Challenge to diller72

[LPC]

You have apparently made a flagrant error by assuming that somehow, PH's Book CTC, articulates the premise that "all excises must involve the exercise of federal privilege"

From the "Lost Horizons" home page:

What is called "income" in the internal revenue laws (that is, what is taxed under those laws) is NOT "money" or "receipts" or "earnings", etc.. It is the exercise of federal privilege, which is measured, for purposes of determining the tax, by the receipts brought in by that exercise. Thus, it is only receipts resulting from the exercise of federal privilege that are relevant to those laws and the related taxes.

And, in what Hendrickson describes as "A Brief Introduction To The Fascinating Trust About The American Income Tax (A rough 'Cliff Notes' version of the first few chapters of 'Cracking the Code- The Fascinating Truth About Taxation In America')":

[The federal income tax] amounts, in its actual application, to a tax on only a specialized subset of the larger class of income, consisting exclusively of revenues attributable to the voluntary profitable use of federal privilege, property or powers-- that is, revenue in which the federal government has a direct ownership interest, and to which it can therefore exercise a direct claim as a matter of right.

If anyone has made a "flagrant error," it is Hendrickson.

[Famspear]

Dear "Ducky": Ain't as easy as it first appeared to be, is it?

At the expense of stating the obvious, you made a flagrant error by assuming that Peter Hendrickson does not articulate the preposterous premise that "all excises must involve the exercise of federal privilege". That is indeed what Pete contends. As other regulars here have pointed out to you, this is what Peter contends on his own web site, losthorizons. Whether he says the same thing in the book itself is of no concern. I ain't buyin' the book.

Other two-bit tax protesters have made the same argument. It's not even original with Pete. And the federal courts had already uniformly rejected that argument long before Pete picked it up. The argument was a dead duck (no disrespect intended to you, Ducky) long before Pete latched on to it.

Ducky, if you're going to defend Pete's writings, you should at least know what he says.

[Cpt Banjo]

Ducky, no CtC'er has been willing to address the questions that began this thread. Would you like to try?

How can one argue (which Hendrickson does -- don't kid yourself) that excises must involve the exercise of federal privileges in view of (1) the Supreme Court's definition of an excise in Bromley, (2) the Court's upholding the taxation of income from illegal activities, which are the exact opposite of the exercise of privileges, and (3) the Court's upholding indirect taxes on countless other things that didn't involve federal privileges (e.g., Mr. Hylton's carriages)?

You won't find the answer on LH. If there's been any attempt to address the issue, Pete has censored it because he knows it would expose the fallacy of his argument. So read the cases for yourself, use your own reasoning ability, and explain how you can possibly reconcile what Hendrickson says with what the Court has said.

[Ducky]

Sorry,

But to say that the book outlines a premise "ALL excises must involve the exercise of a federal privilege" is simply put, a straw man argument developed by "someone" to be easily refuted.

Please provide evidence, as so far you have not, that he contends ALL excises must involve the exercise of a federal privilege.

Another question regarding this qoute

Peter Hendrickson wrote:
What is called "income" in the internal revenue laws (that is, what is taxed under those laws) is NOT "money" or "receipts" or "earnings", etc.. It is the exercise of federal privilege, which is measured, for purposes of determining the tax, by the receipts brought in by that exercise. Thus, it is only receipts resulting from the exercise of federal privilege that are relevant to those laws and the related taxes.

Just wondering how you guys can make the logical leap that since he relates the excise tax of "income" to being valid only if it involves the exercise of federal privilege, to ALL excises being valid taxes if and only if they involve the exercise of federal privilege. This is called a slippery slope fallacy. (not to mention a straw man logical fallacy)

Did you not read my example of shopping? This is direct evidence that he does not hold this contention you guys claim.

And along comes yet another poster whose contribution to the dialogue consists of, "No, no, that's not what Petey says". Is this part of the indoctrination ritual into the cult - whenver the subject comes up, just tell people that they didn't get the gibberish exactly right?

I would refer to this as thinking critically, debunking logical fallacies, something to that effect.

OK, Ducky, here's your big chance - tell us why the salary of someone working for Microsoft isn't taxable. Try to avoid "Read the book". We've noticed previously how Pete's acolytes can't even explain what he says, let alone defend it.

One more thing, the question I ask of everyone who comes in here from LH: Assume that the Sixth Circuit rules against Hendrickson in his own case, and the Supreme Court denies cert. Will you then agree that he is wrong about the law?

Geez did I stumble upon the land of assumptions, I haven't come here from LH, I have seen the site but never actively participated.

