Posts Tagged ‘Taxes

06
Mar
14

Hasn’t Ron Paul been calling for this for DECADES!?

#CPAC Ted Cruz channels The Princess Bride, demands abolition of #IRS http://tiny.iavian.net/20t7

Didn’t Ron Paul run on this and everyone called him batshit crazy?

I hate when politicians take on issues when they are politically favorable, not when they need to be addressed.

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23
Oct
13

The Government Can Spend Its Way Out of Debt

I have been distant in the world of politics lately. I still read political news on occasion but to be honest I am completely disenfranchised by it. To me the ideas and methods purported by politicians (and then supported by the public either directly or indirectly by their silence) is mind boggling.

Let’s face it, we are a broken nation that is in debt. Anyone with an inkling of politics, economics or finances should know that spending yoru way out of debt is not only unreasonable but also an absolutely ridiculous idea. You see, spending money to make money can work for individuals or businesses and we do it all the time. Individuals will invest in certifications, testing, college, and investments in hopes that their spent money will make them something later in life. Their money investment will yield something because they hope that they will be able to produce more with their time/labor with their new skill, certification, or passing test score. A business will also invest to try to make a new product that isn’t on the market, to make a product/service more profitable (less waste) or bring marketplace recognition. Individuals and companies will spend money they don’t have in hopes that they can later make their time more profitable.

The opposite is true of governments because governments do not produce anything – unless of course you count false dreams, hostility, and potentially unfair marketplaces.

Have you ever been to the gas pump and complained about the gas prices? Sure, we all have. Many other people complain about the big, evil oil companies raking in profits. Sure, those companies have been known to be profitable – after all, we all use their products… not only in our cars but in much of our manufacturing (i.e. plastics, etc.). If we are all using their products isn’t it logical to believe that they would indeed be very profitable? Of course! This isn’t even my point of the matter though – my point is that governments get their scoop of money just simply for existing.

According to the Tax Foundation California is the second worst state for taxing gas. If one checks out California’s Gasoline Price Breakdown chart for 2013 they can see that for a $4.00/gal of gas the breakdown looks like this – $2.54 for the crude oil, $0.35 for distribution/marketing profits, $0.43 for the refinery and their profits, $0.02 for California gas tank tax, $0.09 for the state tax, $0.36 for the state excise, and $0.18 for the federal tax.  To put it another way this is $2.54 for the materials, $0.78 to get it out of the ground and refine it (plus profits), and $0.65 to the government – respectively this is 63.5% for the matrials, 19.5% for producing and profits, and 16.25% for the government. If you are getting my drift here I am telling you that the government “makes” almost as much money as the oil company… yet does absolutely nothing in the process to make the product!

Repeatedly we run into this problem of budgeting. The story ends the same all the time and has for some time now – the debt ceiling is raised and spending cuts are promised for a later date. This is absolutely ridiculous and history has shown us that no budget spending cuts (at least nothing significant) will be implemented. Our government is hellbent on spending it’s way out of debt. The problem of course is that no matter what it spends it will never produce anything and if never produces anything then it will never have a return on that investment. All it can do is continue to take from those who have and give to those who do not have.

If anyone can tell me how raising taxes to give to those who do not have  – whether it be in the form of stimulus checks, welfare checks, food stamps, tax refunds to those who don’t pay taxes, or free health care – will bring us out of debt I’d be glad to listen.

23
Jul
13

Why Do We Have the IRS: Abolish It

For 126 years the United States of America had very limited taxes. In this time from 1787 until 1913 the government-funded itself by indirect taxes – mainly tariff, corporation, and other excise taxes. An indirect tax is one that is not levied on each person and can be avoided (or passed on) if you want to. An example of this is the tobacco tax – you do not have to pay the tobacco tax simply for being a resident. You only pay the tax if you voluntarily decide to participate in that activity that the tax is attached to – you can either not smoke or you can grow your own tobacco – you simply avoided that product or service to not pay an indirect tax.

CCH_Title 26Today most Americans have no idea about taxation. Even worse is that they have no idea what the difference is between direct and indirect taxation. Most Americans simply send off any paperwork they may have to a tax professional and that person does it. What is interesting is that you could send your paperwork off to five different individuals and you will come up with a different tax burden computation from each. Each tax preparer will interpret the code and take calculated risks off those interpretations. The sad part is that most of the time they are all right – the tax code is so insanely convoluted that there is an infinite amount of possibilities that one can arrive at for their tax burden – after all Title 26 was reported to be 73,954 pages (~4.5 million words) for 2013. Compare this with the 400 pages (240,045 words) the tax code was in 1913, the Bible with 1,291 pages (774,746 words), and War and Peace at 1,444 pages (866,562 words).

We are routinely told by our government that taxation is a voluntary system but yet every year the IRS sends out legions of enforcers and piles of fines to people they have somehow deemed to be delinquent.  All this despite numerous politicians stating that it is voluntary; even IRS Commissioner Steve Miller said that it was voluntary. How is a system voluntary if we are threatened with fines, court proceedings, garnishment, repossession, liens, and jail time?

Something doesn’t smell right, does it?

Obama-IRS_SMALL

But it doesn’t stop there. Recently we have learned that the Internal Revenue System has targeted political opposition to the President – and worse yet during and election year. This is an obvious abuse of power but despite this fact little to nothing has done to condemn or stop such acts. I think what bothers me about the entire connection with Obama is that a lot of people will claim that he had no knowledge of the targeting nor did he command the targeting. This may be true but I still think it begs a few pertinent questions.

