Friday, November 9, 2007

The Additional Tax

While the Governments, State and Federal, have expansive powers to curtail action, and some small powers to curtail speech or writing, I think neither has any power, on any pretext, directly or indirectly to attempt foreclosure of any line of thought. Our forefathers found the evils of free thinking more to be endured than the evils of inquest or suppression. They gave the status of almost absolute individual rights to the outward means of expressing belief. I cannot believe that they left open a way for legislation to embarrass or impede the mere intellectual processes by which those expressions of belief are examined and formulated. This is not only because individual thinking presents no danger to society, but because thoughtful, bold and independent minds are essential to wise and considered self-government. Progress generally begins in skepticism about accepted truths. Intellectual freedom means the right to re-examine much that has been long taken for granted. A free man must be a reasoning man, and he must dare to doubt what a legislative or electoral majority may most passionately assert. The danger that citizens will think wrongly is serious, but less dangerous than atrophy from not thinking at all. Our Constitution relies on our electorate's complete ideological freedom to nourish independent and responsible intelligence and preserve our democracy from that submissiveness, timidity, and herd-mindedness of the masses which would foster a tyranny of mediocrity. The priceless heritage of our society is the unrestricted constitutional right of each member to think as he will. Thought control is a copyright of totalitarianism, and we have no claim to it. It is not the function of our Government to keep the citizen from falling into error; it is the function of the citizen to keep the Government from falling into error.
COMMUNICATIONS ASSN. v. DOUDS 339 U.S. 382, 443 (195O)

The United States of America in Congress Assembled is a statutory creature of its creation, the Constitution of the United States. Article I § 8 authenticate the legislative reach of the Federal Congress’ statutory enactments. Federal Statutory Authority may not enter the state, without the State’s legislative authority. One caveat to the Federal reach within a State party to the more perfect Union is annotated in Article IV § 4[i].

When the Federal Congress enacted the Normal Income Tax, and additional tax, the statutory reach precluded intertwining the proprietary (substantive) rights of Americans working and living in a private capacity within the State party to the more perfect Union unless said Private American was involved in a statutory privilege within the purview of federal legislative authority. One such American was Frank Brushaber, whose disbursements were taxed in compliance to the Normal Tax. Frank Brushaber held stock in the Union Pacific Railroad, whose disbursements fell within the Normal Tax withholding provisions and his income fell within the provision of the additional tax.

Here in America today, 104 years after the statutory enactment of the Normal Income Tax, and its statutory rider, the additional tax. Federal Courts are routinely ruling in favor of the United States wherein an American Working and living within the State’s party to the more perfect Union are liable for the additional tax, as codified in Title 26 USCA Subtitle A, Chapter 1. The United States Code is the codification of the statutory laws and as such stands as the mere evidence of statutory law. Frank Brushaber litigation challenged the constitutionality of the additional tax that was imposed upon his dividend disbursements[ii]. Frank should have read the statutory provisions of the enactment.

For the purpose of this additional tax the taxable income of any individual shall embrace the share to which he would be entitled of the gains and profits, if divided or distributed, whether divided or distributed or not, of all corporations, joint-stock companies, or associations however created or organized[iii],

The Supreme Court recognized the statutory authority of the Federal Congress to impose excise taxes upon subject matter within its legislative jurisdiction as conferred in the Constitution of the United States.

As has been repeatedly remarked, the corporation tax act of 1909 was not intended to be and is not, in any proper sense, an income tax law. This court had decided in the Pollock Case that the income tax law of 1894 amounted in effect to a direct tax upon property, and was invalid because not apportioned according to populations, as prescribed by the Constitution. The act of 1909 avoided this difficulty by imposing not an income tax, but an excise tax upon the conduct of business in a corporate capacity, measuring, however, the amount of tax by the income of the corporation[iv], with certain qualifications prescribed by the act itself. Flint v. Stone Tracy Co. 220 U.S. 107, 55 L. ed. 389, 31 Sup. Ct. Rep. 342, Ann. Cas. 1912 B, 1312; McCoach v. Minehill & S. H. R. Co. 228 U.S. 295, 57 L. ed. 842, 33 Sup. Ct. Rep. 419; United States v. Whitridge ( decided at this term, 231 U.S. 144, 58 L. ed. --, 34 Sup. Ct. Rep. 24. 
STRATTON'S INDEPENDENCE, LTD. v. HOWBERT, 231 U.S. 399, 414 (1913)

