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Historical Perspectives on the Federal Income Tax


The Basis of Our Argument

Our concern is not about our wages not being a form of "income," for one of the two legal definitions for the word "income" is: "all that comes in, without regard to how much it cost to earn it" (Lukhard v. Reed, 481 U.S. 368, 374, 377 (1987))) http://caselaw.lp.findlaw.com/scripts/getcase.pl?navby=case&court=us&vol=481&page=368

Our concern is about the "classification" of subject matter selected by Congress, in conformance with the 16th Amendment’s specific definition of the word "income," for federal income tax purposes. [Note: the16th Amendment does not impose a tax upon anything or anyone, it simply acknowledges a power or authority already possessed by Congress.] (Billings v. People of State of Illinois, 188 U.S. 97 (1903) http://caselaw.lp.findlaw.com/scripts/getcase.pl?navby=case&court=us&vol=188&page=97. And Eisner v. Macomber http://caselaw.lp.findlaw.com/scripts/getcase.pl?navby=case&court=us&vol=252&page=207

The amount of money being taxed is only one part of that classification process. The second part of it is dependent upon how that money is acquired, so that each member of the class selected by Congress is treated with equality, not only on the basis of the same amount of money, but in relation to the same definition of income. Yes, there is more than one definition for the word "income," used within the Tax Code. Keeping those different meanings within the context of Title 26 and in harmony with the 16th Amendment, is the problem.

Read the legal briefs attached to the Pollock Cases of 1895 for their historical value in understanding our constitutional system of taxation. The Sixteenth Amendment was not worded to change that system; its purpose was to clarify Congresses intent to comply with the requirements of both Article 1, Section 9, clause 4 and Article 1, Section 8 in the taxation of "income". The Supreme Court acknowledged that clarification in 1920 when they reconfirmed the definition the word "income," as used in all of the Revenue Acts of Congress. Merchants Loan and Trust Co., v. Smietanka, 255 U.S. 519 http://caselaw.lp.findlaw.com/scripts/getcase.pl?navby=case&court=us&vol=255&page=519

The second legal definition of the word "income" is: "the gain derived from capital, from labor, or the gain derived from both combined." In other words, income, under the Sixteenth Amendment, is something other than just the mere receiving of money (all that comes in). Its meaning is limited to the gain (i.e., gross amount of profit or increase in value) proceeding from those receipts (whole income), which are produced by the use or sale of "capital," "labor," or both combined (sources). The word "gain" is used to identify the commercial nature of the tax being imposed and thereby prevent the tax from being imposed upon the source itself. The Supreme Court in 1954, in reaction to "punitive damage" awards, clarified the definition of income by adding the words "accessions (increases) to wealth clearly realized". This clarification did not change the nature of the tax as an excise; its purpose was to include within the meaning of "income," other forms of increases in wealth than just commercial net-income. ( Murphy and Leveille v. I.R.S. and U.S.A. http://caselaw.lp.findlaw.com/data2/circs/dc/055139a.pdf. )

The question that we are attempting to resolved is: Is the word "gain," as used in the Supreme Court’s definition, a reference to the gross amount of the increase in value derived from the source (receipts minus "cost basis"), before the deduction of all related expenses (gross income)? Or, is it the net amount of gain (or profit) arrived at after deducting the "cost basis" and all of the related expenses (net-income)? The Sixteenth Amendment, by its wording, would permit the tax to be upon either one, so long as it was not imposed upon the source itself (whole income). But, the tax cannot be imposed upon both definitions, without discriminating between members of the classification selected by Congress. To impose the tax upon the "gross income" of one person and the "net-income" of another runs counter to our system of fairness. Then to impose that same tax upon the annual receipts (whole income) of another person would seem to push the tax beyond all comprehension of the fundamental law. (See "Taxable Income" by Roswell Magill, Ronald Press 1936, Ch. 9, Gross Income, Gross Receipts, or Net Income, [pg 329] and Gulf, C.& S. F. R. Co., v. Ellis, 165 U.S. 150, 159-160 http://caselaw.lp.findlaw.com/scripts/getcase.pl?navby=case&court=us&vol=165&page=159 .

Congress was aware of that potential confusion and avoided any possibility of misinterpretation by imposing the tax upon "the entire net-income" of those subject to the tax law. This "entire net income" identifies the "classification" selected by Congress for purpose of the tax imposed by Statute (Title 26). The Treasury Department in its interpretation of the wording of that Statute from 1913 to 1954, identifies "net-income" as being in the form of "commercial net income," not "wages". (Treasury Regulation 45, Revenue Act of 1918; Article 21, page 176) http://whatistaxed.servehttp.com/OldRegs/Regs45%281918%29/Regs45_1918.pdf (See also Treasury Regulation 118, 1951 to 1954.) [reg118]

Our question is how did the common laborer’s paycheck end up in the "commercial net-income" tax system? Their "wages" generally represent their entire annual receipts (all that comes in) produced by their property labor. Those wages are not derived from any other annual receipts, in compliance with the wording of the Sixteenth Amendment. Nor do such "wages" fall within the definition of "gross income," as there is no deduction from wages (whole income) to prevent the tax from operating directly upon their property (source) labor.

The Federal Income Tax is imposed under Article 1, Section 8 of the U.S. Constitution, it is not imposed under Article 1, Section 9, clause 4, or the Sixteenth Amendment, as a "Capitation, or other direct, tax". Therefore, it must operate upon all persons in like circumstances in a like manner, so that it does not discriminate between members within the same class or include within that class those who do not operate under those same circumstance. This is referred to as a "due process" issue under the 5th and 14th Amendments. The previous Courts recognized that restriction upon the ability of Federal and State Government’s ability to levy taxes. Heiner v. Donnan, 285 U.S. 312 http://caselaw.lp.findlaw.com/scripts/getcase.pl?navby=case&court=us&vol=285&page=326

To this end the tax is imposed as an excise upon a "taxable event," such as being "in business," it is not imposed upon the labor (property) involved in that business. (United States v. Davis, 370 U.S. 67 (1962))

http://caselaw.lp.findlaw.com/scripts/getcase.pl?navby=case&court=us&vol=370&page=67#67 (Educational Films Corp. of America v. Ward, 282 U.S. 379, 391 (1931))


Why? Because in contrast to those two legal definitions of the word "income" stands the existing Supreme Court definition of what constitutes a "direct tax" upon property, i.e., both people and capital, under Article 1, Section 9, clause 4, of the United States Constitution. That definition, provided by the Supreme Court in 1895, is:

"He gives, however, it appears to us, a definition which covers the question before us. A tax upon one’s whole income is a tax upon the annual receipts from his whole property, and as such falls within the same class as a tax upon that property, and is a direct tax, in the meaning of the Constitution." http://caselaw.lp.findlaw.com/scripts/getcase.pl?navby=case&court=us&vol=158&page=625

That, to us, is a straightforward definition. Note that the Supreme Court, in both definitions, made no distinction between capital and labor, for both are property by legal definition. A tax imposed upon the annual receipts (whole income) produced by that property is, in fact, a direct tax upon that property. However, it now seems that the Supreme Court only recognizes capital as being "property," subject to direct taxation under Article 1, Section 9, clause 4 of the United States Constitution. I wonder what happened to the property "labor" and the "capitation" taxes referred to in Article 1, Section 9? Were our founding fathers mistaken? Must everyone earn their living from capital, before they are entitled to the inalienable rights to Life, Liberty and the Pursuit of Happiness?

