Murphy - or are lawyers natural contortionists?

[LPC]

For some reason you keep demanding TANGIBLE proof of a loss while I have stated from the begining that most losses to human capital are INTANGIBLE.

No, I keep asking for tangible proof of a BASIS in her loss.

[LPC]

Natty seems to be inconsistent (again) in asserting that good health and well being are part of "human capital" but the costs of creating that good health and well being are not part of "human capital."

It is not inconsistent at all because I am proving human capital has a cost basis.

If you are "proving" anything (which I doubt), then you are proving two inconsistent things, which means that you are proving nothing at all. If I prove that "A" is "B" AND I prove that "A" is "not B," then I haven't really proved anything at all.

The critics of the "human capital" argument contend that there is no cost basis in human capital

I think it's more complicated than that. Speaking for myself only, I have argued (and would argue) that any cost basis in "human capital" is:

1. Zero under current law;

2. Zero under normal principles of accounting and economics;

3. Impossible to determine accurately even if it was allowed as a nonzero amount; and

4. Inconsistent with principles of good tax policy.

[Paul]

Why stop there? The logic of taxing imputed rental income on owner-occupied housing would also lead to the taxation of the imputed rental value of all property one owns -- cars, lawn mowers, TV's, computers, you name it. You could even impute interest income on the cash one carries around in a wallet or purse or the nest egg stuck in a mattress.

Exactly my point. It would also lead to taxing you on your human potential, which you choose to enjoy by dropping out of school and working for minimum wage, rather than going on to become a doctor and make millions.

[Paul]

Then please explain why all transactions are calculated as income. For instance I trade 6 chickens worth $6 for one pig worth $12. I have, according to tax gurus, an income of $6.

This is why you should never argue with stevesy, except for personal amusement. After he has been told countless time that gain/income is the difference between the value of what you receive and the COST (or basis) of what you give up for it, he still goes back to arguing that income is value received minus value given up, and claiming that this is what the "tax gurus" say.

He never learns, never thinks, and is therefore impervious to argument. But it's fun to watch him sputter.

[Brian Rookard]

--actually do stand in tension to a degree. So, you are essentially correct when you say I am "taking it back" -- at least in part -- when I say that I don't take Murphy and Penn Mutual as applying so broadly that a property tax could be imposed without apportionment simply by calling it an income tax. I am acknowledging that if taken to an EXTREME, the power to tax ANYTHING as "income" might be interpreted as a power to tax property itself by simply calling the tax something else -- and I am saying that I doubt that the courts would interpret the Constitution to that EXTREME.

There's nothing wrong with the Penn decision. And actually, Penn would PREVENT Steve's end-of-the-tax-world hypotheticals.

Penn tells us to look at the SUBSTANCE of the tax.

Thus, if Congress labeled the tax an "income tax" and actually defined the tax so as to tax property because of its ownership, the Courts would look at the substance (taxing property because of its ownership) and say that we evaluate the tax as such (meaning it would be a direct tax).

Penn ignores the labels ... and looks at substance ... that's exactly how it should be.

Steve just can't accept reality.

[Famspear]

Brian Rookard wrote:

There's nothing wrong with the Penn decision. [ . . . ]

[ . . . ] if Congress labeled the tax an "income tax" and actually defined the tax so as to tax property because of its ownership, the Courts would look at the substance (taxing property because of its ownership) and say that we evaluate the tax as such (meaning it would be a direct tax).

Agreed.

Are you paying attention, SteveSy?

[natty]

For some reason you keep demanding TANGIBLE proof of a loss while I have stated from the begining that most losses to human capital are INTANGIBLE.

No, I keep asking for tangible proof of a BASIS in her loss.

gawd, man, is the art of lawyering nothing but word games, out of context submissions and omissions. I told you in the post which you snipped.

Her basis is the sum total of everything she has ever spent on herself. That includes but is not limited to education, everything that builds her self-esteem, the food choices she makes, how she chooses to live, the health care she gets, etc.

[natty]

Natty seems to be inconsistent (again) in asserting that good health and well being are part of "human capital" but the costs of creating that good health and well being are not part of "human capital."

It is not inconsistent at all because I am proving human capital has a cost basis.

If you are "proving" anything (which I doubt), then you are proving two inconsistent things, which means that you are proving nothing at all. If I prove that "A" is "B" AND I prove that "A" is "not B," then I haven't really proved anything at all.

All I did was make a distinction between subsistence consumption and consumption over and above subsistence. Both are costs building one's "human capital", but subsistence consumption is negligible.