The 63rd Congress, the federally elected political bureaucracy’s intent was to impose civil (governmental) control of property by taxation upon the corporate structure, and those who directly profit from the accumulation of said corporate wealth. The principles of the corporate structure are the officers, and stockholders who profit through the distributions of gains and profits derived by the corporate structure. The wages of the corporate officer fell within the statutory authority enacted as the Normal Income Tax. The Corporate Excise Tax imposed originally in August of 1909 was amended in October of 1913 to extend the statutory reach of the Federal Congress to control wealth creation here in America.

Over the next twenty six years, the Legislative branch of the Federal Governance moved to capture the federal judiciary, which would assure the usurpation of rights to property here in America under the color of constitutional authority.

The federal judiciary was effectively captured in 1939, when the Supreme Court, shaped by the new deal politics of Franklin Delano Roosevelt ruled the legislative polices enacted as the Normal Income Tax as repeatedly amended to ensnare the federal judiciary was not considered a diminishment of judicial income.

The case is here under Section 2 of the Act of August 24, 1937, 50 Stat. 751, 752, 28 U.S.C.A. 349a, as a direct appeal from a judgment of a district court whose 'decision was against the constitutionality' of an Act of Congress. The suit below, an action at law to recover a tax on income claimed to have been illegally exacted, was disposed of upon the pleadings and turned on the single question now before us, to wit: Is the provision of Section 22 of the Revenue Act of 1932, 47 Stat. 169, 178, reenacted by Section 22(a) of the Revenue Act of 1936, 49 Stat. 1648, 1657, 26 U.S.C.A. 22(a), constitutional insofar as it included in the 'gross income', on the basis of which taxes were to be paid, the compensation of 'judges of courts of the United States taking office after June 6, 1932'.
  O'MALLEY v. WOODROUGH, 307 U.S. 277, 279 (1939)

Now the public policies implemented at the state and federal level by the political bureaucracy are moved to substantiate an administrative corruption to the due processes of law, under a color of law so transparent that the now ensnared federal and state black robed administrative officer would declare in equity that which has neither form nor substance in law.

The Corporate structure chartered by the United States and/or a State is subject to the Normal income Tax[v]. A recipient of distributions from the corporate structure as a principle, or dividends as an individual shall be subjugated to the additional tax. The additional tax imposed upon distributions in form of dividends still stands today as amended by the Economic Growth and Tax Relief Reconciliation Act of 2001 and again by the Jobs And Growth Tax Relief Reconciliation Act of 2003.

A state may impose an income tax by moving an occupational license tax. This State’s occupational license tax may move in a federal area found within the exterior boundaries of the State. This is the statutory authority granted a State’s polity by the Federal Congress in 1939, under what is known as the Buck Act[vi].

The State may also statutorily impose a resident tax upon individuals (federal and state statutorily determined employees) statutorily incorporated as the State Agreement in compliance to Public Law 587, 82nd Congress Session II, Chapter 940.

This state resident tax is administered and collected by the Commissioner of Internal Revenue.

Title 26 CFR § 301.6361–1 Collection and administration of qualified taxes.
(a) In general. In the case of any State which has in effect a State agreement (as defined in paragraph (a) of § 301.6361–4), the Commissioner of Internal Revenue shall collect and administer each qualified tax (as defined in paragraph (b) of § 301.6361–4) of such State. No fee or other charge shall be imposed upon any State for the collection or administration of any qualified tax of such State or any other State. In any such case of collection and administration of qualified taxes, the provisions of subtitle F (relating to procedure and administration), subtitle G (relating to the Joint Committee on Taxation), and chapter 24 (relating to the collection of income tax at source on wages), and the provisions of regulations thereunder, insofar as such provisions relate to the collection and administration of the taxes imposed on the income of individuals by chapter 1 (and the civil and criminal sanctions provided by subtitle F, or by title 18 of the United States Code (relating to crimes and criminal procedure), with respect to such collection and administration) shall apply to the collection and administration of qualified taxes as if such taxes were imposed by chapter 1, except to the extent that the application of such provisions (and sanctions) are modified by regulations issued under subchapter E (as defined in paragraph (d) of § 301.6361–4). Any extension of time which is granted for the making of a payment, or for the filing of any return, which relates to any Federal tax imposed by subtitle A (or by subtitle C with respect to filing a return) shall constitute automatically an extension of the same amount of time for the making of the corresponding payment or for the filing of the corresponding return relating to any qualified tax.