No, it is because the Pollock Cases in 1895 only dealt with the income tax imposed upon the receipts (whole income) produced by capital, i.e., both real and personal property. The Supreme Court, in those Cases, assumed the tax imposed upon the "gains and profits" (net-income) of business, privileges and employments (not employees) was an excise tax.

Is the common laborer’s paycheck really a "gain" (profit, or increase in wealth) derived from labor (property)? Or is that paycheck merely the receipts (one’s whole income) produced by the exchange of that labor (property) for money or value, from which a "gain," if present, could potentially be derived?

Considering that you can not "derive" (separate from) anything from human labor without surgery, what did the Supreme Court mean by "the gain derived from capital, from labor, or from both combined"?

Labor, just like capital, produces receipts (whole income), i.e., money or value in exchange for it. That money or value then represents the property (source) from which, if present, gains and profits (net-income) could be derived; thereby avoiding the contention that the tax was imposed upon the source (property). The definition of "income" describes the commercial nature of the tax; that is, it is a tax upon the gain derived from the sale or use of capital; the sale or use of labor, or the sale or use of both combined (classifications). The "classification" upon which the excise must operate is business and financial activities (taxable events) producing gains and profits, not the mere exchange of property for money. http://caselaw.lp.findlaw.com/scripts/getcase.pl?navby=case&court=us&vol=188&page=102#102 and http://caselaw.lp.findlaw.com/scripts/getcase.dj.pl?navby=case&court=us&vol=255&page=519#519

The question that has not been addressed by the Court is how the receipts (whole income) produced by the common laborer’s labor (property) are "classified," in conformance with the wording of all three definitions! It is not only about the amount of money being taxed, because under that single circumstance the law is correct. Is common labor, in fact, a business, so that the tax is imposed upon that business activity (classification) and not upon the source (the "due process" part of the equation)? If all labor is "business," then no one can support themselves, or their families, without being "in business," and therefore, labor is a mere "privilege" granted by government, and it is not property at all.

The Department of Justice, as well as the Courts, refused to address those issues or answer our question of classification. Apparently they have accepted (assumed) the concept, in the case of the common law (labor only) employee anyway, that labor is a business. Therefore, the entire annual receipts produced by common labor (the laborer’s source) is all gain or increase in wealth! Something about the fact that the laborer did not have the money yesterday, but they got paid today, therefore, they have more money today than they had yesterday; so it all must be "gain" (increase in wealth). Really? Doesn’t that concept actually apply to every exchange of capital or labor for money or value? You bet, otherwise, why would you rent or sell your property, or engage in business or commercial enterprise, or go to work to earn money? The tax is an excise; that is, it is imposed upon something other than the ownership of property (source). United States v. Gilmore, 372 U.S. 39 (1963). http://laws.findlaw.com/us/372/39.html . The courts have assumed that common labor is a business activity, and they refuse to deal with the fact that human labor is property.


It is easy to establish the value of capital (invested personal property and real estate), it is simply what you paid for it (cost basis) when you acquired it. If you paid nothing for it, then if you sell it, everything received for it is "gain". If you rent it, loan it out, or use it to produce business or financial receipts (whole income), you still own it; and everything you receive for it is "gain" (gross income). That is understandable, sort of. Compare it to depositing $100,000 inheritance into a federally insured bank account, and then receiving interest on that money. You did not earn that money to begin with, the money deposited is not at risk of being lost, and there are no expenses involved in maintaining that investment. That interest you received is definitely a gain or profit derived from capital (source). Follow that concept, for apparently that is the reason why the common laborer’s entire paycheck is now "taxable" income (gains and profits) according to the courts (Line 22 of the 1040 Tax return).

If you did pay for that property, that "cost basis" is deducted from the receipts (whole income), thereby removing the property (source) from consideration in the tax, in compliance with the Sixteenth Amendment and Article 1, Section 9, clause 4. If you incurred expenses on account of using that property (source), the amount you expended on it is then "non-taxable" (gain) income and is deducted from the gross gain (receipts minus cost basis) you exchanged it for, in compliance with the Statute (Title 26). The balance (gains and profits) then is "taxable" income (gain) and, by Statute, you pay the income tax based upon the total amount of the net gains and profits you receive from it and other sources (sale or use of capital, labor, or both combined). The sum of these separate "gains and profits" is shown on Line 22, total income (entire net-income), of the 1040 Tax Return).

But, what about the property called "labor"? You receive money or value for something you did not pay for (cost basis), yet it is your property, given to you by your creator, and you must maintain it in order for it to be productive.

Labor, just like capital, must be put to some use or sold in order to acquire money, or value, in exchange for it; for neither capital nor labor, produces anything on their own. Further, nothing can be "derived from" labor, without first converting that labor (property) to money or value. Labor then is the activity that produces the money or value in exchange for the work being done. That money or value then must represent the property (labor) and is by application the source contemplated by the Sixteenth Amendment. The "gain derived from" that money or value (source) is therefore the "income" allowed to be tax under the Sixteenth Amendment. To hold otherwise obliterates all distinction between property and the gain derived from it, and thereby pits Article 1, Section 9, clause 4 against the Sixteenth Amendment of the United States Constitution, destroying the very document that defines our existence. (Brushaber, 240 U.S. 1 @ 12)

The word source, as used in the Sixteenth Amendment, is a reference to the receipts (income) produced by the personal capital or labor being used or sold. The gain derived from those receipts (whole income) then is the subject of the Amendment, thereby, making the tax indirect in compliance with the Constitution. However, it is the net income or gains and profits produced by the "taxable activity" (classification) that is made the subject of the Statute (in order to avoid such confusion). Congress has not changed that "classification," as far as the Statute is concerned.

