Practical Advice For Newbies II

[The Operative]

Operative, now imagine that $10k GE investment denominated in gold, not dollars that depreciate. You missed the point; investments denominated in fiat dollars are losing 4 to 10% a year (official stats are fudged) to inflation, which America did not have for a hundred twenty some odd years.

No, I did not miss the point. Commodities, like gold, are given value by the supply and demand for them. Using gold as currency does not eliminate inflation. Inflation may still occur when using gold as well as deflation, which is arguably worse.

Dollars are also an indicator of value. The Federal Reserve controls the supply in order to match the demand in as efficient way as possible. If the Federal Reserve makes the right moves, then inflation stays in check.

Why, in the 1920s and 1930s, do we see ZERO court cases where people came in and said "Hey, wait a minute, income does not include my earnings for my labor"?

There are no court cases precisely because "income (for Income Tax purposes) does not include earnings from labor" and the working people were not assessing themselves as having received income.

Nonsense. The 1913 act most certainly did include earnings from labor. So did all of the Revenue Acts during the Civil War period.

These people, who did owe and pay income tax, tended to be people with relatively high incomes.

I agree, but let's not confuse terms. Everyday income (all the money I made) is very different from "income" in the Revenue Acts.

More nonsense.

Now, Harvester, do you really think that the people of that period with high incomes simply paid tax on income they thought was not taxable? Don't you think the high income people in the 1920s and 1930s could afford tax lawyers and accountants to advise them?

No, and Yes.

If income in that period was understood to mean only unearned income or interest income, then why didn't anyone object -- especially the relatively high income earners in the private sector?

Well I'm sure they did object, but they were a minority for starters. And those who really knew the score, or were pulled aside with "hey it's OK to support this, it only taxes your investments in national banks /corporations, it's just an excise on income encompassed by the Revenue Act," knew it was no big deal.

Even more nonsense.

[Brandybuck]

No matter what standard you use (gold, silver, stones, diamonds, oil, etc) there is a naturally occurring rate of inflation, which is around 1.5% per annum. This means that no matter what, there will almost always be some level of inflation.

Um, I'll bite on this. It comes down to how you define inflation. The goldbugs define it as *any* increase in the money supply (making gold mining inherently inflationary). If you define it this way, then there is a natural increase in the money supply as there will be a natural increase in the gold, silver, etc. due to mining and such.

But I define it as an increase in money beyond the market demand for money. If prices fall generally then the demand for money will rise, a decentralized banking system will provide more money, the prices then rise, and we're back to equilibrium. Or vice versa. Thus in a "natural" system there would be no natural rate of inflation or deflation.

[silversopp]

What Harvester failed to mention was that the neighbor's kid purchased several packs of baseball cards, and sold them for $1,000 46 years later. That doesn't mean that baseball cards are always the best investment.

Precious metals definitely have their place in a portfolio. They do serve as a hedge against inflation. You will usually see the price of metals go up as the dollar weakens. It is not, however, the ONLY investment you should make. As pointed out earlier, the stock market on average will yield a greater return.

A gold standard will not prevent inflation. The mining industry adds about 2% to the total tons of gold in distribution every year. This, in effect, would be pure inflation in a gold standard economy. The mining industry would also be able to directly impact financial markets by either producing more or less gold.

In addition, the value of gold will be subject to supply and demand. As new technologies and products are brought to the market that require gold, the demand for gold will grow. As more and more industries demand gold, the value of gold will increase. If a different metal replaces gold in technologies/products, the value of gold will drop.

That being said, there are plenty of flaws with our current system (insanely huge deficits and debt). I don't believe that anyone can come up with any financial system that is perfect. What is most important in any financial system is the ability for the businesses to accurately predict what will happen in the future. If we're expecting easy money policies, and the FED tightens it up - bad things happen (defaulting on debt). If we're expecting a tight money supply, and the FED dumps a whole lot of cash on us - bad things happen (stupid investments in dot com businesses). The problem really boils down to figuring out how to create a consistent constant change in money supply. There's no financial system, past or present, that has been able to do that.