The IRS Commissioner in charge during the targeting was Douglas Shulman. He was to serve for 5 years starting in 2008. So yes, Shulman was put into position during President W. Bush’s term. However, he served less than 9 months under Bush. Furthermore, the Senate that confirmed him was controlled by the Democrats and according to financial records Shulman donated to the Democrats. And this fact is evidenced even further by the White House visitor log showing that the IRS Commissioner Douglas Shulman visited the White House 118 times between 2010 and 2011. By law the President can remove the IRS Commissioner if he has a cause and what a better cause than the IRS targeting certain political groups.

As the proverb goes “You may know a man by the company he keeps.” President Obama had every right to remove Shulman but didn’t. I personally I find it hard to believe that someone visited the White House 118 times in 2 years (that is about once a week) and never squeaked a word about any targeting of the hosts (President’s) opponents. C’mon.

Have you ever thought about how America was before the Tax Code? Arguably America had her biggest growth before 1913 when there were very few taxes and little to no taxes on any income. If you go over to my article entitled The Sixteenth Amendment Did Not Allow the Government to Tax You! then you will see that only 0.37% of the American population even filed for taxes. It wasn’t even until 1916 that over 1% filed and 1943 over 30% filed – mind you that the Sixteenth Amendment was implemented in 1913. Courts have repeatedly ruled that no new powers of taxation were created with the Sixteenth Amendment but that sure as hell doesn’t stop the politicians and the government from saying that is exactly what allows them to tax your paycheck.

We Americans don’t say anything about these inconsistencies because we are scared of the IRS. Check out the list entitled 10 Outrageous Facts About the Income Tax from the CATO Institute.

  1. The U.S. “tax army” is bigger than the U.S. army in Iraq.
    Income taxes are so complex that there are up to 1.2 million paid tax preparers in the country — six times more than the number of troops in Iraq. The tax army includes legions of accountants, lawyers, and computer experts — some of the best minds in the country. Unfortunately, their brainpower is adding little to the nation’s standard of living.
  2. A tax form for every special interest.
    As the income tax grows more complex, the number of IRS tax forms has jumped from 402 in 1990 to 526 by 2002. Congress hands the accountants business on a silver platter when they create special interest tax forms such as “8845-Indian Employment Credit” and “8834-Qualified Electric Vehicle Credit.” When Congress penalizes an activity, we get tax forms such as “6197-Gas Guzzler Tax.” It’s time to end the micromanaging and adopt a simple flat-rate tax. Until then, Congress needs to supplement “6478-Credit for Alcohol Used as Fuel” with form “XXX-Credit for Alcohol Used for Drinking.”
  3. Double-tax on dividends: 60 years and still not fixed.
    Sixty years ago, a Treasury report noted that “double taxation of corporate profits is the principal problem raised in connection with the corporation income tax.” In the 1930s, a Treasury report argued that the tax disincentive to pay dividends caused corporate management problems. Recent scandals proved them right. Congress should bite the bullet and reform dividend taxes now — before the next round of corporate scandals begins. 
  4. Congress promotes discrimination through the tax code.
    The front of the Supreme Court building boldly declares “equal justice under law,” yet the income tax has hundreds of discriminatory provisions. For example, homeowners are treated more favorably than renters since they can deduct mortgage interest and other itemized deductions. Consider that a higher-income homeowner can effectively deduct car loan interest by shifting around his finances but a lower-income apartment dweller cannot. Americans would not stand for such discrimination on other taxes — imagine if each shopper at Wal-Mart was assigned a different sales tax rate!
  5. Congress on tax complexity: Who us?
    Congress frequently holds hearings on tax simplification so members can denounce the tax code’s complexity. Each time, congressional experts and outside think tanks provide useful simplification ideas. Then when the TV cameras are turned off, Congress promptly ignores them and votes for more special interest breaks. The result: The number of pages in the tax code and regulations doubled from 26,300 in 1984 to 54,846 by 2003, according to tax publisher CCH.
  6. AMT designed to catch 155 taxpayers will soon catch 37 million.
    The alternative minimum tax is an unneeded parallel tax system alongside the ordinary income tax. It began life in 1969 after Congress was shocked (shocked!) to learn that 155 wealthy individuals were not paying tax because they used too many of the deductions that Congress had provided them. The AMT has been a complex nuisance ever since. But this dumb idea aimed at the rich is set to explode on the middle-class as the number of AMT taxpayers skyrockets from 3 million today to 36 million by 2010.
  7. Voluntarism works for the U.S. military, not the income tax.
    For years, officials have hailed the income tax as a voluntary system. The Treasury calls it “our voluntary tax system.” The IRS says that it pursues “enforcement programs to promote voluntary compliance” and establishes “strategies to maximize voluntary tax law compliance by emphasizing customer satisfaction.” But with 32 million IRS penalties assessed each year and about $10,000 in income taxes imposed on each taxpaying household, the tax isn’t voluntary and these customers aren’t satisfied.
  8. Congress can’t figure out how to measure “income.”
    Although the income tax is 90 years old, Congress still can’t figure out how to measure “income.” Some income such as municipal bond interest is not taxed, but other income such as dividends is taxed twice. The income tax treatment of savings is particularly incoherent and unstable. For example, there have been 25 major changes in the capital gains tax since 1922. The solution is to replace the income tax with a low-rate tax that exempts savings.
  9. Family saving shouldn’t require an advanced math degree.
    Shouldn’t saving for education, retirement, and other items be as simple as putting money in the bank? Instead, Congress has manufactured hundreds of special savings rules, such as for 401(k)s, Keoghs, deductible IRAs, nondeductible IRAs, education IRAs, Roth IRAs, traditional pension plans, annuities, SIMPLEs, SEPs, MSAs, and others. The IRS guide to IRAs alone is 105 pages long! President Bush’s initiative to consolidate the savings plans and create a universal IRA would be a good step to bring some sanity to this mess.
  10. Income taxes: A bad idea that got worse.
    The income tax is not an example of a good idea gone bad. It was bad from the beginning, and it just keeps getting worse. The income tax distorts financial planning and business investment, and it encourages tax avoidance and evasion. Because the income tax is built on an unworkable base of “income,” the law is continually changing. Let’s simplify Americans’ finances and disband the tax army by pursuing fundamental tax reform.