With that in mind, how is the common laborer’s gain determined so that the tax is imposed upon that gain, and not their labor (source), in conformance with all three definitions? It is true that no one pays for his or her own labor (property), for the ability to labor (source) was given to us by our creator. What we do with that ability (source) is our choice and responsibility. Is the common laborer "in business"? If so, what "business" are they in? (Slaughter House Cases, 83 U.S. 36, 106 (1872)) http://caselaw.lp.findlaw.com/scripts/getcase.pl?navby=case&court=us&vol=83&page=106).

Labor is just as much property as capital is, and a tax levied upon the "whole income" of labor is no different than a tax levied upon the whole income of capital; or the "whole income" (source) of a business or profession (capital and labor combined) for that matter. Can you imagine the hissey fit Bill Gates would throw if the IRS attempted to levy a tax of 10 or 15 percent on the entire annual receipts of Microsoft Corporation? Yet, corporations and laborers are assumed to be in the same "classification," under Title 26, section 7701 (a) (1). [CFR 7701]

Until the labor (property) is deducted from the receipts it is exchanged for, those receipts remain the "whole income" of the property being used and, therefore, in fact, represent that property (source). It is not a matter of "cost basis," as though the laborer is nothing more than a slave bought by the federal government. The statutory tax is an excise upon business enterprise (taxable events), not a "capitiation" tax upon labor (source). Otherwise, why would our founding fathers make a distinction between the methods used to levy such taxes, and why would Congress imposed the tax upon one’s "entire net income," instead of their entire annual receipts? http://caselaw.lp.findlaw.com/scripts/getcase.pl?court=us&vol=192&invol=363

The Constitution was not written to favor the tax collector (IRS), it was written to protect the people from a tyrannical government. The "due process" question is; why is the business entity, including the corporation, taxed only upon their net-income (profit) and the laborer tax upon their entire annual receipts (whole income), when all three are assumed to be in the same classification?

The Glitch

We believe the Statute (Title 26), when read as a whole, is written correctly (USNB of Oregon v. Independent Ins. Agents, 508 U.S. 439, 455 http://caselaw.lp.findlaw.com/scripts/getcase.pl?navby=case&court=us&vol=508&page=455

That is, it does recognize the difference between wages as the "whole income" or annual receipts of the common laborer, and those "wages" which are "derived from" the whole income or annual receipts of business and commercial activities (also labor). Unfortunately, the courts have refused to follow the Legislative history of the "withholding tax," in the case of the common law (not "in business") employee, in order to maintain that difference in the application of the Law.

The Pollock Cases of 1895 established the constitutional definition of what our founding fathers meant by "other, direct taxes," under Article 1, Section 9, clause 4 of the U.S. Constitution. http://caselaw.lp.findlaw.com/scripts/getcase.pl?navby=case&court=us&vol=240&page=16#16 .

Whereas, the prior courts had already established the meaning of "capitation" taxes as:

"upon the person simply without any reference to his property, real or personal, or to any business in which he may be engaged, or to any employment which he may follow." (Head-Money Cases, 18 Fed. Rep. 135, 139/ Pollock v. Farmers, 157 U.S. 429, brief of Attorney General Richard Olney, page 774).

The Pollock Cases are thoroughly argued and documented, including the question of how the tax upon labor (business, privileges, and employments) was measured. The answer the Court provided is:

"We have considered the Act only in respect of the tax on incomes derived from real estate, and from invested personal property, and have not commented on so much of it as bears on gains and profits from business, privileges, or employments, in view of the instances in which taxation on business, privileges, or employments, has assumed the guise of an excise tax and been sustained as such." (158 U.S. 601, 635) [Note, the words used are gains and profits, not "wages" and "employment’s," not employees]

What did the Court mean by "assumed the guise of an excise tax and been sustained as such"? Can anyone find any documentation of an excise tax, State or Federal, being levied upon the pay envelope of the common laborer prior to 1895, or 1936 for that matter? [Paychecks for common labor did not exist until after the Social Security Act of 1935]. We have not, nor did John MacArthur Maguire acknowledge any such cases in his Essay "Taxing the Exercise of Natural Rights" (Harvard Legal Essays, 1934, p. 273-322) referred to by the Supreme Court in 1937. The only documentation he found refers to business endeavors and the gains and profits derived from the privilege of engaging in business transactions and activities. There is no indication that any such tax, as the one now levied upon the common laborer’s paycheck, was ever attempted. The Revenue Acts prior to 1913 simply did not provide for a tax upon common labor (wages) and the tax since 1913 has been imposed upon "commercial net-income". But had there been, Justice Maguire provided ample documentation that it surely would have been ruled unconstitutional as late as 1934. The "classification" of the common law (not in business) employee has never been established, that is, "sustained" by the court.

When the Supreme Court, in 1895, defined the meaning of "other direct, taxes," it was in reference to the existing definition of a "capitation tax". That is, a tax imposed upon the annual receipts (whole income) of capital (source) would be the same as a tax imposed upon the annual receipts (whole income) of labor (source), and is, therefore, a direct tax within the meaning of the Constitution. The Sixteenth Amendment was specifically drafted to preserve that definition and prevent the tax from becoming what it is today. http://www.taxhistory.com/taxref.html

In contrast then, an excise tax is one, which is levied because of the use of property, or because of the use of business, or because of the employment (privilege) which one may follow. It is levied in consequence of doing something ("taxable event"), which by choice you may, or you may not do. http://www.taxhistory.com/crs/05.html

Congress, in 1913, fully understood the difference between direct and indirect taxation. The debates over the 16th Amendment (SJR-40) focused on those differences and Congress rejected the proposal made by Senator McLauren to remove all reference to "direct" and "other direct, taxes" from the existing Constitution. Had that proposed amendment to SJR-40 passed, the federal income tax would be a direct tax on income, i.e., a tax upon the "whole income" or annual receipts of property; both capital and labor.

But it did not pass, the Constitution still requires any and all "capitation, or other direct, taxes" to be apportioned. The 16th Amendment was specifically drawn to clarify the Supreme Court’s decision in the Pollock Cases. That is, that a tax imposed upon the gain or profit (income) derived from the receipts (whole income) of property (source) was to be treated as an excise, impost or duty, not as a direct tax requiring apportionment. The Supreme Court validated that clarification when they defined the term "income" under the Sixteenth Amendment to be "the gain derived from," not the receipts (whole income) produced by, capital, labor or both combined (sources).


