Where Do You Stand In Relation To The Internal Revenue Code?

Every Saturday, I listen to a program, via the world wide web, that's called the American Radio show. It can be heard (MP3/Shoutcast or Windows Media) at 8pm Eastern or 5pm Pacific on Accent Radio Networks, unless you live in Southern California (I think) or anywhere that Accent Radio is broadcast via antenna. As far as I know, no one in my area carries the feed, so I listen to the streaming audio. I've been listening to Dave Champion, the host, for a couple years now. He is a fountain of information, and he explains complex concepts in easy-to-follow ways. This last show was one of those shows. A listener sent him an email that asked a specific question that I found to be exceptionally good. I'm glad that Dave discussed it, because it cleared up some questions in my mind. I've transcribed the portion of his show that pertains to the emailed question. Here it is:

[Time 37:58] Ok. Here's an email somebody sent me and it says, "Dave, without resorting to Larken Rose's "861 Position" regarding the word "sources" in section 61a, gross income, how does one derail the very first step of the conversation where the opponent says, "Come on, Mister. Nontaxpayer... that's a scam. It says in the U.S. Code--Title 26, SubTitle A, Chapter 1, SubPart A, Part 1, Section 1--that, "There is hereby imposed on the taxable income of blah-ba-blah-ba-blah..." I mean the opponent always begins right here. He doesn't sit still for all the discussions of direct and indirect taxes or jurisdiction or anything else. He goes to the beginning of the code and he wants to be walked through it. I forgot how to do that without using Larken's "Section 861". Ok.

Here's my answer: First of all, don't use Larken's "861" because, as you know, my belief is that 861 is a rule book for certain types of international transactions in order to determine, given the nature of that international transaction, what parts of the international transaction are actually taxable under U.S. law. And it is not "The Rule Book" for all of Subtitle A. Ok? That is my view.

He says here that the opponent will not sit still for a discussion of direct and indirect taxes, jurisdiction... Well, unfortunately, if the person doesn't want to sit still for that, then you have to tell them that, "There's no sense in talking to you because the Internal Revenue Code nests within the 16th Amendment. Ratified or not--please don't write me and say, "Oh, it was never ratified! What are you talking about?"--the government acts and works as if it was ratified. So, for the sake of a discussion like this, we have to address that. So, the Internal Revenue Code must nest contextually within the constitutional boundaries of the 16th Amendment. And the 16th Amendment does--I don't want to say, "have to" because it could have changed things but it didn't--it nest within the prior constitutional boundaries of federal taxation as existed before the 16th Amendment. It only clarified that apportionment is not a requirement on the very narrow, narrow, narrow category of taxes addressed by the 16th Amendment, which are, here we go again: non-resident aliens with domestic source income, foreign corporations with domestic source income, a withholding agent on one of the first two, and U.S. citizens residing abroad with foreign earned income--which is a much narrower category than even it sounds like. Ok?

That's what the 16th Amendment addressed, and nothing more. So, where those taxes are concerned, apportionment is not an issue. Ok? That's all it's about.

It did not allow Congress to tax people that could not have been taxed before. The government had the authority prior to the 16th Amendment to tax non-resident aliens with domestic source income, foreign corporations, and so on. All the four classes. Congress had the authority to tax them before, anyway. All the 16th Amendment did was clarify for those four categories apportionment was no longer a necessary rule.

Great! Because that has nothing to do with you or me. Get it? Ok.

[Time 41:34] So, the answer to the question is, "How do you do this?": You don't. You can't argue when somebody says, "Well look, I want to take away the entire context of--the broader context of the discussion--and just say this little narrow thing is so, absent context." All you can do is say, "I'm sorry. You don't know how to argue tax law. When you learn, come back and talk to me, again."

Here's an example I give. It's kind of a funny example... that I would give it this way. I'll say there was a time, down South, when black folks could not come into certain types of businesses. Ok? There was segregation. Blacks had their places to go hang out, whites had their places to go hang out. So, let's say we're talking about a "whites only" bar. Now, frequently, bars, then and now, will say when you walk into the bar you have to check your gun at the bar. We don't want people swilling alcohol, and being indoors here around a bunch of compacted people with guns. Bad stuff can happen in this sort of circumstances like that. Booze and guns don't mix. So, when you come into our establishment, you have to check your gun at the bar.

