Challenge to diller72

[Quixote]

I meant that VAT is not the same as the sales tax we have now.

But the differences are not relevant to this discussion. VATs do not apply to all sales. VATs that do not exempt certain goods and services are the exception, not the rule.

[Cpt Banjo]

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

No, because he suggests otherwise in (a) his misleading Flint quote on the LH home page in which he has the Supreme Court equating excises with the exercise of privileges, and (b) his objection to a national sales tax on the ground that it "would lack any effective connection between the federal government and the object of the tax". It's obvious from these passages that he sees both of these conditions as being necessary for an excise.

[LPC]

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.

If what you say is true, then you've just blown another hole in Hendrickson's logic.

As already demonstrated (and undenied by you), Hendrickon concludes that a federal excise on income MUST involve a federal privilege.

You claim that some excises other than excises on income do NOT require a federal privilege.

How can you tell the difference? Do you flip a coin?

And, more importantly, how do you get from point A to point B? How do you get from "federal excises do not require a federal privilege" to "federal excises on income require a federal privilege"? Where is your proof that an excise on income requires a federal privilege when the general rule is that excises do NOT require a federal privilege?

[LPC]

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.

No, you didn't.

All you did was weasel away from the central issue by claiming that Hendrickson doesn't claim that ALL federal excises require a federal privilege, just SOME federal excises, such as the tax on incomes. Even if your claim were factually correct (which others have disputed), you're still faced with two problems:

1. Why should *any* federal excise require the exercise of a federal privilege; and

2. How can you logically differentiate between the two different requirements?

Your unwillingness to address these questions speaks volumes.

[Famspear]

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.

No, you didn't.

All you did was weasel away from the central issue by claiming that Hendrickson doesn't claim that ALL federal excises require a federal privilege, just SOME federal excises, such as the tax on incomes. Even if your claim were factually correct (which others have disputed), you're still faced with two problems:

1. Why should *any* federal excise require the exercise of a federal privilege; and

2. How can you logically differentiate between the two different requirements?

Your unwillingness to address these questions speaks volumes.

It ain't as easy at it first appeared, is in Ducky? You're the one who wanted to go down this road.

[Famspear]

Here is the challenge posed by Cpt Banjo to diller72 in 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 [ . . . ]

So, it matters not whether Hendrickson claims that a federal excise must involve a FEDERAL privilege or, alternatively, just a "privilege." The fact remains that Hendrickson does contend that a federal excise must involve a FEDERAL privilege (the definition of which he apparently expands to include a state privilege over which the federal government has acquired some authority of some sort).

By contrast, neither the actual text of the Constitution nor the federal courts limit federal excises to taxes imposed in connection with a "privilege" (federal or otherwise).

We're still waiting for you to address the discrepancy between what Hendrickson contends and what the courts have ruled. Not only have you not refuted the challenge posed in the opening post (cogently or otherwise), you haven't even addressed the challenge.

Again, getting back to the federal income tax, how can the tax involve the exercise of a "privilege" (federal or otherwise) when income includes (as the Supreme Court has ruled it does) the receipt of funds in a criminal activity, such as extortion or embezzlement?

[Imalawman]

Ducky, you seem bogged down in tedium and arguing over non-essential jots and tittles (and not very effectively I might add). But let's get down to the nitty gritty. I've posted this question many times and have never received a response. Even if Hendrickson is right about his interpretation of IRC 3401, how does it remove compensation for services under IRC 61 from private sector wage earners?

Also, if 3401 was to be limited only to public sector employee, why are there private sector exemptions contained in the section?

[Cpt Banjo]

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.

As usual, Hendrickson is wrong.