In Its Nature

The Federal Income Tax is by definition a business excise tax, that is, in its nature, it is a tax imposed upon the privilege of receiving gain (or profit) from the sale, exchange, or use of capital, labor, or both combined (commercial usage). It is not a tax imposed directly upon people or property, for to do so would pit the 16th Amendment against Article 1, Section 9, clause 4, and thereby destroy the Constitution. The "no cost basis" theory of labor applies to the "taxable event", not the human being providing that labor (property). http://www.taxhistory.com/crs/09.html

This is the statutory reason why "personal living and family expenses" are not deducted from commercial receipts (26 USC 262). The excise tax, by statute, operates upon the "entire net income" of the business activity or privilege (taxable event), not upon the human being engaged in that activity. By statutory construction (we believe by Constitutional mandate) it is the "personal exemption" allowance that represents the "cost basis" of the labor (property) returned to the human being, acting as the business entity, before the tax is assessed. Pollock v. Farmers, 158 U.S.601, 676 and 694) http://caselaw.lp.findlaw.com/scripts/getcase.pl?navby=case&court=us&vol=158&page=601


The subject matter (classification) selected by Congress is business, privileges, or commercial enterprise (employment’s) and the gains and profits ("entire net income") derived from the business and financial receipts (sources) produced by those taxable activities. See T.R. 103 (1939) for similar wording http://whatistaxed.servehttp.com/OldRegs/Regs103/Regs103.pdf (pages 28-)

This is the heart at which the excise is driven, it delineates the full measure of the Constitutional power to tax, chosen by Congress to be imposed by Statute. (Congressional Record of August 28, 1913, page 3844):

"Why, Mr. President, should Congress attempt to do more than declared in the first section of the proposed bill? It is right; it is comprehensible; it embraces everything—no, I will withdraw that; it does not embrace the full power of Congress, because Congress can levy a tax upon gross incomes if it likes; it may diminish the extent of its taxing power or not exercise it at all; it may exclude certain things from the taxing power that it might include; but it can not change the character of the taxation; and when it is declared in the first lines of this bill that a tax is levied upon the entire net income of all the citizens of this country, we have exercised all the power we have."

This same "character of taxation" has been maintained by Congress throughout the Revenue Acts imposed from 1913 to present. The Senate Finance Committee Report on H.R. 8300, the Internal Revenue Code of 1954, explains the transition from the tax imposed upon "the entire net income," to the tax imposed upon "taxable income". Report No. 1622, June 18, 1954, page 168, Subchapter B—Computation of Taxable Income:

"Section 61 (a) provides that gross income includes "all income from whatever source derived." This definition is based upon the sixteenth amendment and the word "income" is used as in section 22 (a) in its constitutional sense. It is not intended to change the concept of income that obtains under section 22 (a). [1954IRC]

Note that Section 22 (a), under the 1939 Tax Code, defined gross income as "the gain, profit, or income ("gain derived from") various sources and or the use of various sources. It did not define gross income as being the receipts (all that comes in) produced by those sources in violation of the Sixteenth Amendment.

Case on point: The federal income tax, according to the Supreme Court in Commissioner v. Tellier, 383 U.S. 687 (1966) http://caselaw.lp.findlaw.com/scripts/getcase.pl?navby=case&court=us&vol=383&page=687, is an excise tax imposed upon "(commercial) net income" not annual receipts (citing the Congressional Record of 1913).



Treasury Regulation 33 was issued shortly after the Revenue Act of 1913 was passed by Congress and was written in conjunction with that Legislation. Article 1 of that Act imposed the tax upon "net income arising or accruing from all sources". Thus, "net income" is made the subject matter of the federal income tax. Article 3 defined "net income" as the "total gains, profits, and income derived from all sources", i.e., "gross income (gain)," less items 1 through 6 under paragraph B (Article 6) (business related expenses) equals net income, i.e., the subject matter of the Statute. From this "net income" there was to be allowed certain other deduction and the "personal exemption" ($4,000 of net income) in order to determine the actual amount of net income to be taxed. Congress, in 1913, called this taxable income. Without first possessing the subject matter "net income," there is no provision for deducting the personal exemption ($4,000) from the receipts (whole income), as that would impose the tax upon those receipts and thereby change the character of the taxation. http://whatistaxed.servehttp.com/OldRegs/Regs33%281913%29/Regs33.pdf

Congress has never changed that "concept," although they have reduced the personal exemption allowance to below poverty level, making the federal income tax appear to be a "personal" tax. (Ware v. United States 95a0308p, Sixth Circuit, (1995). http://caselaw.lp.findlaw.com/scripts/getcase.pl?court=6th&navby=case&no=950308p;

...Fedral Tax System page 30. "Above the Line Deductions and Itemized Deductions. Page 30, #6.


"Taxable" Income Defined

The House and Senate Reports attached to H.R. 8300 "I.R.C. 1954," page A20, House Report No. 1337; page 170, Senate Report No. 1622) defines taxable income as:

"Section 63. Taxable income defined."

This section is identical with section 63 of the bill as passed by the House. It is derived generally from section 21 of the 1939 Code. Taxable income is defined in subsection (a) as ‘gross income’ minus the deductions allowed by this chapter, other than the standard deduction. Subsection (b) provides that in the case of individuals electing the standard deduction "taxable income" means "adjusted gross income" minus the standard deduction and the deduction for the personal exemptions.

This change of the term "net income" as used in section 21 of the 1939 Code to "taxable income" creates a new concept. It eliminates terms such as "normal tax net income," "surtax net income," in the case of individuals, and "adjusted net income," "normal tax net income," and "corporation surtax net income" in the case of corporations and "net income" for both individuals and corporations. It eliminates the necessity for credits against net income and exemptions which become deductions in arriving at "taxable income" for both corporations and individuals."

The Revenue Act of 1954 changed the "words," but not the meaning of the Revenue Act; this was not a "new concept". The definition of "gross income" as being: "all income from whatever source derived" did not change the meaning of the word income. Title 26 deals with commercial net income, i.e., "gains and profits," not the receipts (whole income) from which that income is "derived. Nor, did the use of the term "taxable income" change the subject matter upon which the excise operated throughout the history of the income tax system. That term simply re-stated the process used in 1913 to obtain the end result. That is, arriving at the actual amount of "commercial net income" Congress chose to make subject to the excise tax, the same as it did in 1913 to 1954. The subject matter is "the gain derived from i.e., the net income derived from "salaries, wages, and compensation for personal services". The word "income" must be construed in its constitutional sense (gain), not in that of the Oxford Dictionary (whole income).

The subject of "Wages"

To this end you will not find the term "wages" in 26 USC 61 (a) (1), nor will you find within Subtitle A or C any wording suggesting that "wages," as the annual receipts (whole income) of labor, are "remuneration for services". The term specifically used in Section 61 (a) is "Compensation for services". It is a legal term, not a common speech term; because that term has, within the Treasury Regulations and Legislative history, a specifically defined meaning under the Tax Code (Section 39.22 (a)-2, 1939 IRC). It means fees, commissions, and percentage of profits, as well as the compensation of publicly elected and appointed officers who are in positions of profit, i.e., positions of privilege. That definition does not contain the word "includes," as though "fees, commissions and percentage of profits" was in addition to wages.

