Income Tax: Where Do You Stand?

[Famspear]

And if the judge ruled the tax does NOT reach non-federally-privileged workers, then that is the law. This suggests that if a TP had an impartial adjudicator, one who hadn't taken the federal seminar in how to handle "tax protester" cases and avoid reversal error, a judge who could read & think for him/herself, without fear or influence, and write their own decisions — then we might get a decision upholding the rule of law.

No, this does not suggest any such thing. Your statement indicates you are not being rational. You are approaching the matter from your conclusion that you and Hendrickson are correct, and that 100% of the judges who have ruled on these tax protester issues are not only wrong but are 'fearful", that they are being unduly "influenced," and that they are not "impartial." That is simply not rational.

Your phrase -- "then we might get a decision upholding the rule of law" -- is typical whiny Hendricksonesque rhetoric.

Hendrickson is right. The human capacity for deception is very great. As a group, Quatlosers illustrate this point, as do those who believe a lie repeated loud and long enough will eventually be believed.

No. Hendrickson is wrong, and Harvester is wrong. People like Harvester and Hendrickson and lorne illustrate the point that the human capacity for self-deception is very great.

Harvester, after all this time, you are still spouting your own infantile nonsense. YOU are the one who is believing the lies -- repeated loudly and often by Hendrickson and his other followers -- including the lie that your "private sector", "non-federal privilege"-related compensation is not taxable to you.

Your actual belief in the lie, however, does not qualify as an actual good faith belief. Your belief is not based on a misunderstanding caused by the complexity of the tax law. Your belief is based on (among other things) your stubborn refusal to accept courts' interpretations of the law. And, as the courts have pointed out, the refusal to accept court interpretations of the law is evidence of willfulness -- the "voluntary, intentional violation of a known legal duty."

The key is not whether you actually believe that your legal duty (to pay federal income tax on your private sector, non-federally privileged earnings) is a duty. (That kind of actual belief is not quite enough for a valid defense in a federal criminal tax case.)

Instead, the key might be whether you are AWARE that the courts have ruled that it is a legal duty. And you clearly are aware of that -- as is "lorne", and as was Peter Hendrickson. Your actual belief is really a disagreement with the courts' interpretation of the law.

In short, a jury could conclude -- just as the jury did with Peter Hendrickson -- that your actual belief is not an actual good faith belief based on a misunderstanding caused by the complexity of the tax law.

No Cheek defense!

[Famspear]

"Harvester" and "lorne," please re-read what the judge stated in Peter Hendrickson's case:

I do want to say a word about the defendant's position that there was an insufficiency of evidence as to his willfulness in making false statements in his submissions to the IRS, because willfulness is a necessary element that the government must show in a successful prosecution in carrying its burden in these 7206 offenses.

The government, in its response to the defendant's motion, points to ample evidence from which a jury could have concluded, obviously did conclude, that the element of willfulness was established beyond a reasonable doubt.

[ . . . ]

I don't doubt that Mr. Hendrickson, for reasons which I can't explain, disagrees with the Internal Revenue Service's position, its interpretation of the code and the position that numerous courts have taken in rejecting his various constructions of his reasons why he is not subject to the income tax.

What is important to note here in this context is that Mr. Hendrickson's disagreement does not equal a lack of willfulness.

Under every definition that every single court has looked at, a citizen taxpayer or noncitizen taxpayer for that matter, is not simply free to impose or construct his or her own definition of what the tax code requires and follow that and thereby evade criminal prosecution. That's simply is not the law nor could it be the law.

[ . . . ]

And the fact that Mr. Hendrickson does not agree with the interpretation of the tax code adopted by the Internal Revenue Service and by the government and by courts, every court that has looked at these issues, does not mean that Mr. Hendrickson is not in a legal sense acting wilfully [sic].

He has been for many years now, on notice and more than notice, that his view has been rejected by every governmental authority that has looked at this.

--Statement of the Court, from pages 8 through 24 of the transcript of the Sentence Hearing Proceedings, Monday, April 19, 2010, United States v. Hendrickson, no. 08-20585, U.S. District Court for the Eastern District of Michigan (Detroit Div.) (bolding added).

EDIT: And, where did the Court in Hendrickson's case obtain this rule? From where does the Cheek doctrine come? From the United States Supreme Court, of course:

[ . . . ] in deciding whether to credit [defendant John] Cheek's good-faith belief claim, the jury would be free to consider any admissible evidence from any source showing that Cheek was aware of his duty to file a return and to treat wages as income, including evidence showing his awareness of the relevant provisions of the Code or regulations, of court decisions rejecting his interpretation of the tax law[ . . . . ]

--from Cheek v. United States, 498 U.S. 192, 202 (1991) (bolding added).

[Number Six]

The U.S. should look at how Europe and Canada implement their tax systems and make adjustments so that those who are able to pay more based on the advantages they enjoy as U.S. citizens, will pay more. "Pay Go" is a sound budget idea, but will never happen if the absolutists continue to obstruct compromise. Grover Norquist is wrong. Those who pay more become better citizens.

[Famspear]

At his losthorizons web site, Peter Hendrickson asks the rhetorical question, "Was grandpa really a moron?".

The answer, of course, is no.