The Secretary of the Treasury’s implemented regulations that require the discretionary issuance of Notice[vii] may be issued to an Individual who then shall be subject to qualified individual state income tax, as if it was the additional tax as codified in Title 26 USCA Subtitle A, Chapter 1 income tax imposed upon the individual.

This Normal income tax has been codified in Title 26 USCA Subtitle A, Chapter II was enacted statutorily by the Sixty-third Congress Secession I, Chapter 16 § II (A) Subdivision 1 on October 3, 1913.

The Additional Tax imposed upon the Individual who receives distributions and or dividends from a Corporate Person as imposed by Sixty-third Congress Secession I, Chapter 16 § II (A) Subdivision 2 on October 3, 1913 has been codified in Title 26 USCA Subtitle A, Chapter I.

Here within the codification to what is referred to as the Internal Revenue Code, the legislative editorial committee’s public policy is imposed by moving an editorial revision to color the linear application of a statutory enactment of the Federal Congress. The individual appears to stand liable first, and the Corporate Personality appears to stand’s liable second. The Statutory fact is the Corporate Personality stands first, wherein the individual liability accrues when and only when said taxpayer receives distribution in forms of wage, gains and profits as principles in the corporate structure. This color of law is a deliberated public policy initiative that assures the appointed political bureaucracy the colorful ability to abuse the statutory due processes of administrative authority under the color of law.

The codification of the Normal Tax and the Additional Tax puts the individual imposition first, and the Normal income Tax second. The codification is the mere evidence of the law, and is used by the state and federally appointed political bureaucracy to impose a public policy in defiance to the administrative due process of agency rules and regulations.

The Normal Income Tax and the additional tax are two intertwined operations of law enacted within the same statutory enactment, which impose first an excise upon the profits secured, and then a second excise upon gain or profits distributed or divided by the corporate personality. The divided or distributed profits are the personally upon which the additional tax is imposed.

One such recipient of this distributed personally was Frank Brushaber, who received taxable dividends from the Union Pacific Railroad. The Union Pacific Railroad was a corporate person subject to the statutory jurisdiction of the United States of America in Congress Assembled. Frank Brushaber litigation was meritless, as he was the statutory individual who received distributions from a taxable source within the subject matter jurisdiction of the Normal income Tax, and wherein he subsequently suffered the imposition of the additional tax.

The imposition of the additional tax statutorily is imposed upon principles who secured distributions from chartered persons in the form of Gross income. Gross Income includes all gains, profits, and income derived from- (a) Salaries, wages, or compensation for personal service of whatever kind and in whatever form paid.[viii]

In 1921, the Sixty-Seventh Congress Session I, Chapter 136 Title II, Part I § 200(5) introduced the “personal service corporation” wherein the principals were statutorily defined as those who are regulatory engaged in the active conduct of the affairs of the corporation. This statutory enactment clarifies who is the statutory individual that accrues a fiscal liability enacted as the additional tax by the 63rd Congress Session I, Chapter 16 § II subdivision 2. Here the statutory law is very clear as to whom the individual shall be that accrues a statutory liability for presenting statements or returns to the Secretary for payment of an income tax.

So how does the Agency administratively step beyond its known statutory authorities for the administrative collection of the Normal Income Tax, and Additional Tax imposed upon individuals?

One part of the answer is found by reading the Normal Income Tax statute enacted by the 63rd Congress Session I, Chapter 16, § IV (S) which repealed in part the Corporate Excise Tax of 1909. The Normal income tax is imposed upon the entire net income from all sources of those Persons, and individuals, whose taxable home is the United States. The statutory term of art “home” is where one conducts a trade or business[ix].