Unless those "wages" are paid as fees; commissions; as a percentage of profits; or as compensation for being an elected or appointed public officer, Congress has specifically exempted them from tax by excluding those receipts (whole income) from the definition of "compensation for services," in conformance with the fundamental law. Congress maintained that definition in Subtitle C (Employment Taxes) by defining "remuneration for services" as being wages, "if paid as compensation for services." (See Public Law 68, 57 Stat. 126, Ch. 120, June 9, 1943 and the House; Senate; and Conference Report 510, pages 29, 34, and 48 attached to H.R. 2570 "The Current Tax Payment Act of 1943). (Rpt 510). For "wages" to be included within the meaning of "gross income" they must first qualify as commercial gross income under Section 22 (a) of the 1939 IRC. That is, such "wages" must be "the gain derived from capital, labor or both combined," not merely the annual receipts produced by the exchange of labor for money. [ra1943]

Our bet is that the Victory Tax of 1942 and the statutory requirement imposed under section 1622 (h) of the 1943 "Current Tax Payment Act" was, and still is, unconstitutional. Why? Because this is the requirement that every "employee" receiving "wages" must file a "withholding certificate (W-4)" claiming to be an "individual" (business entity) subject to chapter 1 (Subtitle A) taxes imposed upon "commercial net income". To us, it seems, that unless you are in business, or have other gains and profits to report, you must commit perjury (lie) just to fill out the W-4 Certificate. The "withholding tax" is imposed under Subtitle C, Chapter 24, "Employment Taxes," it is not imposed under Subtitle A "Income Taxes". Does Subtitle C have any application to the common laborer who is not "in business"? We do not think so. Withholding is not a "tax" at all, it is a method for withholding the excise tax imposed upon "commercial net income" by Subtitle A. [Victory tax] http://caselaw.lp.findlaw.com/scripts/getcase.pl?court=us&vol=000&invol=98-1667

Read 26 USC 6012 "Persons required to make returns of income" and the definition of "person" provided in 26 USC 7701 (a) 1. Then read the Secretary of the Treasury’s corresponding interpretation of that definition found in the 1996 Edition of 26CFR301.7701-1, -2, –3, and 6. [CFR 7701]

Apply the maxim "noscitur a sociis" to the terms used in the definition of "person," so that the meaning of "person" is kept within the context of an excise tax. (Read Jarecki v. G.D. Searle & Co., 367 U.S. 303, 307 for the meaning of "noscitur a sociis") http://caselaw.lp.findlaw.com/scripts/getcase.pl?navby=case&court=us&vol=367&page=303

Those terms all identify entities, whether single owner or multi-owner in nature, through which people engages in business and commercial activities for gain and profit. This is the "classification" upon which the Tax Code operates. (See United States v. Gilmore, 372 U.S. 39, 44 (1963). http://caselaw.lp.findlaw.com/scripts/getcase.pl?navby=case&court=us&vol=372&page=39

Again, the word "person" is a specific legal term, not a common speech term. If this bothers you then read the definition of "person" applicable to H.R. 25, "The Fair Tax Act of 2003" where Congress specifically identifies the "natural person" as being the subject of the tax (Section 2 (a) (7)) H.R. 25

The definition of "person" found in Subtitle C is no different. The term "person" is limited and defined by the words "through and by means of which any business, financial operation, or venture is carried on" (26CFR31.0-2 (a) (8)). Unless you qualify as an entity "through and by means of which any business, financial operation, or venture is carried on," and your "wages" are paid to you as "compensation for services," you are not even addressed by Subtitle C. So why did you file a W-4 Certificate? Honest mistakes (26 USC 6401 (c))? Or, you were told you had to, so you did. [CFR31]

Our presumption then, because the courts have refused to address the issue of "classification" is: The Law dictates that the common laborer is, in fact, a single owner business entity (individual, sole-proprietor, independent contractor) engaged in a for profit business of providing labor (property), having no related "cost basis" or deductible business expenses. Therefore, the gross amount of "wages" (whole income) they receive from their employer (source) is by statutory definition commercial net income ("gains and profits," interest, dividends, royalties, etc.). See lines 7 through 22 of the 1040 Tax Return, what does "total income" mean?

Adjusted Gross Income

H.R. 4646 "Individual Income Tax Bill of 1944", Senate Report 885, dated May 16, 1944, page 24. (Rpt 885) This is the definition of "adjusted gross income" (Section 62 of the 1954-2006 IRC) provided by the Senate Finance Committee and agreed upon by Congress. Read this definition using the meaning of "income" in its constitutional sense, that is, use the word "gain" in place of the word "income," so that the interpretation of "adjusted gross (gain) income" is kept within the context of the Tax Code as a whole and the Sixteenth Amendment specifically. [ra1944]

Section 8, Adjusted Gross Income (gain): (starting at the 3rd paragraph)

"Fundamentally, the deductions thus permitted to be made from gross income, in arriving at adjusted gross income, are those which are necessary to make as nearly equivalent as practicable to the concept of adjusted gross income, when that concept is applied to different types of taxpayers deriving their income from varying sources. Such equivalence is necessary for equitable application of a mechanical tax table or a standard deduction which does not depend upon the source of income. For example, in the case of an individual merchant or store proprietor, gross income under the law is gross receipts less the cost of goods sold; it is necessary to reduce that amount by the amount of business expenses before it becomes compatible, for purposes of the tax table or standard deduction, to the salary or wages of an employee in the usual case. Similarly, the gross income derived from rents and royalties is reduced by the deductions attributable thereto (as defined in clause (4)) in order that the resulting adjusted gross income will be on a parity with the income from interest and dividends in respect of which latter items no deductions are permitted in computing adjusted gross income."

So who are these "different taxpayers;" what are the "varying sources of income;" and how does the tax table and standard deduction make them equal with all other "taxpayers", as far as the federal income tax is concerned (due process)? It would have been helpful if Congress would have made the comparison to the employee’s "wages," instead of the merchant’s business receipts, but they choose not to. Remember, the tax itself is imposed upon "commercial net income," not gross receipts.

Adjusted gross income, in the case of the merchant or store proprietor (individual, i.e., business entity), is defined as being the gross receipts (whole income), minus the cost of goods (i.e., cost basis of property) sold, reduced by the amount of expenses incurred in producing those receipts (whole income). Note, this is the same definition of "net income" used in Regulation 33, Article 3 and identifies the same "commercial net income" defined in the regulation from 1918 to 1954. There is no "adjustment," net income is net income and always will be (commercial) net income no matter what name Congress assigns to it.

