User talk:Drtom444

Welcome to Wikipedia!
Hello, and welcome to Wikipedia!

I reverted the material you added to the article on Stanton v. Baltic Mining because some of it was incorrect and some of it was correct but tangential.

This page is your user "talk" page. This is a better place to discuss this matter than is my "user page". Alternatively, you can make comments on my "user talk page". (A "user page" and a "user talk page" are two different pages. Generally, you're not supposed to make comments or send messages on someone else's "user page". You can make comments or send messages on that person's "user talk page", or on a talk page for an article, etc.)

The Treasury Decision you cited is nice, but it's insignificant and tangential -- and I deleted it for that reason. Generally, we don't cite to ancient Treasury Decisions (T.D.s) to confirm the meaning of a decision in a leading court case. Generally, there is nothing remarkable about a T.D. that references a Supreme Court case.

The exact text of the Stanton v. Baltic Mining decision can be found here:.

The Wikipedia article on this case could probably use some work, but we need to be careful. Some of the material you originally added bordered on tax protester rhetoric. In reading court opinions, you need to be very careful about taking quotes out of context. Famspear (talk) 19:22, 29 December 2012 (UTC)

Now, as to your specific comments. Here is the statement I make on my user page:


 * The question of whether a particular income tax is direct or indirect is also legally irrelevant to the issue of whether that tax must be apportioned. After the Sixteenth Amendment, no income tax of any kind whatsoever, whether direct or indirect, is required to be apportioned.

That statement is a correct statement of the current law, and it has been a correct statement of the law since 1913, when the Sixteenth Amendment was ratified. There is no ruling in the Stanton v. Baltic Mining case (or in any other federal court case since 1913) that indicates otherwise.

The texts in older court cases such as Stanton v. Baltic Mining are written in somewhat archaic legal language, and those texts can be difficult to understand. More on that later. Yours, Famspear (talk) 19:31, 29 December 2012 (UTC)

Now, here is the comment you made on my user page:


 * This statement about the 16th Amendment is not correct. You took a sentence out of context in Stanton v. Baltic mining that was in fact a claim by the plaintiff (referred to as averments) that was determined to be wrong by the court not two sentences away.  You quoted (1) and the Court's comment that this was incorrect is the last sentence in the quote.  If you want the original TD 2303 to verify that this is correct, I will be glad to supply it.

That is incorrect. My statement about the Amendment is correct. And no, I did not take a sentence out of context in Stanton v. Baltic Mining. Further, the statements you quoted from Baltic Mining and from TD 2303 do not contradict what I wrote.

To understand this, you need to understand how various courts have treated this subject over the years.

There are two lines of cases that have developed over the years.

One line of cases (I'll call it line #1) treats all U.S. federal income taxes as being "indirect taxes" -- as "excises" (in the sense that the term "excise" is used to mean a "duty, impost or excise" as that phrase is found in the Constitution).

The other line of cases (I'll call it line #2) refers to U.S. federal income taxes, or at least some U.S. federal income taxes, as being "direct" taxes.

Stanton v. Baltic Mining probably belongs in line #1.

In the "line #2" cases, however, a few parties have used the term "direct tax" to describe a federal income tax and have attacked the validity of the tax on that basis. And what the courts have ruled in those few cases is that the U.S. Constitution, as amended by the Sixteenth Amendment, authorizes a DIRECT federal income tax -- even though cases such as Brushaber and Stanton v. Baltic Mining seem to indicate that all federal income taxes must be indirect taxes (excises).

The WHOLE POINT IS THAT WITH RESPECT TO A FEDERAL INCOME TAX, IT DOES NOT MATTER WHETHER YOU CALL THE TAX "DIRECT" OR "INDIRECT." The "direct tax" versus "excise" (i.e., indirect tax) dichotomy relates to your having to look at the SOURCE OF THE INCOME to determine whether the tax is valid. The whole purpose of the 16th Amendment is to make the SOURCE of the income LEGALLY IRRELEVANT and thereby to make the "direct" versus "indirect" dichotomy irrelevant. If it's an INCOME tax, then it is NOT REQUIRED TO BE APPORTIONED -- regardless of whether it WOULD have been considered a direct tax by the 1895 decisions in the Pollock case.

In studying court cases under American law, you need to focus on what the court DECIDED, not so much on what the court "said." This is one of the most difficult concepts for non-lawyers to understand, in part because non-lawyers simply don't have the background of having studied the texts of thousands upon thousands of court opinions from England and the United States rendered over a period of hundreds of years. The rule of precedent, of stare decisis, relates to determining the HOLDINGS or rulings in court cases. Much of what is written in a court opinion often is not part of the ruling in the case, but is instead what we call obiter dicta, or "words said in passing," or just "dicta."

These dicta are non-binding statements. Dicta may be correct statements of the law, or they may be incorrect, but in any case they DO NOT CONTROL. What controls in a court case is the holding (or holdings) in that case -- and the holdings in a give case sometimes are not clearly stated. To be able to distill holdings from a court opinion, especially a complex one or one rendered 90 or a hundred years ago, a reader needs skill that generally can be developed only by years of study of thousands of court cases of all kinds -- not just tax cases. Famspear (talk) 19:54, 29 December 2012 (UTC)

I am not going to respond to you point by point but give you an overview of how everything fits together once the rules are understood. After the Supreme Court cases, I focus entirely on what the search engines have found, and I consider them to be extremely accurate.

Thanks for the invitation! I enjoy solving problems that have contradictory evidence; with a summa cum laude degree in pure mathematics, I have a particular fondness for precise and sequential areas of knowledge where following the right pathway proves the correctness of the proposition. In mathematics, making “assumptions” is not permitted, and I believe that statutory law follows this same principle; the reader must let the law tell them what it means.