[wserra]

There are no court cases precisely because "income (for Income Tax purposes) does not include earnings from labor" and the working people were not assessing themselves as having received income.

I don't see any point in typing in the anecdotes again and because R4C is so effective there is no transcript or whatever to show you.

I think we've discovered the village idiot mantra of the week: "I can't prove it because it's too obvious."

[Famspear]

Why, in the 1920s and 1930s, do we see ZERO court cases where people came in and said "Hey, wait a minute, income does not include my earnings for my labor"?

There are no court cases precisely because "income (for Income Tax purposes) does not include earnings from labor" and the working people were not assessing themselves as having received income.

No, the reason there are no court cases is that people knew that income included ordinary earnings from labor. And the "working people" WERE assessing themselves as having received income in the 1920s and 1930s. And no one "objected." There is NO RECORD of anyone having ever objected to reporting their ordinary earnings as "income."

Well I'm sure they did object, but they were a minority for starters. And those who really knew the score, or were pulled aside with "hey it's OK to support this, it only taxes your investments in national banks /corporations, it's just an excise on income encompassed by the Revenue Act," knew it was no big deal.

Baloney. You're not "sure" they did object. Why? Because they DID NOT OBJECT. No one objected. You're making this up. There is no record of anyone who was taxed on ordinary earnings having ever objected back in the 1920s and 1930s -- at the time you nitwits claim that people in general supposedly "understood" that income did not include ordinary personal earnings.

No, Harvester, "income" under the Revenue Acts NEVER excluded ordinary earnings from labor. And there is no record of anyone ever claiming otherwise in the 1920s and 1930s.

[Famspear]

You see, Harvester, this is one of the big lies you people tell. You want to re-write history. You lie when you say that people back in the 1920s "understood" that income did not include earnings from labor. You lie when you say you're "sure" that people objected to having their earnings from labor taxed.

It is true that the AVERAGE working person didn't owe federal income tax in the 1920s -- but that was because THE STATUTE ITSELF EXEMPTED A LARGE CHUNK OF INCOME --not because income somehow did not include earnings from labor.

And the HIGH INCOME earners -- the people who could afford tax lawyers and accountants -- DID owe federal income tax and DID litigate tax issues back in the 1920s and 1930s -- and none of those people ever claimed that their earnings from labor was not "income" under the Revenue Acts.

Even back in the 1800s, when people were taxed on their earnings from labor, there is no record of anyone having ever argued that earnings from labor did not constitute "income."

And as far as Peter Hendrickson's pet theory about "federal privilege," there is no record of anyone, ever, in the 1880s or in the 1920s or 1930s, having ever argued that the federal income tax was imposed only on income realized in an "activity" involving a "federal privilege." It never occurred to the people pulling in the big bucks back then -- or to the tax lawyers they hired -- to argue such nonsense.

[LPC]

Income at the time [of the 16th Amendment] generally meant 'unearned income' or interest income

That is both wrong and irrelevant.

For example, in 1913, the same year that the 16th Amendment was ratified, the Supreme Court stated that "the earnings of the human brain and hand when unaided by capital ... are commonly dealt with as income in legislation." Stratton’s Independence, Ltd. v. Howbert, 231 U.S. 399, 415 (1913).

And it's irrelevant because Congress didn't need the 16th Amendment to tax wages and salaries. The Supreme Court in Pollock had ruled that an unapportioned income tax was constitutional only to the extent that it taxed incomes from property (i.e., rents, interests, and dividends). The majority opinion 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). The majority opinion therefore held that the entire tax act was unconstitutional, believing that Congress would invalidate the entire tax act rather than tax only “occupations and labor.”

That a tax on wages and other compensation for labor would have been constitutional even before the adoption of the 16th Amendment was confirmed by the unanimous decision of the Supreme Court in Brushaber, in which the court stated:

“Nothing could serve to make this clearer than to recall that in the Pollock Case, in so far as the law taxed incomes from other classes of property than real estate and invested personal property, that is, income from ‘professions, trades, employments, or vocations,’ (158 U.S. 637), its validity was recognized; indeed it was expressly declared that no dispute was made upon that subject, and attention was called to the fact that taxes on such income had been sustained as excise taxes in the past. Id. p. 635.”

