a lively discussion about the true nature of the income tax
part one of my interaction with a licensed CPA
posting this here for those who missed this lively discussion with t. paine of theeaccountant's substack on the comments section of el gato malo’s post: what's being withheld on withholding taxes.
this post is in no way meant to disparage t. paine. while i am being quite snarky in my replies, my animosity is mostly toward the originators of the fraud. and though i am impatient with the bureaucrats and professionals tasked with carrying out and perpetuating the fraud, i am sympathetic to the level of brainwashing because i was also previously brainwashed. until i actually sat down and took the time to learn this, i believed the bullshit too. and it was only after my own paycheck no longer relied on my complicity with the fraud that i was able to see it for what it is.
t. paine’s starting comment:
my reply:
here’s that link again in case you haven’t already read it:
the remainder of the first volley:
all three replies to that post are mine; it’s lengthy so i had to break it up. also, instead of a pic of the replies, i’m pasting them and linking to them.
1/2
Okay, well, I can see you didn't bother to read and understand any of my post linked above.
From its inception the income tax has been an excise that applies only to gains from the profitable exercise of federal privileges (and therefore needn’t be apportioned), as the Pollock court itself noted (here in Justice Field’s separate concurring opinion):
"...in Springer v. U. S., 102 U.S. 586 , it was held that a tax upon gains, profits, and income was an excise or duty, and not a direct tax, within the meaning of the constitution, and that its imposition was not, therefore, unconstitutional."
~Pollock v. Farmer's Loan & Trust, 157 U.S. 429 (1895)
So, yes, Section 61 lays out all the various types of "income" but without the exercise of FEDERAL PRIVILEGE by definition there is no "income" to tax.
Because the income tax is an indirect tax, which means it can be avoided as long as you are not participating in earning "income" by exercising any privilege, the tax is not on the "income" itself but on the ACTIVITY and the "income" is how the amount of the tax is calculated.
This is Taxation 101, but CPAs pretend not to know this.
So it would appear your research is lacking with respect on what is actually SUBJECT to the tax.
Moving on to "wages" as you've missed the boat on this one as well. As the FICA definitions in 3121 are more convoluted let's look at Section 3401, the analysis is the same regardless, and which is more applicable to the gato post as it applies specifically to withholding.
[My comments are in brackets and specifically defined terms per the code are in quotes.]
3401(a) "wages"
"For purposes of this chapter, the term "wages" means all remuneration (other than fees paid to a public official) for services performed by an "employee" for his "employer" ..."
[so by definition, ONLY the remuneration paid by an "employer" to an "employee" is defined as "wages" and therefore EXCLUDES all other remuneration]
3401(d) "employer"
"For purposes of this chapter, the term "employer" means the person for whom an individual performs or performed any service, of whatever nature, as the “employee” of such person..."
[this one is pretty clear that an employer is defined as the person for whom an "employee" works]
3401(c) "employee"
"For purposes of this chapter, the term "employee" includes an officer, employee, or elected official of the United States, a State, or any political subdivision thereof, or the District of Columbia, or any agency or instrumentality of any one or more of the foregoing. The term "employee" also includes an officer of a corporation."
[are you an officer, employee or elected official of the "United States" (note this term also has a specific definition), a "State" (ditto), or any political subdivision thereof, or DC, or any agency of any of these? no? how about an officer of a "corporation" (also a specifically defined term)? so how are you an “employee” exactly?]
Because the term "employee" is specifically defined in the code it CANNOT also mean the common usage of the word. So if you're hung up on the word 'includes' and think it does also mean the same as the commonly used word, let the Supreme Court disillusion you:
"[T]he verb "includes" imports a general class, some of whose particular instances are those specified in the definition." ~Helvering v Morgan's Inc, 293 U.S. 121, 126 fn. 1 (1934)
"[I]ncluding ... connotes simply an illustrative application of the general principle." ~Federal Land Bank of St. Paul v Bismarck Lumber Co., 314 U.S. 95, 62 S.Ct. 1 U.S. (1941)
So, it's pretty clear that withholding only applies to "employees" as specifically defined in the code and if you do not meet that specific definition, which are specific instances of a general class of Federal Employees, YOU ARE NOT AN "EMPLOYEE" AND YOU DO NOT EARN "WAGES." As is perfectly clear from the definition, only those who are paid as a result of the exercise of federal privilege are included.
So, if you received a W-2 alleging you received "wages" when in fact you did not, you simply have to refute the allegations on Form 4852, and correctly reflect $0 as your "wages" on your Form 1040, which is the correct form to request a refund of the amount erroneously withheld.
This is getting long, so I'll show you how you are misled on "trade or business" in a separate reply.
2/2
Let's begin our analysis here with:
Section 1401(a) Old-age, survivors, and disability insurance
"In addition to other taxes, there shall be imposed for each taxable year, on the "self-employment income" of every individual, a tax equal to 12.4 percent of the amount of the self-employment income for such taxable year."
The key term above is "self-employment income," which has a specific definition in Section 1402(b):
"The term "self-employment income" means the "net earnings from self-employment" derived by an individual..."
Which sends you to Section 1402(a) Net earnings from self-employment:
"The term "net earnings from self-employment" means the gross income derived by an individual from any "trade or business" carried on by such individual..."
From the 1/2 post, you can only have "gross income" if you are engaged in the profitable exercise of federal privilege, but in this case it is further defined as from any "trade or business" which is specifically defined.
You'll note that the definition in Section 1402(c) sends you to Section 162 for clarity, but Section 162 uses the term "trade or business" but does not further define it.
For that you have to go to:
Section 7701. Definitions
"(a) When used in this title, where not otherwise distinctly expressed or manifestly incompatible with the intent thereof-"
As "trade or business" is used in several different sections, but not 'distinctly expressed' elsewhere, the definition here applies to the term used in Section 1402(a).
Section 7701(a)(26) Trade or business
"The term "trade or business" includes the performance of the functions of a public office."
And please refer to the 1/2 post for how the Supreme Court tells you to interpret that pesky word 'includes.'
So, Mr Researcher, explain to us (and your clients who pay you to pretend you don't know what the code says or how to read it), how is it you think that the average self-employed person, who is NOT performing the functions of a public office, is liable for the tax under Section 1401?
I really hope you do come back to this. I fired my CPA because he could not answer my questions and stopped responding, because he was in on the fraud and profiting from it.
Again, tell me how you DO NOT HAVE A CONFLICT OF INTEREST?
Here is positive proof that this analysis is correct - more than a thousand examples of the hundreds of thousands of complete income tax refunds and zero liability admissions being continuously secured from the federal and 38 state and local governments since 2003 by readers of 'Cracking the Code- The Fascinating Truth About Taxation In America'-- Social security and Medicare taxes included:
at this point there are several sub-replies to my reply #1 and reply #3 above. as this post is now getting long, i’ll stop for now and continue in part two.