Being rigorously objective even in the face of a challenge to a closely held belief is very difficult if not impossible for most people; this is known as the Backfire Effect (when confronted with objective evidence that a belief is wrong, instead of accepting the evidence they dig in even deeper to keep their belief ignoring the evidence or trying to explain it away).

As with the fundamentals of any area of knowledge, it is absolutely essential that the basic structure and the “rules” of the law be followed. In statutory law, particularly tax law, the law consists only of the decisions of the top ranks of the three branches of government, Supreme Court decisions for the judicial branch, the statutes at large (equivalent to the USC for tax law) for the legislative branch, and the regulations for the executive branch.

Unfortunately, no law school has a course in administrative law and lawyers are taught that everything can be argued and that judges are qualified to interpret the statutes and make decisions about tax law when most have absolutely no training or understanding, particularly of the more technical aspects of the law. Some judges are very good, because they have chosen a specific area of law to specialize in, but our system does not work optimally in triaging cases to the most competent.

If someone cites specific sections of the law that are contradictory to a particular belief, then the cites must be examined very closely because beliefs about the law can be based on erroneous or incomplete information. Due to the fact that Congress cannot foretell what parts of the law may be expanded over time, not all relevant parts of the law for a particular issue may be located in the same general physical location; in other words, in pari materia is difficult to achieve when it is essential to understanding the correct application of the legal issue at hand.

This is why, as the IRS says on its website, that no lower court decisions can change this law; such decisions apply only to the specific case and set of facts at hand. Therefore citing such decisions as “support” for a position about what the law means is meaningless (unless it happens to correspond to what the law says). Tax court cases are the lowest of the low in the hierarchy of meaningless decisions. One main reason is that if a mistake is made, which is frequent, citing other cases that have come to the same mistaken conclusion as “support” is nothing more than a chain of mistakes. There simply has to be a very high level of consistency in the meaning of the law and this formal structure helps to ensure that is the case.

Tax protestors typically come up with often bizarre reasons why they do not have to pay taxes that have nothing to do with the law. Even when they cite the law, they have their own interpretations or spin, which simply cannot be permitted. This is why the regulations exist, so that the meaning of the often generally worded statutes can be made clear.

Unfortunately, it is rare to find a government case where the law requiring payment of income taxes for all citizens no matter where their income comes from is ever cited; it is “presumed” that everybody knows when most people have no idea. They have simply been told that this is the case by “experts” and there is no evidence in my research of the last 50 years of teaching materials for CPAs and Masters of Taxation students that Brushaber and Stanton were even read, much less understood. Therefore, when Section 61 is cited, there is a major problem (see below).

Although older Treasury Decisions are by definition archaic, this does not change their meaning and influence as long as they are not overturned. Although the IRS website says that the courts are not bound by the regulations, US v. Mayo (2011) reaffirmed that interpretive regulations have the force and effect of law and US v. Correll, 389 U.S. 299 (1967) had even more to say about how the courts must defer to the tax regulations and that regulations long unchanged have even more legal weight: “This case thus comes within the settled principle that ‘Treasury regulations and interpretations long continued without substantial change, applying to unamended or substantially reenacted statutes, are deemed to have received congressional approval and have the effect of law.’

And:

“But we do not sit as a committee of revision to perfect the administration of the tax laws. Congress has delegated to the Commissioner, not to the courts, the task of prescribing "all needful rules and regulations for the enforcement" of the Internal Revenue Code. 26 U.S.C. § 7805(a). In this area of limitless factual variations, "it is the province of Congress and the Commissioner, not the courts, to make the appropriate adjustments." Commissioner v. Stidger, 386 U. S. 287, 386 U. S. 296. The role of the judiciary in cases of this sort begins and ends with assuring that the Commissioner's regulations fall within his authority to implement the congressional mandate in some reasonable manner. Because the rule challenged here has not been shown deficient on that score, the Court of Appeals should have sustained its validity.”

TD 2303 is definitely still valid, but it pales in importance compared to the primary SC case on the issue. In the case of the 16th Amendment, an issue not specifically addressed by Congress, the Supreme Court decided this issue in 1916 not just by the Stanton case, but most importantly by Brushaber, to which Stanton continually refers to as already having dealt with the issue of what the 16th Amendment means. One Supreme Court case is sufficient but here there are two decisions that say the same thing and they have never been overturned, quite the contrary (content of the law is consistent with an excise tax).

Although it is true that the language used is some of these older cases can be somewhat archaic, in Brushaber the Supreme Court began by saying that the argument and confusion of the case "arises from the conclusion that the Sixteenth Amendment provides for a hitherto unknown power of taxation -- that is, a power to levy an income tax which, although direct, should not be subject to the regulation of apportionment applicable to all other direct taxes. And the far-reaching effect of this ERRONEOUS ASSUMPTION will be made clear..." [Notice that this is NOT dicta]

To paraphrase, the court was basically saying, "All these arguments come from the incorrect idea that the 16th Amendment authorizes an unapportioned direct tax."

The honest and objective person then takes this foundation of solid evidence from the beginning and asks where does the law contain the information that tells the reader how this excise tax applies? The evidence is everywhere, but not if you do not ask the right questions because of an incorrect assumption. But first you have to know what question to ask.

27 years after these SC decisions, a Treasury regulation writing lawyer told the then current Congress what the income excise tax is (but did not reference the scope of this law, this is where the regulations come in):

“The income tax is, therefore, not a tax on income as such. It is an excise tax with respect to certain activities and privileges which is measured by reference to the income which they produce. The income is not the subject of the tax: it is the basis for determining the amount of the tax.”

