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'If you're happy and you know it, clank your chains!' The average American is sitting in a mental jail cell with the door wide open. Let's spring them! Start an 'un'-chain letter by copying & pasting the following text box into the bottom of your e-mails:
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01-16-2002 A.L.E.R.T. (A.merica L.aw E.ducation R.ights & T.axation)
TAX BASICS 101, WHAT EVERY AMERICAN NEEDS TO KNOW -- by Gordon Phillips
Ours is, and always has been, a republican form of limited government under a written law. The Constitution declares itself to be the supreme Law of the land at Article VI, Clause 2.
The first three articles of the Constitution grant only those specific powers enumerated therein to the three branches of government -- to the legislative under Article I; to the executive under Article II, and; to the judiciary under Article III. Anything not specifically stated in the Constitution is not authorized, and is therefore unconstitutional.
Some of our national elected officials have claimed, seditiously I might add, that anything not specifically forbidden in the Constitution is therefore permitted by default. If true, this would be Reverse Supreme Law, a ludicrous contention. It may be possible to play a country music record backwards and get back your house, your pickup and your girl friend, but written law doesn't work that way. If the Constitution does not specifically say it's OK, it's not OK.
The first word in the entire Constitution under Article I, Clause 1 is the word 'All', as in 'All legislative powers herein granted shall be vested in a Congress of the United States.' It does not say 'Some' or 'Most'. It does not say 'All, most of the time,' nor is it qualified in any other way. All law making power is vested in the Congress. None is granted to the President, nor to any judge.
Seen in light of the above, 'executive orders' go to officers of the executive branch only and may be ignored by the citizen. Where it otherwise, we would be under a monarchy. Of course, that won't stop the Elian Gonzalez Welcome Wagon from smashing down your front door pursuant to an executive order. But that's a function of the ignorance of those doing the smashing.
Likewise, no utterance emanating from the mouth of a judge can be law. Were it so, the Constitution would have been written by Lewis Carroll, not James Madison and his peers, and the powers of the tyrannical Red Queen ('off with his head!') would have been conveyed on the judiciary ('off with his rights!'). But I can't find that in the Constitution. College law professors are invited to look.
Acts of Congress express legislative intent as 'the force of the law'. However, no ordinary act of the legislature is superior to the Constitution, and no citizen is under any duty or obligation to uphold a clearly unconstitutional law. Under the Constitution, the sole power of the Congress to legislate for the citizen residing within the 50 union states is constrained to interstate commerce and postal roads only.
Please allow me to repeat that. Under the Constitution, the sole power of the Congress to legislate for the citizen residing within the 50 union states is constrained to interstate commerce and postal roads only. Repeat this to yourself until full understanding sinks in.
Under Amendment V, the Constitution protects private property from being taken without due process, or for public use without just compensation, thereby slamming shut the door on the forced participation of the citizen in collectivist federal welfare 'entitlement' programs such as Social Security, free cheese, etc.
The lawful power of government extends only to the protection of life and property. When government goes beyond these powers, it must discriminate against certain classes of citizens in favor of other classes.
One is reminded of young hatchlings in the nest with their beaks pointed skyward, each bleating for the next available worm. Now imagine groups of taxpayers doing the same thing (A.A.R.P. comes to mind), each vying for their 'fare share' of government mediated wealth redistribution, and you understand democracy. Teach your children.
The Constitution allows the raising of taxes only when applied for the general welfare of all citizens equally. The 14th Amendment guarantees the equal protection of the laws (in fact, this is the only remaining effect of the 14th since all Negroes and orientals granted citizenship status by the 14th are long since deceased, or are otherwise listed in the Guinness Book of World Records).
Therefore, participation in federal wealth redistribution schemes such as Social Security can only be elective (voluntary, consensual) for the citizen within the 50 states, since forced participation in any scheme which spends federal funds taxed from one class of citizens (the producers) for the benefit of another (the nonproducers, including career welfare specialists) is clearly unconstitutional.
Since unalienable rights come from God Almighty and not from government or from any other creation of mere mortal man, they cannot be taxed. Nontaxable rights include the rights to 'Life, Liberty, and the Pursuit of Happiness.'
