Monday, November 2, 2009

The Lawful Meaning of the word "Income"

“Recognize what is in your sight, and that which is hidden from you will become plain to you.  For there is nothing hidden which will not become manifest.”
            Jesus, The Gospel of Thomas

Hello again world; welcome to my fourth blog; the fourth in my educational series to you!

"The truth will set you free, but first it will make you miserable".
James Garfield 1831-1881, 20th U.S. President

"I believe that if the people of this nation fully understood what Congress has done to them over the last 49 years, they would move on Washington; they would not wait for an election... It adds up to a preconceived plan to destroy the economic and social independence of the United States!" 
George W. Malone (1890-1961) U.S. Senator (Nevada) 1957 - Source: speaking before Congress

The Lawful Meaning of The Word “Income”

Ok, so in my last blog I wrote about what Compensation really is, according to the law.  I am now going to write about the lawful meaning of the word “Income.”   That’s right, it’s not my opinion, what I think, what my neighbor thinks, what my boss thinks, what you think.  It’s about what the law states what income is; something that somehow, just never got conveyed to you, “John Q. Public,” by our legal system.

You should now be starting to draw a picture of just how much you, the public, have been left out in the cold regarding important issues pertaining to you.  Kind of tells you what the legal profession, Judiciary, Congress, White House are all about, along with the media not doing their job of reporting these critical issues to you, wouldn’t you say?

Let’s get started.  In the U.S. Supreme Court case below, this case distinguished what was and was not income.

Eisner vs. Macomber, 252 U.S. 189:  “…it becomes essential to distinguish between what is and what is not “income,” according to truth and substance, without regard to form.  Congress cannot, by any definition it may adopt, conclude the matter, since it cannot by legislation, alter the Constitution, from which it derives its power to legislate, and within whose limitations, along, that power can be lawfully exercised…”’…[Income is] Derived—from—capital—the—gain—derived—from—capital, etc.


This was the most significant Supreme Court case to define the word “income.”  Here we have the essential matter—not gain accruing to capital, not a growth or increment of value in the investments, but a gain, a profit, something of exchangeable value…severed from the capital however invested or employed, and coming in, being “derived,” that is received or drawn by the recipient for his separate use, benefit and disposal—that is the income derived from property.  Nothing else answers the description…”

It is relevant to note that, nowhere in the entire Internal Revenue Code or the implementing Code of Federal Regulations [CFR-5 massive volumes], is the word “income” defined.  The tax liability is based upon “taxable income.”  Taxable income is “Gross income” minus allowable deductions. You must have “gross income” to have “taxable income.”  Compensation for labor [see prior blog] earned in private occupations of common right, may be excluded from “gross income.”  Only compensation for services as a public [government] servant is calculated in “gross income.” [Again, only government workers]

The word “income” by itself is restricted to its true meaning.  In well settled decisions, the Supreme Court has ruled that the ACTUAL meaning of the word “income” is only “gains and profits severed from capital.”  The capital, if taxable, is still subject to the constitution rules of apportionment.  Any profit earned through the investment or sale of capital assets or property would result in a gain that could be defined as “income” after it was severed or separated from the capital.

Moving along to the next U.S. Supreme Court case where the government tries to sneak in ALL RECEIPTS as income, which was rejected by the Supreme Court.

Doyle v. Mitchell Brothers, 247 U.S. 330:  “…Whatever difficulty there may be about a precise and scientific definition of income, it imports something entirely distinct from principal or capital either as a subject of taxation or as a measure of the tax; conveying rather the idea of gain or increase arising from corporate activitiesWe must reject in this case…the broad contention submitted in behalf of the Government that all receipts, everything that comes in – are income within the proper definition of the term ‘gross income’…”

And now we come to the next U.S. Supreme Court case where income is a profit, gained through a sale or conversion of a capital asset. Note in the last sentence where the Justices gave the benefit of the doubt to the writers of the 16th Amendment, that it MUST have been in their minds about gains and profits being income!  They didn’t want to state that it was the intent of the writers of the amendment to bypass the Constitution in taxing the American Citizenry.

Merchants Loan & Trust Co. vs. Smietanka, 255 U.S. 509, 518, 519 (1923):  “…it [income] should include ‘profit gained through a sale or conversion of capital assets.’ 
There would seem to be no room to doubt that the word must be given the
same meaning, in all of the Income Tax Acts of Congress, that it was given to it in the Corporation Excise Tax Act, and what that meaning is has now become definitely settled by decisions of this court…In determining the definition of the word “income” thus arrived at, this court has consistently refused to enter into the refinements of lexicographers or economists and has approved, in the definitions quoted, what is believed to be the commonly understood meaning of the terms [“gains and profits”] which must have been in the minds of the people when they adopted the Sixteenth Amendment to the Constitution…”

            So, Income, as defined by the Supreme Court means, “gains and profits as a result of corporate activity and profit, gained through the sale or conversion of capital assets.”  It’s a business profit; and not wages or compensation!

To add insult to injury to the Internal Revenue Service, here is another U.S. Supreme Court decision, which addresses the word “gain.”  Income is in every day sense a GAIN!

Conner v. United States, 303 F. Supp. 1187 (1969) pg 1191:  “[1]…The meaning of income in its everyday sense is a gain…the amount of such gain recovered by an individual is a given period of time.”  Webster’s Seventh New Collegiate Dictionary, p. 425 “Income is nothing more or less than realized gain.”  Shuster V. Helvering, 121 F.2d 643 (2nd Cir. 1941).  It[income] is not synonymous with receipts.”  “47 C.J.S. Internal Revenue §98, p. 226.”
“[2] Whatever may constitute income, therefore, must have the essential feature of gain to the recipient.  This was true when the 16th Amendment became effective, it was true at the time of the decision in Eisner v. McComber (supra), it was true under section 22(a) of the Internal Revenue Code of 1939, and it is true under section 61(a) of the Internal Revenue Code of 1954.  If there is no gain, there is no income.”