So, the question is where are the subjects of this excise tax? Where in the law are the specific activities discussed the income from which is taxable? If this is incorrect, then there should be no sections of the law that correspond to this statement. But there are and have always been. Typically, the general definitions of the terms “taxable income” and “gross income” are in the front of the law, with the law going from the general to the more specific. This is not unlike other fields of knowledge.

But in Section 61, it is a mistake (because of the above) to assume that “all income from whatever source derived” means “all income no matter where it comes from,” because the law must tell the reader what it means by a (taxable) source of income (a taxable activity generating taxable income) and it does just that, but not here and not in the related regulations (but the regulations do say to expect a list of such taxable activities somewhere else in the law).

To get to this part of the law, and to bypass fierce opinions about what certain experts think the law means, enter computer search engines (data-mining). These simple yet powerful computer programs are optimal when searching statutory law because they do not argue their own beliefs or stop reading when they get to words that appear to support their beliefs, and they interpret nothing. They simply find every reference of a word or phrase.

So let’s see what happens. After learning that the income tax is imposed on the “taxable income” of individuals, the next logical question is “how to determine taxable income?” When these search terms are put in the eCFR on the government website, there are two and only two locations in the entire CFR (Sections 63,62, 61 and 6012 never come up):

26 CFR § 1.861-8(a)(1):

“§ 1.861–8 Computation of taxable income from sources within the United States and from other sources and activities.

(a) In general—(1) Scope. Sections 861(b) and 863(a) state in general terms how to determine taxable income of a taxpayer from sources within the United States after gross income from sources within the United States has been determined. Sections 862(b) and 863(a) state in general terms how to determine taxable income of a taxpayer from sources without the United States after gross income from sources without the United States has been determined. This section provides specific guidance for applying the cited Code sections by prescribing rules for the allocation and apportionment of expenses, losses, and other deductions (referred to collectively in this section as ‘‘deductions’’) of the taxpayer. The rules contained in this section apply in determining taxable income of the taxpayer from specific sources and activities under other sections of the Code, referred to in this section as operative sections. See paragraph (f)(1) of this section for a list and description of operative sections. The operative sections include, among others, sections 871(b) and 882 (relating to taxable income of a nonresident alien individual or a foreign corporation which is effectively connected with the conduct of a trade or business in the United States), section 904(a)(1) (as in effect before enactment of the Tax Reform Act of 1976, relating to taxable income from sources within specific foreign countries), and section 904(a)(2) (as in effect before enactment of the Tax Reform Act of 1976, or section 904(a) after such enactment, relating to taxable income from all sources without the United States).” These regulations are found under:

TAX BASED ON INCOME FROM SOURCES WITHIN OR WITHOUT THE UNITED STATES

DETERMINATION OF SOURCES OF INCOME

§ 1.861–1 Income from sources within the United States. (a) Categories of income. Part I (section 861 and following), subchapter N, chapter 1 of the Code, and the regulations thereunder determine the sources of income for purposes of the income tax. And:

(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  §§ 1.861–8  through 1.861–14T  for determining  taxable  income  from sources within the United States.

The search engines prove with absolute computer-precision (often called “data-mining”) the following results for specific code-words: -excluded income - occurs for first time in US law in Sec. 861 -eliminated income - Sec. 861 -eliminated items - Sec. 861 -specific sources - Sec. 861 -specific guidance - Sec. 861 -how to determine taxable income - Sec. 861 -the sources of income for purposes of the income tax - Sec. 861 -deductions to excluded income - Sec. 861 -allocation and apportionment of deductions - Sec. 861 -allocation and apportionment to exempt, excluded or eliminated income - Sec. 861

How is it that everything of importance ends up in Section 861? How is it possible to determine one’s taxable income without consulting the section of the law that specifically addresses “allocation and apportionment of deductions”? This is overwhelming objective evidence that Section 861 is the most important section of law for determining taxable income, because it is all here and it is completely consistent with Brushaber (and Stanton).

There is much more that proves that Subchapter N is the critical section of the income excise tax law. The words speak for themselves. My main point is that if you do not ask the right questions, you will not get to the right section of law. These critical sections of the law that have always been there since 1916 that tell the reader how to determine taxable income and they all FLOW from the decisions of Brushaber and Stanton, as they must.

This is why I suggest that you reexamine Stanton as well as Brushaber. If the income tax were not an excise tax, these sections would not exist. But if you want to continue to press your points and explain away this evidence, then I must bow out of this discussion, because objectivity is what works with me (that and the fact that the regulations are the official interpretations of the statutes by the Treasury Department). There is simply too much evidence that stopping reading at a general definition is quite possibly the most unbelievable mistake that has ever been made, all based on a firm belief that the 16th Amendment did what it did not do. Have a nice day. 02:21, 30 December 2012 (UTC)

Dear Drtom444:

You wrote:


 * Thanks for the invitation! I enjoy solving problems that have contradictory evidence; with a summa cum laude degree in pure mathematics, I have a particular fondness for precise and sequential areas of knowledge where following the right pathway proves the correctness of the proposition. In mathematics, making “assumptions” is not permitted, and I believe that statutory law follows this same principle; the reader must let the law tell them what it means.

You are wrong about statutory law, and about law generally. Your approach to the study of statutory law is incorrect. In particular, a fondness for "precise and sequential areas of knowledge where following the right pathway proves the correctness of the proposition" -- in the sense in which you probably mean -- can easily get you in trouble. Law has its own rules of logic -- and the rules are not what you think they are. More on this later.

You wrote:


 * Being rigorously objective even in the face of a challenge to a closely held belief is very difficult if not impossible for most people; this is known as the Backfire Effect (when confronted with objective evidence that a belief is wrong, instead of accepting the evidence they dig in even deeper to keep their belief ignoring the evidence or trying to explain it away).

