Subject: Sins of Omission -----BEGIN PGP SIGNED MESSAGE----- Hash: SHA1 Dear Subscriber, It's time now to address the second web page of Mr. Siegel (law professor at George Washington University). On the first page we looked at, he asserted (with no legal support) that 861 and its regulations don't "matter" and are "irrelevant" to determining the taxable income of most U.S. citizens. Now let's see what his second page says. Here is the link to it: http://docs.law.gwu.edu/facweb/jsiegel/Personal/taxes/861det.htm On that page, he sets out to dispute the claim that "Section 861 shows that the domestic income of U.S. citizens is not taxable." First of all, that's not what I claim. Section 861 itself is NOT where the limited nature of the tax is demonstrated. Sections 861 through 863 categorize ALL income, whether taxable or not, as either domestic or foreign. It is the rest of Subchapter N, and the regulations under 861 which explain how all the pieces work together, which show the limited nature of the tax. Setting aside the slight mischaracterization of the issue, let's see what Mr. Siegel has to say. He makes it clear that he is specifically attempting to respond to my "Theft By Deception" video ( www.theftbydeception.com ), and uses the example from my video of "Andy Green," a hypothetical U.S. citizen who lives and works in Ohio. Mr. Siegel begins by running through the same basics my video does: 1) Section 1 imposes a tax on "taxable income"; 2) Section 63 generally defines "taxable income" as "gross income" minus deductions, and; 3) Section 61 generally defines "gross income" to mean "all income from whatever source derived," and lists a few of the most common items of income (compensation, interest, etc.). Mr. Siegel then asserts that for the income Andy Green receives, "It is not necessary to determine the geographic source of this income because gross income includes income 'from whatever source derived.'" Then, however, Mr. Siegel refers to Section 861(a)(3), which addresses "Compensation for labor or personal services performed in the United States." He even quotes from my video where, at the end of Step Three, I state that based on what we've seen up to this point, including 861(a)(3), the law apparently seems to show Andy's income to be taxable. At this point what strikes me as curious (to put it nicely) about Mr. Siegel's article, is what he OMITS. He has obviously seen the video, so he knows the statutory history of Section 861. If you look at 217(a)(3) from the 1920's, the "grandfather" of 861(a)(3), it very obviously was NOT saying that the compensation of people like Andy Green is taxable. Behold: “Sec. 217. (a) In the case of a NONRESIDENT ALIEN or of a citizen ENTITLED TO THE BENEFITS OF SECTION 262[*], the following items of gross income shall be treated as income from sources within the United States:... (3) Compensation for labor or personal services performed in the United States;... (b) From the items of gross income specified in subdivision (a) there shall be deducted [the allowable deductions]. The remainder, if any, shall be included in full as net income from sources within the United States.” (Section 217, Revenue Act of 1925) (* A citizen could only be "entitled to the benefits of section 262" if most of his income came from federal possessions, such as Guam or Puerto Rico.) My video shows that section, and shows how the section has "evolved" over time, WITHOUT changing in substance, into the current Section 861. I must wonder, why did Mr. Siegel say nothing about that? As a law professor, he of course knows the importance of legislative history, and having seen my video, he knows where 861 came from. So why does he imply that 861(a)(3) means that Andy Green's income is taxable, when he knows full well that that is NOT the case? And that's not all he fails to mention. 