Why would one want to contend with the IRS or the Tax Law when even the IRS doesn’t know what it says (or apparently what it does)? Here is another list of 10 reasons why the IRS is no good from FreedomWorks.

1. The Code is Too Complex.

The code is so big that politicians can’t even agree on how long it is.  Title 26, the Internal Revenue Service (IRS) code totals to about 3,400,000 million words.  The non-partisan Tax Foundation reports that the entire tax code with regulations in 2005 was over 9,097,000 words.  To put that in perspective, the Bible has 774,746 words.  The code has grown in length between 1995 and 2005 by 18.9 percent.  The directions for filing a typical form 1040 totals 161 pages.  The “EZ” version is 41 pages.

2. The Code is Beyond Comprehension.

No single person knows or understands the entire tax code– not even IRS Employees!

In 2008, the IRS was wrong on questions concerning tax law about 10 percent of the time.  Myriads of accountants and lawyers are employed to decipher the cryptic tax code.  It should be scrapped and simplified.  No small modification to the code can remove the enormous complication.  

3. The IRS is Too Big.

The IRS employed 90,647 people in 2008.  It had operating costs of $11,207,223,000.  If we simplified the code, then many of those IRS employees could go into more productive lines of work, rather than checking up on whether or not the correct amount of money was extracted from hard working Americans.  The money spent on the IRS is economic deadweight loss caused by the level of complication of the code.  If it were scrapped and replaced, billions of taxpayer dollars could be saved just by reducing the size of the IRS–not to mention all the gains from productively employing former IRS staff members in the private sector.

4. The Code Corrupts the Culture in Washington. DC.

Lobbying is the biggest business in Washington.  About $3.2 billion was spent in the 2008 on lobbying.  Many, if not the majority, of America’s 15,139 registered lobbyists are working on increasing the level of complication of the tax code by fighting for special loopholes and regulations that will save their company money or put their competitors out of business. Yet lobbying and ethics reform too often focuses on the symptoms, like gift bans, instead of the underlying cause. What would be America’s single most effective move to clean up the swamp of special interests in Washington? Scrapping the code and replacing it with a fair and simple one.

5. The Code Taxes Some Income Two or More Times.

Our code taxes certain types of income twice.  For instance, a company pays taxes on dividends that it pays out and then when stock holders earn money from the dividends, they pay taxes on them again.  When government taxes particular types of income more than others, it distorts the market economy by punishing certain kinds of behavior with double taxation. Absent government intervening through the tax code with the complicated and unfair system, the market economy would likely perform more efficiently.  

6.   Congress Uses the Tax Code to Legislate Morality.

Congress, with its recent passage of the SCHIP bill, raised taxes on cigarettes by 61 cents per pack.  Our corrupt and easily manipulated tax system allows members of Congress to pass laws that increase the cost of certain behavior.  In the case of SCHIP, they targeted smoking.  In the case of AIG, they targeted bonuses.  Frightening precedents are being set by Congress this session that will likely lead to even more explicit penalties for certain industries.  President Obama claims that he will place a cap-and-trade tax on industry that will eliminate construction of any new coal power plants.  Under a fairer and less easily manipulated tax system, government couldn’t pick winning and losing industries as we have witnessed recently.

7. High Marginal Tax Rates Penalize Success.

Marginal income taxes are higher for each dollar workers earn.  Our most productive members of society face federal taxes of 36 percent or higher.  Under our system, the top 10 percent income earners pay 70 percent of federal income taxes.  The president plans to increase top marginal rates to at least 39 percent–and that’s not even counting state income tax rates.  In virtually every state in the country, high income workers would face top marginal tax rates that would rob them of more than 50 percent of their income.  Our current code destroys the incentive of the most productive to work hard.  

Shouldn’t we be trying to give incentive to the most productive to continue working rather than taxing so much of their income away that they no longer think it’s worth working hard?  How many inventions or cures for diseases have we lost because the most productive stopped working when faced with 50 percent or higher rates on each additional hour of work?

8. Complying with the Code Costs Americans Billions.

Compliance is a multi-billion dollar industry and 59 percent of all individuals filing taxes hire someone else to do it for them totaling to 81 million returns done by accountants last year.  If we scrapped the tax code for a simpler one, people could fill out their tax forms easily.  The sum total benefit could be billions of dollars.  All those accountants and lawyers who make their living off the level of complication of the tax code could go into more productive work that would benefit all Americans.  

Compliance weighs more heavily on the poor–making our tax code more regressive than it appears.  Taxpayers with adjusted gross income (AGI) under $20,000 pay 5.9 percent in compliance costs while those with an AGI of over $200,000 pay .5 percent of their income for compliance.

9. The Code Drives Political Donations

The Congressman on the House Ways and Means Committee Received  $55,157,458  in the 2008 Election Cycle.

The Ways and Means Committee deals with taxes.  It’s responsible for “raising the revenue required to finance the Federal Government. This includes individual and corporate income taxes, excise taxes, estate taxes, gift taxes, and other miscellaneous taxes.”  It’s the busiest committee and it’s membership during the 2008 election cycle received $55,157,458 in campaign contributions.  