Brushaber v. Union Pacific R.R. Co., 240 U.S. 1 (1916).

[LPC]

Everyday income (all the money I made) is very different from "income" in the Revenue Acts.

Wrong again.

“[T]he words of statutes--including revenue acts--should be interpreted where possible in their ordinary, everyday senses.” Crane v. Commissioner of Internal Revenue, 331 U.S. 1, 6 (1947); Malat v. Riddell, 383 U.S. 569, 571 (1966).

“In interpreting the meaning of the words in a revenue Act, we look to the ‘ordinary, everyday senses’ of the words.” Commissioner v. Soliman, 506 U.S. 168, 174 (1993).

And stop saying stupid things without providing any evidence that what you say is true.

And those who really knew the score, or were pulled aside with "hey it's OK to support this, it only taxes your investments in national banks /corporations, it's just an excise on income encompassed by the Revenue Act," knew it was no big deal.

There you go again, just making crap up.

[LPC]

Phil Hart's CONSTITUTIONAL INCOME is a great resource here as He gives a thorough analysis of the Congressional Record & newspapers of the day to conclude that The People or Congress did not intend to tax the average workman's pay via the 16th Amendment (our grandparents weren't morons).

Phil Hart did what every other tax protester does, which is to take quotations out of context and ignore all evidence that contradicts what he wants to believe.

He tried out his ideas in court and lost. From the opinion in his Tax Court case:

Petitioner timely filed his 1994 and 1995 tax returns. In an attachment to the 1994 return, petitioner stated: "The wages I earned as reflected on my W-2 form are nontaxable personal property." The attachment also contained other typical tax protester arguments. The 1995 return contained a similar attachment.

[...]

Petitioner next argued: "when I read the statutes and the regulations, I do not find in them where there is a tax on the wages, that's payable by me. It's conceivable there could be a tax payable by somebody else, but it's not payable by me." Petitioner makes tax protester arguments that have been repeatedly rejected by this Court and others as inapplicable or without merit. Rowlee v. Commissioner, 80 T.C. 1111 (1983); McCoy v. Commissioner, 76 T.C. 1027 (1981), affd. 696 F.2d 1234 (9th Cir. 1983). We see no need to repeat these discussions here.

Suffice it to say that petitioner is not exempt from having to pay Federal income taxes. Abrams v. Commissioner, 82 T.C. 403, 407 (1984). Payments of compensation for services performed are included in gross income and subject to the Federal income tax. Sec. 61(a)(1).

[...]

We grant respondent’s motion for a penalty under section 6673. Under section 6673, this Court may award a penalty to the United States of up to $25,000 when the proceeding has been instituted or maintained by the taxpayer primarily for delay or if the taxpayer’s position in such proceeding is frivolous or groundless. Sec. 6673. Based on the record, we conclude that such an award is appropriate in this case.

Petitioner has pursued a frivolous and groundless position throughout this proceeding. At the beginning of this trial, petitioner was clearly warned that if he proceeded with the arguments contained in his written submission, then he would be subject to penalties. Petitioner knew or should have known that his position was groundless and frivolous, yet he persisted in maintaining this proceeding primarily to impede the proper workings of our judicial system and to delay the payment of his Federal income tax liabilities. Accordingly, a penalty is awarded to the United States under section 6673 in the amount of $10,000 in each docket.

Philip Lewis Hart v. Commissioner, T.C. Memo. 2000-78, aff'd No. 01-70173 (9th Cir. 1/9/2002) (additional sanctions of $2,000 imposed), cert. den. No. 02-84 (8/7/2002).

He is reported to have settled with the IRS in 2007. The IRS had filed a petition against him to enforce an administrative summons and he initially filed some tax protester nonsense to try to fight the petition, but then a lawyer entered an appearance for him, withdrew the nonsense, and allowed an order was entered enforcing the summons. United States v. Philip Hart, No. 2:07-cv-00066-EJL (U.S.D.C. Idaho 4/17/2007).

