Direct and Indirect Taxes

   Posted by: BobMcNeil   in IRS

I just received this message from Chuck Conces, Chairman of the Lawmen Committee for the Public Interest.

Posted by: [email protected]
Fri Oct 5, 2007 7:23 am (PST)

Dear Lawmen and Others Who Have Horses:

Last night Larry Becraft was on the Rolly James radio program. He gave some good advice. Don’t use the goofy arguments for one. It is hard to convince a jury that you know what you are talking about when you argue the “federal zone” argument and the other patriot non-sense.

I read Jimmy Chisum’s court ruling and see that Jimmy used that argument and the court just blasted it as stupid non-sense. The good that comes out of that is the Paperwork Reduction Act ruling by the 10th Circuit. You all can be grateful to Jimmy for that.

I very much liked what Larry Becraft had to say except for one thing. He stated that the Circuit Courts around the Country are confused on whether the “income tax” is a direct or indirect tax. Frankly, I don’t give a fudge if the Circuit Courts are confused… the real issue was that the Supreme Court knew exactly what they were saying in all their rulings and answered every question… even the direct or indirect tax question.

Knowlton vs. Moore, 178 US 41, 47 (1900): “Direct Taxes bear upon persons, upon possession and the enjoyment of rights”.

FLINT v STONE TRACY, 220 US 107, 151 – 152 (1911): “Duties and imposts are terms commonly applied to levies made by governments on the importation or exportation of commodities. Excises are ‘taxes laid upon the manufacture, sale, or consumption of commodities within the country, upon licenses to pursue certain occupations, and upon corporate privileges.’ Cooley, Const. Lim. 7th ed. 680.”

The Corporation Excise Tax of 1909 was constitutionally an Indirect Tax. U.S. vs. Whitridge, 231 US 144, 147 (1913): “As repeatedly pointed out by this court, the corporation tax law of 1909… imposed an excise or privilege tax, and not in any sense a tax upon property or upon income merely as income.”

Notice the citing of a privilege tax and corporate privilege tax in the 2 cases.

MERCHANTS’ LOAN & TRUST CO. v SMIETANKA, 255 US 509, 518 – 519 (1921): “The Corporation Excise Tax Act of August 5, 1909, was not an income tax law, but a definition of the word ‘income’ was so necessary in its administration…”

Notice that the word “income” and the definition were necessary to administer the law.

FLINT v. STONE TRACY CO., 220 U.S. 107, 162 (1911): “but the tax is laid upon the privileges which exist in conducting business with the advantages which inhere in the corporate capacity of those taxed, and which are not enjoyed by private firms or individuals.”

The individual income tax is a direct tax on a person’s property and subject to the rule of apportionment. The Supremes said that a man’s labor is his property and is the most sacred and inviolable property as it was the foundation of all other property. The corporate income tax is not a tax on the corporation’s income, it is a tax on the privilege of incorporation, measured by the size of the corporation’s income. The tax on the corporation’s income is just a “cut” that the government takes out of the corporate profits, because of the corporate benefit bestowed on the corporation. The corporation is a creature of the government and does not have the same rights or privileges that a flesh and blood man has. The word “income” in its constitutional sense, means a derivative of a corporate profit. The Supremes ruled on that many times. The 16th Amendment is strictly limited to the constitutional definition of “income”. Further, the Supremes stated that Congress cannot define the word “income” and the government admits that the word “income” is not defined in the Internal Revenue Code.

Sims v. Ahrens et al., 271 SW Reporter at 730: “Income is necessarily the product of the joint efforts of the state and the recipient of the income, the state furnishing the protection necessary to enable the recipient to produce, receive, and enjoy it, and a tax thereon in the last analysis is simply a portion cut from the income and appropriated by the state as its share…”

Redfield v. Fisher, 135 Or. 180, 292 P. 813, 819 (Ore. 1930): “The individual, unlike the corporation, cannot be taxed for the mere privilege of existing. The corporation is an artificial entity which owes its existence and charter powers to the state; but the individual’s rights to live and own property are natural rights for the enjoyment of which an excise cannot be imposed.”

Isn’t it time we end the confusion over the difference between a tax on an individual or non-corporate business, and the tax on a corporation? The first being a direct tax on property, and the second being a tax on a corporate privilege?

No direct un-apportioned tax confirmed by the U.S. Supreme Court rulings.

Knowledge is power. Educate yourselves.

This entry was posted on Saturday, October 6th, 2007 at 3:25 am and is filed under IRS. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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