The Constitution provides for two distinct classes of taxation, and two only: direct and indirect.
As evident from a reading of James Madison's daily notes taken during the Federal Convention of 1787, the original intent of the Framers of the Constitution was that indirect taxes in the nature of excises be laid upon the importation of foreign goods, including investment capital, the principle being that the foreigner would be taxed for the privilege of doing business within our vast markets, while the citizen within the union states would remain free of internal taxation on matters of common law right such as the exchange of his labor for compensation (*).
(* Under the Internal Revenue Code, there is no excise imposed on the domestic earnings of the citizen living and working within the union states who makes an exchange of his labor with another for compensation, since it is an equal exchange of value with neither party gaining from the transaction, wherefore no taxable gain (profit) results.)
As envisioned by the Framers, the limited revenue derived from excises laid on foreigners would fund the day-to-day operations of a small, limited federal government, while the citizen would be taxed only when engaged in allegedly privileged domestic occupations such as the manufacture, sale and distribution of alcohol, tobacco and firearm products.
Article 1, Section 8, Clause 1 authorizes Congress to lay and collect indirect excise taxes which must be uniform throughout the states. When, due to a TRUE FISCAL EMERGENCY -- such as the need to extinguish any debt carrying over from the previous year, to raise funds to prosecute a war, or to send billions to Israel (only kidding) -- said excises should prove insufficient, the power of direct taxation could then be resorted to.
Once the shortfall has been arrived at, Article 1, Clause 2, Section 3 authorizes Congress to apportion the amount to the states as a direct tax in proportion to their respective populations, to be determined by the conducting of a census every ten years pursuant to Article 1, Section 9, Clause 4. Each state would then raise its respective share of the apportioned direct tax pursuant to the authority and limitations imposed under its own state constitution.
Five direct taxes have been apportioned to the states within our nation's entire history, the last in 1861 and none during the entire 1900's. The reason for this is easy to understand by considering the following example.
Let us suppose that Congress wanted to apportion a six trillion 'dollar' (*) direct tax to the states in order to entirely extinguish the so-called 'federal debt'.
(* The Federal Reserve Note -- the green tax anticipation coupon in your wallet bearing the likeness of various deceased notables -- is commonly, but erroneously, referred to as a dollar. It is also not a legal note. It is also not federal. And there are no reserves. Other than that, everything is fine. Alan says so. Read 'Losing Your Illusions' for specifics on this)
Since there are currently 435 representatives in the House of Representatives, a state such as New Hampshire with two representatives would receive a bill for 2/435th's of the apportioned amount, or approximately twenty-seven and a half BILLION 'dollars' (F$27,586,206,897.55 to be precise).
The population of New Hampshire numbered 1,236,000 according to the 2000 census. Assuming half of this number to be property owners (and this is just a guess for illustrative purposes only), each and every owner would receive a bill from the New Hampshire state legislature for approximately F$44,638 -- more money than most Granite Staters earn in a year. Which would immediately cause a revolt, especially in light of the fact that the New Hampshire state constitution authorizes the right of rebellion and states that taxes may be laid on property only with the 'consent' of the owner. Wow. You should read it sometime.
Now you understand why Congress has not laid a direct tax in 141 years (as of this writing in January of 2002); because direct taxes create too much accountability in the minds of the people, and we can't have that. Far easier to exact huge sums through the withholding of wage taxes, an insidious weekly draining of human capital which a docile and tamed people have come to accept as their dutiful 'fair share'. This is the 'out of sight, out of mind' principle hard at work.
Certain past legislation laying direct taxes offered a discount to any state which paid its apportioned share in a timely fashion, yet, should it fail or refuse to do so, left the door open for federal troops to enter the state and collect the tax from its citizens through force of arms. This type of internal invasion probably wouldn't 'play well in Peoria' and has never needed to be resorted to.
While many erroneously believe the 16th Amendment to have provided for a new and hitherto unknown form of taxation which is neither direct nor indirect but is somehow a bastardized combination of the two as is currently taught in some Case Law Schools, the 16th in fact did not amend the Constitution, because it did not repeal Article 1, Section 2, Clause 3 or Article 1, Section 9, Clause 4 which impose the rules pertaining to direct taxes, nor did it repeal Article 1, Section 8, Clause 1 which imposes the rule pertaining to indirect taxation.