[Demosthenes]

Rep. Hart to face judge on tax audit
IRS says he refused to give information

Erica Curless
Staff writer
March 6, 2007

A North Idaho lawmaker who owes thousands of dollars in back taxes is accused of providing inadequate information to the Internal Revenue Service and will face a judge in April to explain why.

Rep. Phil Hart, R-Athol, said during a phone interview Monday from the Idaho House floor that he is trying to get the financial information as part of an audit for the seven years that he didn't pay income taxes.

Hart is scheduled to appear before U.S. District Court Judge Edward Lodge on April 16 in Coeur d'Alene to explain why he hasn't obeyed the IRS. The agency wants Lodge to force Hart to provide the information and pay court costs, according to court documents.

Hart has given the agency at least a "box worth" of documents and said he is working to hand over more records for the years he refused to pay income taxes.

"I'm working on it every week," Hart said, adding that neither he nor his attorney has fully reviewed the petition filed Feb. 12 in U.S. District Court. "I'm busy down here with the hundreds of bills we have."

Hart objects to how Congress and the IRS interpret the 16th Amendment, which gives the federal government the power to collect income taxes. He stopped paying income tax in 1996 while he filed a lawsuit against the IRS to show that Congress was wrongly applying the 16th Amendment.

In 2003, after losing his lawsuit and failing to persuade the U.S. Supreme Court to review the taxing authority of the Constitution and the 16th Amendment, Hart conceded and began paying his taxes.

Now, he said, the IRS is auditing him to ensure he's paying the correct amount, which so far has totaled nearly $90,000 in back taxes, penalties and interest.

Hart said he hopes to have the problem resolved before the April court date.

The lawmaker, a former Constitution Party member who switched to the Republican Party before his 2004 run for the Legislature, said that some of the records demanded by the IRS don't exist and that other information violates the First Amendment and his privacy rights.

Hart said the IRS wants the names of people who bought his book, "Constitutional Income: Do You Have Any?" He wrote the self-published book on the Constitution and the 16th Amendment while he was suing the IRS.

Court documents show that the IRS is requesting PayPal payment records for transactions between January 2002 and August 2005.

The agency also wants the names of people who bought Liberty Dollars – an alternative currency that its maker claims is a hedge against inflation because it's made of silver. Hart said he is no longer selling the coins that mimic U.S. currency from his Hayden engineering firm but confirmed that he once did.

The U.S. Mint and U.S. Justice Department have determined that the use of the Liberty Dollars, produced by the Indiana-based National Organization for the Repeal of the Federal Reserve Act and the Internal Revenue Code (known as NORFED), is a crime.

Hart referred specific questions about the case to Houston-based attorney John Green, who wasn't available for comment. He has a second attorney handling the First Amendment concerns about handing over book purchasers' names to the government.

Michael Rosman, of the Washington, D.C.-based Center for Individual Rights, said he isn't involved in the latest IRS case but said the same principle applies to similar cases he's handled for Hart in the past.

"Why do they need to know?" Rosman said. "If we show he sold to 100 people, what difference does it make who the names are?"

Rosman said Hart is willing to release information on the number and proceeds of the sales, just not names or other personal information.

The IRS also wants information about two trusts, one that owns Hart's Athol home and the other that owns his Alpine Engineering business.

The court records show that Hart refused to disclose information about the Sarah Elizabeth Hart Trust, which is in his daughter's name and owns his home.

Hart is a trustee of the Alpine Northwest III Trust, which the IRS alleges provides both engineering services and sells Liberty Dollars. Court documents show that for 18 months Hart "refused to voluntarily respond."

The IRS says it needs the information to determine Hart's income tax liability for the seven years he refused to pay.

When contacted Monday, U.S. Justice Department spokesman Charles Miller said he would look into the case. IRS Revenue Agent Kate Lopez didn't return calls.

In court documents, Lopez states that she is conducting the investigation into Hart's tax liability. She alleges that Hart and his attorney failed to appear for a Dec. 12 interview. Lopez said that the wife of Hart's attorney left a voice message the day before canceling the meeting – but left it at the Idaho Falls IRS office, not her office in Twin Falls.

