The REAL Cost of the Federal Income Tax

[MonkeyPuppet]

The REAL Cost of the Federal Income Tax

MonkeyPuppet
June 8, 2012


A wise man coined the phrase “tax terrorism season”, and he couldn’t have been more precise with regard to the tactics and activities of the IRS during the first four months of every year.  During this time, the IRS and the U.S. Department of Justice select one or more prominent cases with which to make an example.  Make no mistake, that example is deliberate and for you to see.  What is the message they wish to convey?  It is quite simple… don’t ask questions, do what we say, or we will destroy your life in ways you cannot even imagine.

Most Americans feel proud that we have a system of government that respects their individual rights.  Many laud the Bill of Rights as a necessary and valuable addition to the U.S. Constitution.  To expound upon this foundation, it is easy to point out that each and every American has a right to make decisions for themselves, a right to seek medical care of their own choosing, a right to make their own food choices, and on and on.  Furthermore, Americans have the right to choose for whom they will trade their labor, for what compensation, and how they will dispose of that income after it is received.

So far, I doubt many would find anything wrong with these statements.  However, how many Americans have given much thought to the idea of how the federal government, given its limited and deliberate purpose according to the Founders as the foreign agent of the states with regard to international matters, is obliged to any portion of the fruits of that labor?  This answer is also quite simple… none, or very few indeed.
More important to ask, I believe, is why the Founders would have given the power to tax the domestic remuneration of Americans to the federal government.  Make no mistake, if the federal Congress has the power to tax 1% of your income, it has the power to tax 100%.  The power is one thing, the amount is something else entirely.  Just how does the federal Congress vote on tax rates and the like?  This is done arguably by majority vote.  Does this mean that if the majority wants it, the tax rate could be 50%, 80%, or even 100%?  Another simple answer… yes.

How can this be?  Why would the Founders create a system like this that even a child can see would only promote tyranny?  Yet another easy answer… because they did no such thing!!

If they had, the Founders would have designed a system that destroys families, enslaves millions and even causes death.  Indeed, suicide becomes an attractive alternative to spending years in prison for not following the law as they want you to believe it reads.

Thankfully, the Founders did not design our system of government in this fashion.  We know this because the Founders embraced the principle of individual unalienable rights.  They believed that every American owns their labor and that no government is obliged to the fruits of that labor.

In light of what may indeed be a revelation to many readers, many will invariably ask how the IRS can continue their activities, even if for them to do so is a violation of our founding principles.  Remaining with the theme of this article, the answer is simple… they are not actually doing the dirty work.  The IRS follows the law to the letter.  Their two crimes in this scheme is lying by omission, and following through on enforcement activities knowing that there is a high probability that the victims of those activities are not among those upon whom Congress intended to impose the tax… nor could it by law.

So, who is responsible?  Where does the lie start?  Who or what presents the lie for us to digest?

We have all applied for a new job or accepted a new contract for work.  Typically, we are presented a small volume of paperwork so as to facilitate this new business relationship.  Among this paperwork is the IRS form W4 or the IRS form W9.  If we were presented with any other tax form, we would read it over in detail, searching for how it applies to us and asking ourselves whether or not we should complete it.  However, for these two forms, the vast majority of Americans ask no questions, and without review of the instructions, complete the forms and submit them in order to get that job or to get paid.

What is it that these forms convey?  The first part of this two-part answer is easy.  The signer of these forms is affirming the accuracy of the form’s contents… their name, address, date, etc.  The second part of the answer is less obvious.  In effect, the signer is proclaiming that they are, regardless of actual fact, among those upon whom Congress has imposed the income tax.  The signer is requesting that the paying party either withhold a portion of the signer’s pay to satisfy a potential tax liability (in the case of the W4), or that the signer wishes to calculate their own liability at a later date (in the case of the W9).  What both of these forms convey for the vast majority of Americans, in short, is a lie.

To make things worse, the party requesting that the signer complete the form is demanding that the signer assume this status, contrary to fact, in order to get paid.  This is nothing short of extortion, is it not?  Of course, the requester is rarely, if ever, knowledgeable of the crime they are committing.  They are most likely just as ignorant as the signer.  They believe that they must procure this form from the signer, and the signer believes they are liable and must submit the form to get paid.

What does the requester do with these forms?   They do very little, actually.  It goes into a file along with other pertinent information about the worker or contractor.  What these forms instruct them to do is to send information returns to the IRS… form W2 (for W4 employees) and form 1099 (for W9 contractors).  These resulting forms convey the same message to the IRS as the preceding forms convey to the requester, even if the requester is unaware of the erroneous implication.

When these forms (W2 and 1099) are received by the IRS Automated Collection System, a series of flags are set in play.  The system expects to receive a return filing by the individual or entity noted on the forms as the recipient of the stated taxable income.  Should the system not receive a return by a certain date, notices are sent to the noted address in an attempt to secure a return that may have been overlooked in error.  If a return is not received after that time, an agent will review the information provided and begin a process to file a return using the default filing information… in other words, the worst-case scenario with regard to calculating the amount of tax owed.  In addition, fees and penalties are levied which are added to the total amount due.  That’s right, IRS fees and penalties are treated and collected as if they are taxes.

A good question that should be seeping into your mind at this point is, “If they IRS can file a return for you, then why are we ‘required’ to file one at all?”  This is a good question and is precisely the origin of the erroneous theory that the income tax is voluntary.  It is not… not for those upon whom Congress has imposed it, and unfortunately, effectively not for those with payers who send the IRS fraudulent information returns.

