|62, Adjusted gross income defined.
For purposes of this subtitle, the term "adjusted gross ^income" means, in the case of an individual, gross income minus the following deductions:
tion 3101!6 But, if "income" is nowhere defined in the Internal Revenue Code, how can "income" be logically or legally taxed? Can a law tax something that the law does not define? Remember, "income" as such, does not exist. It is an abstract term. Try to take a picture of "income". Since it does not exist in concrete form (as do other taxable commodities such as cigars, cigarettes, beer, wine, gasoline, etc.), it must be clearly defined or it cannot be taxedl Since nowhere in the Code is "income" defined, "income" as used in Section 6103 obviously cannot be taxed on any basis; or as the courts would say:
"Nothing is taxable unless clearly within a taxing statute." (BENTE vs BUGBEE 103 NJL 608)
"Any doubt as to the persons or property intended to be included in a tax statute will be resolved in favor of the taxpayer." (MILLER vs ILLINOIS CJt. CO. 146 Miss 422)
Pursuing this argument further (which amounts to beating a dead horse), "income" as used in Section 3101 cannot logically be different from "income" as defined in Section 63; and taxes on such "income" cannot be deducted automatically from wages without taking into consideration all the deductions and allowances provided by Section 63. If it is automatically deducted, this makes the tax a direct tax on "wages" instead of a tax on "income". Remember, the income tax "imposed" in section 3101 is merely collected as a percentage of wages and is not a tax on wages but a tax on "income".
* You will ultimately discover that no one can have "income" that is taxable either as a "Social Security" tax or as a regular "income" tax. But for now I merely want to demonstrate that no one can have "income" that is taxable under Section 3101 apart from any other consideration and overlooking entirely that "income" itself cannot be the subject of an enforced tax on any basisl
SUMMARIZING THE POINTS IN CHAPTER 2
1. Social Security taxes withheld from employee wages are "income" taxes and not taxes on wages.
2. Since the Internal Revenue Code does not define "income", no one can have "income" that can be subject to section 3101 "income" taxes.
3. No employer can know whether an employee has "income" subject to tax under Section 3101, nor is any employer authorized or required to make such a determination.
4. In any case, Section 6201 of the Internal Revenue Code requires that the Secretary of the Treasury assess Section 3101 "income" taxes.
5. Section 6203 further requires that the Secretary of the Treasury record an employee's Section 3101 "income" tax liability and furnish the employee a copy of that record of assessment if so requested by the employee; and
6. Code Section 6303 requires the government to send a tax bill to each employee for any Section 3101 "income" taxes for which he may be "liable". Until employees receive such a bill they can have no Section 3101 "income" tax liability!
7. It is obviously unconstitutional for the government to impose two "income" taxes on some Americans while millions of government employees and other citizens are subject to just one.
8. There is nothing in the Internal Revenue Code that requires taxes collected as "Social Security" taxes to be earmarked in any way for supposed "Social Security" purposes.
How To Stop
To stop your employer from deducting an undefined and unassessed "income" tax from your wages, simply give him the affidavit shown in Figure 11. When you give your employer a sworn affidavit stating that you have no "income" that is taxable under Section 3101, he has no choice but to stop deducting such "income" taxes from your wages.
Employers are only authorized (under Section 3101) to deduct "income" taxes from employee wages. If an employee certifies that he has no "income" the employer has no legal basis for deducting "Social Security" taxes! Employers who, nevertherless, continue deducting these taxes (despite having no proof or a court order to the contrary) are liable to the employee for such arbitrary, unauthorized and unwarranted deductions.
Employers Subject to Lawsuits
If your employer does not immediately stop withholding Section 3101 "income" taxes from your wages
1. I,______________, swear under the penalty of perjury that I have no income that is taxable under 26 U.S.C. 3101.
2. I have never been made liable for any such tax pursuant to 26 U.S.C. 6201.
3. I have never received a copy of any assessment for any such tax, pursuant to 26 U.S.C. 6203.
4. I received no notice of any liability for any such tax, pursuant to 26 U.S.C. 6303.
5. Therefore, you have no legal basis for withholding any "income" taxes (allegedly imposed by 26 U.S.C. 3101) from my wages.
6. I understand that you will rely upon this affidavit in making your determination not to withhold from my wages any taxes imposed pursuant to 26 U.S.C. 3101.
My Commission Expires
* Note: See Appendix C for letter that accompanies this affidavit.
(after you send him your affidavit), you should immediately notify him that you are going to sue him1 for any portion of your wages that he has illegally withheld (or continues to withhold) and sends to the government. Remember, he would be sending the government a portion of your wages for a tax which, by law, you could not possibly owe or be liable for.
The government, however, anticipated that some employees might see through their illegal scam, and would threaten employers with such lawsuits, so they tried to cover this contingency by including Section 3102(b) (see Figure 12) in the Code.
Sec. 3102. Deduction of tax from wages.
(b) Indemnification of employer.
