By Johnny Liberty

The Federal Reserve Bank (FRB) requires “withholding” from employee’s income as an economic mechanism to mitigate the damage from spiraling inflation, while concealing currency devaluation. In addition “withholding” keeps your hard-earned Federal Reserve Notes (FRNs) out of circulation so you cannot spend them as disposable income. The contemporary “income tax” system, as bizarre as it is, is an essential component of the Western debt-based central banking system.

By keeping Federal Reserve Notes (FRNs) out of circulation through “withholding”, economic controls are more effective. By maintaining employee net income as near to subsistence as possible, the Citizen is effectively prevented from engaging in meaningful political activity to threaten the global elite’s monopoly over the political, economic and legal systems. 

First Income Tax for Federal Employees

During the American Civil War, the first version of an “income tax” was implemented for federal U.S. government employees only, and once again after the corporate income tax was repealed. The U.S. Congress have been taxing the incomes of federal U.S. government employees since 1861. 

Second Income Tax for Corporations

The second version on the income tax was a corporate tax introduced concurrently with the Federal Reserve Act of 1913 to off-set the debt incurred by the federal U.S. government corporation to the Federal Reserve Bank (FRB). This was yet another attempt to impose a direct tax on wages.

The U.S. Congress authorized a “voluntary” income tax in 1913 for corporate “persons”, under the very popular guise of “soaking the rich for the sake of the poor”. The income tax for corporations was promulgated simultaneously with the alleged ratification of the 16th Amendment. It was repealed by the Internal Revenue Act (Nov. 23, 1921). 

At this juncture, a surtax on individuals was implemented to offset the corporate income tax. These taxes, which became known as income taxes via the Public Salary Tax Act of 1939, were issued against the government returns for public officials. 

Income Tax Goes Directly to the Federal Reserve Bank (FRB)

Before online banking and electronic fund transfers, we wrote paper checks to pay bills and our “income taxes”. If you noticed the stamp on the back of your cashed check from the IRS, you would have noticed that your check payment was endorsed by the Federal Reserve Bank (FRB), not the U.S. Treasury or the IRS. 

As we stated previously, the Grace Commission Report on Government Waste (1984) concluded that not one dime of your hard-earned tax money goes to pay for government services. All “income tax” payments service the interest only on the federal/national “debt (Ø)”.

All “income tax” collected goes to service an un-payable federal/national “debt (Ø)”, and is the greatest fraud ever perpetrated upon the We the People. 

Since we have already asserted that the International Monetary Fund (IMF) via the Federal Reserve Bank (FRB) is a primary principal/creditor of the federal U.S. government corporation, any “income tax” received would be directly routed to the principal-creditor – just like any other bankrupt entity. This is additional prima facie evidence of the bankruptcy of the federal U.S. government corporation.

“The greatest challenge our tax system faces in the 1990s is to ease the burden on taxpayers. Once people conclude that it is too difficult, too time consuming, too expensive to comply, many will stop complying.”
~ Fred Goldberg, IRS Commissioner

Apportionment as Rule of Law

The IRS has no lawful or delegated authority to assess and collect income taxes. The original U.S. Constitution strictly forbade the federal U.S. government from imposing any “direct” tax upon individuals. 

The U.S. Congress could, however apportion direct taxes to a state, but not to the individuals within the state. A capitation means a “head tax”, “poll tax”, “per capita tax” or direct “income tax”, and is not permitted, unless equally apportioned to each state. This is the apportionment rule of law.

“No capitation, or other direct tax shall be laid, unless in proportion to the census
or enumeration herein before directed to be taken.”
~ U.S. Constitution [1:9:4]

“Representatives and direct taxes shall be
apportioned among the several States
which may be included within the Union
to their respective members…”
~ U.S. Constitution [1:2:3]

These original sections of the U.S. Constitution have never been repealed or lawfully amended, and the 16th Amendment, as passed, is invalid. The U.S. Constitution still today  forbids direct taxation of individuals. 

“Any direct tax that is not apportioned is unlawful.”
~ Commissioner v. Obear-Nester, 349 U.S.948 (1954)

Our Founders intentionally limited the taxing powers of the federal U.S. government so as to keep it small. “[the federal government] has no authority to raise either [men or money] by regulations extending to the individual [state] Citizens of America.” 

Apportionment can be a protective shield against direct taxation for all sovereign “state” Citizens providing you are “domiciled” in one of the 48 sovereign states, and not a resident (or franchisee) of the federal United States.

