Wages Cannot Be Taxed As Income
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I. OVERVIEW
The first issue that I shall address is whether section 22(a) of the IRC of 1939 provides for an income tax upon income that is derived from "...salaries, wages, or compensation for personal service..." or whether section 22(a) of the IRC of 1939 provided for an income tax on ..salaries, wages, or compensation for personal service..." Throughout this writing I shall show conclusively that neither Section 22(a) of The Income Tax Act of 1939, the Victory Tax of 1942, the Current Tax Payment Act of 1943 or Section 61(a) of the IRC of 1954 imposes an income tax liability on either "...salaries, wages, or compensation for personal service...". Legally, it is only the income that is "... derived from salaries, wages, or compensation for personal service...", upon which an income tax can be legally imposed. If the income tax that is currently imposed "...salaries, wages, or compensation for personal service..." is unlawful, and leave no doubt, it is unlawful and wholly enforced under "color of law", then no amount of legislative activity can deter that kind of extortion. If it is not legislatively authorized in the first place, how can it be legislatively repealed? In order to resolve the issue the question that will now be explored is whether the IRS can impose an income tax on the income that is "... derived from salaries, wages, or compensation for personal service...", or in the alternative is it the actual "...salaries, wages, or compensation for personal service..." upon which an income tax can be laid. I shall start with section 22(a) of the IRC of 1939. This review will be divided up into: (1). Section 22(a) of The Income Tax Act of 1939; (2) the Victory Tax of 1942; (3) the Current Tax Payment Act of 1943; (4) and Section 61(a) of the IRC of 1954; (5) and the Individual Income Tax Act in 1944 and (5) Separation of Powers Doctrine, starting with section 22(a) of the IRC of 1939; Do no be too quick and jump to the conclusion that because section 22(a) of the IRC of 1939 was replaced with section 61(a) of the IRC of 1954 that any discussion on sectoin 22(a) is meritless. On the contrary, section 22(a) of the IRC of 1939 is inextricably intertwined with its progeny, section 61(a) of the 1954 which is the IRS's current alleged authority for imposing an income tax on "...salaries, wages, or compensation for personal service...", social security payments, pension payments, ect. I. Section 22(a) of the IRC of 1939 When reading section 22(a) of the 1939 IRC in conjunction with section 61(a) of the 1954 IRC it is clear that it the only the actual "...salaries, wages, or compensation for personal service..." upon which an income tax can be laid. If you have wages, salaries or compensation for personal services but no income has been derived from any one or more if these items then there is not and cannot be any income tax liability. If, on the other hand, you have salaries, wages, compensation for services, social security payments or pension payments and income has been derived from any one or more of these sources then the potential exists for an income tax liability. But if no income has been derived from any of these sources then if the Government wants to impose a tax on any one or more of these sources then that tax is not an income tax but an apportioned tax. The meaning and ramifications of the Revenue Act of 1942, otherwise known as the "Victory Tax". This tax was repealed and replaced with "the Current Tax Payment Act of 1943 [which] is still in effect today and provides the authority for the collection of 'income' tax at the source on wages." However, income tax withholding has "been misapplied by many employers for many years against individuals whose employment does not occasion any event or activity that has been taxed for revenue purposes . . ." He calls us away from this de facto behavior with the reminder that "the fact that it [withholding] has been going on for a long time does not make it any more lawful". The Ninth Circuit Court of Appeals agrees in that "a practice condemned by the Constitution cannot be saved by historical acceptance and present convenience." U. S. v. Woodley, 726 F. 2d 1328, 1338 (1983). If Congress has made its intent in the statute clear, the Court must give effect to that intent. Miller v. French, 530 U.S. 327, 326 (2000) (99-224), quoting Sinclair Refining C. v. Atkinson, 370 U.S. 195, 215 (1962). The United States bottoms its case on the proposition that Section 22(a) and it's counterpart Section 61 should be construed to lay an income tax upon the wages or the pension payments rather than laying the income tax upon the income that is derived from the wages or the pension payments. It ascribes this meaning to the words "gains, or profits and income derived from any source whatever" contained at the