Lopez said she traveled to Coeur d'Alene before learning of the cancellation.

The meeting was rescheduled for Dec. 19. That's when Hart allegedly declined to provide information, including details about the trusts. Hart told Lopez he would provide the information by Jan. 8.

Lopez said he never did produce the information. Court records also show that Hart and his attorney failed to provide requested information during a Nov. 9 meeting with a different IRS agent.

During his campaigns, Hart doesn't mention his tax debt or court battles with the IRS. As a state lawmaker, Hart said he has no power to influence the IRS or federal tax laws. He doesn't campaign on the subject because he said it is too complicated for most people.

Hart said he accepts other taxes including taxes on business profits, investment income and property. He said that taxes pay for a civilized society. Hart never advised others not to pay their federal income taxes, he said.

In June 2005, the trust that owns his home owed $7,236 in property taxes for 2003 and 2004. Kootenai County Treasurer Tom Malzahn said that Hart paid off his tax debt in 2006 and remains current.

At the time, Hart declined to talk about his involvement with the trust or the property tax bill other than to say that the payments were "just behind" and that the reason had nothing to do with a tax objection.

Hart's business, which is overseen by the Alpine trust, owes the county $35 for personal property taxes on business equipment, Malzahn said.

[LPC]

And [the meaning of "income" in the 16th Amendment is] irrelevant because Congress didn't need the 16th Amendment to tax wages and salaries. The Supreme Court in Pollock had ruled that an unapportioned income tax was constitutional only to the extent that it taxed incomes from property (i.e., rents, interests, and dividends). The majority opinion 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). The majority opinion therefore held that the entire tax act was unconstitutional, believing that Congress would invalidate the entire tax act rather than tax only “occupations and labor.”

That a tax on wages and other compensation for labor would have been constitutional even before the adoption of the 16th Amendment was confirmed by the unanimous decision of the Supreme Court in Brushaber, in which the court stated:

“Nothing could serve to make this clearer than to recall that in the Pollock Case, in so far as the law taxed incomes from other classes of property than real estate and invested personal property, that is, income from ‘professions, trades, employments, or vocations,’ (158 U.S. 637), its validity was recognized; indeed it was expressly declared that no dispute was made upon that subject, and attention was called to the fact that taxes on such income had been sustained as excise taxes in the past. Id. p. 635.”

Brushaber v. Union Pacific R.R. Co., 240 U.S. 1 (1916).

My understanding of Pollock was also confirmed by the 10th Circuit Court of Appeals in Charczuk v. Commissioner of Internal Revenue, 771 F.2d 471, 473, 56 A.F.T.R.2d 85-5740, 85-2 USTC P 9656 (10th Cir. 1985):

While ruling that a tax upon income from real and personal property is invalid in the absence of apportionment, the Supreme Court [in Pollock] explicitly stated that taxes on income from one's employment are not direct taxes and are not subject to the necessity of apportionment. Pollock v. Farmer's Loan and Trust Co., 158 U.S. at 635, 15 S.Ct. at 919.

[Tax Man]

During his campaigns, Hart doesn't mention his tax debt or court battles with the IRS. As a state lawmaker, Hart said he has no power to influence the IRS or federal tax laws. He doesn't campaign on the subject because he said it is too complicated for most people.

Now he'll get to show us how well he understands the tax laws.

[.]

Think about those words of wisdom from our resident loon, Harvester.

On Planet Van Pelt, magic words and special symbols make all the difference. Thumbprints are everything.

Sort of like on Planet Hendrickson, except Pete hasn't come up with any special symbols. Well, there was that attempted mail-bomb thing, but all that got him was his previous conviction.

Only 8 days until your hero hears the loud clang of federal prison doors behind him. Some of your CrackHead buddies and perhaps even you are next, as I'm quite sure that CI has had the lot of you on their radar for some time.

It may be too late to move on to the next scammer in your idiotic, lame efforts to free-load. I won't be shedding any tears when you are finally caught.

[.]