If we scrapped the code, the committee members would lose their power to manipulate the code in order to pay off their campaign contributors.  Our tax system leads to corruption and corporate capture of legislation .

10. Laws Should Rest on Principles of Justice.

The tax code is modified every few years along no reasonable principle.  The code is arbitrary and unpredictable, and is morphing from its stated purpose– efficiently raising government revenue– into an instrument that Congress uses to instill fear, punishment, and political control. The code should be scrapped and replaced with a more just system based on principles of fairness and equality before the law rather than on the whim of lobbyists and lawmakers.

IRS_decimal point

America grew best when she didn’t demand through a “voluntary” tax system. People were allowed to manage their finances and plan for their savings. With an ever-changing tax system in place that grows by hundreds of pages per year and is over 73,000 pages what it was originally supposed to be it makes it very difficult to plan anything – especially for businesses. It should be fairly evident by now that the taxes collected aren’t for your benefit – it is for the lobbyist and the political leaders to get ahead of their competition. If you can have the government make your competition squirm while you don’t then you gain an advantage. GE did this in 2010 when it filed a 57,000 page tax return on its $14 billion of profits and paid… no taxes at all.

We should seriously look at shutting down the IRS. While everyone thought he was crazy Ron Paul repeatedly called to end the corrupt IRS.

I want to abolish the income tax, but I don’t want to replace it with anything. About 45 percent of all federal revenue comes from the personal income tax. That means that about 55 percent — over half of all revenue — comes from other sources, like excise taxes, fees, and corporate taxes.

We could eliminate the income tax, replace it with nothing, and still fund the same level of big government we had in the late 1990s. We don’t need to “replace” the income tax at all. I see a consumption tax as being a little better than the personal income tax, and I would vote for the Fair-Tax if it came up in the House of Representatives, but it is not my goal. We can do better.

As much as I hate to say it, the Second Plank of Karl Marx’s Communist Manifesto was “A heavy progressive or graduated income tax.” Why do we have such a tax system where we effectively punish those making money? Not to mention a system where people who pay no taxes repeatedly receive money and benefits for free.

Consider signing the petition here. Click below.

Cruz_Splashgraphic_abolishirs-300x177

11
Nov
12

The GOP should help crash America

Those Who Fell To Communism

Photo by by rhapsouldize of DeviantArt

Before the 2012 primary election I argued that the last chance for America is to elect Ron Paul as President of the United States. The main charge against the GOP was that all the contenders – save Ron Paul – were big-government politicians and big-government was exactly what was ruining America. Before you go and get excited please understand that I’m not singling out Democrats here as big-government folks as many people like to try to pin the tail. Fiscally the Democrats want to spend money they don’t have on “social programs” and the Republicans want to spend money they don’t have on wars and nation building. Regulation wise the Democrats want to legislate the market and the Republicans want to legislate morality. They both support progressive taxation, passing laws without reading them, pseudo-safety, spying on citizens, groping citizens as they travel, and controlling their right to protect themselves. They both support fiat currency, the Federal Reserve, Quantitive Easing, fractional-reserve-lending, not auditing the Federal Reserve, bailouts, and fake stimulus checks. And best yet they all are in favor of ceding our sovereignty to the United Nations, Germany, Mexico, NAFTA, the IMF, or whoever asks for it.

I’ve heard a great divide lately after the 2012 Presidential election from all sides. I’ve heard many say that they feel that a second American Civil War is on the horizon. Others simply are realizing that as 47% of Americans don’t even pay incomes taxes on the large, that we are at the crucial turning point where half of Americans are simply voting to maintain eating out of the fiscal trough and they will vote for whoever promises them the most feed – in this case Obama promised the most.

I said before the election that if Ron Paul didn’t get elected President that it was all downhill – that America will fall. I followed that up in my conversations with friends that the faster America falls, the better. Now, I’m not saying that I want America to be overthrown, I simply want her to fall as quickly as possible so that when she does fall there will still be enough people who are able-bodied and who still value Freedom and Individualism to pick up the pieces and rebuild the greatest nation on Earth.

Apparently I’m not the only one. Arnold Ahlert said it best,

As a result, I have a suggestion for the Republicans, one they won’t hear from anyone else: give Barry and Company everything they want, without an iota of resistance. Let ’em raise taxes and the debt ceiling, gut the military, and run up trillions of dollars of additional deficits and debt. Then stand back, and let an utterly corrupt media chronicle the demise — without being able to pin an ounce of the ensuing socialist catastrophe on an ‘obstructionist’ GOP. (link)

I’ve heard more people say that they feel that they should just quit their job and start collecting welfare and food-stamps. I think many of us know people who are indefinitely on these social programs, many of who abuse those programs and it quite frustrating to watch them live the good life while we struggle to do the right things in life – pay for our mortgages, buy groceries for our fridge, and cut our debt down. I personally know of multiple people who own homes on my tax dollar and eat like kings who don’t have jobs and haven’t in some time. There comes a breaking point where we look around and wonder why we are the only one working and struggling while others are living off our sweat in luxury… and then we say fuck it and join in.

Why fight it? Let’s just crash this bitch.

24
Aug
10

The Real Reason Gays Are Not Allowed To Marry

On October 21, 1936, our 32nd American President, Franklin D. Roosevelt, said to the people at Worcester, Massachussets, “Taxes, after all, are dues that we pay for the privileges of membership in an organized society.” So what is this organized society and why am I a member of it? I have a membership to SAM’S Club by my own choice. I was a member of the National Spelological Society only after I voluntarily filled out an application and paid my dues. If I wanted to be a member of the National Rifle Association then I too would be doing the same thing. Even with banking you won’t be a member of a credit union unless you apply and are accepted.

