All Caps Nonsense

[Neckbone]

Neckbone:

I also hope that Steve comes back. With David banned from posting, we now lack a village idiot.

David who got banned? Is it VanPelt?

Neckbone

[Doktor Avalanche]

Neckbone:

I also hope that Steve comes back. With David banned from posting, we now lack a village idiot.

David who got banned? Is it VanPelt?

The very same.



David Merrill Van Pelt (far right) - proof this photo is a complete fabrication.

[LPC]

Until 1935, there was no taxation of pay for labor to object to!

Well, that's not true, because income taxes have ALWAYS taxed pay for labor.

The income tax that was contested in the Springer decision in 1880 was a tax on “the annual gains, profits, or income of every person residing in the United States, or any citizen of the United States residing abroad, whether derived from any kind of property, rents, interests, dividends, salaries, or from any profession, trade, employment, or vocation, carried on in the United States or elsewhere, or from any other source whatever....” Act of June 30, 1864, ch. 173, Sec. 116, 18 Stat. 223, 281. The statute therefore taxed all forms of earned income, specifically including references to both “salaries” and incomes from “employment.” The constitutionality of the statute was challenged by a lawyer with income from his legal practice (i.e., his labor), and the Supreme Court unanimously upheld the constitutionality of the tax, holding that it was a “duty or excise” that did not need to be apportioned. Springer v. United States, 102 U.S. 586 (1880).

The Supreme Court later held that the same statute could not constitutionally apply to the salary of a state judge. Collector v. Day, 78 U.S. 113 (1870). If the statute in question did not apply to salaries, the decision would not have been necessary.

But the Supreme Court reversed Collector v. Day when Congress revised the federal income tax in 1932. The language of the opinion shows that the Supreme Court believed that Congress could tax the earnings from both private employment and governmental employment:

The challenged taxes laid under section 22, Revenue Act of 1932, c. 209, 47 Stat. 169, 178, 26 U.S.C.A. 22, are upon the net income of respondents, derived from their employment in common occupations not shown to be different in their methods or duties from those of similar employees in private industry. The taxpayers enjoy the benefits and protection of the laws of the United States. They are under a duty to support its government and are not beyond the reach of its taxing power. A nondiscriminatory tax laid on their net income, in common with that of all other members of the community, could by no reasonable probability be considered to preclude the performance of the function which New York and New Jersey have undertaken, or to obstruct it more than like private enterprises are obstructed by our taxing system.

Helvering v. Gerhardt, 304 U.S. 405, 420 (1938).

So the statement that there was "no taxation of pay for labor" before 1935 is clearly and demonstrably wrong.

So this is a "formal warning" to Mr. Bulten. Repeating your false claims will be considered trolling and will be dealt with appropriately.

[LPC]

Until 1935, there was no taxation of pay for labor to object to!

Well, that's not true, because income taxes have ALWAYS taxed pay for labor.

I should have also added that the income tax at issue in the Pollock case in 1895 was also a tax on all gains, profits, and income, "whether said gains, profits, or income be derived from any kind of property, rents, interest, dividends, or salaries, or from any profession, trade, employment, or vocation carried on in the United States or elsewhere, or from any other source whatever...."

The majority opinion first struck down the tax on incomes from property (i.e., rents, interests, and dividends), but then went on to state that, if only the tax on interest, rents, dividends, and other income from property were ruled unconstitutional, “this would leave the burden of the tax to be borne by professions, trades, employments, or vocations; and in that way a tax on capital would remain in substance a tax on occupations and labor.”

Pollock v. Farmers’ Loan & Trust Co., 158 U.S. 601, 637 (1895) (emphasis added for the benefit of the reality-impaired).

[Quixote]

Sure, the distinction is relevant for purposes of separating out, for example, COGS, but we do that only because a deduction is allowed for COGS, and as everyone knows, deductions come after computation of income. Likewise, we subtract basis from the amount of money or FMV of property received in exchange for property separately from the computation of gross income only because there is a separate statute that lets us do that. The reduction is not built in to the definition of income; it is a separate step.