The words of wisdom from our resident loon disappeared while I was posting.

[wserra]

The words of wisdom from our resident loon disappeared while I was posting.

Well, not exactly "disappeared", ".". More like "unhijacked". Still, sorry about that, ".".

Replying to "." reminds me of a certain Victor Borge routine.

[Harvester]

.. as I'm quite sure that CI has had the lot of you on their radar for some time.

Oooo I'm really scared now! [/sarcasm] haa, come'n git me Revenue Scammer! Have you forgetten I'm a law abiding non-taxpayer?

Captain, 'naturally occurring inflation' I have no problem with and so insignificant it can be put out of view (Note the nearly flat line until 1913 and how it really spiked when we went off the gold standardlink). The inflation caused by handing our monetary system over to bankers to oversupply fiat paper money and thereby enrich themselves & politicians is what I AM concerned about and rises somewhat beyond "government interference" as you describe it. Electronic banking systems can handle hard money (gold) transactions as well as fiat. And note that politicians did not "game the system" for 123 years because our sound money system prevented it.

I was ready to move on to Famspear/LPC and the tax scam, but it appears many are either ignorant of our modern banking system, or, intentionally misconstruing my point. It's not that I'm a goldbug or feel an investment IN gold/silver is superior. Rather, we should all have investments in stocks, bonds, whatever, denominated in gold/silver or some other commodity-backed system, that precludes the automatic loss of 4 to 10% of it to bankers. Of course y'all realize the reason we have a central bank is because of fractional reserve banking (bank only has a fraction of its deposits). The central bank provides the backstop, as the lender of last resort. Furthermore, when you borrow money, the bank doesn't loan you money it has, it creates new money based on your signature, your promise to pay. They've expanded the money supply by the amount of your loan. It's all conveniently explained by the Federal Reserve Bank of Chicago

A nation with sound money needs a central bank like a fish needs a bicycle.

[The Operative]

<SNIP NONSENSE PROVING HARVESTER HAS NO CLUE ABOUT HISTORY, MONEY, ECONOMICS, OR BANKING>
A nation with sound money needs a central bank like a fish needs a bicycle.

This latest post from Harvester proves in my mind that he also unable to read and understand the English language.

[bmielke]

A nation with sound money needs a central bank like a fish needs a bicycle.

Never seen a fish bicycle, but as all nations really do need a central bank and I have neverseen one I am wondering if it would be a good business to get into, I have tools, I am capable of making them I think. Who would buy it though? Aquaculturists? Maybe exersise the little guys before shipping them off to market?

Seriously a central bank is important to a country, I think you need to do a little more research. Try to avoid Sui Juris, that will rot your brain.

[Famspear]

I was ready to move on to Famspear/LPC and the tax scam, but it appears many are either ignorant of our modern banking system, or, intentionally misconstruing my point.

So, in addition to holding The Truth about the federal tax law, you are now pontificating for us about the modern banking system, eh, Dingbat?



Look, Dimwit, do yourself a favor. Don't pontificate to other people about something about which you know next to nothing - namely, the banking system.

Instead, go get admitted to an accredited college or university. Major in accounting. After about four years, earn an accounting degree. See if you can hack that.

Then, if you can hack that, try to get hired at a large CPA firm. While you're working, study for, sit for, and pass the Uniform Certified Public Accountant Examination, and become licensed as a CPA.

As a CPA, continue to work for a few years for the accounting firm, and work on some bank audits. Learn about banks. Learn the ins and outs of how the modern banking system works.

Then come back here and pontificate.

EDIT: In case you didn't know, Dingbat, I am a certified public accountant with a lot of bank audit experience. Neither I nor anyone else in this forum needs your help understanding the banking system.

[The Operative]

Instead, go get admitted to an accredited college or university. Major in accounting. After about four years, earn an accounting degree. See if you can hack that.

If I am not mistaken, most states have moved to the 150 semester credit hour rule. While many states allow a person to sit for the CPA exam with only 120 credit hours (the standard four year degree) and specific requirements for accounting courses and business, in order to get licensed, a person needs 150 semester credit hours.