Grandpa -- even going back to the period from 1913 to 1920, and in the 1920s, and in the 1930s, and in the 1940s, and in the 1950s - knew that the compensation he received for services he performed was "income" within the meaning of the federal revenue acts, and that there was no exclusion for compensation in an "activity" not involving a "federal privilege."

How do we know that Grandpa knew this, and that Hendrickson is wrong?

Because Grandpa paid taxes -- sometimes big taxes -- on that compensation. There is NO RECORD of anyone who paid federal income tax on private sector, non-federally privileged income EVER raising the Hendrickson argument in a court of law. Not at the Board of Tax Appeals. Not at the federal district courts. Not at the federal claims court. No record at all.

And the "Grandpas" who litigated federal tax issues in the courts in the 1920s, 1930s, 1940s, etc., etc., were THE BIG EARNERS. How do we know this?

Using the inflation factor of the consumer price index, the 1913 federal income tax law (the first modern federal income tax) effectively excluded an amount of income equivalent to well over $60,000 in terms of year 2010 dollars. The people who were paying federal income tax in the 1920s and 1930s, etc., were BIG SHOTS. They HIRED TAX LAWYERS TO REPRESENT THEM IN COURT. They knew what the law was back then. And not one of them ever tried to argue what Hendrickson tried to argue.

Harvester and lorne, do you have any idea of what federal income tax rates were, back in the old days? Do you know what the highest marginal tax rates were back in the early 1950s?

OVER NINETY PERCENT!

And, in terms of today's dollars, you had to be earning HUGE amounts of money to pay tax (in the early 1950s) at a tax rate of OVER NINETY PERCENT.

No, Hendrickson, Grandpa was not a "moron." Grandpa and his tax lawyers in the period from 1913 to the 1960s knew very well what the tax law was. And Grandpa was never, even once, in all those years, "moronic" enough to try to make the argument that Hendrickson makes.

A final note:

As someone with a child who is mentally retarded, I hesitate -- only briefly -- to refer to or to repeat Hendrickson's use of the term "moron". The term is of course is used by Hendrickson in a pejorative sense. Many people, especially those who have family or friends who are mentally retarded, certainly may object to the use of that term, or may be offended by it.

[LPC]

And, in terms of today's dollars, you had to be earning HUGE amounts of money to pay tax (in the early 1950s) at a tax rate of OVER NINETY PERCENT.

I was looking at tax rates and brackets recently, and doing some inflation calculations, and our current tax brackets are ridiculously narrow.

There was actually a $2,000,000 income tax bracket in 1916 (top rate of 15%), and a $1,000,000 bracket from 1921 through at least 1932, with top rates between 63% and 73%. In 1932, $1,000,000 was worth $14,000,000 to $16,000,000 is 2009 dollars, so the only people paying tax at the top brackets were the very, very, very highest income earners, such as movie stars and CEOs of major corporations.

In 1954, the top bracket dropped to $200,000 (single taxpayer), with a rate of 91%, but that's still $1,400,000 to $1,600,000 of taxable income (not assets or even gross income) in 2009 dollars.

The current top income tax rate is only 35%, and is reached with only $373,650 of taxable income.

The closest the US ever got to a flat tax system was 1988, when the top income tax bracket was 28% and started at only $43,150, which is about $71,000 to $78,000 in 2009 dollars. (There was a tax rate of 33% from $43,150 to $89,560, but that "bubble" only eliminated the tax benefit of the 15% tax bracket, and so the maximum average rate was only 28% even if there was a short range in which the marginal rate was 33%.)

Although the top tax rates (and brackets) have varied wildly, the marginal tax rates applicable to what I would call upper-middle-class taxpayers (say $50,000 in current dollars) haven't really changed that much, starting from a low of 19% in 1942, and peaking at 31% in 1982, then falling to the current level of 25%. (I'm ignoring changes in personal exemptions and standard deductions.)

[ashlynne39]

I'm not donating any brain cells.

Besides, the people who need them the most wouldn't know what to do with them.

That was my thought too. I think Harvey et al are delusional but I'm not giving them any of my brain cells. Frankly they haven't proven they know how to use the ones they have so why should I give up any of mine.

[Brandybuck]

Other. I think the income tax is immoral and the equivalent of legalized theft. I think the IRS is comprised of a bunch meddlesome scoundrels. However, the 16th amendement was duly ratified and the income tax perfectly legal.

Thinking you can get rid of the income tax by imagining it to be a fairy tale, is about as useful as thinking you can repel an armed robbery by pretending the muggers gun to be a bouquet of flowers.

[Gregg]

one who hadn't taken the federal seminar in how to handle "tax protester" cases and avoid reversal erro

At least one of the many problems with your entire premise is you have yet to show that any such "seminar" exists.

[Bud Dickman]

Lorne is also delusional. I destroyed too many brain cells courtesy of Meyers Rum in my younger days.

P.S. The Appleton Rum was good stuff also.

[Red Cedar PM]

And if the judge ruled the tax does NOT reach non-federally-privileged workers, then that is the law.

And if a cow has balls, it's a bull.

If ifs and buts were candy and nuts we'd all have a Merry Christmas.

[Dr. Caligari]

And if the judge ruled the tax does NOT reach non-federally-privileged workers, then that is the law.

Please let me know when a judge makes such a ruling.