announced that, taxes on real
> estate being indisputably direct taxes, taxes on the rents or incomes
> of real estate are equally direct taxes.
>
> Second. We are of the opinion that taxes on personal property or the
> income of personal property, are likewise direct taxes.
>
> Third. The tax imposed by sections twenty-seven to thirty-seven
> inclusive of the Act of 1894, so far as falls on the income of real
> estate and personal property, being a direct tax within the meaning of
> the Constitution and therefore unconstitutional and void because not
> apportioned according to representation, all those sectionsconstituting
> one representation, all those sections constituting oneentire scheme of
> taxation, are necessarily invalid.
>
>Now we know what is to be taxed as a direct tax, and that the citizens of
>the United States as distinguished from the citizens of the States, can be
>taxed by Congress directly and Constitutionally without the rule of
>apportionment being applied. However, the citizens of the States, if they
>are to be taxed on their real and personal property or the income from both,
>Congress must do so by the rule of apportionment or the tax is invalid. This
>is proven in the following:
>
> Pollock v. Farmers Loan & Trust, 157 US 429, 556.
>
> The Constitution provides that representation and direct taxes shall be
> apportioned among the several States according to the numbers and no
> direct tax shall be laid except according to enumerations provided for;
> and also that all duties, imposts and excises shall be uniform
> throughout the United States.
>
>
> Pollock v. Farmers Loan & Trust, 157 US 429, 581.
>
> If it be true that by varying form the substance may be changed, it is
> not easy to see anything would remain of the limitations of the
> Constitution, or of the rule of taxation and representation, so
> carefully recognized and guarded in favor of the citizens of each
> State. But Constitutional provisions cannot thus be evaded. It is
> substance and not the form which controls as have been established by
> repeated decisions of the court.
>
> Pollock v. Farmers Loan & Trust, 157 US 429, 583.
>
> But acceptance of the rule of apportionment was one of the compromises
> which made adoption of the Constitution possible and secured the
> creation of that dual form of government so elastic and strong, which
> has thus far survived in unabashed vigor. If by calling a tax indirect
> when it is essentially direct, the rules of protection could be
> frittered away, one of the great landmarks defining the boundary
> between nation and the States of which it is composed, would have
> disappeared and with it one of the bulwarks of private rights and
> private property.
>
> Pollock v. Farmers Loan & Trust, 157 US 429, 596.
>
> It was hoped and believed that the great amendments to the Constitution
> which followed the late Civil War had rendered such legislation
> impossible for all future time. But the objectionable legislation
> reappears in the act under consideration. It is the same in essential
> character as that of the English Income Statute of 1692, which taxed
> Protestants at a certain rate, Catholics as a class at double the rate
> of Protestants, and Jews at another and separate rate.
>
>In view of the fact that Congress can only tax the real and personal
>property or the income from both by the rule of apportionment as determined
>by representation, it is vital to understand that the District of Columbia
>and the territories have no representatives in Congress and the number is
>determined by the census taken each 10 year period. The rule of
>apportionment means that each State will be taxed a given percentage of the
>total amount, the percentage to be determined by the portion of its
>representation in Congress with respect to the total existing at the time.
>
>As a quick example, say there are at present 435 members in the House of
>Representatives and California has 43 members in the House. California,
>therefore, would be apportioned approximately 10 percent as its share of the
>amount to be collected by a direct tax.
>
>Our founding fathers never intended that the borrowing power granted to
>Congress would ever result in the percent deficits. It was thought that the
>Indirect class of taxes (duties, imposts and excises) would supply all the
>revenue needed by the National Government, however, should emergencies
>arise, which they were wise enough to state they were unable to see at that
>time, they granted to Congress the additional power of direct taxes which
>could be used to cancel any debts acquired through the use of the borrowing
>power during emergencies. (It is not the intent here to go into the subject
>of honest money and the Federal Reserve System, but simply note that there
>is a link between the borrowing power, direct taxes and emergencies.)
>
>
> Income in a Constitutional Sense
>
> as a Result of Sovereignty
>
>The phrase, "limitations of the Constitution", as used by the Supreme Court
>of the United States in the Pollock case previously mentioned, indicates
>that the government of each State and the National government are limited by
>the Constitution as to the powers they may exercise. The sovereignty of the
>States along with the sovereignty of the National Government in both its
>national and local legislative powers were limited. Sovereignty is equated
>with taxing power, and this limited sovereignty has been defined by the
>Supreme Court of the United States as shown in the following:
>
> McCulloch v. The State of Maryland, 4 Wheat 316, 429.
>
> The sovereignty of a State extends to everything which exists by its
>own authority, or is introduced by its permission.
>
>Thus the taxing authority of a State is Constitutionally limited as
>sovereignty and taxation are synonymous. Remember: the individual does not
>exist by the authority of a State, nor is the individual introduced by its
>permission. The individual is born with certain unalienable rights and that
>governments are instituted to secure these rights.
>
>Now the taxing authority of Congress with respect to its national
>legislative powers is contained in the Constitution, however, the local
>legislative powers of Congress have been defined by the Supreme Court of the
>United States in the following case:
>
> Capital Traction Co. v. Hoff, 171 US 1.
>
> The Congress of the United States, being empowered by the Constitution
> `to exercise legislation in all cases whatsoever' over the seat of the
> National Government has the entire control over the District of
> Columbia for every purpose of government, national or local. It may
> exercise within the district all legislative powers that the
> legislature of a State might exercise within the State.