Every employer required so to deduct the tax shall be liable for the payment of such tax, and shall be indemnified against the claims and demands of any person for the amount of any such payment made by such employer.
It is a very interesting section of "law", which states that employers "... shall be indemnified against the claims and demands of any person for the amount of any such payment made by such employer." When employers are notified of impending lawsuits they should send the letter shown in Figure 13 to the government. If the government does not respond to this letter by
1 See Appendix C for sample lawsuit.
agreeing to defend and indemnify the employer, then the employer is obviously free to immediately stop withholding Section 3101 "income taxes. Can the government force employers to expose themselves to such lawsuits (by forcing them to withhold money from employee paychecks) without any assurance that they will be defended and indemnified?
Section 3102 — Legal Fiction
Actually, Section 3102(b) is based on fraud (designed to give employers a false sense of security) since it only promises to indemnify employers "required" to deduct Section 3101 "income" taxes. Since no employer is "required" to deduct such taxes, this section cannot apply to any employer! Section 3102(a) (Figure 14) is the Code section dealing with the deduction of such taxes and makes this abundantly clear.
You will note that nowhere in Section 3102(a) does it state that any employer is "required" to deduct Section 3101 "income" taxes. The section merely states that such taxes "... shall be collected...". The Federal government relies on the public confusing "shall" with "required". In these tax statutes, however, the word "shall" actually means "may" and, the word "may" can be used in place of "shall", making the above statement read that employers "may collect" such taxes2.
In any case, the word "shall" appears in this Section only once while the word "may" appears four times
2 For example, the Supreme Court held in Cairo Fulton RE vs. Hecht 95 U.S. 170 that"... as against the government the word shall when used in statutes is to be construed as "may" unless a contrary intention is manifested." For a more detailed explanation of this, see pages 34-37 of How Anyone Can Stop Paying Income Taxes by Irwin Schiff (Hamden, CT: Freedom Books, 1982).
Mr. Donald T. Regan
Secretary of the Treasury
Main Treasury Building
15th Street & Pennsylvania Avenue, N.W.
Washington, B.C. 20220
Dear Mr. Secretary:
I have been threatened with a lawsuit by my employee
if I remove any "income" taxes from his/her wages as imposed by 26 U.S.C. 3101.
Attached is his/her affidavit swearing that he/she has no income subject to such tax and further that he/she has never been notified by the government that such a tax was ever assessed or recorded. He/she also swears that he/she has never received any notice of "liability" for such a tax pursuant to 26 U.S.C., Sections 6201, 6203 and 6303.
Not wishing to expose myself to any liability in this matter, I will no longer withhold such taxes from
__________________'s wages until you notify me in
writing that the government will pay any and all costs of litigation and will indemnify me against all claims and losses I might incur (pursuant to 26 U.S.C. 3102[b] should I disregard his/her sworn statement.
Very truly yours,
Fred Hardnose President
Sec. 3102. Deduction of tax from wages.
The tax imposed by section 3101 shall be collected by the employer of the taxpayer, by deducting the amount of the tax from the wages as and when paid. An employer who in any calendar quarter pays to an employee cash remuneration to which paragraph (7)(B) of section 3121 (a) is applicable may deduct an amount equivalent to such tax from any such payment of remuneration, even though at the time of payment the total amount of such remuneration paid to the employee by the employer in the calendar quarter is less than $50; and an employer who in any calendar year pays to an employee cash remuneration to which paragraph (7)(C) or (10) of section 3121(a) is applicable may deduct an amount equivalent to such tax from any such payments of remuneration, even though at the time of payment the total amount of such remuneration paid to the employee by the employer in the calendar year is less than $100; and an employer who in any calendar year pays to an employee cash remuneration to which paragraph (8)(B) of section 3121(a) is applicable may deduct an amount equivalent to such tax from any such payment of remuneration, even though at the time of payment the total amount of such remuneration paid to the employee by the employer in the calendar year is less than $150 and the employee has not performed agricultural labor for the employer on 20 days or more in the calendar year for cash remuneration computed on a time basis; and an employer who is furnished by an employee a written statement of tips (received in a calendar month) pursuant to section 6053(a) to which paragraph (12)(B) of section 3121(a) is applicable may deduct an amount equivalent to such tax with respect to such tips from any wages of the employee (exclusive of tips) under his control, even though at the time such statement is furnished the total amount of the tips included in statements furnished to the employer as having been received by the employee in such calendar month in the course of his employment by such employer is less than $20.
and the word "required" does not appear at all! This is no accident. Employers cannot (constitutionally) be forced to be unpaid tax collectors for the government. Such a requirement would render the law unconstitutional since it would violate the 13th Amendment of the U.S. Constitution (which outlaws involuntary servitude). In addition, the government certainly could not compound the illegality by forcing such unpaid tax collectors to further expose themselves to employee lawsuits! Thus, Section 3102(b) is a legal fiction because the government is only authorized to indemnify "employers required to deduct". Since Section 3102 does not impose such a requirement or obligation on any employer, the government is actually barred by law from indemnifying any employer sued by an employee for illegally withholding Section 3101 "income" taxes. And, further, since employers cannot be forced to expose themselves to lawsuits for which they cannot receive indemnification, they should immediately cease withholding such taxes. Of course, any employer can stop deducting anyway, since (as you can see) the law does not impose a withholding requirement! Section 3102(b) does, however, attempt to further trick employers into believing that they can be "liable" for taxes not withheld. But note such a "liability" only extends to employers "required" to deduct and since no employer is "required" to deduct, no employer can be "liable" for the taxes not deducted!