It is next contended that the attempted taxation is void because it levies a tax upon the exclusive right of a state to grant corporate franchises, because it taxes franchises which are the creation of the state in its sovereign right and authority. This proposition is rested upon the implied limitation upon the powers of national and state governments to take action which encroaches upon or cripples the exercise of the exclusive power of sovereignty in the other...While the tax in this case, as we have construed the statute, is imposed upon the exercise of the privilege of doing business in a corporate capacity, as such business is done under authority of state franchises, it becomes necessary to consider in this connection the right of the Federal government to tax the activities of private corporations which arise from the exercise of franchises granted by the state in creating and conferring powers upon such corporations. We think it is the result of the cases heretofore decided in this court, that such business activities, though exercised because of state-created franchises, are not beyond the taxing power of the United States...

...We therefore reach the conclusion that the mere fact that the business taxed is done in pursuance of authority granted by a state in the creation of private corporations does not exempt it from the exercise of Federal authority to levy excise taxes upon such privileges.
Flint v. Stone Tracy Co., 220 U.S. 107 (1911)

[grixit]

Is it possible the Ducky is a troll? They seem more articulate than most of the tps (and not really tp but just asking questions) that come here.

[Famspear]

I note that the challenge to diller72 was posted in the opening of this thread on May 20th. He reactivated his account on May 22. After 13 days, however, we still have received no response from diller.

Maybe Ducky will be more forthcoming.

Hey, I know! I'll just HOLD MY BREATH and wait for diller72 and Ducky to respond. That should speed things up! (That's worked so well in the past....)

[Ducky]

I am not a troll, it is not my intention to bait others into emotional responses by posting off topic controversial posts. I have better things to do with my time. Quite the contrary, I would like to engage in rational discourse that proves to be on topic and coherent. I thought that my initial response and ensuing discussion was salient, but maybe others don't agree.

I plan to draft responses to as many of your(collectively) posts as I reasonably can. Currently, I am preoccupied and don't have the time respond, be patient. This isn't indicative of me running away, just busy.

I came here for a rational discussion regarding CTC. I will play the devil's advocate, because I have read his book and find his argument compelling. I lurked around LH for a while and noticed that they generally try to quell dissent, which obviously never leads to an objective outlook, that is why I came here. There is no censorship and you guys hold the stance of opposition, fair enough, Right?

It is quite apparrent that many of you are well versed in law and specifically tax law and relevant court cases, I plan on learning a lot and hopefully engaging in some meaningful debate.

till later,

Duck-e

[Imalawman]

btw - welcome to quatloos! I hope that you're sincere and you'll find all the discourse you want here.

[Quixote]

I came here for a rational discussion regarding CTC. I will play the devil's advocate, because I have read his book and find his argument compelling.

You might start the discussion by setting out PH's argument as you understand it. It has been my experience that no two people come away from Cracking the Code with the same understanding of PH's argument, assuming he made one.

[SteveSy]

THE JURY that the "murder" law is not what it is, or that the murder law is being misapplied. Same concept for tax law.

No, see....the difference is murder is quite obvious. There should be no reason that OJ couldn't show the jury the text of the law showing what murder is. Why should he be denied such a thing after all the law is public. This doesn't happen with the income tax because the judge is afraid of letting the jury see the law. He's so insecure of his position he or she thinks some "idiot tax protester" can convince the jury over his many years of supreme knowledge of the law. Sounds pretty pathetic if you ask me if this supposed great legal scholar can't out due some tax protester living in his one room shack with no legal education....what a joke.

Besides that, it's not even that....there doesn't have to be a debate on what the law means. It is after all based on willfulness. Its a simple as showing the jury what the law says and saying I read this and this is what I thought it meant. I mean if the jury can see how he could see it that way then what's the problem? Again, the law is public, anyone can pickup the law and read it. The truth is the courts know the average jury member would likely say "Hey, I can see how he thought that.", and the federal courts will have no part of allowing the jury giving someone a fair chance.

The courts are afraid of letting the average person see the law in a trial concerning income taxes, that's clear. Courts offer "opinions"...they only have opinions and nothing more. Many times they have no clue of the law. I can show majority opinion from two separate circuit courts saying the exact opposite on how the income tax operates, direct or indirect. In fact they belittle the defendant as if it's obvious....all they have really done is shown the incompetence of the system itself.

[Paul]

No, see....the difference is murder is quite obvious.