end of the section. The United States argues that by use of the "gains" Section 22(a) and it's counterpart, Section 61 reaches not merely the income that is derived from either the wages or the pension payments but also the wages and the pension payments themselves. Well before this case the U.S. Supreme Court had defined income as "the gain derived from capital, labor or from both combined." it was only the income that was derived from wages, etc that could legally have an income tax levied on it. This position finds for its support the holding of the U.S. Supreme Court. The Supreme Court had before it the 1954 Code when the Court decided the case of Commissioner v. Glenshaw Glass Co., 348 U.S. 432, 75 S.Ct. 477. The Court held that: "?although the definition of gross income had been simplified, no effect on its present broad scope was intended." The "broad scope" of the "definition of gross income" did not include wages as a synonym of income. The definition of gross income was limited to the income tax that could be laid upon the income that was derived from wages. Once the United States makes wages a synonym of income and then lays an income tax upon the wages because the wages is synonym of income then the United States is no longer laying an income tax upon the income that is derived from the wages; it is laying an income tax upon the wages. This is not what Congress legislated and the U.S. Supreme Court has repeatedly held the same. It is only the income that is derived from the wages that an income tax can be laid upon. If the United States want to lay a tax on the wages then it has to apportion the tax to be constitutionally correct. The case of Commissioner v. Glenshaw Glass Co. has never been overruled, superseded, amended or modified by the U.S. Supreme Court or by Congress. Hence, it is only the income that is derived from the wags or the pension payments that an income tax can be laid upon and not the wags or pension payments themselves. When the Court held that "...the definition of gross income had been simplified," where, how and when was it simplified"? It was simplified in the counterpart to Section 22(a) that counterpart being Section 61 of the 1954 Code . In other word, no effect in the present broad scope of Section 61 was intended when congress passed Section 61 the counterpart to Section 22(a). Hence, whatever was gross income under Section 22(a) is still gross income under Section 61. In short, the IRC of 1954 adopted prior to entry of the decision in Commissioner v. Glenshaw Glass Co., shows no intent on the part of Congress to lay an income tax on wages or pension payments but to lay an income tax only upon the income that is derived from either the wages or the pension payments. No U.S Supreme Court case that is inconsistent with Commissioner v. Glenshaw Glass Co., can. be cited. There has thus been consistent U.S. Supreme Court and legislative acceptance of the basic concept of income. Both avenues lead to the conclusion that gross income subject to tax by Section 22(a) and it's counterpart Section 61 does not extent to either wages or pension payments but extends only to the income that is derived from either the wages or the pension payments. The revision of Section 22(a) of the IRC to Section 61 of the IRC of 1954 throws new light on the weakness of the United States entire position. Section 61 of the 1954 code reflects a desire to clarify and simplify the definition of gross income without changing its meaning. To that end, Section 61(a) provides: (a) General definition. Except as otherwise provided in this subtitle, gross income means all income from whatever source derived, including (but not limited to) the following items: (1) Compensation for services, including fees, commissions, fringe benefits, and similar items; (2) Gross income derived from business; (3) Gains derived from dealings in property; (4) Interest; (5) Rents; (6) Royalties; (7) Dividends; (8) Alimony and separate maintenance payments; (9) Annuities; (10) Income from life insurance and endowment contracts; (11) Pensions; (12) Income from discharge of indebtedness; (13) Distributive share of partnership gross income; (14) Income in respect of a decedent; and (15) Income from an interest in an estate or trust. The House Ways and Means Committee pointed out that "While the language in existing section 22(a) has been simplified, the all-inclusive nature of statutory gross income has not been affected thereby. Section 61(a) is as broad in scope as section 22(a)." Similarly, the Senate Committee on Finance noted that Section 22(a) "is not intended to change the concept of income that obtains under section 22(a)." By this simplification, Congress recognized that the term "income" has an accepted, known concept. The repetitious words "gain" and "profits" were eliminated from the primary statement of the definition, and the entire catch-all