Obviously, you are concerned that either you or I needs to be concerned about being "rigorously objective" in the face of a challenge to a "closely held belief." Good. Now, let's identify who needs to be concerned about that.

YOU need to be concerned. I do not.

Here's why.

What you are describing to me in your post are your beliefs. What I am describing to you are not my beliefs. Rather, I am describing the law to you. That's my job -- to teach the law. My knowledge of the law does not come from formulation of "beliefs" on my part. My knowledge of the law does not come from having been "taught" the law by law professors. Law school does not work under the same principle as college. If you were taught mathematics by listening to lectures and reading texts written by mathmeticians, you may not understand what I am driving at. More on this (perhaps) later.

You wrote:


 * As with the fundamentals of any area of knowledge, it is absolutely essential that the basic structure and the “rules” of the law be followed. In statutory law, particularly tax law, the law consists only of the decisions of the top ranks of the three branches of government, Supreme Court decisions for the judicial branch, the statutes at large (equivalent to the USC for tax law) for the legislative branch, and the regulations for the executive branch.

No. Wrong. In statutory law, particularly tax law, the law consists not only of the decisions of the "top ranks" of the three branches of government. Completely wrong. This is a common mistake that I see non-lawyers, particularly those who are opposed to the U.S. federal income tax make. The decisions of ALL FEDERAL COURTS are part of what make up the law. A common tax protester-tax denier argument is that the lower courts are not following the rulings of the U.S. Supreme Court. That is incorrect. A common tax protester-tax denier argument is that the lower courts' rulings do not agree with the Supreme Court rulings on the federal income tax. That is also incorrect.

You wrote:


 * Unfortunately, no law school has a course in administrative law.....

Absolutely false. Many law schools have courses in administrative law. Absolutely false.


 * .....and lawyers are taught that everything can be argued and that judges are qualified to interpret the statutes and make decisions about tax law when most have absolutely no training or understanding, particularly of the more technical aspects of the law.

Absolutely false. It sounds like you have never been to law school. First of all, in law school, law students are not "taught" by their law professors in the sense in which you obviously assume. And law students do not use textbooks (the kind of books you used in high school and college), except as secondary sources.

You wrote:


 * Some judges are very good, because they have chosen a specific area of law to specialize in, but our system does not work optimally in triaging cases to the most competent.

I don't believe you're in any position to pontificate about judges.

You wrote:


 * If someone cites specific sections of the law that are contradictory to a particular belief, then the cites must be examined very closely because beliefs about the law can be based on erroneous or incomplete information. Due to the fact that Congress cannot foretell what parts of the law may be expanded over time, not all relevant parts of the law for a particular issue may be located in the same general physical location; in other words, in pari materia is difficult to achieve when it is essential to understanding the correct application of the legal issue at hand.


 * This is why, as the IRS says on its website, that no lower court decisions can change this law; such decisions apply only to the specific case and set of facts at hand. Therefore citing such decisions as “support” for a position about what the law means is meaningless (unless it happens to correspond to what the law says).  Tax court cases are the lowest of the low in the hierarchy of  meaningless decisions.

Wrong. Completely wrong.

Lower court decisions, including those by the United States Tax Court not only can "change" the law, and do so with frequency, but court decisions (whether at the lower court level or at the Supreme Court are the only official sources on the interpretation of the law under the American legal system.

You wrote:


 * One main reason is that if a mistake is made, which is frequent, citing other cases that have come to the same mistaken conclusion as “support” is nothing more than a chain of mistakes. There simply has to be a very high level of consistency in the meaning of the law and this formal structure helps to ensure that is the case.

No, there does not "simply have to be a very high level of consistency in the meaning of the law" -- not in the sense in which I think you mean. You obviously have some serious misunderstandings about how the law works.

You wrote:


 * Tax protestors typically come up with often bizarre reasons why they do not have to pay taxes that have nothing to do with the law. Even when they cite the law, they have their own interpretations or spin, which simply cannot be permitted. This is why the regulations exist, so that the meaning of the often generally worded statutes can be made clear.

In general, I agree with that.

You wrote:


 * Unfortunately, it is rare to find a government case where the law requiring payment of income taxes for all citizens no matter where their income comes from is ever cited; it is “presumed” that everybody knows when most people have no idea.

That is false. The statutes requiring payment of income taxes are cited with regular frequency in the cases. It's not "rare" at all.

You wrote:


 * They have simply been told that this is the case by “experts” and there is no evidence in my research of the last 50 years of teaching materials for CPAs and Masters of Taxation students that Brushaber and Stanton were even read, much less understood. Therefore, when Section 61 is cited, there is a major problem (see below).

Brushaber and Stanton are cited much more often by tax protesters -- who do not understand what they are reading -- than by law professors in tax law courses. Certainly you are correct that cases such as Brushaber and Stanton are not often studied in tax courses. But that DOESN'T MEAN WHAT YOU APPARENTLY THINK IT MEANS.

Now, for the stunner. If you're holding a cup of beverage near your keyboard, you might want to put it down before you read this:

A tax practitioner today, to be competent and successful and serve his clients well, does not need to understand the provisions of Article I of the Constitution relating to taxes. He doesn't need to understand the Sixteenth Amendment. HE DOESN'T NEED TO HAVE READ SPRINGER, OR POLLOCK, OR FLINT V. STONE TRACY COMPANY, OR BRUSHABER, OR STANTON, OR MERCHANTS' LOAN, OR ANY OF THE OTHER CASES SO OFTEN ERRONEOUSLY CITED BY TAX PROTESTERS. HE DOESN'T NEED TO UNDERSTAND APPORTIONMENT, OR GEOGRAPHICAL UNIFORMITY, OR THE DEFINITION OF A DIRECT TAX, OR AN EXCISE, OR ALMOST ANY OF THE TAX LAW CONCEPTS THAT ARE SO DEAR TO TAX PROTESTERS.