No, stevesy, if you would for once in your life stop and think something through, rather than just run to your desired outcome, you would realize that you can't let the jury decide what the law is for themselves. All you see is the result you want -- that the jury will decide the government is wrong on the law, and that the what the defendant actually did isn't a crime. What you never think about is what happens when the jury does find the defendant guilty. How could you tell whether the jury convicted based on a misunderstanding of the law, without opening up the deliberations of the jury to scrutiny and possible reversal by the judge and the appellate courts? And that goes for murder as well as tax law. The gradations of fault and potential punishment in an unlawful death can be pretty subtle and vary tremendously from state to state, and letting the jury decide what each one is could just as easily result in a defendant being wrongfully found guilty or found guilty of a more serious crime as it could lead to the jury letting an innocent man loose because it sees through the prosecution's misrepresentation of the law. Leave the law to the judge, who must explain his holdings and whose holdings are subject to scrutiny by the appellate courts, and let the jury perform its function -- being the ultimate finder of fact.

[Famspear]

THE JURY that the "murder" law is not what it is, or that the murder law is being misapplied. Same concept for tax law.

No, see....the difference is murder is quite obvious. There should be no reason that OJ couldn't show the jury the text of the law showing what murder is. Why should he be denied such a thing[;] after all[,] the law is public. This doesn't happen with the income tax because the judge is afraid of letting the jury see the law. He's so insecure of his position he or she thinks some "idiot tax protester" can convince the jury over his many years of supreme knowledge of the law. Sounds pretty pathetic if you ask me if this supposed great legal scholar can't out due [sic] some tax protester living in his one room shack with no legal education....what a joke.

Besides that, it's not even that....there doesn't have to be a debate on what the law means. It is after all based on willfulness. Its a simple as showing the jury what the law says and saying I read this and this is what I thought it meant. I mean if the jury can see how he could see it that way then what's the problem? Again, the law is public, anyone can pickup the law and read it. The truth is the courts know the average jury member would likely say "Hey, I can see how he thought that.", and the federal courts will have no part of allowing the jury giving someone a fair chance.

The courts are afraid of letting the average person see the law in a trial concerning income taxes, that's clear. Courts offer "opinions"...they only have opinions and nothing more. Many times they have no clue of the law. I can show majority opinion from two separate circuit courts saying the exact opposite on how the income tax operates, direct or indirect. In fact they belittle the defendant as if it's obvious....all they have really done is shown the incompetence of the system itself.

(bolding added).

Steve, until you come to the point in your life where you admit to yourself that you need help, you are not going to get any better. Ask yourself why you are having these thoughts.

[rachel]

I am not a troll, it is not my intention to bait others into emotional responses by posting off topic controversial posts. I have better things to do with my time. Quite the contrary, I would like to engage in rational discourse that proves to be on topic and coherent. I thought that my initial response and ensuing discussion was salient, but maybe others don't agree.

I plan to draft responses to as many of your(collectively) posts as I reasonably can. Currently, I am preoccupied and don't have the time respond, be patient. This isn't indicative of me running away, just busy.

I came here for a rational discussion regarding CTC. I will play the devil's advocate, because I have read his book and find his argument compelling. I lurked around LH for a while and noticed that they generally try to quell dissent, which obviously never leads to an objective outlook, that is why I came here. There is no censorship and you guys hold the stance of opposition, fair enough, Right?

It is quite apparrent that many of you are well versed in law and specifically tax law and relevant court cases, I plan on learning a lot and hopefully engaging in some meaningful debate.