If you would like to start another thread I will address the Microsoft question, but for now it is advisable to stay on the topic outlined by the OP.

I didn't ever say I espouse these ideas or follow them myself, infact I still pay my taxes. I have read the book and to me the argument follows rather logically. As far as the case pending and making assumptions about its outcome, I honestly haven't followed it closely. Actually, could somebody perhaps link all the relevant literature regarding the case, I would like to inform myself.

[The Observer]

I didn't ever say I espouse these ideas or follow them myself, infact I still pay my taxes. I have read the book and to me the argument follows rather logically. As far as the case pending and making assumptions about its outcome, I honestly haven't followed it closely. Actually, could somebody perhaps link all the relevant literature regarding the case, I would like to inform myself.

Perhaps you should follow very closely what has happened to Hendrickson's theories in court before you think that they are logical. As they say, the proof is in the pudding.

[Famspear]

Oh, come on, Ducky. Peter himself says, in the index to his book posted at losthorizons:

"Privilege Tax & Excise Tax are synonymous"

http://www.losthorizons.com/tax/CtCIndex.htm

Again, I don't care what Pete says in the book. On his web site, he equates an excise tax with a privilege tax - with the exercise of a federal privilege.

[Cpt Banjo]

But to say that the book outlines a premise "ALL excises must involve the exercise of a federal privilege" is simply put, a straw man argument developed by "someone" to be easily refuted.

Please provide evidence, as so far you have not, that he contends ALL excises must involve the exercise of a federal privilege.

You can start with Hendrickson's misleading quote on the LH home page:

"...the requirement to pay [excise] taxes involves the exercise of privilege.
United States Supreme Court, Flint vs. Stone Tracy Co. 220 U.S. 107 (1911)

http://www.losthorizons.com/

As others have pointed out, the quote misrepresents what the Court really said, because it was addressing a particular type of tax -- one imposed soleley upon corporations:

The tax under consideration, as we have construed the statute, may be described as an excise upon the particular privilege of doing business in a corporate capacity, i. e., with the advantages which arise from corporate or quasi corporate organization; or, when applied to insurance companies, for doing the business of such companies. As was said in the Thomas Case, 192 U. S. supra, the requirement to pay such taxes involves the exercise of privileges, and the element of absolute and unavoidable demand is lacking. If business is not done in the manner described in the statute, no tax is payable.
Flint v. Stone Tracy Co., 220 U.S. 107, 151 (1911)

But Pete generalized this quote about privileges to cover all excises. Ask yourself why he felt the need to do so. Might it be that his premise is that all excises involve federal privileges?

I have read the book and to me the argument follows rather logically.

OK, Ducky, let's stick to the income tax. Explain how illegally-obtained income is taxable when there's no federal privilege.

[Imalawman]

I didn't ever say I espouse these ideas or follow them myself, infact I still pay my taxes. I have read the book and to me the argument follows rather logically. As far as the case pending and making assumptions about its outcome, I honestly haven't followed it closely. Actually, could somebody perhaps link all the relevant literature regarding the case, I would like to inform myself.

Ah, the "TP Savings Clause". This should read, "I am a TP at heart, but don't want to get caught with my pants down, so I'll just say that I'm thinking about being a TP - just searching for the truth. I still pay taxes, so you can't say anything about that. In the event, (or when) I get my ass handed to me, I will say thank you for the information, that is all I wanted." - exit TP.

Same ol', same ol'. At least Sub V. and Diller had little more chutzpah.

[Famspear]

Ducky wrote:

Just wondering how you guys can make the logical leap that since he relates the excise tax of "income" to being valid only if it involves the exercise of federal privilege, to ALL excises being valid taxes if and only if they involve the exercise of federal privilege. This is called a slippery slope fallacy.

As noted above, we are not making a "logical leap." And there is no "slippery slope." Hendrickson specifically equates "privilege tax" and "excise tax" on his own web site. And "excise tax" involves more than just the federal income tax. You are just digging your hole deeper.

Further, you should ask yourself the question: Why did you even raise this issue? As far as I can tell, Hendrickson's focus is on the federal INCOME tax anyway, not other federal excises.

I'll pose essentially the same question to you as was posed to another person the other day: Can you find a federal court case where an individual argued that he was not liable for the federal income tax on the theory that the relevant "activity" did not involve a privilege, or a federal privilege, etc. (use whatever terminology you or Pete want to use) and the court ruled that the individual was correct ON THAT POINT? Answer: No, you cannot find any such case. None exists.

