Subject: Complying With The Law (Part 4) -----BEGIN PGP SIGNED MESSAGE----- Hash: SHA1 Dear Subscriber, Suppose today you learned that the U.S. Congress passed a law that said the following: Section 1: A tax is hereby imposed on the importation of automobiles into the U.S., including all cars, pick-up trucks, vans, and SUVs. Section 2: See Section 3, which provides that the vehicles listed in Section 1 may in some cases be excluded from the tax imposed by this Act. Section 3: Automobiles manufactured by the following companies are subject to the tax imposed by this Act: Honda, Mazda, Mercedes, Peugot and Ferrari. Now suppose you were in the business of importing Hyundai's into the U.S. Would you think the tax applied to the business you were doing, or not? While you do import CARS, where the law specifies which MANUFACTURERS are subject to the tax (a different issue entirely), Hyundai isn't there. Should you just ASSUME that the tax also would apply to Hyundais, even if that's not specifically pointed out? There is a principle of law, expressed in Latin as “inclusio unius est exclusio alterius,” which dictates that where the law specifically lists matters to which it applies, an “irrefutable inference” must be drawn that what was NOT listed was intended to be omitted. (It only makes sense for the law to work that way, so we don't have to guess at what the law requires.) Specifically regarding tax laws, the Supreme Court says that they should NOT be interpreted in a way that includes "matters not specifically pointed out” (Gould v. Gould, 245 U.S. 151). (The Court then said that in case of doubt, tax laws should be interpreted in favor of the citizen, NOT in favor of the government.) So, in our example above, if the law doesn't specifically point out that Hyundais are subject to the tax, you should conclude that they are NOT. Now compare that hypothetical example to a few actual citations from the current income tax regulations: Section 1.61-1 says that "gross income" means "all income from whatever source derived, unless excluded by law." By itself that doesn't tell us much, since it just means "everything that isn't exempt is taxable," which is a truism. Sections 1.861- 8(a)(3) and 1.861-8(b)(1) say that the items of income listed in Section 61 of the tax code (things such as compensation for services, interest, rents, business income, etc.) make up what are called "classes of gross income." Then those regulations say that those "classes of gross income" "may include EXCLUDED income." In other words, we're again told that they may be exempt. And the regs direct us to another section... Section 1.861-8T(d)(2) gives a list of non-exempt income. On the list is certain foreign income of Americans, U.S. income of foreigners, and other matters related to international corporations and federal possessions. The domestic income of the average American, on the other hand, is conspicuously NOT on the list. So we're told about certain items of income, we're told they're sometimes exempt, and then we're told that income is NOT exempt when it comes from certain types of INTERNATIONAL trade. And this is just what we saw with the older income tax regulations, as well. Compare that to our hypothetical car-importing tax. I want to interrupt things here for a quick word about "prejudice." People often "pre-judge" things before they have all of the evidence--sometimes before they have ANY of the evidence. That is "prejudice." When looking at the hypothetical car- importing tax above, you have no prejudice, because you've never heard of it before. You look at what it says, and based on that alone decide what it means. On the other hand, when it comes to the federal income tax, the average American starts enormously biased and prejudiced, because he thinks he ALREADY KNOWS what the law taxes. Hardly anyone has seen the tax laws; they just go by what "everyone knows." Since most people start with a deeply ingrained belief that most Americans owe federal income taxes, when they look at the law itself they will be starting with the foregone conclusion that it means that most Americans owe the tax. Without that prejudice, it would be perfectly reasonable--dang near unavoidable--based on the citations above, to suspect that the tax applies to INTERNATIONAL trade, but not to purely domestic commerce. But since that flies in the face of "conventional wisdom," people have a hard time even considering the possibility that that could be true. Our long-held beliefs and baseless assumptions get in the way of our objectivity. Consider the following: 1) The tax code has an index. If you look under "Income tax" and look up "citizens," you will find only entries about citizens living or working OUTSIDE of the United States. Why? 2) If you look at the instruction booklet for the infamous 1040 form, where it talks about the issue of "income," it says that Americans must report income they receive from OUTSIDE of the United States. It does NOT say the same about their domestic income. Why? 3) Most of IRS Publication 525, titled "Taxable and Nontaxable Income," deals with which ITEMS of income are or are not specifically exempted. But when it comes to the issue of COMMERCE, the only thing the publication says is that Americans must report income they receive from OUTSIDE of the United States. Why? ( You can confirm the previous two items yourself at: http://www.irs.gov/formspubs/index.html ) 4) In fact, EVERYWHERE you look in the law books regarding the issue of commerce, you will find INTERNATIONAL trade discussed. The IRS has something called a "cumulative bulletin," in which all its rulings are published. When it comes to income from INSIDE the U.S., the entries are always about foreigners. When the income is from OUTSIDE of the U.S., American citizens and residents are mentioned. But again, domestic income of the average American is NEVER mentioned. Why? 5) Subchapter N of the federal income tax statutes is titled "Tax based on income from sources within or without the United States." As the name implies, this is where the law addresses the issue of COMMERCE: when domestic income is taxable, and when foreign income is taxable. Once again, it's all about FOREIGN income of Americans and domestic income of FOREIGNERS. And once again, the domestic income of Americans is not mentioned at all. Why? 6) To top it all off, as we'll see in the upcoming messages, there are specific sections of the tax code which give the rules about determining taxable DOMESTIC income (and different sections for determining taxable foreign income), and for over 80 YEARS those sections have showed income from within the U.S. to be taxable for FOREIGNERS, but NOT for the average American. Why? Isn't it a little weird for the rules about domestic income to FAIL TO SAY that such income is taxable for the 100,000,000 million Americans who report it every year? There are a lot of things in the law itself which suggest that the tax is a tax on INTERNATIONAL trade, not a tax on the income of the average American. But since most people are so sure (based on what they've always heard, but not based on the law) that all Americans owe this tax, they are actually incapable of believing their own eyes. They immediately seek to explain away the evidence, in order to preserve their long-held, but utterly baseless beliefs. In the next message, we'll see what I consider to be the most blatant example of that. Sincerely, Larken Rose -----BEGIN PGP SIGNATURE----- Note: This signature can be verified at https://www.hushtools.com/verify Version: Hush 2.5 wpwEAQECAAYFAkW4vagACgkQGmVFo/iGj32EEQP+Mn+b8XSXdpGvkqKcCWa+URjODUSO cdUi/GpPuFcj40qkLEIDrXHzwuw3+83BbWOtAEr1LNfhzyKkZ9WjagoK+PBP0JktnXjz +kPsII3GZUlc98cXeT+SH2Hd+HQS3gFmifGn0vgDoxi0GzSLrMYRSBnM7/0yS60u2EnU 1KsX/4Y= =G28k -----END PGP SIGNATURE----- Concerned about your privacy? Instantly send FREE secure email, no account required http://www.hushmail.com/send?l=480 Get the best prices on SSL certificates from Hushmail https://www.hushssl.com?l=485 -------------------------------------------------------------------- To subscribe, send a blank message to 861-on@mail-list.com