16th Amendment Created No New Taxing Powers

The Internal Re-Venue Service (IRS) claims the 16th Amendment gives them the constitutional authority to impose and collect direct taxes, despite the fact that the U.S. Supreme Court ruled the 16th Amendment created no new power of taxation, thus, did not amend or change the constitutional limitations forbidding direct taxation on individuals. 

Additionally, as can be shown, the 16th Amendment (1913) was never lawfully ratified by the sovereign “states” of the Union. 

16th Amendment Improperly Ratified

According to The Law That Never Was, authors Red Beckman and Bill Benson traveled to all the State Capitols to obtain certified copies of the official voting records of the thirty-six states that allegedly ratified the 16th Amendment. 

By careful accounting, thirty-two states had committed grievous departures from acceptable procedure during the ratification process. In the official canvas of the first nineteen (19) Amendments of the U.S. Constitution, the U.S. President’s signature is glaringly missing from the 16th Amendment. This is another story in a long history of frauds perpetrated upon We the People.

The real purpose for the 16th Amendment was to create a smoke screen, making it appear that constitutional restrictions on direct taxing had been abolished. But once the smoke had cleared, the Citizens would soon forget and the income tax would further encroach upon the assets and rights of the people who ever increasingly pay tribute to the Federal Reserve Bank (FRB) and their foreign principals-creditors.

“The Congress shall have the power to lay
and collect taxes on incomes,
from whatever source derived, without 
apportionment among the several states,
and without regard to any
census or enumeration.”
~ 16th Amendment

Third Income Tax For Appointed and Elected Government Officials Engaged in Business

The current Subtitle A tax and Subtitle C Social Security and related taxes have never applied to anyone other than appointed and elected government officials engaged in United States trade or business (defined at IRC §7701(a)(26)). 

Victory Taxes After WWII

The U.S. Congress did not make the income tax “mandatory” until World War II, when a “victory tax” was imposed on “wages” as an “National Emergency” measure to help pay for the war. In contrast, both before and after World War II, “wages” were not subject to federal income taxes. 

The U.S. Congress morphed the “victory tax” into the modern version of the “income tax” a few years after WWII to finance the Cold War debt, the rising military-industrial complex, and foreign-aid corporate programs to other developing countries. 

No Direct Tax, Wages Are Not Income

Because many of the “citizens of the United States” weren’t paying attention after World War II, as many are today, We the People did not realize that the federal U.S. government could not constitutionally impose any direct “income tax” on their wages or property. They assumed that “wages” were income; thus, they volunteered to be taxed. Once again, Citizens swallowed a fraud and a hoax, and were left confused and holding the bag.

Several federal courts have ruled that states are prohibited from imposing an indirect tax upon an unalienable right (no sales tax on food items). Your right to work is an unalienable right and many states have right to work laws whereby the government cannot license or tax your right to work in the profession of your choice. 

According to the Internal Revenue Code (IRC), “wages” are not taxable because they are not defined as “income”. 

What is Taxable Income or Gain?

A lawful tax liability is created from an increase or gain in the value of property, not from gross income, providing you are a person required to file and report. 

Where income from private enterprise is defined as property, it is generally exempt from direct tax under fundamental law. “Wages”, salary and other returns from public service are deemed to be privileged, commercial enterprises due to government-granted benefits, thus, are considered to be taxable. In other words, the “income tax” is nothing more than an excise tax levied against privileges and benefits derived from federal government service.  

Income is Defined in the IRC in the Same Light as a Schedule C, Standard Business Calculation

David Myrland’s Our Uncle, Our Problem demonstrates that IRC § 7701(e) (contract for lease of property) relative to IRC §83 calculations (of the fair market value) and IRC §1011, 1012, 1014 (adjusted basis of property transferred) confirms this. 

GROSS INCOME (minus) EXPENSES = INCOME (PROFIT or GAIN)
or INCREASE OF VALUE

In calculating “gross income”, 26 USC §83 applies to all compensation for services.  §1.83-4(b)(2) requires that the cost of compensation for services is to be figured by applying the provisions of §1012 and the regulations hereunder. 

Regarding 26 USC §83 calculations, ask these questions. Where, under §1012, is the exclusion of intangible personal property, such as labor, from property that is to be treated as a cost? 

Which specific provisions exclude my compensation from the provisions of §83? How am I to comply with the provisions and requirements of §83? 

As an independent contractor or employee, does §83 allow the taxation of the fair market value of services, received as a fee or wage?