AND HE DOESN'T NEED TO UNDERSTAND ANCIENT TREASURY DECISIONS.

A SUCCESSFUL TAX PRACTITIONER, ONE WHO HAS A FEDERAL TAX PRACTICE, DOES NOT NEED TO KNOW ABOUT ANY OF THE MATERIAL THAT YOU APPARENTLY THINK HE SHOULD UNDERSTAND.

You wrote:


 * Although older Treasury Decisions are by definition archaic, this does not change their meaning and influence as long as they are not overturned.

Forget about the old Treasury Decisions.

You wrote:


 * Although the IRS website says that the courts are not bound by the regulations, US v. Mayo (2011) reaffirmed that interpretive regulations have the force and effect of law and US v. Correll, 389 U.S. 299 (1967) had even more to say about how the courts must defer to the tax regulations and that regulations long unchanged have even more legal weight:


 * “This case thus comes within the settled principle that ‘Treasury regulations and interpretations long continued without substantial change, applying to unamended or substantially reenacted statutes, are deemed to have received congressional approval and have the effect of law.’


 * And:


 * “But we do not sit as a committee of revision to perfect the administration of the tax laws. Congress has delegated to the Commissioner, not to the courts, the task of prescribing "all needful rules and regulations for the enforcement" of the Internal Revenue Code. 26 U.S.C. § 7805(a). In this area of limitless factual variations, "it is the province of Congress and the Commissioner, not the courts, to make the appropriate adjustments."  Commissioner v. Stidger, 386 U. S. 287, 386 U. S. 296. The role of the judiciary in cases of this sort begins and ends with assuring that the Commissioner's regulations fall within his authority to implement the congressional mandate in some reasonable manner. Because the rule challenged here has not been shown deficient on that score, the Court of Appeals should have sustained its validity.”


 * TD 2303 is definitely still valid, but it pales in importance compared to the primary SC case on the issue. In the case of the 16th Amendment, an issue not specifically addressed by Congress, the Supreme Court decided this issue in 1916 not just by the Stanton case, but most importantly by Brushaber, to which Stanton continually refers to as already having dealt with the issue of what the 16th Amendment means.  One Supreme Court case is sufficient but here there are two decisions that say the same thing and they have never been overturned, quite the contrary (content of the law is consistent with an excise tax).


 * Although it is true that the language used is some of these older cases can be somewhat archaic, in Brushaber the Supreme Court began by saying that the argument and confusion of the case "arises from the conclusion that the Sixteenth Amendment provides for a hitherto unknown power of taxation -- that is, a power to levy an income tax which, although direct, should not be subject to the regulation of apportionment applicable to all other direct taxes. And the far-reaching effect of this ERRONEOUS ASSUMPTION will be made clear..."  [Notice that this is NOT dicta]

So far, so good. Except that you need to let me worry about what passages of text are dicta and what passages are not dicta. And I'll let you know what is dicta and what is not, if I determine that it's important that you know.

You continued:


 * To paraphrase, the court was basically saying, "All these arguments come from the incorrect idea that the 16th Amendment authorizes an unapportioned direct tax."


 * The honest and objective person then takes this foundation of solid evidence from the beginning and asks where does the law contain the information that tells the reader how this excise tax applies? The evidence is everywhere, but not if you do not ask the right questions because of an incorrect assumption.  But first you have to know what question to ask.


 * 27 years after these SC decisions, a Treasury regulation writing lawyer told the then current Congress what the income excise tax is (but did not reference the scope of this law, this is where the regulations come in):


 * “The income tax is, therefore, not a tax on income as such. It is an excise tax with respect to certain activities and privileges which is measured by reference to the income which they produce. The income is not the subject of the tax: it is the basis for determining the amount of the tax.”

OK. Stop right there.

The quotation is the famous quotation by F. Morse Hubbard, as published in the Congressional Record of March 27, 1943, page 2580. Hubbard was a former Treasury Department employee. Tax protesters LOOOVVVVVVVE to cite the Hubbard quote. There are serious problems with it.

First, it's WRONG. Hubbard was wrong. The federal income tax is a tax on "taxable income" as defined in section 1 of the Code (for individuals, etc.) and in section 11 (for corporations), and so on. THE FEDERAL INCOME TAX IS NOT A "TAX ON CERTAIN ACTIVITIES AND PRIVILEGES" THAT IS "MEASURED BY REFERENCE TO THE INCOME WHICH THEY PRODUCE."

Completely wrong. Nothing in the Constitution says that. Nothing in any Federal statute says that. Nothing in any ruling by any court says that. Nothing in ANY TREASURY REGULATION says that.

The Hubbard quotation is NOT FROM A TREASURY REGULATION. The quote is NOT FROM A TREASURY DECISION. It's from the Congressional Record, for heaven's sake.

And it's not a correct statement of the law.

You wrote:


 * So, the question is where are the subjects of this excise tax? Where in the law are the specific activities discussed the income from which is taxable?  If this is incorrect, then there should be no sections of the law that correspond to this statement.  But there are and have always been.

No, that's not the question. The "subjects of the excise tax" argument, again, is an old tax protester argument. The argument is that somehow the federal income tax must tax a subject "activity". And no, there are no sections of the law that correspond to your statement. See below. You wrote:


 * Typically, the general definitions of the terms “taxable income” and “gross income” are in the front of the law, with the law going from the general to the more specific. This is not unlike other fields of knowledge.