1) He harps on the wording "from whatever source derived" (in Section 61), but never mentions the fact that the regulations say that "Section 861 and following... and the regulations thereunder determine the SOURCES of income for purposes of the income tax" (26 CFR 1.861-1). My video quotes that repeatedly. Why didn't he address it, or even mention it at all? 2) He cites Section 61, but doesn't mention the fact that for many decades, since before I was born, Section 61 itself was followed by a cross-reference which specifically referred to Section 861 regarding "Income from sources within the United States." (That cross-reference was part of the actual text of the statute previously, as 22(g) in the 1939 Code.) My video mentions it. Why doesn't Mr. Siegel? 3) He quotes from Section 61, including the list of common "items" of income. He doesn't mention the fact (which my video does mention) that the regulations say that those items make up "classes of gross income," which in some cases include EXEMPT income (i.e., they are NOT always taxable) (26 CFR 1.861-8(a)(3), 1.861-8(b)(1)). He also never mentions the list of non-exempt income which those regulations then lead to (26 CFR 1.861-8T(d)(2)(iii)), though my video quotes from it. 4) He quotes the very broad wording of the general statutory definition of "gross income," but doesn't mention at all the fact that income tax regulations, past and present, show that notwithstanding the broad wording of the section, there ARE Constitutional limits upon what is taxable, because some income is, "under the Constitution, not taxable by the Federal government" (26 CFR 39.22(b)-1 (1956)). My video specifically quotes that, but Mr. Siegel doesn't mention it at all. (See also 26 CFR 1.312-6.) 5) He doesn't mention any of the places, such as those quoted in my prior message, where the regulations say, unequivocally and unconditionally, that 861 and its regulations give the rules for determining one's "taxable income from sources within the United States." He ASSERTS we shouldn't look there, but doesn't address (or even mention) all the citations that say the exact opposite--citations which ARE included in my video. In short, Mr. Siegel parrots the exact mistakes made by the status quo tax professionals, and ignores the citations which demonstrate their error. He doesn't refute them or respond to them: he acts as if they don't exist. And since he's seen the video, this can't very well be explained by mere ignorance. For example, he quotes from 26 CFR 1.1-1 (as does my video), which says that citizens are liable "to the income taxes imposed by the Code," whether their income is "from sources within or without the United States." Of course, the taxes "imposed by the Code" apply only to one's TAXABLE income (not all income), as 1.1-1 also states. So how does one DETERMINE his taxable income, foreign and/or domestic? “(c) Determination of taxable income. The taxpayer’s taxable income from sources WITHIN OR WITHOUT the United States WILL BE DETERMINED under the rules of Secs. 1.861-8 [and following].” [26 CFR § 1.863- 1(c)] My video quotes this, specifically as it relates to the wording in Section 1.1-1, yet Mr. Siegel doesn't mention it at all, instead asserting again that we need not look at 861 and its regulations. Why? It can't be because he's not aware of that regulation; he's seen the video. It's not that I expect Mr. Siegel to respond to every point I make, but it would be nice if he wouldn't just ignore evidence, acting as if it doesn't exist or as if he's never seen it. When I give specific citations refuting various assumptions and claims made by the status quo tax professionals, to simply REPEAT the same claims, without doing a thing to address the contrary evidence, is a very strange method of debate, if you ask me. If his goal is to change my mind, or yours, wouldn't it be better to ADDRESS some of those citations, instead of acting as if they don't exist? Sincerely, Larken Rose www.larkenrose.com -----BEGIN PGP SIGNATURE----- Note: This signature can be verified at https://www.hushtools.com/verify Version: Hush 2.5 wpwEAQECAAYFAkXzKUcACgkQGmVFo/iGj33qJgP/WUNX83aSDpWJwlZ21FvLlezNS7gB Xl02Bu+OqaKFzYnGTYUPj4QZjd2fjvYnLNl++0SlG1Yj1Q+v6Eua18hPmBzUMXagjS+9 84uBaP8/4XDReeoePU3BxC05+YjKSGLfSp9bnpP/57Z0VAJahBSRuSy3JDx1oo1kh+20 OuB7sWs= =9S69 -----END PGP SIGNATURE----- Recharge and relax. Click for great vacation packages. http://tagline.hushmail.com/fc/CAaCXv1OpM7oP9TxCt5hlqLYoKjQEUqJ/ -------------------------------------------------------------------- To subscribe, send a blank message to 861-on@mail-list.com