By contrast, there are lots of court cases where the argument has been rejected. And there are at least two U.S. Supreme Court cases where the Court ruled that receipts from criminal activity (specifically extortion or embezzlement) are taxable to the wrongdoer AS INCOME under the federal INCOME tax law, even though the wrongdoer is required to return the funds to the rightful owner. How in the world can the activity of criminal extortion or embezzlement involve the exercise of a "privilege" (federal government privilege or any other kind)?

[wserra]

I didn't ever say I espouse these ideas or follow them myself

Ah. So when you characterized an accurate statement about Hendrickson's position as a "flagrant error" and a "straw man", you were reacting as an impartial, just-the-facts-ma'am observer, right?

I have read the book and to me the argument follows rather logically.

A conclusion you reached without reading the judgment in which a federal judge characterized it as a steaming load of horsepucky (alright, not in those words)? And then directed Hendrickson to file accurate returns, reporting his wages as income, for the years he lied about? Well, after you read it here, I assume that you'll change your mind, being impartial and all.

[Ducky]

"Privilege Tax & Excise Tax are synonymous"

Sure I agree that he says that.

On his web site, he equates an excise tax with a privilege tax - with the exercise of a federal privilege.

There you go again making a "logical leap" that since he equates an excise tax with a privilege tax, he must contend that that privilege be federally connected. I will reiterate that this is a slippery slope fallacy. Please provide evidence that PH contends ALL excises, to be valid, must be associated with a federal privilege!

To make this easier, please respond to the fact that PH recognizes a national sales tax is an excise(we can all agree on that, Right?), but he does not contend that people don't have to pay sales tax, unless, and only unless they are connected federally. That would be preposterous. he contends that you don't have to go and buy a 12 pack of pepsi, that is your privilege, and therefore don't have to pay the associated excise tax. There is no mention of any federally connected privilege here, and he still believes the national sales tax is valid and constitutional.

You're starting to argue from incredulity.(which I am sure I don't need to mention, is fallacious)

OK, Ducky, let's stick to the income tax. Explain how illegally-obtained income is taxable when there's no federal privilege

I was addressing the OP, which I refuted cogently.

[Ducky]

Further, you should ask yourself the question: Why did you even raise this issue? As far as I can tell, Hendrickson's focus is on the federal INCOME tax anyway, not other federal excises

You should ask yourself that question. I know why I did, I was responding to the OPENING POST

I formally challenge you and the rest of the LH members to explain the discrepancy between what Hendrickson says an excise is and what the Supreme Court says it is

I was trying to clarify this discrepancy that CaptBanjo claimed existed and which he further elucidated in a later post to be

the bogus premise that all excises must involve the exercise of federal privileges

[Cpt Banjo]

The OP raised the issue of the taxation of illegally obtained income; you simply chose not to address it.

[Cpt Banjo]

To make this easier, please respond to the fact that PH recognizes a national sales tax is an excise(we can all agree on that, Right?)

No, we can't.

After all, a broad-based federal sales tax or VAT-- which would be functionally involuntary in nature (thus, direct), and would lack any effective connection between the federal government and the object of the tax as well -- is just as much prohibited by Article 1, Section 9 of the Constitution as is the general tax on receipts that most Americans misunderstand the income tax to be, and thus would be unconstitutional without an amendment.

http://www.losthorizons.com/tax/TaxReform.htm

[Famspear]

Peter Hendrickson writes:

What is called "income" in the internal revenue laws (that is, what is taxed under those laws) is NOT "money" or "receipts" or "earnings", etc.. It is the exercise of federal privilege, which is measured, for purposes of determining the tax, by the receipts brought in by that exercise. Thus, it is only receipts resulting from the exercise of federal privilege that are relevant to those laws and the related taxes.

http://www.losthorizons.com/

(underlining is by Hendrickson in original).

Ducky, you can bob and weave all you want, but you're boxed in. I don't much care about what Hendrickson says or does not say about whether some OTHER federal excise involves (or does not involve) a FEDERAL privilege (versus merely "a privilege").

And neither do you.

Hendrickson equates "privilege tax" and "excise tax", as you have now finally admitted. This is about Hendrickson's erroneous statements about the U.S. federal income tax. Whether Hendrickson contends or does not contend that OTHER federal excises involve a FEDERAL privilege or, alternatively, just a "privilege" is of no moment on the issue of the nature of the U.S. federal income tax.

[Ducky]

To make this easier, please respond to the fact that PH recognizes a national sales tax is an excise(we can all agree on that, Right?)

No, we can't.