Uh, no, that is incorrect. General definitions are sometimes found "in the front" of the law -- that is, in the early sections of a set of statutes. But you're generalizing a bit too much here.

You wrote:


 * But in Section 61, it is a mistake (because of the above) to assume that “all income from whatever source derived” means “all income no matter where it comes from,” because the law must tell the reader what it means by a (taxable) source of income (a taxable activity generating taxable income) and it does just that, but not here and not in the related regulations (but the regulations do say to expect a list of such taxable activities somewhere else in the law).

No. That is incorrect.

This is unfair, but the law does not have to tell the reader what "it means" by a taxable source. Not in the sense in which you are speaking. This is part of another tax protester argument -- similar to the phony argument that the law MUST say things in just the way the reader wants those things said, with the level of CLARITY that the reader desires. THAT IS A FUNDAMENTAL ERROR.

IT MAY NOT BE FAIR, BUT YOU ARE QUITE WRONG ABOUT THIS.

You wrote:


 * To get to this part of the law, and to bypass fierce opinions about what certain experts think the law means, enter computer search engines (data-mining). These simple yet powerful computer programs are optimal when searching statutory law because they do not argue their own beliefs or stop reading when they get to words that appear to support their beliefs, and they interpret nothing. They simply find every reference of a word or phrase.

Uh oh. You have figured out how to use search engines.

Not good.

Let's see what happens.

You wrote:


 * So let’s see what happens. After learning that the income tax is imposed on the “taxable income” of individuals, the next logical question is “how to determine taxable income?” When these search terms are put in the eCFR on the government website, there are two and only two locations in the entire CFR (Sections 63,62, 61 and 6012 never come up):


 * 26 CFR § 1.861-8(a)(1): [snip!]

Stop right there. This is what I was afraid of.

You have fallen into the old "861 argument." The regulation you are citing is a regulation interpreting Internal Revenue Code section 861. We have seen this nonsense over and over and over and over and over and over AND OVER AND OVER AND OVER AND OVER AND OVER AGAIN.

Neither section 861 of the Internal Revenue Code nor the regulations thereunder define "taxable income." They do not define "gross income." They do not define "adjusted gross income." They do not define "income" itself.

You wrote:


 * How is it that everything of importance ends up in Section 861? How is it possible to determine one’s taxable income without consulting the section of the law that specifically addresses “allocation and apportionment of deductions”?  This is overwhelming objective evidence that Section 861 is the most important section of law for determining taxable income, because it is all here and it is completely consistent with Brushaber (and Stanton).

Wrong. How is it that you erroneously concluded that "everything of importance ends up in Section 861"?

Answer: By reading tax protester literature.

You wrote:


 * There is much more that proves that Subchapter N is the critical section of the income excise tax law.

No, there isn't. Subchapter N is not a critical section of the income tax excise law at all. You don't even know the purpose of Subchapter N.

I do.

We have a term for some of the people who have tried to use the 861 argument. The term is "convicted felon." Examples: Larken D. Rose and Charles Thomas Clayton.

For more information on some of the 861 arguments, see the Tax Protester FAQ by legal commentator Daniel B. Evans, at

Thurston Bell was an early proponent of an 861 argument. It didn't work for him.

For information on Larken Rose, see.

For information on Charles Thomas Clayton, see.

For authoritative information on why the 861 arguments are incorrect, see:

Aiello v. Commissioner, 69 T.C.M. (CCH) 1765, T.C. Memo 1995-40 (1995).

Williams v. Commissioner, 114 T.C. 136 (2000).

United States v. Bell (a Thurston Bell case), 238 F. Supp. 2d 696, 2003-1 U.S. Tax Cas. (CCH) paragr. 50,501 (M.D. Pa. 2003), aff'd, 2005-2 U.S. Tax Cas. (CCH) paragr. 50,661 (3d Cir. 2005).

Corcoran v. Commissioner, Case no. 2947-01, T.C. Memo. 2002-18 (2002).

Loofbourrow v. Commissioner, 208 F. Supp. 2d 698 (S.D. Tex. 2002), at.

Some of the following is adapted from something found "somewhere on the internet", as we say:


 * The earliest reported case in which section 861 is raised as a limitation on the income tax is the 1993 case of Solomon v. Commissioner. Solomon v. Commissioner, T.C. Memo 1993-509; 1993 Tax Ct. Memo LEXIS 519; 66 T.C.M. (CCH) 1201 (United States Tax Court 1993). In that case, the protester's primary argument was that "the State of Illinois is not part of the United States", Solomon v. Commissioner, T.C. Memo 1993-509 at 4 (T.C. 1993), and that he was therefore a resident alien, subject to taxation only under the provisions of §861. The court ruled:


 * [P]etitioner's position is not bolstered by the regulations under section 861. To the contrary, section 861(a)(1) and (3) provides that interest from the United States and compensation for labor or personal services performed in the United States (with exceptions not applicable here) are items of gross income which shall be treated as income from sources within the United States. Solomon v. Commissioner, T.C. Memo 1993-509 at *3 (T.C. 1993).


 * In Solomon, the court also stated:


 * The record in this case establishes that petitioner had no interest in disputing either the deficiencies or the additions to tax determined by respondent. Furthermore, it is clear that petitioner instituted this action to delay the assessment and collection of his Federal income taxes. Rather, petitioner has raised only the tired, discredited arguments which are characterized as tax protester rhetoric. A petition to the Tax Court is frivolous if it is contrary to established law and unsupported by a reasoned, colorable argument for change in the law. [ . . . ] Based upon the established law, petitioner's position is frivolous and groundless. Taxpayers with genuine controversies were delayed while we considered this case. Accordingly, we will require petitioner to pay a penalty to the United States in the amount of $5,000. Solomon v. Commissioner, T.C. Memo 1993-509.