Keep in mind that the business "person’s" compensation is nothing more than a percentage of the profits they earn, it is by no means their annual receipts (whole income). Whereas, for the common laborer, their "wages," in most cases, are their annual receipts (whole income), such "wages" are not "derived from" their annual receipts; and they pay their income tax based upon those entire annual receipts (whole income).

Therefore, "adjusted gross income (gain)," is by definition the (commercial) net income of the business owner (individual), made equal to and the same as the "wages" (whole income) those owners paid to their employees in exchange for their employee’s labor (property). In other words, the common laborer’s source of income (gain) is no longer their labor (property), it is now their business employer. Their "wages" are no longer their annual receipts (whole income) produced by their labor, it is now their gross (gain) income derived from their business activity. Or, one is forced to conclude that the employee’s "wages" are equivalent to interest or dividends.

Read "Federal Income Taxation, Cases and Materials" 1953 Edition, Surrey and Warren, Chapter 3, Section 4, pages 292 to 294:

"The Standard Deduction and Supplemental Tax Table for Individuals":

"But the existing structure did not provide a measure of that type of taxable income. In effect what was needed was a measure of net income from business and other profit-seeking activities plus gross income from other sources, so as to arrive at taxable income prior to the allowance of any personal expenses."

The Federal Tax Regulations in effect on January 1, 1957 provides a definition of "adjusted gross income" relative to the "optional tax table" made available under section 3 of the 1954 Tax Code. This table is used "in lieu of" filing the tax return under section 1 and corresponds to the Supplement T provisions of the 1939 IRC. Under the 1957 Regulation section 3 could only be used if the "adjusted gross income" of the "taxpayer" did not exceed $4,999.51. The following is used on page 43 (subsection 1.3-1 (a)) as Example (1):

"A is employed at a salary of $4,600 for the calendar year 1954. In the course of such employment, he incurred travel expenses of $750 for which he was reimbursed during the year. Such items constitute his sole income for 1954. In such case the gross income is $5,350 but the amount of $750 is deducted from gross income in the determination of adjusted gross income and thus A’s adjusted gross income for 1954 is $4,600."

In other words, the money A expended out of his $4,600 salary to cover his employer’s expenses was reimbursed to him by his employer, thereby making his salary whole again, i.e., $4,600. However, that reimbursed money ($750) was then added to his $4,600 salary, thereby increasing his salary (gross income (gain)) to $5,350; from which the $750 is then deducted back out to determine his "adjusted gross income (gain)" Note: had the expenses not occurred, A’s adjusted gross income (gain) would be his $4,600 salary, making the tax, in substance, direct upon his annual receipts (whole income).

Thus the name "adjusted gross income" was born. Was it legal, we don’t think so. The object of "classification" is to assure that the tax operates upon all in like form under like circumstances. The employee has nothing in common with his employer, as far as the excise is concerned. Nor is the tax imposed as a "capitation" tax under Article 1, Section 9, and clause 4, upon the employer. The employer is taxed as a consequence of their choice to be "in business," the tax being measured by the net income or profit of that business or financial activity, not its receipts (whole income). The common laborer, on the other hand, cannot hire someone to take their place at work or pay themselves out of the receipts from that work, nor are they allowed to deduct their expenses, if they have any, "above the line" like all other business owner do. http://caselaw.lp.findlaw.com/scripts/getcase.pl?navby=case&court=us&vol=485&page=355

The "adjusted gross (gain) income" concept was an attempt by Congress to change the measurement of the excise from that of commercial net income (business) to that of the statistics of disposable income (life), projected by the Department of Commerce, Bureau of the Census. This method combined the net income compensation of the sole-proprietor with the annual receipts "wages" of the common law (labor only) employee, through the term "adjusted gross (gain) income." This measurement of income related to the actual amount of disposable money they each had during the year, making the tax equal under that single circumstance. By doing so they integrated the excise tax upon business labor (taxable event) with a "capitation" tax upon the common laborer’s property, to form a new basis for the income tax. In this way the federal income tax was changed from a class tax to a mass tax. [doc 1, doc 2] (For more information on the change from a "class" tax, based upon "commercial net-income," to a mass tax, based upon the statistics of personal income, see: http://www.taxhistory.org/Civilization/treasdocs.htm)






The beginning point of this new concept of "taxable income" is found in Supplement T of the 1941 Tax Code, it is currently found in Section 3 of the 1996 IRC. However, the actual beginning point is traced to the Revenue Act of 1940 (H.R. 10039) and two changes made to the meaning of "gross income". [ra1940]

First, the reporting requirements, i.e., the actual requirement to file a tax return, was changed from the basis of $1,000 of "commercial net income" to $800 of commercial gross income, so that the deduction of business related expenses could be verified. This seems to be the beginning point of the separate schedules attached to the 1040 Tax Return.

Second, the basis of the "personal exemption" was changed from $1,000 of "commercial net income," to $800 of commercial net income, thereby increasing the total number of "individuals" required to file tax returns and pay the federal income tax. It was not done to suck the common laborer into the federal income tax system. In 1940, the cost of living was very low; in fact, most people could live on $800 per year and still put money into a savings account. However, the tax system, being imposed upon net income, became very complicated for those new "taxpayers" that had never kept records of actual business expenses.

Congress, in 1941, came up with a solution that would make it easier for the small businessperson (individual) to file their tax return. This "solution" provided for an arbitrary 10 percent deduction to cover business related expenses and then combined those expenses with the allowable amount of "personal exemption," each person was entitled to, into one convenient tax table. This "table" was then based upon "gross income (gain)," including the entire amount of "salaries, wages, compensation for personal services, interest, rent, annuities, and royalties." This is the first introduction of the employee’s "wages" into the "commercial net-income" tax system. The transition was made by choice, not compulsion. [ra1941]

(Supplement T, 1941: 55 Stat. Chapter 412, Sept. 20, 1941, page 689, Section 102):

"Section 400. Imposition of Tax.

"In lieu of the tax imposed under sections 11 and 12, an individual may elect, for each taxable year, to pay the tax shown in the following table if his gross income for such taxable year is $3,000 or less and consists wholly of one or more of the following: Salary, wages, compensation for personal services, dividends, interest, rent, annuities, or royalties:"

Note that the 1941 Revenue Act itself (Sections 11 and 12) imposes the tax upon "the entire net income," not the entire annual receipts of the citizen. The term "gross income (gain)" is defined under Sec. 22 (a) as: "Gross income" includes gains, profits, and income (gain) derived from salaries, wages, or compensation for personal services". The terms "salaries, wages, or compensation for personal services" identifies the receipts (whole income) from which, if present, gains and profits could be "derived," it does not identify labor (source) as being subject to the tax. Congress, in order to prevent the "individual" from escaping the excise tax upon net-income, included the word "wages" in the definition of "gross income." Thereby, precluding the "individual" from paying themselves "wages" as a method of escaping the burden of the tax.