phrase "gains or profits and income derived frm any source whatever" was dropped. This clarification reflects not merely a prospective purpose but an historical intent. It undermines what the United States has characterized as the "foundation" of it's argument - that the controlling term is "gain" rather than "income". What Congress was endeavoring to do in Section 22(a) was perfectly clear to the U.S. Supreme Court in Helvering v. Clifford, 309 U.S. 331, 334 (1940), when it said: "The broad sweep of this language indicates the purpose of Congress to use the full measure of its taxing power within those definable categories." ( Emphasis added ). And what are those "definable categories" upon which an income tax can be imposed upon? Section 22(a) of the 1939 IRC and it's progeny, section 61(a) of the 1954 IRC and the Legislative history sets forth the contours of the "definable categories." The "definable categories" which sets forth the outer parameters of the "definable categories" of the items upon which an income tax can be laid is only the income (gain) that is derived from the wages and not the wages themselves upon which an income tax cab be laid. The Legislative History makes it clear and leaves no doubt that rather than imposing an income tax on the wages it is only the income that is derived from the wages, if any, upon which an income tax can create an income tax liability and only that income upon which an income tax can be imposed. According to the Legislative History that led up to the re- wording of section 22(a) of the 1939 to the current wording of section 61(a) of the 1954 code nothing changed section 22(a) of the 1939 IRC when section 61(a) was passed by Congress. The Legislative History that is the heart of section 61(a) of the of the 1954 IRC provides that "[W]hile the language in existing section 22(a) has been simplified, the all-inclusive nature of statutory gross income has not been affected thereby. Section 61(a) is as broad in scope as section 22(a): "Gross income' includes gains, profits, and income derived from salaries, wages, or compensation for personal service . . . of whatever kind and in whatever form paid, or from professions, vocations, trades, businesses, commerce, or sales, or dealings in property, whether real or personal, growing out of the ownership or use of or interest in such property; also from interest, rent, dividends, securities, or the transaction of any business carried on for gain or profit, or gains or profits and income derived from any source whatever. . . ._ (Emphasis added.). Section 22(a) of the 1939 IRC. It is only the income that is "...derived from salaries, wages, or compensation for personal service . . .", that creates any income tax liability. Since it was only the "....income derived from salaries, wages, or compensation for personal service . . . of whatever kind and in whatever form paid, or from professions, vocations, trades, businesses, commerce, or sales, or dealings in property, whether real or personal, growing out of the ownership or use of or interest in such property...", upon which an income tax could be imposed, according to the wording of section 22(a) of the 1939 IRC and nothing changed in Section 22(a) of the 1939 IRC ( it was only the income that was "...derived from salaries, wages, or compensation for personal service . . .", upon which an income tax could be imposed and not upon the salaries, wages, or compensation for personal service . . themselves coupled with the fact that the Congressional history that is a part of section 61(a) of the 1954 IRC leaves no doubt that since nothing changed from the application of section 22(a) of the 1939 to the taxing "..... salaries, wages, or compensation for personal service ..., as it relates to imposing an income tax upon these items of property then it logically has to follow that it is still only the income, if any, that is ".... derived from salaries, wages, or compensation for personal service...", that creates any income tax liability (notwithstanding any tax breaks, i.e. write-offs, allowances deductions, exemptions, etc.), and not the ...salaries, wages, or compensation for personal service...", themselves upon which an income tax liability can be created and imposed. Therefore, the earning of any "...salaries, wages, or compensation for personal service..." does not create any potential income tax liability. Section 22(a) and it's direct counterpart is a strange mixture of specification and generality. It deals specifically with "gains, profits, and income" derived from personal service; (2) from businesses of all sorts; and (3) from the investment of capital. This enumeration is then followed by the tail-end reference to "gains or profits and income derived from any source whatever." Neither the meaning of Section 22(a) or Section 61 is to be found in verbal or grammatical niceties. Rather, these