There actually is a “magic bullet”!
[NOTE: The perspective of this post is primarily upon the everyday average, menial or mechanical, laborer.]
It is frequently stated that there is no “magic bullet” concerning the federal income tax. However, because of a common misperception of what, for the purposes of federal tax law, is to be construed as ‘income’, there actually is a so-called “magic bullet” and it is observable in plain sight; within Section 61(a) of the Internal Revenue Code (IRC or 26 U.S.C. [United States Code]) to be exact. Section 61(a) of the IRC precisely reflects the exact context and intent of the Sixteenth Amendment. 26 U.S.C. 61(a) reads as:
“Except as otherwise provided in this subtitle, gross income means all income from whatever source derived, including (but not limited to) the following items:
[numerations: (1)-(15) omitted]”
While the Sixteenth Amendment reads as:
“The Congress shall have 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.”
[Above emphasis added.]
The primary consideration of the above essentially translates into “as prescribed by federal tax laws, ‘income’ derives from whatever source, regardless”, ergo, in absence of a stipulated “source” there is unequivocally no income to be claimed. A “source” is in the contextualized binding of numerations 1-15 within Section 61 and Sections 71-90 [of the IRC/26 U.S.C.], (meaning that a “source” need not be specifically listed, though the “source” must coincide with the provisions as stipulated therein, so as to take into consideration a “sources” contextual relatives). Each individual Section [supra] as pertaining to what is to be construed as ‘income’, exists without any mention, to any degree, of your common [natural law] rights, that is to say your inalienable rights to engage, seek, partake, or receive monetary receipts though contracting, laboring, livelihood, occupation, pay, remuneration, revenue, salary, subsistence, sustenance, toiling, wages, working, or anything else similarly related [TO NOTE: “compensation for services” [as included within 26 U.S.C. 61(a)(1)] in its general sense would more correctly refer to the receipt of additional or motivational perks and benefits such as dividends or stock options from one's employer, apart from their contractual monetary payments normally received, be they in the form of a commission, hourly wage, salary, etc.].
Now consider the above posed as a simple equation, with variable ‘r’ being equivalent to “whatever source” [representing your base revenue or capital], variable ‘g’ as being representative of all your realized gain and profit deriving out from that “source” [that is, your positive investment return from engaging whatever privilege to your own personal benefit or advantage through the prudent and proficient use of your base revenue or capital], variable ‘e’ as being the sum total of all permissible deductions thereby accounting for your personal expenses and losses [that is, your total negative sum or loss experienced, primarily in relation to your investments and privileged industries or occupations], and variable ‘i’ as being the equivalent of your realized ‘taxable income’ [representing your total positive increase apart from your originating revenue or capital (with notable exceptions, discussed in more detail below), meaning your net monetary growth after having accounted for all permissible expense and deduction, in other words your gain, profit, or increase aside from your capital, revenue, and other such assets of personalty being initially held by yourself].
Without possessing the precise amounts for any of the three core variables ‘r’ or ‘g’ or ‘e’, the above equation cannot possibly be solved and thereby no legally binding “assessment” of tax can be performed by you or the IRS. With this realization, we must therefore conclude that in earning our base revenue or capital through our own fair exchange of personal toiling by way of industries or occupations of common right, (meaning an industry or occupation, which is not deemed a “privilege” by the Legislature) we possess only one of the three required variables, this being variable ‘r’ (keeping in mind that ‘e’ is intended to remain mostly in relation to bona fide pursuits of ‘g’), and thereby we are at this time unable to solve the equation (at least, that is, until we have taken in a realized ‘gain’ or ‘profit’ from our base revenue or capital). To explain this further, visually:
(r⊢g)-e=i
Legend:
⊢ = indicating that ’g’ derives from ‘r’
r = revenue & capital
g = gains & profits [26 U.S.C. 61 - ‘gross income’]
e = expenses, losses, & deductions [26 U.S.C. 62 - ‘adjusted gross income’]
i = income [26 U.S.C. 63 - ‘taxable income’]
That is to infer, regardless of the source, without having received any revenue or capital, meaning ‘r’, the value of ‘g’ cannot be greater than zero (0), with exception to when engaging in privileged benefits, enterprise, industries, or occupations, such as is the case when receiving federal aid, as with corporate or social welfare or subsidies; dividends or investments, bonds/insurance/joint-stocks/stocks; mining or Bureau of Alcohol, Tobacco, Firearms, & Explosives (BATFE) activities, railroads and other such interstate or international transporting; federal agencies, offices, and instrumentalities; interstate or international agriculture or commerce, imports, etc.; or when you receive what is technically considered to be ‘g’, while depending upon that as your base revenue or capital, as your subsistence, such is the case for those who are wealthy and are literally capable of “making their money work for them”, meaning that they are living primarily on their investment returns or through their gambling and other such winnings, while not contracting or working in any other laborious capacity). We then take that derived total sum of ‘g’ (out from ‘r’ by cross-canceling ‘r’ with itself, first noting the above listed exceptions), this determines what is known as your ‘gross income’ [26 U.S.C. 61], and then we deduct our total losses and all legally authorized expenses and deductions out from ‘e’, giving us our ‘adjusted gross income’ [26 U.S.C. 62] and thereby conclude our ‘taxable income’ (also known as ‘net income’) [26 U.S.C. 63], which we then use as the figure for our annual “self-assessment” of federal income taxes, which are to be due and submitted on an IRS 1040 or whatever form.