Another tactic used by the IRS is to investigate and attempt to prosecute the noted individual or entity for failing to file a return.  Here’s the kicker… outside of outright evasion of taxes, which is very rarely pursued, the only criminal charge that occurs is willful failure to file.  Can you read between the lines here?  As with most criminal charges, this requires the IRS to prove that the noted individual knowingly and willfully did not file a return despite knowing and believing they should have.

I would hope that readers are putting the pieces together by now.  The bottom line here is simple.  With regard to the vast majority of Americans, the IRS is merely following a set of procedures prescribed by statutes and regulations while it is payers who are providing them with false information with which to use while executing those procedures.

Why do payers request (read: demand!) that new hires fill out and sign IRS form W4’s?  Why do payers request (read: demand!) contracted parties fill out and sign IRS form W9’s?  They do this out of ignorance.  They believe it is required by law.  However, when asked for a reference as to where such law can be read, they have no answers.  More often than not, their legal counsel and accountants cannot provide such a reference.  The reason is because there is no reference in law for their demands… not for the average American living and working within the 50 states of the union.

What is the solution to this fraud?  How to we resolve what many consider the largest financial crime in American history?  Again, the answer is simple.  We must refuse the extortion tactics of private payers acting as snitches and informants for the IRS.  They are, albeit unknowingly, supplying the IRS with fraudulent information that enables the IRS to extract our wealth, destroy our livelihood, break apart our families, and for many unfortunate souls, force them to seek the ultimate remedy to what seems an insurmountable level of debt or perhaps even prison… suicide.

This lie is literally killing all of us.  It is robbing us of our dignity and our wealth.  All the while, it provides Congress with the means to acquire an unlimited amount of capital with which to chip away at every other aspect of liberty.

If Congress can reach into our lives and extract the fruits of our labor using only ignorance, what other rights might they infringe upon with this de facto authority?  Our right to travel?  Our right to vote?  Perhaps one day they will decide how we dispense of the labor itself.  Of course, they won’t be acting alone in this endeavor.  Private payers will ignorantly enforce Congress' will to our detriment and effectively destroy the very foundation of our Republic… the unalienable rights of the individual.





References:
"Income Tax: Shattering the Myths" by Dave Champion, and roughly 6 years of independent research on the subject of federal tax law.

[Geolibertarian]

If a critical mass of Americans had taken Henry George's advice in the late 19th century, the federal income tax would never have been instituted in the first place:

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http://www.econlib.org/library/YPDBooks/George/grgPP34.html#Book VIII, Chapter 3

Progress and Poverty

Book VIII: Application of the Remedy

Chapter 3: The Proposition Tried by the Canons of Taxation

The best tax by which public revenues can be raised is evidently that which will closest conform to the following conditions:

1. That it bear as lightly as possible upon production—so as least to check the increase of the general fund from which taxes must be paid and the community maintained.

2. That it be easily and cheaply collected, and fall as directly as may be upon the ultimate payers—so as to take from the people as little as possible in addition to what it yields the government.

3. That it be certain—so as to give the least opportunity for tyranny or corruption on the part of officials, and the least temptation to law-breaking and evasion on the part of the taxpayers.

4. That it bear equally—so as to give no citizen an advantage or put any at a disadvantage, as compared with others.

Let us consider what form of taxation best accords with these conditions. Whatever it be, that evidently will be the best mode in which the public revenues can be raised.

[Continued...]

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[MonkeyPuppet]

I am a proponent of the LVT model at the state level.  However, at the federal level, I think the Founders had it right when they empowered the federal Congress to impose excises upon international trade and the utilization of the federal government as a service in that capacity.

While it would indeed be news to most Americans, this is exactly what the federal income tax is today.  Sure, they don't know it like that because of the way it is mal-applied (as explained in my article), but nonetheless, that is the truth of it.  It is an excise levied upon the gains enjoyed principally by foreign persons capitalizing on our domestic market.  This method provides both an incentive for greater trade, as with necessity comes additional funding at the federal level, but also encourages domestic production and patronage as the international interests must contend with an additional cost to compete with our local production.

What has been designed at the federal level with regard to taxation is, in my opinion, the best mechanism for liberty.  However, the vast majority of Americans have bought the lie and believe something that is the complete opposite of the truth... due to their own ignorance and arguably what I would consider intellectual (and moral) cowardice.

I think it would be short-sighted to scrap it, and instead embrace an alternative.  The reason being that without understanding how the current federal tax system is supposed to work, any alternative would be equally obfuscated to allow the same level (or more) of mal-application to the detriment of liberty.  The "fix", if you will, for the current mal-application is to cure the fundamental problem... ignorance itself.

This is where many other ideals of the pro-liberty movement intertwined with the Tax Honesty movement.  Most notably is the federal Department of Education and its influence over the educational standards within the several states.  So long as this entity exerts influence, educating the next generation of American adults as to the true nature and limited scope of federal taxation, starting with basics in jurisdiction, will be impossible.  Those wishing for the current mal-application to continue unabated will oppose any effort to uncover the truth... especially when it comes to those who will eventually be embraced by that mal-applied scheme.


A good example to point out that most would never have thought to research is in the instructions for the IRS form W9 itself (which would prompt a payor to submit a 1099 to the IRS).  It states very clearly that the form is to be filled out only by a "U.S. person".  This is a legal term that, while it may include a U.S. citizen in certain circumstances, it does not mean that all U.S. citizens (or state citizens) are embraced.  The easiest way to explain this is to point out that all fathers are male, but not all males are fathers.