sections have been accepted by the lower courts as an attempt to describe the statute the general understanding of what is "income". Separate content has not been given to the three words, "gains," "profits." and "income." Necessarily the concluding phrase is no more than a generalized reference to the content supplied the term "income" by the enumeration of items which precede it. All of this finds expression in the case of Commissioner v. Glenshaw Glass Co.,,348 U.S. 426, (1954). In 1977, some 23 years after Commissioner v. Glenshaw Glass Co., the U.S. Supreme Court decided Commissioner v. Kowalski, 434 U.S. 77 (1977). The high Court held that: Footnote #13: The House and Senate Report ( i.e. H.R. Rep. No. 1337, 83rd Cong, 2d Sess, A18 (1954; S.Rep No. 1622 83rd cong. 2d Sess., 168 (1954), states that: "[Section 61] corresponds to section 22(a) of the 1939 Code. While the language in existing section 22(a) has been simplified, the all-inclusive nature of statutory gross income has not been affected thereby. Section 61(a) is as broad in scope as section 22(a)." Well before this case the U.S. Supreme Court had defined income as "the gain derived from capital, labor or from both combined." it was only the income that was derived from wages, etc that could legally have an income tax levied on it. This position finds for its support the holding of the U.S. Supreme Court. The Supreme Court had before it the 1954 Code when the Court decided the case of Commissioner v. Glenshaw Glass Co., 348 U.S. 432, 75 S.Ct. 477. The Court held that: "?although the definition of gross income had been simplified, no effect on its present broad scope was intended." The "broad scope" of the "definition of gross income" did not include wages as a synonym of income. The definition of gross income was limited to the income tax that could be laid upon th e income that was derived from wages. Once the United States makes wages a synonym of income and then lays an income tax upon the wages because the wages is synonym of income then the United States is no longer laying an income tax upon the income that is derived from the wages; it is laying an income tax upon the wages. This is not what Congress legislated and the U.S. Supreme Court has repeatedly held the same. It is only the income that is derived from the wages that an income tax can be laid upon. If the United States want to lay a tax on the wages then it has to apportion the tax to be constitutionally correct. The hypothesis that wages can be taxed as income in unacceptable. The statutory law and Congressional history behind the statutory law and Congressional history support this hypothesis. First, it is only the income that is derived from the property, whether that property be wages, compensation for services, pension plan payments or social security payments. In attempting t show that it is only the income that is derived from the wages, et. upon which an incme tax can be laid, your author is taking the question of whether wages can be taxed as income past the stage of taxing the wages as income and onto the stage of only taxing the income that is derived from those wages. That is what section 22(a0 provides for and section 61(a) did not and does not change that. It is not only civil fraudulent inducement but it is fraudulent inducement on the part of any entity that induces one to pay an income tax on any wages, compensation for services, pension plan payments or social security payments where no income has first been derived from any of the above items. On the other hand, if one has derived any income from any wages, compensation for services, pension plan payments or social security payments then one is obligated to report that income and to pay any income tax on that income that is derived from the wages, compensation for services, pension plan payments or social security payments. Certain lower courts - courts lower than the U.S. Supreme Court - have erroneously held through fraudulent inducement and conspiracy that wages are equated with income and, therefore, any income derived from the wages, compensation for services, pension plan payments or social security payments is subject to an income tax being laid on the wages, compensation for services, pension plan payments or social security payments. That is a LIE of the first magnitude. I will explain. First, it is not only infinitely inappropriate but it is civil and criminal fraud for the Government to advance the proposition that wages can legally be taxed as income. In all probability, the Government's most important position that gives false legitimacy to the argument is that people have been fraudulently induced into believing this position of the Government that wages, compensation for services, pension plan payments or social security payments, etc can legally be taxed as income. There are many reasons as to why this fraudulent