till later,

Duck-e

Ok Ducky,
I'm not taking any sides with either quatloos or CtC.
First flaw found in CtC.
Start at the beginning with the "reporting requirement" statutes of chapter 21 FICA . You wont find these requirements in chapter 24. Pete doesnt cover this in CtC because he either completely and deliberatley passes over it; doesnt understand it or both, but nonetheless significant in understanding.
Read those regulations and statutes to fully understand the requirement for obtaining SSN's, ITIN's and TIN's. Understand that the subject and purpose of SSN's, ITIN's and TIN's are for identification of the employer and employee under the Social Security Act having the legal relationship of employer/employee.
Second flaw found in CtC.
Pete beleives and thinks you need to rebut making 3401(a) wages from somehow being magically catagorized as a "privileged" government employee. However, you will find federal laws passed for impersonating government officials in any capacity.
What Pete doesnt understand is that you are being deducted the same tax as the 3401(c) employee is, but not actually being a 3401(c) employee. Just because your Home Depot, Menards or JC Penny's earnings are being taxed the same 3402 deductions as a 3401(c) employee doesnt mean you are a 3401(c) employee. Nowhere will you find the form W4 breaking federal impersonating laws for working towards Social Security benefits.
There is Title 5 which lumps the average everyday employee making 3121(a) "wages" for Social Security benefits which includes "survivor benefits" in with the 3401(c) employee.
See Sec. 552a. Records maintained on individuals.
http://frwebgate.access.gpo.gov/cgi-bin ... :+5USC552a
Pay particular attention to 5USC 552a(a) 2 because "individual" includes all "U.S. citizens" and aliens lawfully admitted for permanent residence. "Individual" here is no different than whats found in 26CFR1.1-1, and notice Ducky, there is no federal nexus, aka "privilege", in this definition for "individual".
BTW, Its also the same "individual" identified on the INDIVIDUAL 1040 tax form.
Fully understand 5USC 552a(a) 12 because the federal government administers government benefits through its Social Security Administration. Social Security is not a state agency, but federal. Dont pass this off as insignificant as Hendrickson does.
Now heres what silences Peter E. Hendrickson to the point that he slams his head into the sand and deluded himself with selfishness to concludes that Title 5 is only for employees of government organizations.
Mr. Hendrickson misses all together how Title 5 is titled and will not comment when you correct him.
Title 5 is titled:
TITLE 5--GOVERNMENT ORGANIZATION AND EMPLOYEES
It does not say TITLE 5--EMPLOYEE'S OF GOVERNMENT ORGANIZATIONS as Peter E. Hendrickson wants you to beleive because U.S. citizens and aliens lawfully admitted for permanent residence would not be listed in 5USC 552a(a) 2. Nothing in 5USC 552a(a) 2 is suggesting these are government organization employee's.
Keep that in mind when you read 5USC 552a(a) 13 where the "individual" is lumped together with officers and employees of the Government of the United States as "federal personel".

Having 3402 deductions from your Home Depot, Menards or JC Penny's earnings is simply a tribute tax for working for Social Security benefits.
Third flaw found in CtC.
Blacks Law Dictionary for "privilege" as seen on Losthorizons has nothing to do with working for the federal government.

"PRIVILEGE: A particular benefit or advantage enjoyed by a person, company, or class beyond the common advantages of others citizens. An exceptional or extraordinary power of exemption. A particular right, advantage, exemption, power, franchise, or immunity held by a person or class, not generally possessed by others."

Black's Law Dictionary, 6th Ed.

Pete Hendrickson taught his readers all to well how to read definitions, so check the definition yourself using Petes rule to see if government employee's have over any nongovernment employee a particular benefit or advantage as a class of citizen or class of person beyond other citizens.
Does working for the government constitute a different class of citizenship or person than nongovernment employee's?
Do government employee's have execptional or extraordinary power of exemption than nongovernment employee's?
Do they have power and immunity that nongovernment employee dont?
Of course not!
Peter E. Hendrickson just pulled the "privilege" out of his ass to sell a book and confuse his readers who seem all to happy to take the perverbial $5,000.00 penalty bullet to the head.

Now something to really think about Ducky! Click on this link and go to footnote 37 and take note as to what rights of the Bill of Rights the 14th amendment incorporates for the U.S. citizen.
http://www.gpoaccess.gov/constitution/pdf2002/018.pdf
Something to think about if you want to remain a tax paying slave "U.S. citizen" over a sovereign state citizen.
This is going to stir the pot a little, but its proof through rights the sovereign exist.