The constitution cannot conflict with itself, and the aforementioned supreme taxing clauses were still in full force and effect the very moment the ink dried on the 16th Amendment. They are still in full force and effect right this minute. Isn't this exciting? I think so.
As correctly read by the supreme Court in the 1916 cases 'Brushaber vs. Pacific Railroad Co.' and 'Stanton vs. Baltic Mining', the 16th Amendment simply prohibited Congress from removing the income tax from the great class of indirect taxes to which it inherently belonged from the beginning, and attempting to place the income tax into the category of direct taxes which would then require apportionment to the States. Do you see how simple this is to understand? But apparently not at Harvard Law.
Note that there is still to this day no authority in the Constitution for Congress to directly tax the labor or other property of a citizen, the 16th Amendment notwithstanding, making the Internal Revenue Code 100% constitutional as written. It is the misapplication of the tax code that is unconstitutional, not the code itself.
The citizen becomes the subject of internal taxation only when engaged in an activity not of unalienable right -- i.e., one which can be licensed (regulated) by the federal government. All laws pertaining to property being the sole jurisdiction of the states, occupational licenses such as are applied for by a beautician, a real estate agent or a chiropractor, are state-issued and are not a federal matter.
The exercise of a natural right can be neither regulated nor taxed. However, the act of making application for an occupational license converts a right -- in this case, the right to work for a living as a beautician, a realtor or a chiropractor, and to keep 100% of the earnings -- into a regulatable privilege which can then be taxed (and is).
This is why the act of applying for an occupational license can only be voluntary. As in all matters, licenses are issued to applicants only. Since there can be no requirement to apply, all applications are, and can only by, 100% voluntary. However, by submitting the application, the applicant agrees to come under the requirements of the law, at which point all constitutional arguments become moot.
A long standing principle of American jurisprudence is that a law must be written explicitly with all legal terms defined, to mean exactly what it says and to say exactly what it means. A law must also be readily understandable by any person of average intelligence, otherwise, as the courts have correctly ruled, such a law would have to be held 'void for vagueness'. This is remarkably easy to understand. But apparently not at the Justice Department.
All United States law is categorized into 50 'titles' of law comprising the entire United States Code, abbreviated 'USC'. Regulations to administer and enforce the Law are promulgated by agencies of the executive branch.
Title 26, abbreviated '26 USC', encompasses the entirety of the Internal Revenue Code. The Department of the Treasury oversees the Internal Revenue Service, with the authority of the Secretary of the Treasury delegated down to the Commissioner of Internal Revenue, who then further delegates his authority down to agents and other employees of the IRS. Treasury regulations for the Internal Revenue Code are found in 26 Code of Federal Regulations.
It has been the consistent experience of those educated in these matters that the vast majority of tax attorneys, C.P.A.'s and tax preparers have never read, and for that reason, do not understand the actual, limited liability of the citizen working exclusively within the 50 union states for income and employment taxes. They rely instead upon IRS booklets, pamphlets, publications, guidelines, circulars, 'case law', etc., none of which are, or can be, the law itself.
In order for such publications to be law, the IRS would have to be included under Article 1, Section 1 of the Constitution where, as stated earlier, all law making authority is vested in Congress. However, no mention of the IRS can be found there. Please inform your C.P.A. of this.
The tax code was first codified in 1939, again in 1954, and again in 1986. We are currently under the 2002 version of the 1986 code. In order to understand the Internal Revenue Code which encompasses far more than just income and Social Security employment tax -- also known as the wage tax -- one must first understand the compartmentalization and subdivision of the code.
The code is currently divided into eleven subtitles, the first five of which, subtitles A through E, each cover different categories of taxation. Subtitle F covers procedure, administration and general definitions which apply throughout the code when not replaced by local, specific definitions applicable to certain sections or paragraphs only. The remaining five subtitles, G through K, pertain to the Joint Committee On Taxation, Financing Presidential Election Campaigns, etc.