inducement survives. Second, if any entity who has voluntarily subjected him or herself to the signing of a W-4 and the signing of any income tax return retreats from that position by withdrawing that W-4 and not signing and filing any income tax return, then the IRS is going to bring to bear on that entity certain civil and criminal sanctions. If this fraudulent inducement and deceit on the part of the Government were to fail then the Governmental entities would be fearing the loss of their vocations, pay check, pensions and most important of all, the loss of any tax breaks in the form of tax write offs, exemptions, allowances, etc. These Governmental entities that would be fearing the loss of their vocations, pay check, pensions and most important of all and the loss of any tax breaks in the form of tax write offs, exemptions, allowances, etc are Federal Judges, Clerks of the Court, United States government employees. With this argument there is a vacuum. However, there is an acceptable solution to this problem so that the deceit and fraudulent inducement can be eliminated. The solution is to first declare that it is only an income tax that can be laid upon any income by first declaring that wages is not a form of income but only a form of potential source from which an income can be derived thereby subjecting that income that is derived from wages, compensation for services, pension plan payments or social security payments to a possible income tax. But what is it that stands in the way of the implementation of this solution. It is those in the government that have the power, position, motive, intent and opportunity to thwart and sabotage such implementation. Their motive for such implementation is that they will no longer bill entitled to claiming any tax breaks in the form of tax write offs, exemptions, allowances, etc. In short these governmental entities motive is to gain the retention of the tax breaks in the form of tax write offs, exemptions, allowances, etc which results in the shifting of the tax burden to those who are least capable of claiming those tax breaks in the form of tax write offs, exemptions, allowances, etc; the average working class. The United States has made an erroneous and self-serving assertion that the argument in regards to 26 USC 61 as Congress passed that statute, the United States interpretation of the Statute and the United States Supreme Court's reliance upon the Congressional history underpinning 26 USC 61, is frivolous. Lawrence will explain again why Lawrence's litigation is anything but frivolous. Rather, it is the United States's position that is frivolous. Lawrence will rule on the U.S. Supreme Court case of Commissioner v. Glenshaw Glass Co., 348 U.S. 428, 75 S.Ct. 473, 99 L.Ed 483 and the Congressional history behind 26 USC 61. Turning to the "HISTORICAL AND STATUTORY NOTES" following 26 USC section 61 it provides that: "Revision Notes and Legislative Reports: Under "1954 Act", in relevant part, one finds a reference to House Report No. 1337, Senate Report No. 1622, and Conference Report No. 2543, see 1954 U.S. Code Cong. And Adm. News. Pp. 4155, 4802, and 5280, respectively." When we turn to page #4155 of the 1954 U.S. Code Cong. and Adm News, at page #4155 that page provides that: _This section corresponds to section 22 (a) of the 1939 Code. While the language in existing section 22 (a) has been simplified, the all- inclusive nature of statutory gross income has not been affected thereby. Section 61 (a) is as broad in scope as section 22 (a). Section 61(a) provides that gross income includes "all income from whatever source derived." This definition is based upon the 16th Amendment and the word "income" is used in its constitutional sense. Therefore, although the section 22(a) phrase "in whatever form paid" has been eliminated, statutory gross income will continue to include income realized in any form. Likewise, no change is effected by the elimination of the specific reference to compensation of the President and judges of courts of the United States, and the compensation of such individuals will continue to be taxed in the same manner as that of other taxpayers. The Supreme Court had before it the 1954 Code when the Court decided the case of Commissioner v. Glenshaw Glass Co., 348 U.S. 428, 75 S.Ct. 473, 99 L.Ed 483. The issue before the high court was: The common question is whether money received as exemplary damages for fraud or as the punitive two-thirds portion of a treble-damage antitrust recovery must be reported by a taxpayer as gross income under 22 (a) of the Internal Revenue Code of 1939. The Court said: The sweeping scope of the controverted statute is readily apparent: _SEC. 22. GROSS INCOME. _(a) GENERAL DEFINITION. - `Gross income' includes gains, profits, and income derived from salaries, wages, or compensation for personal service . . . of whatever kind and in whatever