So what does it mean when our government says that we have a “membership” into a “society.” In all the above examples, memberships are something that you individually volunteer to be in. You aren’t really “born into” any membership. Or are we?

In my above examples when I become a member of SAM’S Club, they give me a membership number on my membership card. When I became a member of the NSS I received a membership number on my membership card. I would assume that the NRA would be the same. And likewise with my banking I also have a membership number. But for this membership into this society do we have a similiar situation? Well, it seems that we do.

In 1935 the government passed the Social Security Act. In this act normal citizens were allowed to sign up for an insurance and retirement program. In exchange for their membership they paid their dues and the government through the Social Security Administration issued membership numbers. Prior to 1935 the government had this same plan and enumerated their participants, their government employees, with Social Security Numbers. The act simply allowed non-government employees to join under the plan – of course, so long as they paid their membership fees.

However, even back then the people still had a choice to be a part of the plan. They still had a choice on whether to join. In fact, the Enumeration at Birth program wasn’t even established until 1989. Here is the werd part though… FDR said that taxes a part of a membership of a society. So one should assume that if you are a member of the society (presumably in this case, an American) then you pay taxes. Right?

Somewhat.

Taxes are everywhere and generally everyone will come in contact with them somehow. I want to zero in on the income taxes though. The biggest change to the the tax code was a few years after the Social Security Act of 1935 with the Revenue Act of 1942. In the 1942 edition the Subtitle C code was introduced which incorporated the language, almost verbatim, from the Social Security Act of 1935. Is this just a coinscidence? Doubtful.

Could it be that with the Social Security Act of 1935 the government radically changed who we are? Or made us join in on a membership of which we didn’t even know about? To me, it seems that way. Even the SSA admits that one does not need to have a SSN to live or work in America.

Today we are given SSNs at birth by our parents with the encouragement of the doctors. The process is easy and the hospital does all the work for you. You simply check off a box and bam, they give you a SSN.

I am way off tangent here because the real reason I wanted to write is because I find it interesting how gay people are not allowed to marry. Quite honestly, politicians don’t care who does what behind closed doors. Many American’s don’t care either. So, why are they not allowed? I think the answer to this lies in the tax question. Married people are likely to have children, which will be automatically enrolled into the Social Security program. The SSN cannot be revoked, removed, deleted, or nullified. So once you have a number, you will have that number until you die. So, anytime you use that membership number on certain things – there will be certain legal implications of using that number. In this case, I am proposing that you are submiting your membership in the Social Security program and thus you will have to pay your membership dues to be a part of that society.

But back to gay marriage. Gay couples will never have children. They physically cannot produce offspring. So, they will never be bringing new members into the taxation system. So, since they never will bring new children into the system, it is to the government’s benefit to keep them at a higher [single] rate. It is the government’s little ploy to try to get gay people to be straight and procreate to get more members.

So there you have it, that is why gay people are not treated equally under the tax laws.

11
Jul
10

AZDOR: Just Because You Work, Doesn’t Mean You Are An Employee

From a very young age we are taught that everyone pays taxes. Later on in our lives when we start working we are told that when you work, you pay taxes. We are told that the 16th Amendment allows the government to tax any “income” you may have. You are a worker, then you are an employee. You pay someone for work, then you are an employer. You pay someone for work, and that money is a wage. Someone does work for you, and that work is considered a service provided.

But, what happens when you have someone in power admit that these are not necessarily true?

I asked the Arizona Department of Revenue 4 very simple questions, which to me their answers are surprising.

1. According to Arizona law, is every individual that works considered an “employee”?

2. According to Arizona law, is every individual that pays someone else for work completed considered to be an “employer”?

3. According to Arizona law, is every payment made for work completed considered to be a “wage”?

4. According to Arizona law, is all work completed considered to be a “service”?

Their answers were as follows. Continue reading ‘AZDOR: Just Because You Work, Doesn’t Mean You Are An Employee’

11
Apr
10

The Sixteenth Amendment Did Not Allow the Government to Tax You!

So guess what time it is – TAX TIME! For many of you it is a viewed as a time to “get a refund.” Of course, this completely ignores the fact that the government has been taking your money, interest free mind you, for the entire year. That money never even hit your wallet (or purse for you ladies) so it never really seemed like yours in the first place.

But, what is the justification for the government to take 20 or so percent of your paycheck? If you listen to the Internal Revenue Service (IRS) then they will tell you that they do.

The Law: The constitutionality of the Sixteenth Amendment has invariably been upheld when challenged. And numerous courts have both implicitly and explicitly recognized that the Sixteenth Amendment authorizes a non‑apportioned direct income tax on United States citizens and that the federal tax laws as applied are valid. In United States v. Collins, 920 F.2d 619, 629 (10th Cir. 1990), cert. denied, 500 U.S. 920 (1991), the court cited to Brushaber v. Union Pac. R.R., 240 U.S. 1, 12-19 (1916), and noted that the U.S. Supreme Court has recognized that the “sixteenth amendment authorizes a direct nonapportioned tax upon United States citizens throughout the nation.” (link)

So POOF there you have it – the courts have undoubtedly recognized that the Sixteenth Amendment allows a direct income tax on [all] United States citizens. If you are a United States citizen, then you are taxable.

United States v. Collins, 920 F.2d 619, 629 (10th Cir. 1990), cert. denied, 500 U.S. 950 (1991)

the court found defendant’s argument that the Sixteenth Amendment does not authorize a direct, non-apportioned tax on United States citizens similarly to be “devoid of any arguable basis in law.”