Subtitle A embraces the income tax. Subtitle B embraces estate and gift taxes. Subtitle C embraces wage (employment) tax. Subtitle D embraces miscellaneous excise taxes. Subtitle E embraces alcohol, tobacco, and 'certain other excise taxes'.
Each subtitle is totally distinct and separate from the other subtitles with regard to the tax to which it pertains, and the liability and enforcement provisions within one subtitle do not apply to another. For example, Subtitle A, income tax, as stated above, is a distinct and separate class of tax from subtitle C which is the wage or Social Security employment tax. Proof of this is that the estate tax under subtitle B lies between them, and pertains to neither.
As with all law, jurisdiction must first pertain. With regard to taxation, the following four questions pertaining to Who, Where, What and When must always be asked and answered before a determination can be made as to the liability of a particular individual for a particular class of taxation:
Question #1 -- Who is the person being taxed?
Question #2 -- Where is the person geographically located? The Constitution is geographical in its application, applying solely within the States of the Union. Congress's authority to legislate for the citizen living within the union States, as stated earlier, is specifically limited to interstate commerce and postal roads. However, Congress has plenary power to legislate within the seat of government, currently the District of Columbia, and within the federal territories and possessions, without regard for the constitutional constraints which pertain within the union states.
Question #3 -- What is the object of the intended taxation -- i.e., in what activity was the person involved? Is it a taxable activity? Note that the income tax is imposed under code section 1 on the 'taxable income' of an unspecified 'individual', not on the individual himself. Question #4 -- Within what period or time frame did the activity take place?
The IRS routinely designates the citizen who has ever filed a tax return as a 'taxpayer', a one-word term legally defined at code section 7701(a)(14) as 'any person subject to [liable for] any internal revenue tax.' However, liability cannot arise from mere activity alone since geographical and other requirements may not apply. Liability must arise from written statute.
The income tax is imposed on taxable income under code section 1, chapter 1, in subtitle A. The only liability statute in all of subtitle A, chapters 1-6, making any person liable for the tax on income is code section 1461 which makes the 'withholding agent' as defined in code section 7701(a)(16) '... required to deduct and withhold any tax under the provisions of sections 1441, 1442 and 1443.'
An examination of these three sections reveals their applicability to pertain exclusively to foreigners: section 1441 pertains to the nonresident aliens, meaning to the foreigner residing outside the united States; section 1442 pertains to foreign corporations; and section 1443 pertains to certain foreign tax-exempt organizations.
Noticeably missing is the authority to withhold income tax from the citizen living and working with the 50 states! In fact, there is no code section to be found anywhere within subtitle A, or anywhere else within the entire tax code for that matter, in which Congress has authorized the withholding of income tax from the citizen living and working within the states of the Union. Alert the press!
An examination of the tax regulations reveals that the income tax is imposed on foreign, and not on domestic items and sources of income. Provisions within 26 CFR at section 1.861-8(f)(1) specifically list all items of 'taxable income' from sources within the United States, and all of the sources listed are foreign.
Although it will astonish most Americans to learn of this, the following three are the only conditions under which a citizen living within the union states could owe the income tax:
(1) When in receipt of income in the form of dividends coming from any foreign source outside of the union states;
(2) When living and working abroad in a foreign country under a current tax treaty with the U.S. and earning over the current exclusion, which when combined with housing costs and other exemptions, exceeds $100,000;
(3) When withholding income tax as the U.S. agent or representative of a foreigner doing business here within the united States (as per 1441, 1442, and 1443 above).
If never engaged in any of the foregoing activities, no income tax -- not so much as one thin dime -- has ever been paid. Since most citizens have assessed themselves many thousands of dollars on Form 1040 over the course of their working lives, the question then becomes, what exactly have they been paying?
The answer is that they have been paying the Social Security employment tax on wages under Subtitle C, as commonly reported by employers on Form W-2, for the purpose of building credits towards welfare (wealth transfer) entitlement programs such as Social Security.
However, because the citizen has executed an annual self-assessment under penalty of perjury on the Form 1040 tax affidavit, swearing each year that all earnings, compensation, receipts, etc., listed thereon as income to him, the law is thereby rendered moot and the Constitution goes out the window. The affidavit stands as true and correct, and the IRS relies upon the sworn testimony.