No, COGS and basis are no deductions from gross income, they are necessary to the calculation of gross income. Only gains from the sale of property are income, not the full price received for it. Were that not so, the various attempts to extend the concept of COGS would not have required a constitutional analysis for rejection, only a statutory one.

If there were a statute that said, "The amount of gross income received from wages and other compensation shall be reduced by the amount of any expenditure by the taxpayer in earning those wages"--or words to that effect--then and only then would the distinction Bulten is making resemble the legitimate distinction you are making. But there is no such statute. And even if there were, it wouldn't change the fact that gross income would include the full amount of wages, salaries, and other compensation.

We are in perfect agreement on that. Bulten is aware that the Tax Court (with the 8th circuit affirming) has rejected the argument that cost of maintaining the "human machine" must be subtracted as if they were costs of goods sold. His wordplay appears to be an attempt to avoid those rejections.

[John J. Bulten]

Pile-on!

Lawman, they don't write the law that way because it would be unconstitutional, just like it would be unconstitutional to tax only the Bultens at 99.9%. If they amended the constitution to create either of these new powers of taxation (unapportioned direct or nonuniform indirect taxes), however, this would answer in kind the "show us the law" crowd, and those who affirm tax honesty would pay such taxes as far as humanly possible (the "tax dishonesty" remainder would thus be smoked out). I don't believe in avoiding taxes at all costs: I believe in legal tax minimization strategies.

Wes, your argument has lost with me, and nothing requires me to address every silly little thing you raise.

Kickback, I've admitted that my being a nonfiler from 8/15/00 to 2/2/05 was a mistake, and have accepted the consequences of this mistake. I think that sufficiently addresses the mindset you project upon me.

Famspear and Grammarian, while the absence of unambiguous rulings addressing my question is potential evidence against some of my other positions, right now I am defending a particular syllogism, narrowly drawn, and asking about the absence of evidence for YOUR viewpoint which should be widely available if the syllogism I proposed were invalid. The one does not answer the other. I really don't think Famspear has attempted to answer the request for counterexamples.

Also Kickback, as for the "Kenedy" and "Hewlitt" argument, first recall that businesses have time to research proven loopholes so they don't need to rely on unproven ones. But we also have a significant recent case where big business DID take time to overcome an unproven and presumably "TP" position (search for "Publius" at losthorizons.com/newsarchive.htm). They challenged a century-old tax in court claiming billions were at stake, they were fought by the full regalia of the DOJ and IRS, and they were frequently denied and turned down in district court, and all over the interpretation of a single common word of law. In such situation it would be typical Quatloos blindness to assume the IRS is right in its interpretation, that the argument has lost too many times to count, and that the objectors are full-bore TPs whose psychology can be amateur-diagnosed with impunity.

Unfortunately for your case, finally an appellate court upheld the tax objectors. Then another and another, but IRS still claimed its ability to impose the tax. By the time 6 appellate courts had ruled against IRS, it backed down and admitted the tax needed to be refunded. The tax was the telecommunications tax of 1898, which was recently refunded to all taxpayers, and the word of law was "and". The IRS had collected billions by saying it meant "or".

This suggests that 1) even when big business is involved it takes a long long time and 2) when the issues are clearly framed enough for them they will support defeat of a massively overreaching IRS power grab.

Famspear (and Grammarian) again, first, Sections 86 and 90 of the Revenue Act of 1862 taxed, respectively, government salaries, and income derived from salaries; taken together, since there was no double taxation nor redundancy, a statutory distinction was made between salary and income from salary. Since these provisions were later combined, and "salary" subsumed under the headword "compensation", a clear statutory distinction between compensation and income from compensation is demonstrable, and compensation does not necessarily derive, to its recipient, income equal to its value. (This is a very brief CtC summary only to answer your question, NOT to deflect from mine.)

Now, Famspear, $50K as a month's compensation for services at a grocery store in 1913 simply could not have been realistic pay for labor at that rate, but would necessarily be payment for something like corporate services (so would be income because regarded as complete profit, with such services being regarded as otherwise uncompensated public contributions, the same rationale obvious since 1862). But to be more reasonable, suppose I was paid for LABOR at $400/month times 10 months. My position is that nobody in their right mind would have contemporaneously called the $4K "compensation for services", and nobody would have called it "gains, profits, or income from wages". I am asking for a counterexample to that assertion.