SUMMARIZING THE POINTS COVERED IN CHAPTER 3
1. There is no law that "requires" employers to withhold Section 3101 "income" taxes from employee wages.
2. Supplying a sworn statement to one's employer (certifying that one has no "income" that is taxable under Section 3101) furnishes a legal bar from having such taxes taken from one's pay.
3. Employers withholding Section 3101 "income" taxes from the wages of an employee (after being notified that said employee has no "income" tax liability under Section 3101) can be liable to such employee for any wages illegally withheld and sent to the government.
4. The law bars the government from indemnifying those employers who are sued by their employees for illegally withholding 3101 "income" taxes from their wages.
Self-Employ eds -
How They, Too,
Can Drop Out
As explained (see page 221, Appendix A), it is the employees who actually pay both portions of "Social Security" taxes. With that in mind let's examine that portion of the tax theoretically paid by the employer per Code Section 3111(a) and (b) (Figure 15). Note again the misleading captions, but also note these important differences:
1. First, the tax on the employer is specifically identified as being an "excise" tax. This clearly establishes that the tax on employees is an un-apportioned, direct tax and, therefore, automatically unconstitutional.1
2. Both Section 3101(a) and (b) clearly show that the taxes they impose are taxes on wages. Note neither section even mentions "income".
This, of course, confirms the fact that Section 3101 taxes are "income" taxes (illegally levied as a direct
1 See Why No One Can Have Taxable Income by Irwin Schiff.
Subchapter B.—Tti ob Employers
Sec. 3111. Rate of tax.
(a) Old-age, survivors, and disability insurance.
In addition to other taxes, there is hereby imposed on every employer an excise tax, with respect to having individuals in his employ, equal to the following percentages of the wages (as defined in section 3121(a) and (t)) paid by him with respect to employment (as defined in section 3121(b))—
(1) with respect to wages paid during the calendar years 1974 through 1977, the rate shall be 4.95 percent;
(2) with respect to wages paid during the calendar year 1978, the rate shall be 5.05 percent;
(3) with respect to wages paid during the calendar years 1979 and 1980, the rate shall be 5.08 percent;
(4) with respect to wages paid during the calendar year 1981, the rate shall be 5.35 percent;
(5) with respect to wages paid during the calendar years 1982 through 1984, the rate shall be 5.40 percent;
(6) with respect to wages paid during the calendar years 1985 through 1989, the rate shall be 5.70
(7) with respect to wages paid after December 31,
1989, the rate shall be 6.20 percent.
(b) Hospital insurance.
In addition to the tax imposed by the preceding subsection, there is hereby'imposed on every employer an excise tax, with respect to having individuals in his employ, equal to the following percentages of the wages (as defined in section 3121(a) and (t)) paid by him with respect to employment (as defined in section 3121(b))—
(1) with respect to wages paid during the calendar years 1974 through 1977, the rate shall be 0.90 percent;
(2) with respect to wages paid during the calendar year 1978, the rate shall be 1.00 percent;
(3) with respect to wages paid during the calendar years 1979 and 1980, the rate shall be 1.05 percent;
(4) with respect to wages paid during the calendar years 1981 through 1984, the rate shall be 1.30 percent;
(5) with respect to wages paid during the calendar year 1985, the rate shall be 1.35 percent; and
(6) with respect to wages paid after December 31, 1985, the rate shall be 1.45 percent.
tax) as compared to Section 3111 which creates a contrived excise tax, levied "with respect to having individuals in (your) employ equal to a percentage of the wages paid".
The tax is a contrived excise because it is not levied on anything — not a product or even a supposed privilege. Excise taxes are levied on things (i.e. on a bottle of wine, on a pack of cigarettes, on a gallon of gas or, as in the case of Federal estate or gift taxes, on the supposed privilege of bequeathing or giving away property). The fact that this tax is being levied "with respect to having individuals in (one's) employ" is proof that the tax is not a legitimate excise since it is not levied on anything, and cannot be an excise tax within the meaning of the U.S. Constitution! Its use here merely signals the government's attempt to jimmy an unauthorized tax into Article 1, Section 8, Paragraph 1 of the Constitution. That the attempt was, indeed, fraudulent was pointed out by the First Circuit Court of Appeals when it found Social Security unconstitutional on this and other grounds (see pages 68-70).
But, in any case, it should be noted that the tax itself was to be determined by wages and not by income. So the employee tax is clearly a tax on income as opposed to the employer's portion which is a tax on nothing, but measured by employee wages.2