Code section 6201(a) authorizes the Secretary of the Treasury to assess tax on stamps and on returns which have been filed. However, regardless of whether or not the filer was actually in receipt of foreign sources or items of income, or whether there was in fact ever a legal requirement for him to file in the first place, once a return is filed, 6201(a) applies.
The IRS refers to this mass self-assessment phenomenon as 'voluntary compliance'. This, in a nutshell, is the current revenue collection system.
The income tax is reported through declaration and withholding, either by the citizen with foreign sources of income or by the withholding agent of the foreigner. The only requirement within the code for an individual to file returns of income with respect to subtitle A can be found at code section 6012 (a).
Under the 1980 Paperwork Reduction Act, Congress made the Office of Management and Budget, abbreviated 'OMB', the watchdog required to review any agency form or information collection request presented to a citizen, and, if approved, to assign an OMB approval control number to the form. Any form not bearing an OMB approval control number Congress calls 'bootleg', instructing that such a form may be ignored by the citizen.
Under 26 CFR part 602, OMB assigned approval control number 1545-0067 to both tax regulations 1.1-1 'Tax imposed' and 1.6012-0 'Persons required to make returns of income'. Note that these regulations implement underlying code sections 1 and 6012, which as mentioned above, impose the income tax and make an as yet unspecified individual required to file an income tax return.
Contrary to popular expectation, the sole IRS form in existence on which this number is displayed is not Form 1040, but Form 2555 'Foreign Earned Income.'
The top of Form 2555 instructs the filer 'attach to Form 1040' and states that 2555 is 'for use by U.S. citizens'. Further examination of the tax regulations reveals that the 1040 form, titled 'U.S. Individual Income Tax Return', is a supplemental worksheet to be attached to Form 2555 and to numerous other primary, required returns. There is no requirement for the 1040 to be filed other than as a worksheet attached to a primary return.
It is interesting to note that the 1040 form is not titled 'U.S. Citizen Income Tax Return', while Form 2555 'Foreign Earned Income' specifically states that its use, as mentioned above, is for the citizen. Clearly, the IRS understands the distinction between an individual and a citizen.
Treasury Decision 2313 issued in 1916 to 'collectors of internal revenue' pursuant to the U.S. Supreme Court decision in Brushaber v. Union Pacific Railroad Co. clarifies that the Form 1040 individual income tax return is to be used by the U.S. agent of a foreigner in receipt of interest or dividends from the stock of domestic corporations on behalf of the alien.
For the above reasons, the income tax under Subtitle A is not 'voluntary' as some have asserted. It is mandatory, but only for those to whom it applies. Since the law is limited in its application, the question of whether it is mandatory or voluntary is superfluous. The question is: to whom, and under what circumstances is the law applied?
With regard to the wage tax under Subtitle C, certain legal requirements may be considered mandatory, but only for the payor of the wages, namely the 'employer', and even then, only if both the participating employer and the covered employee have agreed via voluntary application on Form W-4 to participate in the entitlement programs.
26 CFR at section 31.3402(p)(1)-(b)(2) states with regard to the W-4 form:
'An agreement under section 3402(p) shall be effective for such period as the employer and employee mutually agree upon. However, either the employer or the employee may terminate the agreement prior to the end of such period by furnishing a signed written notice to the other.'
Terminate means to end, stop, cut off, etc. This is not a form, just a letter from one to the other in which written notice is served. It's that clear. Please alert employers, employee leasing companies and 'temp' agencies nationwide.
Under 26 CFR section 301.6109-1 'identifying numbers', a Taxpayer Identification Number is required to be furnished by a nonresident alien or a foreign corporation only. No regulation can be found requiring a citizen within the union states to obtain, or to furnish, either a Social Security Number (SSN) or an Employer Identification Number (EIN), both of which are forms of Taxpayer Identification Numbers (TIN).
Under 42 USC section 405(c)(2)(B)(i), the Secretary of Social Security is authorized to assign Social Security Numbers under subparagraph (I),
'... to aliens at the time of their lawful admission to the United States either for permanent residence or under other authority of law permitting them to engage in employment in the United States and to other aliens at such time as their status is so changed as to make it lawful for them to engage in such employment',
and under subparagraph (II),
'... to any individual who is an applicant for or recipient of benefits under any program financed in whole or in part from Federal funds including any child on whose behalf such benefits are claimed by another person.'