Broughton v. United States, 632 F.2d 706 (8th Cir. 1980), cert. denied, 450 U.S. 930 (1981)

the court rejected a refund suit, stating that the Sixteenth Amendment authorizes imposition of an income tax without apportionment among the states.

United States v. Hockensmith, 104 A.F.T.R.2d 2009-5133, 2009 WL 1883521 (M.D. Pa. Jun. 30, 2009)

the court rejected the taxpayer’s arguments that no law created an income tax and that the taxpayer was outside the government’s taxing authority. The court held that the Sixteenth Amendment allows for the taxation of income and eliminates the requirement for apportionment among the states.

IRS Publication 2105 entitled “Why Do I Have to Pay Taxes” also states,

Congress used the power granted by the Constitution and Sixteenth Amendment, and made laws requiring all individuals to pay tax.

So there you have it. There is nothing unconstitutional about the Sixteenth Amendment so you are taxable. The Sixteenth Amendment reads as follows.

The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.

But wait…

The Sixteenth Amendment was ratified on February 3, 1913, so if it is what allowed the government to tax “incomes, from whatever source derived” then we should have an influx of people start filing starting around 1913 or 1914. Please review the chart below as I have compiled a list of the number of returns from 1913 to 2005 as well as a corresponding population. I have also added a category of the percentage of the American public filing as well as a percent increase of filings from the previous year.

Year Number of Returns Population % of Population Filing % Increase
1913 358,000 97,225,000 0.37% NULL
1914 358,000 99,111,000 0.36% 0.00%
1915 337,000 100,546,000 0.34% -5.87%
1916 437,000 101,961,000 0.43% 29.67%
1917 3,473,000 103,268,000 3.36% 694.74%
1918 4,425,000 103,208,000 4.29% 27.41%
1919 5,333,000 104,514,000 5.10% 20.52%
1920 7,260,000 106,461,000 6.82% 36.13%
1921 6,662,000 108,538,000 6.14% -8.24%
1922 6,787,000 110,049,000 6.17% 1.88%
1923 7,698,000 111,947,000 6.88% 13.42%
1924 7,370,000 114,109,000 6.46% -4.26%
1925 4,171,000 115,829,000 3.60% -43.41%
1926 4,138,000 117,397,000 3.52% -0.79%
1927 4,102,000 119,035,000 3.45% -0.87%
1928 4,144,000 120,509,000 3.44% 1.02%
1929 4,133,000 121,767,000 3.39% -0.27%
1930 3,852,000 123,076,741 3.13% -6.80%
1931 3,411,000 124,039,648 2.75% -11.45%
1932 4,083,000 124,840,471 3.27% 19.70%
1933 3,892,000 125,578,763 3.10% -4.68%
1934 4,198,000 126,373,773 3.32% 7.86%
1935 4,670,000 127,250,232 3.67% 11.24%
1936 5,486,000 128,053,180 4.28% 17.47%
1937 6,350,000 128,824,829 4.93% 15.75%
1938 6,251,000 129,824,939 4.81% -1.56%
1939 7,652,000 130,879,718 5.85% 22.41%
1940 14,711,000 132,122,446 11.13% 92.25%
1941 25,870,000 133,402,471 19.39% 75.85%
1942 36,619,000 134,859,553 27.15% 41.55%
1943 43,722,000 136,739,353 31.97% 19.40%
1944 47,111,000 138,397,345 34.04% 7.75%
1945 49,932,000 139,928,165 35.68% 5.99%
1946 52,817,000 141,388,566 37.36% 5.78%
1947 55,099,000 144,126,071 38.23% 4.32%
1948 52,072,000 146,631,302 35.51% -5.49%
1949 51,814,000 149,188,130 34.73% -0.50%
1950 53,060,000 152,271,417 34.85% 2.40%
1951 55,447,000 154,877,889 35.80% 4.50%
1952 56,529,000 157,552,740 35.88% 1.95%
1953 57,838,000 160,184,192 36.11% 2.32%
1954 56,747,000 163,025,854 34.81% -1.89%
1955 58,250,000 165,931,202 35.10% 2.65%
1956 59,197,000 168,903,031 35.05% 1.63%
1957 59,825,000 171,984,130 34.79% 1.06%
1958 59,085,000 174,881,904 33.79% -1.24%
1959 60,271,000 177,829,628 33.89% 2.01%
1960 61,028,000 180,671,158 33.78% 1.26%
1961 61,499,000 183,691,481 33.48% 0.77%
1962 62,712,000 186,537,737 33.62% 1.97%
1963 63,943,000 189,241,798 33.79% 1.96%
1964 65,376,000 191,888,791 34.07% 2.24%
1965 67,596,000 194,302,963 34.79% 3.40%
1966 70,160,000 196,560,338 35.69% 3.79%
1967 71,651,000 198,712,056 36.06% 2.13%
1968 73,729,000 200,706,052 36.73% 2.90%
1969 75,834,000 202,676,946 37.42% 2.86%
1970 74,280,000 205,052,174 36.22% -2.05%
1971 74,576,000 207,660,677 35.91% 0.40%
1972 77,573,000 209,896,021 36.96% 4.02%
1973 80,693,000 211,908,788 38.08% 4.02%
1974 83,340,000 213,853,928 38.97% 3.28%
1975 82,229,000 215,973,199 38.07% -1.33%
1976 84,670,000 218,035,164 38.83% 2.97%
1977 86,635,000 220,239,425 39.34% 2.32%
1978 89,772,000 222,584,545 40.33% 3.62%
1979 92,694,000 225,055,487 41.19% 3.25%
1980 93,902,000 227,224,681 41.33% 1.30%
1981 95,396,000 229,465,714 41.57% 1.59%
1982 95,337,000 231,664,458 41.15% -0.06%
1983 96,321,000 233,791,994 41.20% 1.03%
1984 99,439,000 235,824,902 42.17% 3.24%
1985 101,660,000 237,923,795 42.73% 2.23%
1986 103,045,000 240,132,887 42.91% 1.36%
1987 106,996,000 242,288,918 44.16% 3.83%
1988 109,708,000 244,498,982 44.87% 2.53%
1989 112,136,000 246,819,230 45.43% 2.21%
1990 113,717,000 249,438,712 45.59% 1.41%
1991 114,730,000 252,127,402 45.50% 0.89%
1992 113,605,000 254,994,517 44.55% -0.98%
1993 114,602,000 257,746,103 44.46% 0.88%
1994 115,943,000 260,289,237 44.54% 1.17%
1995 118,218,000 262,764,948 44.99% 1.96%
1996 120,351,000 265,189,794 45.38% 1.80%
1997 122,422,000 267,743,595 45.72% 1.72%
1998 124,771,000 270,298,524 46.16% 1.92%
1999 127,075,000 272,690,813 46.60% 1.85%
2000 129,374,000 281,421,906 45.97% 1.81%
2001 130,255,000 285,081,556 45.69% 0.68%
2002 130,076,000 287,803,914 45.20% -0.14%
2003 130,424,000 290,326,418 44.92% 0.27%
2004 132,226,000 290,045,739 45.59% 1.38%
2005 134,373,000 295,753,151 45.43% 1.62%

