Available Now! (click cover)

America's Counter-Revolution
The Constitution Revisited

From the back cover:

This book challenges the assumption that the Constitution was a landmark in the struggle for liberty. Instead, Sheldon Richman argues, it was the product of a counter-revolution, a setback for the radicalism represented by America’s break with the British empire. Drawing on careful, credible historical scholarship and contemporary political analysis, Richman suggests that this counter-revolution was the work of conservatives who sought a nation of “power, consequence, and grandeur.” America’s Counter-Revolution makes a persuasive case that the Constitution was a victory not for liberty but for the agendas and interests of a militaristic, aristocratic, privilege-seeking ruling class.

Sunday, July 15, 2007

The "861" Argument

Some tax-deniers insist that wages earned domestically are not taxable. How do they know? Section 861 of the tax regulations told them so.

Here's what tax professor Jonathan R. Siegel of George Washington University Law School says about the argument:
The 861 argument, as articulated by Larken Rose, contains much, much buildup, but in the end it's all based on a misunderstanding of this regulation. The regulation just provides a list of the situations in which it matters whether income is from foreign sources or not. The regulation does not show that domestic income is not taxable. The above references, and particularly code section 61's definition of gross income as "all income from whatever source derived" (as opposed to section 871's limitation to "the amount received from sources within the United States"), shows that the domestic income of a U.S. citizen is subject to the income tax.

By the way, the notion that the whole thing turns on a regulation is somewhat ironic: most tax protestors are particularly insistent that they want the government to rely on laws (which have to be passed by Congress), not just regulations (which come from a government agency such as the IRS).

Siegel adds that as long as we're consulting the IRS regs, we might as well look at 26 C.F.R. § 1.1-1:

. . . (b) Citizens or residents of the United States liable to tax. In general, all citizens of the United States, wherever resident, and all resident alien individuals are liable to the income taxes imposed by the Code whether the income is received from sources within or without the United States.

As we've come to expect, there's nothing to the 861 argument. For more, click here.


Anonymous said...

I would suggest that everyone (including you, Sheldon) go read the full article linked above, and ALL the comments. You'll get quite an education in tax law.
Here's the link to the comments:

Sheldon Richman said...

The comments are the same old fallacies and misquotes that have been said over and over. There is nothing new there. They have all been refuted by me and others. Don't believe what you read about income taxation on blogs--even here. Anyone can assert anything. Read the cases yourself. And remember: there is a difference between thinking and wishful thinking. On the Cryer acquittal, see my post "Tax-Case Acquittals."