The Normal income Tax imposed a withholding requirement at the source of income that is disturbed to the person and or it’s individual.

Subdivision 2 of the Normal income Tax incorporated an additional tax which statutorily defined a taxable liability shall accrue upon the net income that was derived by an individual.

For the purpose of this additional tax the taxable income of any individual shall embrace the share to which he would be entitled of the gains and profits, if divided or distributed, whether divided or distributed or not, of all corporations, joint-stock companies, or associations however created or organized, formed or fraudulently availed of for the purpose of preventing the imposition of such tax through the medium of permitting such gains and profits to accumulate instead of being divided or distributed; and the fact that any such corporation, joint-stock company, or association, is a mere holding company, or that the gains and profits are permitted to accumulate beyond the reasonable needs of the business shall be prima facie evidence of a fraudulent purpose to escape such tax; but the fact that the gains and profits are in any case permitted to accumulate and become surplus shall not be construed as evidence of a purpose to escape the said tax in such case unless the Secretary of the Treasury shall certify that in his opinion such accumulation is unreasonable for the purpose of the business. When requested by the Commissioner of Internal Revenue, or any district collector of the internal revenue, such corporation, join-stock company, or association shall forward to him a correct statement of such profits and the names of the individuals who would be entitled to the same if distributed. Reference Sixty-third Congress Session I, Chapter 16 § II Subdivision, page 166, 167, October 3, 1913

The material fact in law is that the Normal income tax is one part of the October 3rd 1913 enactment, which included the additional tax imposed upon the individual who shared in the gain and or profit, is an element in law that is willfully overlooked by the current administrators of the Internal Revenue Service[x].

The current administrative oversight imposed by the Secretary and its statutory delegate the Commissioner of Internal Revenue is to move a systemic fraud to subvert the statutory limitations that limit the taxable source of income as enacted by the 63rd Congress. The Normal income Tax and additional tax are currently codified in Title 26 USCA Subtitle A Chapter II and Chapter I.

The material fact that the income tax imposed upon the individual is the additional tax is an element in law that is administratively usurped by the current administrators of the Internal Revenue Service, who impose a systemic fraud to subvert the statutory limitations that limit the taxable source of income as enacted by the 63rd Congress

In 1935, the United States in Congress Assembled extended its reach to move inside the exterior boundaries of the State’s party to the more perfect union with the imposition of Social Security. Social Security is a wage tax imposed upon the statutorily determined employee[xi]. This Wage Tax is a state statutory enactment that has been determined by the Social Security Board to stand in compliance to Federal Authority.[xii]

The Federal Congress enacted an excise tax on August 14th, 1935 statutorily named “Social Security”[xiii]. This statutory program usurped the private tradition of the local community wherein locally controlled beneficial associations were formed to provide private pensions to the worker. Charities were privately funded, wherein the Widow, Orphan, or blind would be able to find assistance in the local community. The advent of Social Security usurped these private organizations. The secularization of beneficial societies, and charities moved under the State plan. The State plan statutorily required the State legislature to enact statutory authority to impose wage taxes upon the Employer of eight individuals or more. Social Security is a state[xiv] driven excise enactment of the State legislature which statutorily empowered the Commissioner of Internal to collect this “indirect tax.”

Title VIII, TAXES WITH RESPECT TO EMPLOYMENT § 807(a) The taxes imposed by this title shall be collected by the Bureau of Internal Revenue under the direction of the Secretary of the Treasury and shall be paid into the treasury of the United States as internal-revenue collections. If the tax is no paid when due, there shall be added as part of the tax interest (except in the case of adjustments made in accordance with the provisions of section 802(b) and 805) at the rate of one-half of 1 per centum month from the date the tax became due until paid. 74th Congress Session I, Chapter 531, August 14th, 1935, page 637

The catch to Social Security is that it is an excise imposed upon the wages of the employee engaged in service to a statutorily charted trade or business. The statutorily defined employee is an Officer of the corporation. The codification of this statutory fact is found in Title 26 USCA Subtitle C, Chapter 21 § 3121(d). In order to overcome this statutory limitation for the imposition of the wage tax, the Internal Revenue Service has artfully expanded the term of art “employee” and “includes”.