form paid, or from professions, vocations, trades, businesses, commerce, or sales, or dealings in property, whether real or personal, growing out of the ownership or use of or interest in such property; also from interest, rent, dividends, securities, or the transaction of any business carried on for gain or profit, or gains or profits and income derived from any source whatever. . . ._ (Emphasis added.). This Court has frequently stated that this language was used by Congress to exert in this field _the full measure of its taxing power._ Helvering v. Clifford, 309 U.S. 331, 334 ; Helvering v. Midland Mutual Life Ins. Co., 300 U.S. 216, 223 ; Douglas v. Willcuts, 296 U.S. 1, 9 ; Irwin v. Gavit, 268 U.S. 161, 166 . Respondents contend that punitive damages, characterized as _windfalls_ flowing from the culpable conduct of third parties, are not within the scope of the section. But Congress applied no limitations as to the source of taxable receipts, nor restrictive [348 U.S. 426, 430] labels as to their nature. And the Court has given a liberal construction to this broad phraseology in recognition of the intention of Congress to tax all gains except those specifically exempted. Commissioner v. Jacobson, 336 U.S. 28, 49 ; Helvering v. Stockholms Enskilda Bank, 293 U.S. 84, 87 -91. Thus, the fortuitous gain accruing to a lessor by reason of the forfeiture of a lessee's improvements on the rented property was taxed in Helvering v. Bruun, 309 U.S. 461 . Cf. Robertson v. United States, 343 U.S. 711 ; Rutkin v. United States, 343 U.S. 130 ; United States v. Kirby Lumber Co., 284 U.S. 1 . Such decisions demonstrate that we cannot but ascribe content to the catchall provision of 22 (a), _gains or profits and income derived from any source whatever._ The importance of that phrase has been too frequently recognized since its first appearance in the Revenue Act of 1913 5 to say now that it adds nothing to the meaning of _gross income._ Nor can we accept respondent's contention that a narrower reading of 22 (a) is required by the Court's characterization of income in Eisner v. Macomber, 252 U.S. 189, 207 , as _the gain derived from capital, from labor, or from both combined._ . It therefore cannot be said with certitude that Congress intended to carve an exception out of 22 (a)'s pervasive coverage. Nor does the 1954 Code's legislative history, with its reiteration of the proposition that statutory gross income is _all-inclusive,_ give support to respondent's position. The definition of gross income has been simplified, but no effect upon its present broad scope was intended At footnote the U.S. Supreme held that: III. SECTION 61(a) OF THE INTERNAL REVENUE CODE OF 1954 In discussing 61 (a) of the 1954 Code, the House Report states: _This section corresponds to section 22 (a) of the 1939 Code. While the language in existing section 22 (a) has been simplified, the all- inclusive nature of statutory gross income has not been affected thereby. Section 61 (a) is as broad in scope as section 22 (a). _Section 61 (a) provides that gross income includes `all income from whatever source derived.' This definition is based upon the 16th Amendment and the word `income' is used in its constitutional sense._ H. R. Rep. No. 1337, supra, note 10, at A18. A virtually identical statement appears in S. Rep. No. 1622, supra, note 10, at 168. [348 U.S. 426, 434] Today, 26 USC 61 as it relates to wages is still the same; "Gross income' includes gains, profits, and income derived from salaries, wages, or compensation for personal service . . . of whatever kind and in whatever form paid, or from professions, vocations, trades, businesses?". The Legislative branch and Judicial branch of the United States has declared that it is only the income that is derived from Lawrence's property that an income tax can be laid on and not upon the property itself. If that is a "frivolous argument, then the U.S. Congress and our U.S. Supreme has presented a frivolous argument. That is the ultimate conclusion that the IRS wants this Court to adopt. However, the IRS's position is not the truth. In footnote #6 the Court said: "The phrase ( i.e._the gain derived from capital, from labor, or from both combined._ ) was derived from Stratton's Independence, Ltd. v. Howbert, 231 U.S. 399, 415 , and Doyle v. Mitchell Bros. Co., 247 U.S. 179, 185 , two cases construing the Revenue Act of 1909, 36 Stat. 11, 112. Both taxpayers were _wasting asset_ corporations, one being engaged in mining, the other in lumbering operations. The definition was applied by the Court to demonstrate a distinction between a return on capital and _a mere conversion of capital assets._ Doyle v. Mitchell Bros. Co., supra, at 184. The question raised by the instant case is clearly distinguishable." In 1977, some 23 years after the Court decided Commissioner v. Glenshaw Glass Co., the U.S. Supreme Court decided