            Oh my gosh!  If there is no gain then there is no income?  How come I didn’t read about this in the newspapers?  And what; here is another case that goes to the Supreme Court that further elucidates on the words income and gain.

Taft v. Bowers, N.Y. 1929, 49 S. Ct. 199, 278
Taft v. Bowers, 278 U.S. 470, 73 L. Ed. 460: “The meaning of “income” in this amendment is the gain derived from or through the sale or conversion of capital assets: from labor or from both combined; not a gain accruing to capital, or growth or increment of value in the investment, but a gain, a profit, something of exchangeable value, proceeding from the property, severed from the capital, however employed and coming in or being “derived,” that is, received or drawn by the recipient for his separate use, benefit, and disposal.  U.S.C.A. Amend 16, Note 64.

Southern Pacific v. Lowe. Federal Register Vol. 238, pg. 850
“…The true function of the words ‘gains’ and ‘profits’ is to limit the meaning of the word ‘income’ and to show its use only in the sense of receipts which constituted an accretion to capital.  So the function of the word ‘income’ should be to limit the meaning of the words ‘gains’ and ‘profits.’

Eisner v. Macomber, N.Y. 1929, 40 S.Ct. 189
Eisner v. Macomber 252 U.S. 189, 64 L.Ed. 521
Walsh v. Brewster, Conn. 1921 41 S.Ct. 392
Walsh v. Brewster 255 U.S. 536, 65 L.Ed. 762
“The word ‘income’ as used in this [16th] amendment does not include a stock dividend, since such a dividend is capital and not income and cannot be taxed only if the tax is apportioned among the several states in accordance with Article 1 Section 2, Clause 3, and Article 1, Section 9, Clause 4 of the Constitution.”

And now we have the Congressional Record.  Just what is the Congressional Record?  Well, if you Google and search the term, you will get a number of hits, which you can click any one to get a description of what it is, but basically, it is the official record of the proceedings and debates of the United States Congress.  Please note that even when this was debated in Congress, they already knew what income was, and wasn’t, but again this somehow was just never conveyed to you, the public.

1913 Congressional Record, pg. 3843, 3844: Senator Albert B. Cummins:
“I assume that every lawyer will agree with me that we [Congress] can not legislatively interpret the meaning of the word ‘income.’  That is a purely judicial matter…the word ‘income’ has a well-defined meaning before the amendment of the Constitution was adopted.  It has been defined in all of the courts of this country [as gains and profits]…If we could call anything that we pleased, income, we could obliterate all the distinction between income and principal.  The Congress can not affect the meaning of the word ‘income’ by any legislation whatsoever…Obviously the people of this country did not intend to give to Congress the power to levy a direct tax upon all the property of this country without apportionment.”

            Apportionment?  Just what does that mean?  I will cover this in another blog, but quickly, it means that the people of this land can only be taxed after a census has been taken of the population, and that the tax levied EQUALLY to every person in the land.  Notice that the U.S. Constitution never said anything about a graduated tax scale!  You will find this in Article 1, Section 2, Clause 3, and Article 1, Section 9, Clause 4 of the U.S. Constitution.

            Here are just a few more tidbits for your reading, and of course the last item here refers to the United State Code, Title 26 going back to 1954 wherein the code states that if there is no gain, then there is no income!  They don’t hide it from you, folks because it’ in plain sight; they just don’t tell you about it!  So guess what, it’s up to you to read and find out about it.

Congressional Globe, 37th Congress 2nd Session, pg. 1531:  “The words ‘gains’ and ‘income’ mean the same thing.  They are equivalent terms…”

26 U.S.C.A. ’54 §61(a):  “Under Internal Revenue Code of 1954, [and all other codes] if there is no gain, there is no “income.”

            In my next blog I will write about the United States and just how many of them there are.  Yes, there is more than one!  Down the road, I will write about the Titles of the land, what Positive and Non-Positive law is about, the Sovereignty of the state, Sovereignty of the American Citizen [not to be confused with U.S. citizen], Uniform Commercial Code, Admiralty Law, California Income Tax Law, The Republic versus Democracy, legal definition of money [not currency] and more.  Just more confusion for you to consider, and why you just can’t figure why things are the way they are, but it’s all in the law!

One last thing: I get tired of listening to people talking about America being a Democracy.  It is NOT.  Did you forget what you learned in school?  These several states were founded as a Republic.  Recall the pledge of allegiance [or has that now been outlawed] “I pledge allegiance to the Flag…and to the REPUBLIC, for which it stands...”  Democracy is rule by a mob, and is the first step towards Socialism.  Check it out for yourself!

Disclaimer            Disclaimer            Disclaimer            Disclaimer            Disclaimer            Disclaimer

            Again folks, the information provided to you above is for educational purposes, and is not an endorsement for you NOT to pay your federal and state income taxes!  You WILL file your income tax returns gladly, and know how much you have learned about your Constitution, the law, and the Congress.  From here on end, it’s up to you, but do you get the feeling that you are being screwed from every angle, from professions and institutions you came to trust?  It’s all about the money, honey; taking more and more money out of your pocket, making your poorer and poorer and ultimately subservient to the government in totality.  In other words: a slave, and after all, the best-kept slave is the one who doesn’t know he/she is a slave.  Those whom we elected to run the government have now become the Kings, Lords, Prince and Princess’s, Dukes and so forth.  It’s all in their strategically planned goal for us common folk.

Keep reading, do your independent research and continue to learn more about what has been kept from you!  The truth cannot hurt you; only your closed mind can.

Until my next blog…

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