The critics of the "human capital" argument contend that there is no cost basis in human capital

I think it's more complicated than that. Speaking for myself only, I have argued (and would argue) that any cost basis in "human capital" is:

1. Zero under current law;

2. Zero under normal principles of accounting and economics;

3. Impossible to determine accurately even if it was allowed as a nonzero amount; and

4. Inconsistent with principles of good tax policy.

It is no more impossible to determine than a question to the jury, and how is it good tax policy to tax a court transaction where there is absolutely no room for negotiation? If anything it opened the door for litigators to demand their award be labeled a "physical damage award" when in fact it was mental.

[natty]

Penn tells us to look at the SUBSTANCE of the tax.

Did Penn reverse Brushaber?
Brushaber told us to look at the FORM of the tax.

[natty]

Let's start simply.

What is the value -- basis -- in the human capital asset when it is acquired by the person? Hint: that's normally what is paid to acquire the asset.

Let's start with a tangible asset- a law degree. Thus, one cost would be the price paid to the law school.

[Famspear]

Natty wrote:

gawd, man, is the art of lawyering nothing but word games, out of context submissions and omissions

But Natty also wrote:

Did Penn reverse Brushaber?
Brushaber told us to look at the FORM of the tax.

Natty, go back and read Brushaber and Penn Mutual again. Who's playing word games, Natty?

And, Natty also wrote:

Let's start with a tangible asset- a law degree. Thus, one cost would be the price paid to the law school.

At the risk of becoming repetitively tiresome, in order to reiterate what should be obvious to everyone here, the cost incurred to go to law school is treated as a non-deductible personal living expense. It's not treated as a capital expenditure, and it's not treated as an acquisition to, or investment in, any kind of "property." And it's not treated as an increase in basis in anything, under the Code.

A law degree does have future usefulness beyond the year in which it is earned, though. Again, if you want to write your Congressional representative and argue that the law should be changed to make the cost of a law degree somehow be capitalizable as "basis" in something, go for it.

Although it does not matter in our discussion, I would also point out that if a law degree were treated as an asset for Federal income tax purposes, it would be considered an intangible asset, not a tangible one. (And the tangible paper diploma is not the degree itself, it's merely evidence of the degree.)

--Famspear

[SteveSy]

Then please explain why all transactions are calculated as income. For instance I trade 6 chickens worth $6 for one pig worth $12. I have, according to tax gurus, an income of $6.

This is why you should never argue with stevesy, except for personal amusement. After he has been told countless time that gain/income is the difference between the value of what you receive and the COST (or basis) of what you give up for it, he still goes back to arguing that income is value received minus value given up, and claiming that this is what the "tax gurus" say.

He never learns, never thinks, and is therefore impervious to argument. But it's fun to watch him sputter.

I meant they had paid $6 and $12 respectively for both. Besides, COST is not everything when it comes to income. You just responded to a post concerning value as income dufus.

For instance the insurance man that sells himself insurance and the commission, which was never actually received, is calculated as income. Or saved rent on a house you own. The IRS is more than willing to calculate economic benefit, regardless of "COST", as basis for income.

You're like a man in a clown suit trying to present yourself as intellectually superior. The laughs are all mine....

[SteveSy]

At the risk of becoming repetitively tiresome, in order to reiterate what should be obvious to everyone here, the cost incurred to go to law school is treated as a non-deductible personal living expense. It's not treated as a capital expenditure, and it's not treated as an acquisition to, or investment in, any kind of "property." And it's not treated as an increase in basis in anything, under the Code.

Jesus Christ, are you dense or what? What does the "code" have to do with a discussion of what is or is not income under the constitution? I tried to get you to see the obvious flaw in your silly use of "the code says". Congess does not have the power to define constitutional words and phrases to expand or limit the constitution. They do not have the power to change the constitution by fiat. The "code" appears to be your security blanket. It's what you use to accept an alternate reality. The "code" is limited to the confines of the constitution. Who cares what the code says about deductions. If disallowing a cost makes the definition of income expand beyond what is really income then congress flat out doesn't have the power to limit that expense.

[Famspear]

SteveSy wrote:

I meant they had paid $6 and $12 respectively for both. Besides, COST is not everything when it comes to income. You just responded to a post concerning value as income dufus.

I think the word is "doofus" not "dufus." Maybe they're alternate spellings, though.

For instance the insurance man that sells himself insurance and the commission, which was never actually received, is calculated as income.

I'm not sure what you're saying here Steve. If you are an insurance salesman and you buy insurance coverage for yourself from a carrier for which you also happen to sell insurance to others, and the insurance carrier either pays you a commission on that sale or credits that commission against the premium you would otherwise pay, then, yes I guess you would have to report the commission as income. Actual receipt or constructive receipt count the same for a taxpayer using the cash receipts and disbursements method of accounting.