>
>So it is obvious that the taxing authority of Congress when dealing with
>local legislative powers has been limited to that of a State as expressed by
>the court in the McCulloch case previously mentioned.
>
>With this understanding of limited sovereignty and its effect on the
>authority to tax, Section 954 of Title 26 - Internal Revenue of 1926 gives
>added insight as to what may be also income in a constitutional sense.
>
> Section 954. Gross income; what included, what not included. For
> purposes of this chapter, except as otherwise provided in section 985.
>
> (a) The term "gross income" includes gains, profits and income derived
> from salaries, wages or compensation for personal services (including
> in the case of the President of the United States, the judges of the
> Supreme and inferior courts of the United States, and all other
> officers and employees, whether elected or appointed, of the United
> States, Alaska, Hawaii or any political subdivision thereof, or the
> District of Columbia, the compensation received as such) of whatever
> kind and whatever form paid, or professions, etc., etc.
>
>Now remember that Congress has both general and local legislative power;
>section 954 contains both these powers, but does not explicitly so state. It
>can be understood only by an understanding of our dual system of government
>and the court decisions concerning limitations of the Constitution with
>respect to sovereignty.
>
>First, it shows "gains and profits" which is the character of income that
>comes within the scope of the 16th Amendment.
>
>Second, income derived from salaries, wages or compensation for personal
>service and within the brackets specifies the local legislative authority of
>Congress as determined by the previously mentioned court decision.
>
>Congress has exceeded its local legislative authority by taxing the
>President of the United States and the judges of the Supreme and inferior
>courts as the Constitution expressly provides that their salaries shall not
>be diminished. The Court has determined that this also means not to be
>diminished by taxation. When a president discloses his tax return that he
>voluntarily files, he does so in an attempt to convince everyone that they
>are required to file also, which, of course, is not necessarily true.
>
>It should also be pointed out that section 954 taxes employees who are
>citizens of States living within the political jurisdiction of a State.
>Remember: the sovereignty of Congress in its local authority "extends to all
>that exist as a result of its own authority"; the Treasury of the United
>States exists as a result of the authority of Congress and all funds paid
>out of that Treasury (Federal Funds) are subject to taxation by Congress.
>
>As a result of its local legislative powers, which have been defined by the
>Supreme Court as part of the limitations of the Constitution, Congress can
>tax all that exists as a result of its own authority. Occupations of common
>right are not those created as a result of the formation of the government.
>It was not until 1939, with the passage of the Public Salary Tax Act of
>1939, that Congress exceeded its local legislative authority and, by use of
>the General Power of Concurrent Taxation, proceeded to tax the Officers and
>Employees of the States.
>
>
> The General Power of Concurrent Taxation.
>
>The general power of concurrent taxation was granted by the States to the
>National Government upon adoption of the Constitution. This concurrent
>power was to be exercised only in the area of excise taxes -- that is, if
>the State levied an excise tax on a given thing then the National Government
>had been granted power to also exercise an excise tax upon the same thing.
>
>As a result of the National Government's attempt to use this power to tax
>the Officers of State Government, as shown by the Buffington v. Day case (11
>Wall [US] 113), the Supreme Court developed what became to be known as The
>Concept of Intergovernmental Tax Immunity.
>
>In the Buffington v. Day case, it was the position of the National
>government, which is stated in the case that "Taxation of the incomes of
>state officers derived from their salaries, is exactly what the Stare does
>do; therefore, the right to do the same for certain objects was granted to
>the United States, under the general power of concurrent taxation."
>
>It ii important to note that in the 1860's it was generally accepted by all
>that the only thing subject to a direct tax was real estate. Everything
>else was just an excise tax. It was not until 1895 that Chief Justice
>Fuller and the Supreme Court in the Pollock case had determined that real
>estate and personal property and the income from both were to be taxed
>Constitutionally by direct taxation as determined by representation and the
>rule of apportionment when taxing the citizens of the States.
>
>Had this correct interpretation of the Constitutional Taxing Power been
>available in the 1860's, I do not think that the National Government would
>have ever tried to tax the salary of a judge of a probate court in the State
>of Massachusetts.
>
>When Chief Justice Fuller and the U.S. Supreme Court correctly determined
>the proper meaning of the taxing power with respect to direct taxation, they
>essentially reversed many of the previous decisions of the courts concerning
>taxation pertaining to individuals.
>
>
>[Reprinted from `Freedom League Newsletter', Apr/May 1986]
>
<snip>
===========================================================================
Paul Andrew Mitchell, Sui Juris : Counselor at Law, federal witness 01
B.A.: Political Science, UCLA; M.S.: Public Administration, U.C.Irvine 02
tel: (520) 320-1514: machine; fax: (520) 320-1256: 24-hour/day-night 03
email: [address in tool bar] : using Eudora Pro 3.0.3 on 586 CPU 04
website: http://supremelaw.com : visit the Supreme Law Library now 05
ship to: c/o 2509 N. Campbell, #1776 : this is free speech, at its best 06
Tucson, Arizona state : state zone, not the federal zone 07
Postal Zone 85719/tdc : USPS delays first class w/o this 08
_____________________________________: Law is authority in written words 09
As agents of the Most High, we came here to establish justice. We shall 10
not leave, until our mission is accomplished and justice reigns eternal. 11
======================================================================== 12
[This text formatted on-screen in Courier 11, non-proportional spacing.] 13
Return to Table of Contents for
Supreme Law School: E-mail