Commissioner v. Kowalski, 434 U.S. 77 (1977), the high Court held that: Although Congress simplified the definition of gross income in 61 of the 1954 Code, it did not intend thereby to narrow the scope of that concept. See Commissioner v. Glenshaw Glass Co., supra, at 432, and n. 11; H. R. Rep. No. 1337, 83d Cong., 2d Sess., A18 (1954); S. Rep. No. 1622, 83d Cong., 2d Sess., 168 (1954). Footnote #13: The House and Senate Report ( i.e. H.R. Rep. No. 1337, 83rd Cong, 2d Sess, A18 (1954; S.Rep No. 1622 83rd cong. 2d Sess., 168 (1954), states that: "[Section 61] corresponds to section 22(a) of the 1939 Code. While the language in existing section 22(a) has been simplified, the all-inclusive nature of statutory gross income has not been affected thereby. Section 61(a) is as broad in scope as section 22(a)." In Kowalski, supra, the U.S. Supreme Court _... {was] concerned [with] the federal income tax and the issue of what was income._ Central Illinois Public Service v. United States, 435 U.S. 21 (1978). While section 61(a) is as broad in scope as section 22(a) it certainly is no broader than 61(a). The Judges of today's courts have made section 61(a) broader than section 22(a) by equating wages with income and then laying the income tax on the wages rather laying the tax on the income that is derived from the wages. Neither ssection 22(a) nor it's progeny, 61(a) authorizes an income tax on the wages, but rather only the income that is derived from those wages. That is what section 22(a) provides for and section 61(a) did not change that statutory provision. That is the _full measure_ of the taxing power of 61(a). If one argues that , except for Governmental employees, wages cannot be taxed as income, then the argument that the Government imputes to the "Tax Protestor" is that the wage earner does not want to pay his "fair share". First, lets make it abundantly clear in this article that we are not dealing with the concept of the presence of fair share or the absence of it. We are dealing with ones "legal share". Hence, we will deal with that "legal share." II. VICTORY TAX OF 1942 III. CURRENT TAX PAYMENT ACT OF 1943 III. SECTION 61(a) OF THE INTERNAL REVENUE CODE OF 1954 IV. SEPARATION OF POWERS DOCTRINE V. THIS COURT AND THE INTERNAL REVENUE SERVICE IS BOUND BY DECISIONS OF THE U.S. SUPREME COURT UNTIL OVERRULED BY THAT COURT. The Supreme Court recently stated: If a precedent of this Court has direct application in a case, yet appears to rest on reasons rejected in some other line of decisions, the Court of Appeals should follow the case which directly controls, leaving to this Court the prerogative of overruling its own decisions. Rodriquez de Quijas v. Shearson/American Express, Inc , 490 U.S. 477, 484, 109 S.Ct. 1917, 1921-22, 104 L.Ed.2d 526 (1989); Hatter v. U.S., 64 F.3d 647, 650 (Fed. Cir, 1995); Automatic Sprinkler Corp. v. Darla Environmental, (CA7, 94-2682) ("We follow rule--as the Supreme Court insists we must, no matter how old the rule and no matter how much it differs from a judge's view of sound policy. Rodriguez de Quijas v. Shearson/American Express, Inc., 490 U.S. 477, 484 (1989); Thurston Motor Lines, Inc. v. Jor- dan K. Rand, Ltd., 460 U.S. 533, 535 (1983); Hutto v. Davis, 454 U.S. 370 (1982) )". The above cited authorities has "direct application" in this case. The application is that wages cannot be taxed as income. Hence, this is the reason why Lawrence presents this argument and the reason why the United States did not object to the claimed exemptions of Lawrence. "Gain, lawful or unlawful, constitutes taxable income "when its recipient has such control over it that, as a practical matter, he derives readily realizable economic value from it." Rutkin v. United States, 343 U.S. 130, 137, 72 S. Ct. 571, 575, 96 L. Ed. 833 (1952). See also Commissioner v. Glenshaw Glass Co., 348 U.S. 426, 431, 75 S. Ct. 473, 477, 99 L. Ed. 483 (1955) (receipt of punitive damages taxable); United States v. Schmidt, 935 F.2d 1440, 1448 (4th Cir. 1991) (dominion and control of property makes it taxable); In re Bentley, 916 F.2d 431, 432 (8th Cir. 1990) (increase in wealth over which taxpayer has dominion is taxable)." U.S. v. Mueller, 74 F.3d 1152;1996 U.S. App. LEXIS 2193;96-1 U.S. Tax Cas. (CCH) P50,190;77 A.F.T.R.2d (RIA) 893;9 Fla. L. Weekly Fed. C 872 February 14, 1996, Decided The issue in Ruskin v. U.S., supra was "...whether money obtained by extortion is income taxable to the extortioner under 22 (a) of the Internal Revenue Code." At footnote #1 in Rutkin v. United States, 343 U.S. 130, 137, 72 S. Ct. 571, 575, 96 L. Ed. 833 (1952), The High Court cites 26 USC 22(a) of the 1939 I.R.C." [ Footnote 1 ] "SEC. 22. GROSS INCOME. "(a) GENERAL DEFINITION. - `Gross income' includes gains, profits, and income derived from salaries, wages, or compensation for personal service . . . of whatever kind and in whatever form paid, or from professions, vocations, trades, businesses, commerce, or sales, or dealings in property, whether real or personal, growing out of the ownership or use of or interest in such property; also from interest, rent, dividends, securities, or the transaction of any business carried on for gain or profit, or gains or profits and income derived from any source whatever. . . ." (Emphasis supplied.) 