Or saved rent on a house you own. The IRS is more than willing to calculate economic benefit, regardless of "COST", as basis for income

No, Steve, the IRS is not more than happy to, and does not, and will not, calculate economic benefit on "saved rent" on a house you own. You're in fantasy land on this one. And there is no provision under current Federal income tax law to impose an income tax on "saved rent" on a house you own. Imputed income has been recently discussed to some degree in this or another thread. Not all imputed income is considered includible in gross income for tax purposes.

--Famspear

[Famspear]

SteveSy wrote:

Jesus Christ, are you dense or what? What does the "code" have to do with a discussion of what is or is not income under the constitution? I tried to get you to see the obvious flaw in your silly use of "the code says". Congess [sic] does not have the power to define constitutional words and phrases to expand or limit the constitution. They do not have the power to change the constitution by fiat. The "code" appears to be your security blanket. It's what you use to accept an alternate reality. The "code" is limited to the confines of the constitution. Who cares what the code says about deductions. If disallowing a cost makes the definition of income expand beyond what is really income then congress flat out doesn't have the power to limit that expense.

No, Steve, you are quite wrong. The Code is not attempting to define constitutional words and phrases, or to limit the constitution. As has already been explained to you, nothing in Article I of the Constitution or in the 16th Amendment says that the Congressional power to tax is somehow limited to stuff that's "really income."

You are correct when you say that Congress cannot expand or limit the constitution, though.

Further, disallowing a cost does not make the definition of income expand beyond what is really income.

And even further, "income" is not defined in the Constitution. And with respect to excises (indirect taxes), there is no restriction in the U.S. Constitution saying that Congress cannot take something that's not income and still TAX it as income.

What you seem to be missing -- by not carefully reading the actual text of the Constitution itself and cases like Penn Mutual and Murphy -- is that it DOES NOT MATTER whether something is "really income" under the Constitution.

When you say "congress flat out doesn't have the power to limit that expense" you are promulgating more idiosyncratic SteveSy tax protester rhetoric.

Go back and read Article I and the Sixteenth Amendment. You are making things up as you go along, Steve.

--Famspear

[SteveSy]

No, Steve, the IRS is not more than happy to, and does not, and will not, calculate economic benefit on "saved rent" on a house you own. You're in fantasy land on this one. And there is no provision under current Federal income tax law to impose an income tax on "saved rent" on a house you own. Imputed income has been recently discussed to some degree in this or another thread. Not all imputed income is considered includible in gross income for tax purposes.

--Famspear

My response was about an income calculation that does not inclue "cost". Paul acted as if all transacations use cost in the calculation of income. I did not say the IRS would calculate "saved rent" as income. I merely mentioned it as a potential to a consideration of income.

[SteveSy]

You are correct when you say that Congress cannot expand or limit the constitution, though.

Further, disallowing a cost does not make the definition of income expand beyond what is really income.

That is obviously a statement without a shred of logical thought behind it.

If indeed income is calculated using basis then limiting basis (cost) would expand income. I guess lawyers are trained to forget about the rules of cause and effect.

[Famspear]

Earlier, I wrote:

Further, disallowing a cost does not make the definition of income expand beyond what is really income.

I want to qualify that statement. Regarding disallowing a cost that would go into basis, I am not talking here about disallowing a cost that would go into basis in "property." Instead, we're talking about whether you can have a cost basis in something called "human capital." As has been stated before, current tax law does not recognize "human capital" as "property" in the same way that a house or a car or even "purchased goodwill" is recognized as property. You can have a cost basis in a house or a car -- or goodwill that you PURCHASED as part of a PROPERTY acquisition. Current law, however, treats the expenditures that Natty or SteveSy seem to think should be part of "basis" in "human capital" as expenses, not as capital expenditures. Further, the law treats those expenses as either non-deductible section 262 personal living expenses, or as deductible under some Code provision like 162 or 212 or whatever. It depends on the nature of the expense.

--Famspear

[Famspear]

SteveSy wrote:

That is obviously a statement without a shred of logical thought behind it.

If indeed income is calculated using basis then limiting basis (cost) would expand income. I guess lawyers are trained to forget about the rules of cause and effect.

Actually, you got that in before I could insert my explanation. See above.

Again, you don't seem to be talking about "basis" as that term is used in the U.S. Federal income tax law. You are talking about imaginary basis in something called "human capital." Yes, the term "human capital" is mentioned in some of the case law, but I don't recall seeing anything in case law where a court actually ruled that a taxpayer had a tax basis in human capital (not even in the now-vacated first Murphy decision). And there is definitely nothing in the Constitution or the Code about that.

--Famspear

[Famspear]

SteveSy wrote:

If indeed income is calculated using basis then limiting basis (cost) would expand income. I guess lawyers are trained to forget about the rules of cause and effect.

At the expense of appearing to beat a dead horse, Steve, let's assume that "limiting basis (cost) would expand income." Now, go find something the Constitution that says Congress cannot do that when imposing a tax.

Good luck.

--Famspear