I note you also misread "all dividends are taxable", not addressed to you, as my position rather than what I said it was, a faulty deduction. I note you also didn't answer the question of whether the TWO graphs of historical facts, which are evidence that MIGHT be adduced to supply the counterexample I seek, addressed your belief. How many different ways do I need to ask my question until you admit you understand it? I only raised the one issue: I asked for one of two types of counterexample. Everything else was merely responsive to the ensuing pile-on, just like all my deflections of your side points in this post are merely responsive. Here is one more way of attempting to get back to the same question I keep asking: since you believe pay for labor was income in 1913, do you believe that there should have been many individual laborers who filed returns and/or had withholding for the 1910s (not necessarily a majority of all workers, just a number agreeable to the number paid above exemption level in accord with contemporaneous pay statistics)? Yes or no. Then we can discuss whether history evidences that belief. Your failure to answer on this thread so far looks like "growing in office" and losing your previous apparent open-minded candor.

Grammarian again, as I said, the distinction between income and compensation (or salary) is a necessary construction of the RA of 1862, which is the statute you request. It wouldn't hurt to change the hypothetical to 1862 instead of 1913 if you don't like that gap: 1) In 1862, pay for work did not derive, and was not, "income derived from salaries". 2) There is no statutory change in meaning between "income derived from salaries" and "income derived from compensation" implicit in today's law. 3) So workers do not derive income from their pay in itself.

Now thank you for providing both lists of cites, which meet the standards for consideration as to whether they provide the counterexamples I request. Your access to old BTA cases is better than mine, so it would be helpful if you could post quotes or links or tell us how we could easily replicate your research. (You also appear to have corrected your solecism that the cases show "income from wages" equals "income derived from wages".) It's entirely possible that these cases may actually lead you to believe that "pay for work" equals "income from (or derived from) pay for work", and may begin to answer my challenge.

Quixote, I've been ignoring your replies because, true to your deceptive affirmation of deception, they do not answer. You said "the real issue ... is if income derived from pay for work was taxed". No, the real issue (that for which I requested evidence) is if income derived from pay for work is generally equal in amount to the pay for work. And yes, I won't be using whatever argument was rejected by the 8th Circuit. I'm not looking to you to answer in the future, either.

Neckbone, I said nothing about investment. The 1913 act taxed "income derived from salaries ... also from interest, rent, dividends, securities ...." (http://www.losthorizons.com/Forum3/topi ... IC_ID=1604) So income derived from interest is a statutory concept, not one of my making.

LPC, not at all. The 1864 employment tax in Springer is now essentially the "trade or business" tax and is of completely different statutory derivation from what today we call "employment tax". (Of course in Pollock, the "tax on ... labor" was a similar tax on reselling labor as a trade or business.) The tax in Day was applied specifically to government salaries, so is off point; my question is its application to income derived from private salaries. Similarly, in Gerhardt, "a construction engineer and two assistant general managers", as the Court stressed, "all took oaths of office" and received annual salaries (p. 410). As officials, they did not receive pay for labor in itself, but pay attached to office (for the Port of New York no less), which was taken to derive equivalent income in the same way as the Revenue Acts explicitly treated other government office. And I like how you say 1870 is later than 1880.

LPC, you also egregiously changed the subject by re-demanding an answer from a distant thread (to which the answer, BTW, is "I don't 'use a definition from section 3401 to affect the meaning of section 61'"). So this is a "formal warning": repeating your thread hijacking will be considered trolling, for which you are hereby sanctioned to ... oops, sorry, wrong forum.

[Famspear]

Bulten wrote:

-----"I really don't think Famspear has attempted to answer the request for counterexamples."

Yep, you're right. I have not attempted to answer your request for counterexamples. --Famspear

[Famspear]

Mr. Bulten wrote:

-----"In such situation it would be typical Quatloos blindness to assume the IRS is right in its interpretation, that the argument has lost too many times to count, and that the objectors are full-bore TPs whose psychology can be amateur-diagnosed with impunity."