Please note that the idea that lower court rulings are not authoritative and binding on the interpretation of the law is laughable. THIS IDEA IS AN OLD TAX PROTESTER MYTH.

INDEED, THE VAST MAJORITY OF ISSUES IN LAW ARE NEVER DECIDED BY THE UNITED STATES SUPREME COURT. THEY ARE DECIDED BY TRIAL COURTS AND INTERMEDIATE APPELLATE COURTS. THE DECISIONS OF ALL COURTS ARE BINDING AS JUDICIAL PRECEDENT UNDER THE U.S. LEGAL SYSTEM, SUBJECT TO A LOT OF DETAILED RULES THAT I WON'T GO INTO NOW.

The reason that tax protesters try to argue that the lower courts' decisions don't count is that THEY DON'T LIKE THE LOWER COURT DECISIONS.

The problem is that the tax protesters can't find any SUPREME COURT DECISIONS that back them up either. Tax protesters claim to believe that cases like Brushaber and Stanton support their theories -- just as you erroneously did with the 861 argument.

You wrote:


 * The words speak for themselves.

No, the words do not speak for themselves.

You wrote:


 * My main point is that if you do not ask the right questions, you will not get to the right section of law.

Agreed.

You wrote:


 * These critical sections of the law that have always been there since 1916 that tell the reader how to determine taxable income and they all FLOW from the decisions of Brushaber and Stanton, as they must.

No.

You wrote:


 * This is why I suggest that you reexamine Stanton as well as Brushaber.

No, I don't need to reexamine Stanton and Brushaber. Unlike most tax practitioners, I have actually studied Stanton and Brushaber for many years -- almost certainly MORE THAN YOU HAVE, and almost certainly before you ever heard of these cases.

IN NEITHER STANTON NOR BRUSHABER, NOR IN ANY OTHER FEDERAL COURT CASE, HAS ANY COURT EVER RULED THAT SECTION 861 OR THE RELATED REGULATIONS MEAN WHAT YOU THINK THEY MEAN.

You wrote:


 * If the income tax were not an excise tax, these sections would not exist.

The income tax IS an excise (an indirect tax) -- according to many courts. A few courts in the modern era have characterized it as a direct tax, which MAY SEEM to contradict the label of "excise". But I'm not going to get into the details of why that is the case right now. ALL YOU NEED TO KNOW ABOUT THIS IS THAT IT PRETTY MUCH DOESN'T MATTER WHETHER A PARTICULAR FEDERAL INCOME TAX (ANY ENACTED SINCE FEBRUARY 1913) IS AN EXCISE OR, ALTERNATIVELY, A DIRECT TAX.

You wrote:


 * But if you want to continue to press your points and explain away this evidence, then I must bow out of this discussion, because objectivity is what works with me (that and the fact that the regulations are the official interpretations of the statutes by the Treasury Department). There is simply too much evidence that stopping reading at a general definition is quite possibly the most unbelievable mistake that has ever been made, all based on a firm belief that the 16th Amendment did what it did not do. Have a nice day.

If "objectivity" as you define it is "what works for you," then perhaps you should indeed bow out of this discussion -- and you should give up your study of law.

Law schools do not operate the way you apparently think they operate. Lawyers do not learn the law in the way you apparently think lawyers learn the law. And law does not work the way you apparently think it works. The logic of law is not the kind of logic you are using. And when I say this, I know whereof I speak. Famspear (talk) 04:30, 30 December 2012 (UTC)


 * By the way, where in the world did you get the hilariously silly idea that "no law school has a course in administrative law", as you put it? At the University of Houston Law Center, for example, the courses for the fall semester of 2012 included, among other things, "Administrative Law" (Course # 5382) and, of course, "Tax Procedure" (Course # 5292). In the Tax Procedure course, the 733 pages of class materials (of which I just happen to have a copy) include over 460 pages of administrative law dealing specifically with federal income taxation.


 * Now, those courses are electives, and there may be other courses in administrative law there as well.


 * But on top of that, every first year law student at the University of Houston (where I earned my Doctor of Jurisprudence law degree years ago) was REQUIRED to take two semesters of legal research and writing when I was there. At the University of Houston, a large chunk of those courses was research in -- hold on, wait for it..... administrative law. I'm betting that this could still be the case today, although I haven't checked.


 * Oh, and since you obviously were confused, let me clarify for you. The Congressional Record generally is not considered a source of administrative law. Federal administrative law is published in (among other things) the Federal Register and is codified in the Code of Federal Regulations -- not the Congressional Record.


 * Stick to math. Famspear (talk) 06:36, 30 December 2012 (UTC)


 * And at the expense of appearing to rub it in, the Spring 2013 course offerings at the University of Houston Law Center include -- you guessed it -- "Administrative Law" (Course #5382), again! Also, Advanced Tax Research (Course # 6370), where the description of the course includes the following verbiage: "....After establishing a solid research process, using the core legal resources used by all attorneys, the course will develop your expertise in critical areas less familiar to many attorneys, such as international and foreign law, empirical (non-legal) research, legislative history, and the increasingly important administrative law....." (bolding added). Also, Oil and Gas Pipeline Regulation (Course #5297), which is not a tax course but which is largely administrative law. Then there is Patent Law (#5332) which I believe is largely administrative law. Then there is Securities Regulation (#5363), a big chunk of which is going to be administrative law. Famspear (talk) 06:54, 30 December 2012 (UTC)

Stanton v. Baltic Mining Company
Now, what did the Supreme Court actually decide in Stanton v. Baltic Mining Company?

The Court decided that the income tax provisions of the Tariff Act of 1913 (enacted in October 1913, about eight months after the ratification of the Sixteenth Amendement) were not unconstitutional.