After all, a broad-based federal sales tax or VAT-- which would be functionally involuntary in nature (thus, direct), and would lack any effective connection between the federal government and the object of the tax as well -- is just as much prohibited by Article 1, Section 9 of the Constitution as is the general tax on receipts that most Americans misunderstand the income tax to be, and thus would be unconstitutional without an amendment.

http://www.losthorizons.com/tax/TaxReform.htm

You are comparing apples and oranges. A VAT is not the national sales tax that we have now.

we should be able to agree on the point I made above.
From his book I qoute

PH
we see that while a tax on shopping in general would be a capitation, or direct tax; a tax laid upon some particular thing for which one might or might not shop at one's discretion would be indirect, an thus not a capitation... A tax accompanying each transaction involving a taxable article that takes place in your store is an indirect tax, while a taxon having your store open for such transactions ... would be a capitation.

Ducky, you can bob and weave all you want, but you're boxed in. I don't much care about what Hendrickson says or does not say about whether some OTHER federal excise involves (or does not involve) a FEDERAL privilege (versus merely "a privilege").

And neither do you.

I am not bobbing and weaving at all, and no, I am not boxed in. I stand by my original contention. Stop moving the goal posts.

Capt Banjo in his original post states:

Your puzzlement is understandable, considering your unfortunate acceptance of Hendrickson’s false premise that an excise must involve the exercise of a federal privilege

{bolding mine}

Can you agree that in no way shape or form does he contend that an excise must involve the exerxise of federal privilege?

[Famspear]

By the way, Hendrickson does indeed appear, as a general proposition, to limit his theory (about all federal excises, and not just federal income taxes, somehow being limited to taxes on the exercise of a "privilege") to activities involving FEDERAL privileges, not just "privileges" in general. See Hendrickson's FAQ on his own web site:

Q. Are privileges which are granted by a state, such as the special treatment under state law enjoyed by a state-chartered corporation, among those taxable under a federal excise tax?

A. Short answer: No.

(bolding added).
http://www.losthorizons.com/tax/faq.htm

Hendrickson goes on to say:

Authority extends to one's own property and one's own creations, not those of others. I will grant the possibility that one entity might cede a measure of authority over its own creation to another, but that this has been done, such as in the case of a state-chartered corporation, for instance, would have to be clearly demonstrated. It would not be an easy thing to do in the case of an entity such as privately-owned, merely state-chartered artificial entity, for ownership/authority in such an entity really doesn't belong to the state, and what authority the state DOES have is only as specified by law, and as knowingly agreed to by those forming the entity. That is, for the federal government to acquire authority over a state corporation, provisions for that authority would have to be clearly laid out in the state-corporation-chartering language, such that the citizens who are seeking the state charter are clearly informed of the arrangement to which they would be agreeing.

(bolding added).

http://www.losthorizons.com/tax/faq.htm

Essentially, Hendrickson may be saying that a federal excise (income tax or otherwise) must involve a FEDERAL privilege. Even if the federal excise involves a state privilege, there apparently must be, in his eyes, an "authority" granted to the FEDERAL government over the state privilege in order for the federal excise to be applicable to that privilege.

So, I win this argument, too. But I don't see how its material, anyway, as we are concerned specficially with federal income taxes anyway.

[Dezcad]

You are comparing apples and oranges. A VAT is not the national sales tax that we have now.

(bolding added) I'm fairly certain that we do NOT have a national sales tax now.

[Ducky]

You are comparing apples and oranges. A VAT is not the national sales tax that we have now.

(bolding added) I'm fairly certain that we do NOT have a national sales tax now.

Sorry, you are correct. I meant that VAT is not the same as the sales tax we have now.

[Quixote]

In the rush to hand Ducky his ass, some posters have failed to notice that Ducky (or maybe Hendrickson; it isn't clear from Ducky's post) has redefined "privilege".

For example, to help illustrate the "privilege" nature of an excise PH uses shopping. Let's use grocery shopping as an example; a tax on grocery shopping in general would be a direct tax as their is no "privilege" involved, the vast majority of people have to go grocery shopping. However, a tax on specific items (sales tax) is an excise, as you have the "privilege" to go buy a 12 pack of pepsi and pay the associated sales tax. This point is further illuminated by the fact that there exists a large list of non taxable food items, items which there is no privilege involved, necessities in other words. PH in no way tries to associate the federal excise "sales tax" with involving the exercise of a federal privilege.

No doubt Ducky will tell me that I misunderstood him, but it appears that under the new definition, the purchase of anything that is not a "necessity" is the exercise of a privilege. Given the subjective nature of necessity, the new definition opens up new opportunities for the Cracked Head stock response of "that's not what PH meant."