[Ducky]

I came here for a rational discussion regarding CTC. I will play the devil's advocate, because I have read his book and find his argument compelling.

You might start the discussion by setting out PH's argument as you understand it. It has been my experience that no two people come away from Cracking the Code with the same understanding of PH's argument, assuming he made one.

Yeah that sounds like a good idea. Actually that is why I posted in this particular thread, because it addresses the idea of excises or indirect taxes. This is actually the first chapter of CTC "About Taxes-Direct v. Indirect", so a good place to start. I think it will be easier and more beneficial to dissect the book and discuss chapter by chapter.


PH starts by elucidating the difference between a direct tax or capitation and an indirect tax, specifically an excise. PH argues that the "income" tax falls under that of an excise, and therefore must be related to a taxable activity or event, which makes it wholly optional. Optional, in the sense that one has the privilege or right to decide to engage in the activity. Moreover, in relation to an excise tax, it is not the income which is taxed but the activity or event which produced the income, the income is only used as a basis for determining the tax due. This contradicts his interpertation of a direct tax (capitation), which he derives from Adam Smith to mean "any tax levied upon and or measured by the exercise of a basic right--such as the right to life, liberty, the ownership of property, working, or engaging in trade.", which makes a direct tax wholly un-optional or unavoidable, and therefore, the direct tax would have to be subject to apportionment.

It could hardly be denied that a tax laid specifically on the exercise of those freedoms would be unconstitutional. US Supreme Court. Murdock v. Pennsylvania 319 U.S. 105 480-487, (1943)

He further posits that the the federal gov't does not have the authority to lay an indirect tax on basic common rights or activities, Citing the US Supreme Court and other courts.

"Since the right to receive income or earnings is a right belonging to every person, this right cannot be taxed by privilege" Jack Cole Company v Alfred T Macfarland, Commissioner, 206 tenn. 694, 337 S.W.2d 453 Supreme Court of Tennesse (1960)

"An Income tax is neither a property tax nor a tax on occupations of common right, but is an excise tax... The legislature may declare as 'privileged' and tax as such for state revenue, those pursuits not matters of common right, but it has no power to declare as a 'privilege' and tax for revenue purposes, occupations that are of common right." Simms v Ahrens, 271 SW 720 (1925)

So I am sure you all have plenty of responses. have at it.

[grixit]

He further posits that the the federal gov't does not have the authority to lay an indirect tax on basic common rights or activities, Citing the US Supreme Court and other courts.

No problem. The income tax is not a tax on rights or activities, it's a tax on income.

[jg]

PH starts by elucidating the difference between a direct tax or capitation and an indirect tax, specifically an excise. PH argues that the "income" tax falls under that of an excise, and therefore must be related to a taxable activity or event, which makes it wholly optional. Optional, in the sense that one has the privilege or right to decide to engage in the activity.

But, Hendrickson uses capitation to mean something that no judge has ever meant to try to restrict the scope of the income tax. See http://www.losthorizons.com/Intro.pdf The Supreme Court has always spoke of the complete and plenary power of the Congress to tax income, regardless of source.

The Adam Smith economic definition of direct tax has been rejected as making it a direct tax under the Constituiton by the Supreme Court. If you want to begin at the beginning, read the decision at http://caselaw.lp.findlaw.com/cgi-bin/g ... &invol=586 where the Supreme Court first decided that the income tax is an indirect tax under the Constitution even though Adam Smith was correct that it is direct in an economic sense.

The event or activity being taxed is the realization (or constructive receipt) of income. The current statute, codified in Title 26, in Section 1 imposes the Federal income tax on the "taxable income" of individuals. See http://docs.law.gwu.edu/facweb/jsiegel/ ... tNoLaw.htm

Of course, income tax is optional in the sense that one is free to arange one's affairs so as to not have taxable income; much the same way that one is free to not purchase items subject to sales tax.

Also, pay close attention to the snippets used without context and from state courts used by Hendrickson.

I hope this helps you see Hendrickson's claims are not supported by the law.