Clue: Mr. Bulten, on a day to day basis, I (and I suspect several other posters here) begin our real-world work with the assumption that the IRS MIGHT be WRONG in its interpretation, just as legal counsel did in all those phone excise tax cases -- that's part of the reason we get paid the big bucks. I never assume that any of my clients are full-bore tax protesters (none of them are).

The IRS is wrong on stuff all the time. That's why people like me make the money we make. And that's in part why we have something called a COURT SYSTEM.

And yes I can, as a strictly amateur psychologist, diagnose the psychology of tax protesters -- with impunity. I can be accurate with my amateur psychology some of the time -- and I am very probably WRONG much of the time -- as I have NO expertise in psychology. The difference between me and many, many tax protesters is that tax protesters do not want to admit that they have no expertise in TAXATION. --Famspear

[Cpt Banjo]

...Sections 86 and 90 of the Revenue Act of 1862 taxed, respectively, government salaries, and income derived from salaries; taken together, since there was no double taxation nor redundancy, a statutory distinction was made between salary and income from salary.

Wrong. The reason there was no double taxation was not because the statute distinguished between "salaries" and "income derived from salaries". The reason was because in calculating the amount of income taxable under Section 90, a deduction was allowed by Section 91 for the salary that was taxable under Section 86. If the two concepts referred to different things, there would have been no need for the deduction.

[Famspear]

Oh, another thing Mr. Bulten:

In the phone excise tax cases, no frivolous arguments were raised. Those were not tax protester cases.

Attempting to compare the kinds of arguments made by legitimate litigants in tax cases like the phone excise tax cases with the laughable arguments you raise about wages is like trying to compare Einstein's questioning of the Newtonian view of the universe (which eventually led to Einstein's Special Theory of Relativity in 1905 and his General Theory of Relativity, circa 1915) with an argument that scientists are wrong about the material composition of the Moon by arguing that the Moon is made of green cheese. ---Famspear

[John J. Bulten]

Old Man Kennedy (Joseph Sr.) was a greedy, manipulative and would have probably gladly used ANY loophool or VALID legal argument to reduce his taxes.

Then it should be easy to document that Kennedy did or did not withhold tax on his laborers.

If John Bulten's theory actually held water, the IRS would have ALREADY produced Revenue Rulings to close that loophole.

This explication of the law is quite old, but was not clearly and consistently demonstrable until the electronic code and CtC. However, there is a revenue ruling that addresses misapplications of this application of the law. If the application held no water, it would be easy to demonstrate that in the 1860s and 1910s everyone understood the law to apply generally to any pay for any laborer.

The wages are not wages (and the variations) argument is frivolous. Not a loophole, frivolous. Huge, huge difference.

But it can be no variation of a frivolous argument to hold that wages are what the law says they are, and that "includes" means what the law and regulations say it means. And if your view were right, it should be easy to document that laborers in 1913 filed tax returns as appropriate under your theory.

Banjo, I have answered before why Section 91 does not operate as you would hope, but I do not think I will get that response in before the thread closes.

[grixit]

"Derived" = "They paid you"

You're welcome.

[wserra]

Wes, your argument has lost with me, and nothing requires me to address every silly little thing you raise.

Absolutely right.

Have fun in court.

[Famspear]

Dear Mr. Bulten: You still have not responded. You've made the usual noises, but your noises have been unresponsive.

You announced your theory earlier this week that the Federal income tax is imposed on "income derived from compensation" and not on "compensation." You have not shown us a court case where a court ruled that there is any difference between (A) "income derived from compensation" for personal services performed by an individual, and (B) "compensation" for personal services performed by an individual.

There is no such case, and for Federal income tax purposes there is no such difference.

Your theory is phony. --Famspear

[Joey Smith]

I've admitted that my being a nonfiler from 8/15/00 to 2/2/05 was a mistake, and have accepted the consequences of this mistake.

Translation: I acted stupidly then but I'm not acting stupidly now.

[Demosthenes]

Way too long. Start a new thread.