We will notice that there are a few years where there was a big jump over the previous year. The biggest one is from 1916 to 1917 going from 437000 returns filed to 3,473,000 returns filed respectively. The second big jump is from 1939 to 1940 with 7,652,000 and 14,711,000 returns filed respectively. For the first example, 1916 to 1917 there was a whopping 3,036,000 extra returns filed for a total jump of nearly 695%. Why in the world would we have that big of a jump and later a 92% jump in 1939 to 1940? If the Sixteenth Amendment was what made us liable, then what happened in 1913, 1914, 1915, and 1916 where less than 0.43% of the American public filed? Was the government (IRS) so inept that it couldn’t wrangle in millions of righteous returns? Please… give me a break.

Take a minute and think about all your friends and family. Who files? If my life, everyone I know files (with the exception of children). I would venture to say that this is true for you as well. But look at the above table. Up until 1939 less than 6% of the public filed! For our purposes we will say that only 45% of the people file taxes today – the rest are underage or wholy exempt. By using this logic we still have a gap of 39% of the public not filing. That means that almost 4 of 10 people never filed up until 1939. And when I say they didn’t file, I mean they didn’t even fill out and sign a 1040 and of course didn’t pay taxes.

WHY!?

If you are more of a visual person let’s take a look at a graph. (Click on the graphic to see full view).

This graph was made from data from the IRS SOI report found here. The population data was found from Census.gov or other websites that derived their data from the Census Bureau. All data from the above table also was derived from these sites.

So seriously. Check that graph out. The part in orange is the number of returns filed and the yellow part is the population. Why is it that up until 1939 the number of returns generally did not change? But after about 1946 the amount of returns filed tracked with the population?

Look, it is pounded into our heads that we have to pay taxes. People always have and always have ever since the conception of government. This is true and I do not question this. Tax law has been around in America since it was founded – it is in the Constitution. However, America was founded on a unique idea that there were to be rules for how people were to be taxed. You know, the whole no tax without representation? No longer was it the will of the king or queen or dictator for what they wanted. No, for the first time the We the People were to have a say in how we were to be taxed.

Along the line something changed in America. I don’t know exactly what happened but I can speculate. I do know a few things though. The Sixteenth Amendment that was passed in 1913 did not make it so that I was taxable. If it was, then how do you explain the less than 6% of the population filing before 1939? Did it really take 26 years for them to finally enforce the Sixteenth Amendment? Certainly not the IRS I know.

The better answer is that in 1939 World War II started with the United States of America entering on December 8, 1941. Later in 1942 the American government signed into law what was called the Victory Tax of 1942. What it did was “There shall be levied, collected, and paid for each taxable year beginning after December 31, 1942, a victory tax of 5 per centum upon the victory tax net income of every individual (other than a nonresident alien subject to the tax imposed by section 211(a)).” So if you wern’t paying taxes before, then you were now. This was later repealed by the Income Tax Act of 1944. But alas, two years was enough for people to get used to the government mandating that they have money taken out of their paycheck to give to the “good of the government,” which at the time of the bill was to fight the Axis of Evil.

But this still doesn’t explain why we had massive increases in people filing from 1939 to 1942 – 7,652,000 to 36,619,000 filings respectively. I have a theory but I believe it was because of the Social Security Act of 1935. Prior to this America had gone through the Great Depression – 1929 to 1939. During these times people’s lives were ruined. Their savings depleted and many were looking for help. The government has always take care of it’s people with retirement plans, unemployment benefits, temporary assistance, and other programs to help its workers out. Essentially what the Social Security Act of 1935 did was open up these programs to the general public, even if they were not working for the government. In other words, people could purchase “insurance” through the government.

I would assume that the support grew quite rapidly in the following years for the program. After all, people had just got done starving on the streets and living in the gutter – they wanted help. Of course, good old Uncle Sam was there to lend them a helping hand! In 1940 the government did a major overhaul to the tax law. The major addition was the Subtitle C taxes, called employment taxes. The language of Subtitle C of the Internal Revenue Act of 1940 is almost, if not, word for word taken from the Social Security act of the 1935. What am I saying here? I am saying that if you wanted to participate in Social Security then you had to be treated in a different manner than you were before so you could be eligible. This is why there was an increase in taxes filed from 1935 to 1939. Look at the filings from 1925 to 1935. In general the amount of people filing is 4 million. There is very little deviating in these ten years. However when Social Security became an option (1935) about 1 million people voluntarily signed up every year until 1939 – then it was coded into law and then concreted into people’s minds that their “employer” took out money via the Victory Tax. It became commonplace. It became expected.