In lieu of actually keeping tract of business expenses the "individual" was allowed to use the tax table to determining the actual net income or gain, "derived from" salaries, wages, or compensation for personal services, etc. This election to use the tables did not change the fact that the tax was an excise upon commercial activities, it simply provided a way for those subject to the provisions of the excise to calculate their tax. The problem was, it opened the door to converting the federal income tax into a mass tax upon all whom received "wages".

As an offshoot to this concept, Congress, in 1942, implemented what they termed "The Victory Tax". This tax was separate from, but in addition to, the normal commercial net income tax imposed by Chapter 1 of the 1939 IRC. In the Congressional Record, Congress refers to the "Victory Tax" as being a "gross income (gain)" tax, but yet, defines it as a net income tax. The question we asked is why? If the federal income tax could be imposed upon gross-income (gain), why define the basis of the tax as being "net income"? What difference would it make, unless they knew the Supreme Court would invalidate the tax on the annual receipts (whole income) of the common laborer if the question of Constitutionality were to be raised?

The definition for "Victory tax net income" is found in 56 Stat. Chapter 619, Sec. 172, page 884:

"Sec. 451. Victory Tax Net Income.

    1. Definition.—The term ‘victory tax net income’ in the case of any taxable year means (except as provided in subsection (c)) the gross income for such year (…) minus the sum of the following deductions: (1) Expenses; (2) Interest; (3) Taxes: etc., (business expenses)
    1. Supplement T Taxpayers.—If for any taxable year a taxpayer makes his return and pays the tax under Supplement T, the term ‘victory tax net income" means gross income (gain) for such year."
    2. With the "Victory Tax" came the provisions for withholding on wages, that is, such "wages" as would be "includible in gross income (gain)" because of their nature as "gains and profits" derived from business and financial receipts. However, every employee, whether they were in business or not, was required to file a W-4 Certificate claiming the number of personal exemptions they were allowed to take. This "certificate" then confirmed such employees were subject to the excise tax upon commercial activities imposed by chapter 1 of the 1939 Tax Code. It also made their wages (whole income) equivalent to the net income or profit of their employer through the use of Supplement T. (See the Federal Register of March 31, 1943, Treasury Decision 5249, page 3901, Sec. 19.466-1 (b) "Wages includible in gross income".) [td5249]


      The 1943 "Current Tax Payment Act" did not change the Internal Revenue Code of 1939 or any of its provisions. That Act’s purpose was to move the "Victory Tax" out of the commercial net income provisions of Subchapter D of Chapter 1, under which it did not belong, and put those provisions to collect that money into a separate chapter (Subchapter D of Chapter 9, Employment Taxes). Why? Because Congress recognized the "honest mistake," as to liability for the federal income tax imposed under Chapter 1, that was bound to occur under the Victory Tax "Collection of Tax at Source on Wages" definition of "wages". [ra1943]

      We encourage everyone to read 56 Stat., Chapter 619, Section 172 "Temporary Income Tax on Individuals" beginning on page 884. Pay attention to the definitions contained in sections 465 and 466 (pages 887 and 888). [56 stat]

      Then read the Conference Report attached to H.R. 2570 (Misc. Reports, Vol. 3, Congressional Serial Set 10762, Report 510, 1943). The 1942 Act reads: "to the extent that such wages are includible in gross income (gain)" they are subject to the provisions of "withholding". The 1943 Act however, made changes to both the definition of wages and the application of that definition to the "withholding" provisions. Page 34 of that Report provides this information:

      "A clerical amendment in the House bill eliminated the provision in section 466 (a) which restricts the withholding to wages includible in gross income. This same change is made in the Senate Bill. This limitation, which was designed to exclude from withholding the amount of any wages payment exempted under the law from the tax imposed by chapter 1 of the code, is rendered unnecessary by the changes made in the definition of the term "wages"."

      What form of "wages" would be exempted from the tax upon "commercial net income," under chapter 1, if all wages were taxable? The same "wages" exempted by the fundamental law, as defined by the Supreme Court, that is, those "wages" which constitute the whole income or annual receipts of the common laborer.

      The current interpretation of those changes are reflected in the wording found in 26CFR31.3401(a)-1 and 2 (Section 465 (b) and 466 (a) of the 1942 Revenue Act):

      "Wages. (a) In general. (1) The term "wages" means all remuneration for services performed by an employee for his employer, unless specifically exempted under section 3401 (a) or excepted under section 3402 (e).

      (2) The name by which the remuneration for service is designated is immaterial. Thus, salaries, fees, bonuses, commissions on sales or on insurance premiums, and retirement pay are wages within the meaning of the statute IF paid as compensation for services performed by the employee for his employer."

      What is the definition of "compensation for services," being that the definition of "remuneration for services" is now controlled by it? The only one we found is provided by Treasury Regulation 118 (1939 IRC) 39.22 (a) –2 published in the 1956 Edition of U.S. Code & Congressional Administrative News, page 496. It is the legal definition use within the tax system, at least in 1943 and it does not "include" common labor "wages". It reads:

      "(a) Commissions paid salesmen, compensation for services on the basis of a percentage of profits, commissions on insurance premiums, tips, … etc.". [Nowhere does it identify the "wages" of the common law (labor only) employee as being included, unless those "wages" are paid a "a percentage of profits".

      [Note 26 USC 61-(a) (1) uses the same definition, and, like the legal definition of "compensation for personal services," it does not include the term "wages." Why? Because not all "wages" are paid as compensation for personal services; only such "wages" as constitute commercial net income are paid as "compensation for personal services"]

      To further confuse the issue, Congress, in 1944, repealed the Victory Tax imposed upon what they deemed to be gross income (gross gain) and then re-instituted that same tax under the name "adjusted gross income". In addition, they required every employee, subject to withholding on wages, to file a new Withholding Certificate under Subchapter D of Chapter 9 (Employment taxes), thereby voiding the withholding requirement under Chapter 1 (income taxes) of the 1939 IRC. (58 Stat., Ch. 210, Sec 22 (e), page 254) The question raised is, why? If the levy of the tax upon gross gain was valid under the 1942 provisions, why did they change those provisions in 1943, and then make everyone file a new withholding certificate?