Title XI § 1101(a) (6): The term “employee” includes an officer of a corporation[xv].

Title XI § 1101 (b): The terms “includes” and “including” when used in a definition contained in this Act shall not be deemed to exclude others things otherwise within the meaning of the term defined[xvi].

Here stand three forms of taxation imposed upon the Person, inclusive of its individual, whose is a principal in the day to day affairs of the personal service corporation. These three administrative taxing programs have been constitutionally constituted under the statutory authority of the United States and the State’s party to the more perfect Union.

The problem facing America and Americans is the administrative collection of these three taxing programs is moved contrary to the nature of the law, by an appointed political bureaucracy that secures funding from the elected political bureaucracy to perfect a known systemic fraud manipulated by the political bureaucracy at the federal and state level.

The State and Federal Revenue Services have learned how to stand in equity that which has neither form nor substantive in law.

This expansion of a statutory limitation is imposed in equity in defiance to the statutory text as enacted by the Federal and State legislature. The appointed political bureaucracy secures funds from the elected political bureaucracy annually to move an informal administrative collection process in direct defiance to administrative limitations.

It was Frank Brushaber’ s improper claim upon which relief shall be granted that has been used to this very day to substantiate the ongoing systemic fraud of the Political Bureaucracy to perfect in equity that which it is statutorily unable to substantiate in law.

The linear responsibility of the Commissioner to issue NOTICE is statutorily codified in Title 26 USCA Subtitle F Chapter 61 § 6001[xvii]. The systemic problem is that this NOTICE is never issued to the singular American engaged in the labor pool of the enumerated American Employer. The American employer unknowingly issues invalid collections of information portending the accrual of wages that accrued as source taxable income under the additional tax.

Sixty-Eighth Congress Session I Chapter 234 Title X § 1002(b):

Whenever in the judgment of the Commissioner necessary he may require any person, by notice service upon him, to make a return, render under oath such statements, or keep such records as the Commissioner deems sufficient to show whether or not such person is liable to tax.

The forth level of the political bureaucracy’s systemic fraud was statutorily enacted by the 82nd Congress session II, Chapter 940, as public law 587 on July 17th, 1952. This statutory enactment authorized the imposition of withholding income taxes owed a State by a federal employee. This particular withholding statute is now codified in Title 26 USCA Subtitle C Chapter 24.

What few Americans comprehend, is the willing intention of the United States in Congress Assembled to statutorily fund informal administrative activities under law of the fraudulent transaction. This law of the fraudulent transaction moves within a fiction of law, which allows a fictional falsity to be presumed true, which perfects justice by devious means[xviii].

The legislative court[xix] expects the targeted American to waive their substantive rights to the due process of agency authority UNDER THE color of law. Read the Reform and Restructuring Act of 1998 which statutorily empowered the collection due process hearing for reviewing the informal collection activities of the Internal Revenue Service.

This informal administrative sleight of hand (systemic fraud) was superimposed under the decisions of the United States Supreme Court, wherein the ubiquitous wavier of substantive rights is the key to imposing all that lies in equity in defiance to that which has neither form or substance in law[xx].

Americans have a singular choice. Learn to substantiate their God Given Unalienable (substantive) Rights within the form driven legalistic lands of the administrative State. Or learn the true meaning of suffering the insufferable tyranny of a political bureaucracy that lies well in equity when the targeted opponent has no knowledge how to stand the force of law.

"Liberty cannot be preserved without a general knowledge among the people, who have a right, from the frame of their nature, to knowledge, as their great Creator, who does nothing in vain, has given them understandings, and a desire to know; but besides this, they have a right, an indisputable, unalienable, indefeasible, divine right to that most dreaded and envied kind of knowledge; I mean, of the characters and conduct of their rulers."
-- John Adams (Dissertation on Canon and Feudal Law, 1765)
Reference: Our Sacred Honor, Bennett, 253.