Some background: As in the case for any federal income tax, the income tax imposed by the Tariff Act of 1913 was not apportioned among the states according to population. That is, the dollar amount of tax raised from the residents of each state (compared to the total dollar amount raised from the residents of all the states) was not in proportion to the population of that state (compared to the combined population of all the states), for the obvious reason that "income" can vary widely from state to state without regard to population.

Mr. Stanton, the appellant, was a stockholder of the Baltic Mining Company, and he objected to the federal income tax imposed, under the Tariff Act of 1913, on Baltic Mining.

Mr. Stanton sued the company to try to get the trial court to issue an order prohibiting the company from paying the income tax. The federal government filed briefs in the case, in support of the validity of the income tax.

The federal trial court upheld the validity of the income tax provisions of the Tariff Act of 1913. The trial court rejected Mr. Stanton's arguments that the income tax was invalid.

The case was then taken by Mr. Stanton on a "direct appeal" to the U.S. Supreme Court, which means that Mr. Stanton was allowed to by-pass the applicable court of appeals, and go directly to the Supreme Court.

The U.S. Supreme Court affirmed the trial court's ruling that the income tax provisions of the Tariff Act of 1913 were valid. Mr. Stanton lost.

Here's what happened at the Supreme Court (condensed summary of just the most important points).

Mr. Stanton's argument -- that the provisions of the Tariff Act of 1913 were unconstitutional under the Fifth Amendment, in that the Act denied, to mining companies and their stockholders, the equal protection of the laws, and that the Act deprived them of their property without due process of law -- was rejected by the Supreme Court.

Mr. Stanton's argument -- that the unapportioned income tax under the Tariff Act of 1913 was not "within the authority" of the Sixteenth Amendment because the Amendment authorizes only an exceptional direct income tax without apportionment -- was rejected by the Supreme Court.

Mr. Stanton's argument -- that the unapportioned income tax under the Tariff Act of 1913 was a direct tax and that it was void because it was unapportioned -- was rejected by the Supreme Court. Stanton had tried to argue that even after the Sixteenth Amendment, this income tax was required to follow the old Pollock rule (a case in 1895 where the Court had held that an income tax on income from certain sources, specifically an income tax on interest income, dividend income, and rent income, was to be treated as a "direct" tax and therefore was required to be apportioned). The Court rejected that argument.

SOURCE OF THE INCOME IS NO LONGER RELEVANT as to whether the tax on that income is required to be apportioned. If it's an income tax, it's not required to be apportioned. CLASSIFICATION OF THE INCOME TAX AS "DIRECT" OR "INDIRECT" IS NO LONGER RELEVANT as to whether the tax is required to be apportioned. If it's an income tax, it's not required to be apportioned.

All federal income taxes are unapportioned. Nevertheless, since the year 1913, neither the U.S. Supreme Court nor any other federal court has EVER INVALIDATED ANY FEDERAL INCOME TAX on the ground that the tax was "direct" or that it was "indirect" or that it was "unapportioned." Famspear (talk) 21:01, 29 December 2012 (UTC)

The decisions of lower courts (courts other than the U.S. Supreme Court) are not "meaningless decisions"
Dear Drtom444: Earlier, you wrote:


 * This is why, as the IRS says on its website, that no lower court decisions can change this law; such decisions apply only to the specific case and set of facts at hand. Therefore citing such decisions as “support” for a position about what the law means is meaningless (unless it happens to correspond to what the law says). Tax court cases are the lowest of the low in the hierarchy of meaningless decisions.

No, that's not precisely what the IRS says on its website, and that's not a correct statement of how our legal system works.

Tax Court cases are not "meaningless decisions." Decisions of the U.S. District Courts, the U.S. Bankruptcy Courts, the U.S. Tax Court, and the various U.S. Courts of Appeal are (or can be) BINDING JUDICIAL PRECEDENT. Now, the precedential value of a given decision depends on various factors, but we don't need to get into the details right now. All you need to know is that the binding effects of these decisions are NOT limited "only to the specific case and set of facts at hand." You are quite wrong.

It is true that in various places from time to time, the IRS has published written statements that do make it appear that the IRS recognizes only U.S. Supreme Court rulings, and not the rulings of the U.S. Tax Court, the U.S. District Courts, the Courts of Appeals, and so on. However, that is not really what the IRS means. You can be forgiven for getting the wrong impression, though.

The IRS does publish a set of internal documents, called "Actions on Decisions," or AODs. An AOD is issued by the IRS to its own personnel from time to time, to explain whether the IRS agrees or disagrees with a certain lower court ruling. However, IRS personnel do not treat AODs and similar IRS announcements as negating the concept of judicial precedent with respect to those lower court decisions. The IRS recognizes the principles of stare decisis and judicial precedent with the lower court decisions, and the IRS will generally concede a given issue during an administrative proceeding (such as an IRS examination of a tax return) with a taxpayer where the IRS concludes that the case law of that circuit goes against the IRS.

The IRS also generally adheres to the controlling precedent of a given circuit court of appeals when litigating a case in which the legal issue in question is bound by the judicial precedent of the court of appeals of that circuit.

I have been representing taxpayers in administrative dealings with IRS personnel -- IRS attorneys, IRS revenue agents (i.e., the folks who examine tax returns), IRS revenue officers (i.e., the collections officers) IRS special agents (i.e., the criminal investigators, who carry firearms and are empowered to make arrests), and other IRS personnel -- on tax return examination, tax refund, and tax collection issues for over twenty years. I know whereof I speak. You have been getting bad information about how the American legal system works, and how federal tax law in particular works. Famspear (talk) 01:15, 31 December 2012 (UTC)