Labor is Property, Not Taxable Income

If you are selling your labor to an employer, then labor is your property. Your labor is your property, therefore not taxable. If you are exchanging labor for a paycheck, then zero gain = zero tax. This is the same as if you are breaking even, not making a “profit”. 

The same calculation applies for both cash or bartered exchanges. The entire income tax code has nothing to do whatsoever with “wages”, but “profit”, “gain” and “increase” in value.

NO INCOME = NO INCOME TAX
NO PROFIT = NO GAIN

As an “employee”, you are not even required to keep books and records. 

“Compensation for labor (wages) cannot be regarded as profit within the meaning of the law. The word ‘profit’ …means the gain made upon any business or investment – a different thing altogether from mere 
compensation for labor (wages).” ~ Oliver v. Halstead, 196 Va. 992 (1955)

“[The IRS] taxes only income ‘derived’ from many different [U.S.] sources; one does not ‘derive income’ by rendering services and charging for them.”
~ Edwards v. Keith, 231 F.110

References:

1. Wikipedia | Internal Revenue Act of 1921, §213, pp.237 and 238; IRC of 1954, §3401(c), people identified as “employees” amended in 1986].
2. Cornell Law | United States v. Constantine, 296 U.S. 233, 56 S.Ct. 223, 80 L.Ed 233 (1935).
3. GovInfo | U.S. Government Manual, p.794, 1995/96 edition.
4. Wikipedia | Grace Commission Report on Government Waste (1984); Free At Last by N.A. Scott, Ph.D., D.D., pp.2-5; Family Guardian | Confirms the allegation that the income tax revenues go 100% to pay the interest on the national debt and not a single nickel of it goes to the government; Citizens Against Government Waste
5. Wikipedia | Fred Goldberg, IRS Commissioner.
6. Wikipedia | U.S. Constitution [1:9:4]; Limits on Federal Power.
7. Wikipedia | U.S. Constitution [1:2:3]; House of Representatives.
8. Court Listener | Commissioner v. Obear-Nester, 217 F.2d 56 (7th Cir 1954).
9. Founders Archives | The Federalist Paper #15 by Alexander Hamilton, Modern Library.
10. Justia | Brushaber v. Union Pacific Railroad, 240 U.S. 1 (1916).
11. The Law That Never Was | The Law That Never Was by Red Beckman and Bill Benson; Amazon; Senate Document 240.  Regarding the supposed ownership of the IRS;  Pandora’s Box by Alexander Christopher, p.523 (IRS is owned by R.E. Harrington Insurance Company of England which had its roots in the original Virginia Company that colonized the southern part of the USA) www.archive.org/details/PandorasBoxAlexChristopher1993
12. Cornell Law | 16^th Amendment, U.S. Constitution.
13. Javelin Press | Goodbye April 15th by Boston T. Party (Javelin Press, Austin, Texas, 1992) (income tax is for public employees).
14. Congressional Record | Congressional Record for March 27, 1943, p.2580.
15. Citation Needed | Our Uncle, Our Problem by David Myrland. regarding IRC §7701(e) (contract for lease of property) relative to IRC §83 calculations (of the fair market value) and IRC §§1011, 1012, 1014 (adjusted basis of property transferred).
16. Ibid.
17. Javelin Press | Goodbye April 15th by Boston T. Party (Javelin Press, Austin, Texas, 1992) (wages are not taxable as income).
18. Justia | Oliver v. Halstead, 196 Va. 992 (1955); People ex rel. Thomas B. Needles, Auditor, 90 Ill. 166. “Reasonable compensation for labor or services rendered is not profit.” Laureldale Cemetery Association Matthews, 354 Pa. 239, 47 A.(2d) 277; The word “profit” is defined in Black’s Law Dictionary (3rd ed.) as “The advance in the price of goods sold beyond the cost of purchase. The gain made by the sale of produce or manufactures, after deducting the value of the labor, materials, rents, and all expenses, together with the interest of the capital employed.” There is a clear distinction between “profit” and “wages” or compensation for labor. “Compensation for labor can not be regarded as profit within the meaning of the law. The word ‘profit’, as ordinarily used, means the gain made upon any business or investment — a different thing altogether from mere compensation for labor.”
19. Case Law Vlex | Edwards v. Keith, 231 F.110 (2nd Cir 1916).

Source: Sovereign’s Handbook by Johnny Liberty (30th Anniversary Edition), Volume 2 of 3, p.85 – 90

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