I am not really sure if I am making sense here. We will never know exactly how or what happened with the history of taxes. I do hope that by this table and chart that I have made you DO question what the government says about “why you must pay” though. They cite the Sixteenth Amendment as the precedent for being able to tax you but it can be clearly seen that it did not. Less than 6% of people filed taxes, much less paid taxes, before 1939.

Why? Why? WHY?!

Nothing has changed with laws. If you were not taxable back in 1920 then you are not taxable today. The Code has not changed in substance, only structure of how it was written. The courts, including the Supreme Court and Tax Court, have ruled that the Sixteenth did not expand the taxation power of the government.

Stanton v. Baltic Mining Co. , 240 U.S. 103 (1916)

it was settled that the provisions of the 16th Amendment conferred no new power of taxation, but simply prohibited the previous complete and plenary power of income taxation possessed by Congress from the beginning from being taken out of the category of indirect taxation to which it inherently belonged, and being placed [240 U.S. 103, 113]in the category of direct taxation subject to apportionment by a consideration of the sources from which the income was derived,-that is, by testing the tax not by what it was, a tax on income, but by a mistaken theory deduced from the origin or source of the income taxed. (link)

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

The various propositions are so intermingled as to cause it to be difficult to classify them. We are of opinion, however, that the confusion is not inherent, but rather arises from the conclusion that the Sixteenth Amendment provides for a hitherto unknown power of taxation — that is, a power to levy an income tax which, although direct, should not be subject to the regulation of apportionment applicable to all other direct taxes.

[…]

…they would result in bringing the provisions of the Amendment exempting a direct tax from apportionment into irreconcilable conflict with the general requirement that all direct taxes be apportioned. Moreover, the tax authorized by the Amendment, being direct, would not come under the rule of uniformity applicable under the Constitution to other than direct taxes, and thus it would come to pass that the result of the Amendment would be to authorize a particular direct tax not subject either to apportionment or to the rule of geographical uniformity, thus giving power to impose a different tax in one state or states than was levied in another state or states. This result, instead of simplifying the situation and making clear the limitations on the taxing power, which obviously the Amendment must have been intended to accomplish, would create radical and destructive changes in our constitutional system and multiply confusion.” (link)

Eisner v. Macomber 252 U.S. 189 (1920)

Afterwards, and evidently in recognition of the limitation upon the taxing power of Congress thus determined, the Sixteenth Amendment was adopted, in words lucidly expressing the object to be accomplished:

“The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several states and without regard to any census or enumeration.”

As repeatedly held, this did not extend the taxing power to new subjects, but merely removed the necessity which otherwise might exist for an apportionment among the states of taxes laid on income. Brushaber v. Union Pacific R. Co., 240 U. S. 1, 240 U. S. 17-19; Stanton v. Baltic Mining Co., 240 U. S. 103, 240 U. S. 112 et seq.; Peck & Co. v. Lowe, 247 U. S. 165, 247 U. S. 172-173. (link)

Bowers v. Kerbaugh-Empire Co., 271 U.S. 170 (1926)

The Sixteenth Amendment declares that Congress shall have power to levy and collect taxes on income, ‘from whatever source derived’ without apportionment among the several states, and without regard to any census or enumeration. It was not the purpose or effect of that amendment to bring any new subject within the taxing power. (link)

Penn Mutual Indemnity Co. v. Commissioner, 32 T.C. 653 at 659 (1959), aff’d, 277 F.2d 16, 60-1 U.S. Tax Cas

In dealing with the scope of the taxing power the question has sometimes been framed in terms of whether something can be taxed as income under the Sixteenth Amendment. This is an inaccurate formulation [ . . . ] and has led to much loose thinking on the subject. The source of the taxing power is not the Sixteenth Amendment; it is Article I, Section 8, of the Constitution. (link, sorry I had to use wiki as I could not find a free link to the TC case)

Emphasis mine. So what is it besides the fear of the IRS that makes you eligible for taxes? Is it really the 16th like the government tells us? I’d like to know your thoughts.




Quotes:

"We are apt to shut our eyes against a painful truth... For my part, I am willing to know the whole truth; to know the worst; and to provide for it." - Patrick Henry

"Politicians and diapers both need to be changed, and for the same reason." - Anonymous

"Right is right, even if everyone is against it, and wrong is wrong, even if everyone is for it." - William Penn

"Naturally the common people don't want war; neither in Russia, nor in England, nor in America, nor in Germany. That is understood. But after all, it is the leaders of the country who determine policy, and it is always a simple matter to drag the people along, whether it is a democracy, or a fascist dictatorship, or a parliament, or a communist dictatorship. Voice or no voice, the people can always be brought to the bidding of the leaders. That is easy. All you have to do is to tell them they are being attacked, and denounce the pacifists for lack of patriotism and exposing the country to danger. It works the same in any country" - Hermann Goering

"I know that nothing good lives in me, that is, in my sinful nature. For I have the desire to do what is good, but I cannot carry it out. For what I do is not the good I want to do; no, the evil I do not want to do this I keep on doing." - Romans 7:18-19

"Twenty years from now you will be more disappointed by the things you didn't do than by the ones you did do. So throw off the bowlines. Sail away from the safe harbor. Catch the trade winds in your sails. Explore. Dream. Discover." - Mark Twain

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