      That concept of "taxable income (gain)" simply does not work for the common laborer! First of all, Supplement T provided for an arbitrary 10% deduction for business related expenses, in lieu of records proving actual business expenses. It was designed to make it easier for those who were "in business," i.e., the small mom and pop business who did not keep tract of their business expenses, to determine their actual net income for purposes of the tax. Instead, Congress used that definition to trap the common laborer into a tax system, in which they did not belong, thereby, converting the federal income tax from an excise upon business to a direct tax upon labor (property).

      Remove section 62 from the Tax Code and literally nothing changes for the business owner, in relation to the computed amount of tax owed. It is still an excise upon commercial activities, measured by "net-income". Section 62’s entire purpose was to camouflage the issue of the tax being an excise upon commercial activities, measured by the gain or profit derived from them. They accomplished this by creating a presumption that the income tax was a personal tax, measured by the amount of disposable money available each year, regardless of how that money was acquired. In other words, Congress changed the character of the excise from that of a tax upon commercial activities, to that of a "direct" tax upon labor (property), measured by the statistics of personal income. Those statistics were compiled by the Department of the Treasury from information taken from tax returns filed from 1913 to 1940 and the U.S. Department of Commerce from the Bureau of the Census "Statistical Abstract" information (Revenue Act of 1942). Read the documents available on this web-site, they provide an invaluable insight into the transition from a class tax, based upon commercial net income, to a mass tax based upon the statistics of personal disposable income. http://www.taxhistory.org/Civilization/Documents/Withholding/witholding.htm.





      That no Court of Law will ever answer

      The questions we presented to the Department of Justice and the Supreme Court were not about "wages" not being income, but rather, about the common laborer’s" classification" in relation to the business excise tax imposed by Title 26, Subtitles A and C. The laborer’s "wages" are, in most cases, their entire annual receipts (whole income), not their "entire net income," as though they were in the business of making "gains and profits" from the exchange of their labor for money. The Department of Justice, as well as the lower courts, refused to address those issues or answer any questions concerning the application of the law. We wonder why. Could it be that those answers would embarrass them, that, perhaps, they actually made an "honest mistake" as to who was in fact is liable for the federal income tax?



      Our conclusion, therefore, is that despite the fundamental law the common labor for hire employee is "classified," for income and employment tax purposes, as being a single owner entity (individual), not a human being. Therefore, their "wages," despite not being "derived from" commercial and financial (business) receipts (or any receipts at all), are arbitrarily "classified," for income tax purposes, as being commercial net income (gains and profits). And apparently there is nothing the common laborer can do about it.

      The Personal Exemption Issue

      For those of you who do fall within the classifications of business and net income, we would suggest investigating the statutory, as well as, constitutional purpose behind the personal exemption allowance. The income tax is an excise; it is not a capitation tax. The maxim "the power to tax, is the power to destroy" applies to excise’s effect upon the activity, not the impact upon the human being. In other words, once the court confirms the validity of the excise they are powerless to limit the force by which Congress imposes the tax upon that activity. (In the1940’s the maximum tax burden Congress could impose by Statute was 90%). If you could not afford to pay the tax you owed, your option would be to cease being in that business. [Where does the common laborer go in that case? On welfare!]

      Congresses dilemma was that to tax the "entire net income" of the business, without allowing the owner to deduct "personal living and family expenses," would smack the court as being a capitation tax. Yet, if Congress were to allow, without some restraint, the deduction of "personal living and family expenses" directly from the commercial net income produced by the "taxable activity," they simply would never be able to collect an income tax. Who would pay such a tax that could be so easily avoided by inflating "personal living and family expenses"? It was a catch 22 requiring a solution. Congress opted to set the personal exemption allowance above the highest average cost of living, thereby avoiding the charge that the tax was unconstitutional, yet still being able to collect some amount of tax. As of today, that concept has never been challenged or introduced to the court as a constitutional objection. We did not pursue that course, because we lacked "standing" under the true application of the Law. Our contention is that we, as common law laborers providing labor (property) only, and having no other source of income, are not addressed by Title 26. Therefore, Title 26 has no application to our whole income (source), except, from our "honest mistake" of filing the W-4 claiming to have taxable "commercial net income" wages.

      I’m not sure about you, but we find it impossible to live on the $3,200 Congress now allows as a "personal exemption", thereby raising the question of constitutional validity.

      Our suggestion would be to raise the amount allowed as a "personal exemption" to a point that reflects the actual "cost basis" of labor, for the majority of laborers throughout the United States, and eliminate all other "personal" deductions. At least in that way it could not be construed as a "capitation" tax, or a tax levied directly upon the common laborer’s back. This information is readily available from the Statistical Abstract of the United States and is updated every year. The 1995 (1998 Edition) "Average annual pay" of the common worker, based on selected metropolitan areas, Table 695, could be used as a starting point in establishing a reasonable "cost basis" of labor.

      We have posted our court case documents in an effort to inform and educate as many common law (labor only) employees as possible. This is not a tax protest, nor an encouragement to not pay taxes. Instead, we encourage people to pay the federal income tax and follow the presumption of the Law until it can be legally changed. We believe, in our case anyway, that the justice system failed; perhaps it was our fault for not hiring an attorney.



      Time Table of Court Documents

      1. 1996 Response from Treasury/ Letter from Jerry Lewis
      2. Application for refund, Attachment A to 1040X 2/7/01
      3. Response from IRS 5/14/01, Notice of disallowance 1/22/02
      4. Request for appeal hearing on disallowance
      5. Request for extension of time to file suit for refund
      6. Court Case filed 1-21-2004
      7. Answer to complaint by DOJ
      8. Request for joint schedule conference
      9. Response to proposed schedule conference
      10. 2nd request for scheduling conference
      11. Status report April 4/05, doj’s version
      12. Status report April 4/05 our version
      13. Notice of Motion for Summary Judgement, DOJ
      14. Statement of Uncontroverted Facts and Conclusions of Law, DOJ
      15. Response Opposing Motion for Summary Judgement
      16. Statement of Genuine Issues
      17. Reply to Plaintiff’s Motion Opposing Summary Judgement
      18. Judgement of District Court/ Order Granting Sum. Jud. to U. S.
      19. Appeal to 9th Circuit
      20. Motion for Summary Affirmance, DOJ
      21. Response to motion for summary affirmance
      22. Memorandum of the 9th Circuit, (05-55954 pdf)#15
      23. Appeal for rehearing En Banc 9th Cir.
      24. Order of the 9th Circuit denying rehearing
      25. Judgement of the 9th Circuit (final)
      26. Petition for Writ of Certiorari, Supreme Court Docket 06-141
      27. Application for Extension of Time to File for Rehearing
      28. Extension of time granted by Justice Kennedy
      29. Petition for Rehearing
      30. Petition denied

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