[i] § 4 The United States shall guarantee to every State in this Union a republican Form of Government, and shall protect each of them against Invasion; and on Application of the Legislature, or of the Executive (when the legislature cannot be convened ) against domestic Violence.
[ii] As a stockholder of the Union Pacific Railroad Company, the appellant filed his bill to enjoin the corporation from complying with the income tax provisions of the tariff act of October 3, 1913 (II., chap. 16, 38 Stat. at L. 166). Because of constitutional questions duly arising the case is here on direct appeal from a decree sustaining a motion to dismiss because no ground for relief was stated. BRUSHABER v. UNION PACIFIC R. CO., 240 U.S. 1 (1916)
[iii] Sixty-third Congress Session I, Chapter 16 § II Subdivision, page 166, October 3, 1913
[iv] Title 4 USCA Chapter 4 § 110(c): The term “income tax” means any tax levied on, with respect to, or measured by, net income, gross income, or gross receipts.
[v] The income tax, its statutorily defined in Title 4 USCA Chapter 4 § 110(c)
[vi] Title 4 USCA Chapter 4 § 101-110
[vii] Sixty-Eighth Congress Session I, Chapter 234 Title X § 1002(b): Whenever in the judgment of the Commissioner necessary he may require an person by notice served upon him, to make a return, render under oath such statements, or keep such records as the Commissioner deem as sufficient to show whether or not such person is liable to tax.
[viii] Regulations 33, Article 4, page 30 January 5, 1914
[ix] Commissioner v Stidger, 386 US 28, 293 (1967)
[x] Reference Title 26 CFR part 31.0–2 General definitions and use of terms
[xi] Title 26 USCA Subtitle F Chapter 61 § 6110
[xii] Regulations 91 Relating to Employees’ Tax and Employers’ Tax under Title VIII of the Social Security Act
[xiii] 74th Congress Session I Chapter 531, 1935
[xv] 74th Congress Session I Chapter 531
[xvi] 74th Congress Session I Chapter 531
[xvii] Title 26 CFR part 1.6001-1(d): (d) Notice by district director requiring returns statements, or the keeping of records. The district director may require any person, by notice served upon him, to make such returns, render such statements, or keep such specific records as will enable the district director to determine whether or not such person is liable for tax under subtitle A of the Code, including qualified State individual income taxes, which are treated pursuant to section 6361(a) as if they were imposed by chapter 1 of subtitle A.
[xviii] Balletine’s Law Dictionary 3rd Edition, page 468; “Fiction”
[xix] GRANFINANCIERA, S. A. v. NORDBERG 492 U.S. 33, 69 (1989)
[xx] The Social Security Act (Act of August 14, 1935, c. 531, 49 Stat. 620, 42 U.S.C., c. 7 (Supp.II), 42 U.S.C.A. 301-1305) is divided into eleven separate titles, of which only titles IX and III are so related to this case as to stand in need of summary. The caption of title IX is 'Tax on Employers of Eight or More.’ Every employer (with stated exceptions) is to pay for each calendar year 'an excise tax, with respect to having individuals in his employ,' the tax to be measured by prescribed percentages of the total wages payable by the employer during the calendar year with respect to such employment. Section 901, 42 U.S.C.A. 1101. One is not, however, an 'employer' within the meaning of the act unless he employs eight persons or more. Section 907(a), 42 U.S.C.A. 1107(a). There are also other limitations of minor importance. The term 'employment' too has its special definition, excluding agricultural labor, domestic service in a private home, and some other smaller classes. Section 907(c), 42 U.S.C.A. 1107(c). The tax begins with the year 1936, and is payable for the first time on January 31, 1937. During the calendar year 1936 the rate is to be 1 per cent., during 1937 2 per cent., and 3 per cent thereafter. The proceeds, when collected, go into the Treasury of the United States like internal revenue collections generally. Section 905(a), 42 U.S.C.A. 1105(a). They are not earmarked in any way. In certain circumstances, however, credits are allowable. Section 902, 42 U.S.C.A. 1102. If the taxpayer has made contributions to an unemployment fund under a state law, he may credit such contributions against the federal tax, provided, however, that the total credit allowed to any taxpayer shall not exceed 90 per centum of the tax against which it is credited, and provided also that the state law shall have been certified to the Secretary of the Treasury by the Social Security Board as satisfying certain minimum criteria. CHAS. C. STEWARD MACH. CO. v. DAVIS, 301 U.S. 548, 574 (1937)

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