The Social Security Administration confirms in writing to anyone who inquires that: 'The Social Security Act does not require a person to have a Social Security number in order to live and work in the United States, nor does it require a Social Security number simply for the sake of having one'.
However, believing that they are required to do so by law, Social Security Numbers are routinely applied for by parents on behalf of their legally incompetent minor children. Application is made on Form SS-5 'Application For Social Security Account Number'. Legally, of course, there can never be a requirement under force of written law to make application for anything, making all applications 100% voluntary as already stated. Since there is also no legal requirement to enter a Social Security Number on Form W-4, to sign or submit the form, and no legal requirement for an employer to obtain an Employer Identification Number in order to hire a citizen, neither party -- 'employee' or 'employer' -- can be compelled to participate in the welfare entitlement programs. Hence, compliance under Subtitle C is correctly said to be voluntary.
IRS Publication 515 and Treasury regulation 1.1441-5 explain the proper use of the Statement of Citizenship, the original of which is retained by the withholding agent and a copy sent to the IRS in Philadelphia which is the IRS' international tax office. This makes perfect sense since the income tax is a tax on foreign source income. The Statement of Citizenship authorizes and indemnifies the withholding agent not to withhold income tax from the working citizen who chooses not to have the tax withheld.
The citizen working for a living within one of the union states who files a 1040 form thereby creates a legal presumption of a tax liability where none may actually exist under Law, and will be expected by the IRS to continue to file unless and until the presumption of liability is rebutted via a sworn Affidavit of Revocation and Rescission sent to the Secretary of the Treasury pursuant to Title 5, section 552(d), thereby shifting the burden of proof to the agency which must then disprove the statements of fact contained within the affidavit and cannot do so.
Of course, the citizen who legally volunteers, as many thousands of Americans have already done, to stop participating in Social Security, Medicare, and other intergenerational wealth transfer programs will not receive back any monies already paid in.
For a detailed and exhaustive understanding of the federal tax laws pertaining to income and employment tax, it is highly recommended that the reader view the two-hour introductory educational video titled 'The Truth Behind The Income Tax' and the 12-hour master tax education video seminar titled 'Just The Facts'. Write to me at email@example.com for ordering information.
Taxpayers new to this information might now want to ask themselves, 'Could it be that my chains are imaginary?'.
Although only a minority of business owners across America understand the power they hold in their hands, they can stop the New World Order gravy train dead in its tracks, simply by refusing to use their non-required Employer Identification Numbers, or to withhold payroll taxes for Uncle Sam for free, thereby functioning as un unpaid custodian in a federal building.
Look soon for an announcement here about the debut of a nationwide organization and web site supporting America's nonwithholding business owners. It's called 'F.R.E.E.' -- The Fellowship of Recently Enlightened Employers.
A fire cannot be extinguished by dousing it with oxygen, nor a doomed ship saved by bailing water back INTO the boat. Yet the Constitution is clearly burning, and our nation is clearly sinking.
Meanwhile, ideologically challenged Americans appalled over horrific images of '9-11' displayed on their television sets (1) enthusiastically wave their flags (2) while continuing (schizophrenically) to pay for their own destruction (3) with the fruits of their very labor (4).
If this enabling trend continues, we will devolve into total fascism (5). Therefore, in order to avert this preventable disaster -- and because it now appears clear that the combined understanding of the federal power of taxation of all 535 elected legislators (6) in Congress could fit into a thimble (7), this review of the constitutional authority for federal taxation was in order.
Please take a minute to forward this to elected and appointed officials (8) at every level of government: county, state and federal. One never knows when a seed planted will take root.
(1) made in Communist China (2) also made in Communist China (3) as dreamed of by Communists in China and elsewhere (4) via wage taxes introduced by Communists succored by Franklin D. Roosevelt (5) as in Communist China today (6) many of them known to be 'on the take' from China (see a trend developing?) (7) when will they begin wearing togas and playing the violin? (8) tax-consuming public servants
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