53 Stat. 9, 53 Stat. 574, 26 U.S.C. 22 (a). The "...money obtained by extortion...", by "....extortion...", was income in Rutkin, upon which an income tax could be laid since the "...money obtained by extortion..." was "...gain....derived from....dealings in property...growing out of the ....use of ....the transaction of any business carried on for gain or profit...". The money that was obtained by extortion in Rutkin was, therefore, income (gain) upon which an income tax could be laid. Under section 22(a) and it's progeny section 61(a) of the 1954 IRC, the government does not have subject matter jurisdiction to lay an income tax on "extortion" any more than it has subject matter jurisdiction to lay an income on "....salaries, wages, or compensation for personal service . . .". If under section 22(a) the Defendant in Rutkin would have received "....salaries, wages, or compensation for personal service . . . of whatever kind and in whatever form paid...", then, as in the case of the gain obtained by extortion in Rutkin, the income tax could only be laid on the "...income derived from [the] ....salaries, wages, or compensation for personal service...", and not on the "...salaries, wages, or compensation for personal service...", itself. The Court in Rutkin went on to hold that: The issue here is whether money extorted from a victim with his consent induced solely by harassing demands and threats of violence is included in the definition of gross income under 22 (a). We think the power of Congress to tax these receipts as income [343 U.S. 130, 139] under the Sixteenth Amendment is unquestionable. The broad language of 22 (a) supports the declarations of this Court that Congress in enacting that section exercised its full power to tax income. 11 We therefore conclude that 22 (a) reaches these receipts. At no time prior to the passage of the re-wording of section 22(a) into the current wording under section 61(a) of the 1954 code was wages, compensation for services, pension payments, social security payments ever taxed as income. But what happened? It is very simple; rather than the Government laying an income tax on the income that was derived from the above property, the Government simply equated wages, compensation for services, pension payments, social security payments with income. Now that wages is equated with wages, compensation for services, pension payments, social security payments the Government can now lay the income tax directly on the wages, compensation for services, pension payments, social security payments rather than on th income that is derived from the wages, compensation for services, pension payments, social security payments. Do not attempt to impute the argument to Plaintiff that wages, compensation for services, pension payments, social security payments cannot be taxed. They can, but not as income. The wages, compensation for services, pension payments, social security payments can be taxed by apportioning a tax on the wages, compensation for services, pension payments, social security payments. But what is that the Government has stood to gain by laying an income tax on the wages, compensation for services, pension payments, social security payments rather laying the income tax on the income that is derived from the wages, compensation for services, pension payments, social security payments? The Government has gained the opportunity to allow those in power to escape the income tax itself through the invocation of various tax breaks - write-offs, allowances, deductions, etc which is a gain to those that have the power to invoke that they did not have when it was only the income that was derived from the wages, compensation for services, pension payments, social security payments that an income tax was laid upon. WHAT A MASSIVE CONSPIRACY. And who is primarily at the heart of this massive conspiracy? The Federal Judges exclusive of the U.S. Supreme Court and the U.S. Attorneys. But what, if anything do these entities have to gain? First, the lower Federal Court Judges gain the opportunity to completely escape and avoid the income tax that is laid upon their judicial salaries by the invocation of the "tax breaks." Second, the lower Federal Court Judges gain the power over the people by calling wages income and then laying the income tax on the wages, compensation for services, pension payments, social security payments. Power, after all, is the greatest aphrodisiac known to man.
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