Literally, if you have ever done this, it's quite hysterical. They give you a claim check--just like, you know, your laundry--and then at the end of the night, you go give them your claim check and they give you back your gun. You stick it in your holster and you get in your car and you drive home. Ok?

[Time 42:55] Now, if this is a "whites only" establishment, and it has a sign that says, "Check your guns at the bar," does that sign have anything to do with black folks? Did the man who made that sign, and hung that sign up where you walk in the bar--did he have any intention in his heart, his soul, his mind--that that sign was to apply to black people? No! Because black people aren't allowed in his bar. So, the sign clearly had nothing to do with black folks.

Well, that's exactly the same thing as the tax code. There's a sign inside the bar that's Section 61a, Definition of Gross Income. But that applies only to the four people who are allowed in the bar: non-resident aliens with domestic source income, foreign corporations, yadda, yadda... Those four people are allowed in the bar; and when they walk in the door of the bar, there's a sign, "61a, Gross Income. Here are the items of Gross Income: Rent, Royalties, blah-ba-blah-ba-blah... The whole thing."

That's the context. If somebody wants to cut away the context and just focus on the sign... Well, you just got to tell them, "Look, you know nothing about law. How can I debate something with you that you have absolutely no concept of? You don't understand the principle that things have to nest within one another."

Like I said at the beginning, excellent stuff! I think many people make the mistake of assuming that the Internal Revenue Code automatically applies to them because they draw breath within the boundaries of the United States. Dave's position is just the opposite. He says, "You must first prove to me that I'm one of those 'Taxpayer' things (citing jurisdiction and taxing authority), then we'll see what taxes are imposed on 'Taxpayers' by your code book. Until then, I'll just stay out here on the sidewalk. But hey, if you want to go in and hand over your [money] because you think the sign inside applies to you, be my guest."

We must remember that when the colonies decided to form into a collective of nation-states known to the world as The United States, they did so via a constitution. That constitution granted the new governing body very limited, yet superior, authority over a select number of areas. By this I mean to say the federal government has limited jurisdiction over certain types of subject matter. One of those areas is taxation. The federal government can impose two types of tax: Direct and Indirect. And to each type are certain and specific restrictions. From a treatise on Direct Taxes at We The People's website:

Under the U.S. Constitution, the Congress is authorized to impose two different types of taxes, direct and indirect. Via Art. 1, �8, cl. 1, of the Constitution, indirect taxes (excises, duties and imposts) must be uniformly imposed throughout the country. Direct taxes are required via Art. 1, �2, cl. 3, and Art. 1, �9, cl. 4, to be imposed pursuant to the regulation of apportionment. These tax categories are mutually exclusive and any given tax must squarely fit within one category or the other.

Again, if the imposed tax does not fit squarely within one of those two categories, it is unconstitutional, and therefore null and void.

Dave's point is that the federal government has always had taxing authority. But, after some confusion in the late 1800's over the imposition of a new income tax, the States ratified the 16th Amendment to clarify whom the new income tax would be imposed upon. In 1916, it became part of our U.S. Constitution. The States empowered the federal government with certain taxing authority, which allowed for Direct and Indirect taxes, the 16th Amendment removed the apportionment clause from a narrow class of taxation on certain individuals, and the Internal Revenue Code works within the authority of the 16th Amendment and the U.S. Constitution to impose that tax.

And that's where the above commentary comes into play. Who is subject to the tax imposed by the 16th Amendment and the Internal Revenue Code? You? Me? Miguel that is here on a worker-visa? Dave has in his possession papers that clearly states who the 16th Amendment applies to. You'd be surprised to see who made the list: non-resident aliens with domestic source income, foreign corporations with domestic source income, a withholding agent on one of the first two, and U.S. citizens residing abroad with foreign earned income. I know that I'm not one of those four classes of individuals.

So, in light of this new evidence, why am I paying over my income to the federal government so they can redistribute it to individuals getting back up to ten times the amount they paid in (assuming they paid in) because of programs such as earned income credits, child deductions, etc.? I suspect it is because I unknowingly "volunteered" myself by signing a W-4 form. You know, the form that says, "Under penalty of perjury, I declare that I have examined this certificate and to the best of my knowledge and belief, it is true, correct, and complete." I walked right through the doors of that bar to read the sign, didn't I? And now, I'm paying for it!