Now when the average working individual gets paid monetarily, that money they have taken in was done so to “make them whole”, for the fact that over the last two-weeks, respectively, that person has been giving their time, energy, and effort to another individual or business in exchange for that paycheck, for whatever sum they have agreed upon with their employer. To better clarify, an individual’s act of laboring is not a “source” as indented in law; however, the money taken in through an individual’s act of laboring could potentially serve as such a “source” depending on how that money is applied after being received by the individual. That is to say, that money received by the average day/night laborer in a presumably even exchange for their toiling has yet to itself derive any ‘gain’ nor ‘profit’, or more correctly stated, that individual has yet to have actually received any ‘income’.
Furthermore, as is commonly stated, with little actual philosophical thought, the average person truly does “live from paycheck to paycheck”, meaning that by the time the average laboring individual actually receives their paycheck, the majority of that money earned by their own hand, has already been spent on what are deemed the essentials of life, such as: food, rent, clothing, utilities, gas, insurance, babysitters, etc., and as such these individuals are not permitted to account for their personal losses, nor much, if any deduction, outside of “personal allowances”, which of course does not even begin to cover actual living expenses, which very obviously is in complete opposite to businesses, franchises, and corporations, as they are in most cases the correct subjects of the federal income tax and as such the IRC is tailored specifically to their considerations.
Of course, that being stated once the money earned from an individual’s laboring, does itself derive a gain or profit, that additional money is legally regarded as ‘income’ and is therefore taxable under the IRC, e.g. while working fulltime at the Ralph’s Supermarket located in downtown Los Angeles, California as a Checker, you save a small portion of your pay by depositing it in your IRA and spend the remainder of your pay on rent, bills, food, utilities, doctors fees, gas, a couple of nights out dining and at the movies, etc.. Realizing that only that portion of your received pay, which thereafter gains you interest from your IRA is taxable under the IRC, the rest, all 100% of it belongs to you, (with possible exception to your State’s own imposed taxes; being that your State’s Legislature is subject only to your own State Constitution, and thereby have prescribed their own enumerated powers, which may only slightly vary from that enumerated within the U.S. Constitution).
In summary, as meant within a proper legal context a ‘gain’ is a monetary or pecuniary increase acquired through the prudent use of an individuals assets, such as one’s capital or revenue; meaning to realize an increase in revenue from business investments, estates, rents, etc.; a ‘profit’ is distinguished from ‘wages’ and realized only by businesses, corporations, franchises, joint-stocks, and partnerships after first deducting their expenses from their receipts (net earnings); and ‘income’ so far as it affects the everyday American worker, is but a positive increase in individual monetary wealth resulting from the prudent use of their accumulated capital or revenue. Therefore the federal income tax, as pertaining to one’s industry or occupation is really but a tax levied upon the federally granted privilege of obtaining additional capital or revenue out from their base capital or revenue, while presuming a risk in enterprise, so as to ultimately realize winnings or an increase in monetary value and all without actually having to do anything burdensome to oneself such as is the case with toiling. This methodology works similarly to gambling at a casino, a horse track, or with the lotto; except instead of investing your capital or revenue on dice, cards, horses, or lotto tickets, you are investing in capital gains, that is in the performance of business and enterprise, through the medium of interest, dividends, stocks, etc., each of the above activities are properly taxed under the indirect mode of ‘excise taxes’.
Practically speaking, one may realize ‘income’ even while they sleep and may loose ‘income’ all the same. Metaphorically speaking, one’s capital or revenue could be thought of as a fruit bearing tree and its fruits as the income realized from whatever capital or revenue invested into it. Whereas to pluck the tree’s fruits, brings no harm to the tree, however, to strip the tree of its leaves, branches, or bark brings irrevocable harm to the future fruit bearing capabilities and subsequent liveliness of that tree.
In light of the above content, notice what is specifically not included within the below numerations of Section 61 of the IRC/26 U.S.C.; there is no mention of: employment, laboring, livelihood, occupations, toiling, working, etc.; taking in or earning capital, money, remuneration, revenue, wages; seeking subsistence or sustenance, etc.. There is only a clarifying reference to being “compensated” for one’s “services” and notice what is specifically listed therein. This is for very good reason, because taxing the right of livelihoods, in general or by blanket clause, was never the intention of the IRC/26 U.S.C.. Furthermore, this is why there are individual Subtitles and Sections included within the Internal Revenue Code (IRC), such as for: BATFE, railroad employees, insurance and joint-stock companies/partnerships, resident/nonresident citizens and aliens, and of course federal employees, public offices/officers, and their instrumentalities… Because no specific class of American employee, laborer, or worker was intended to ever be included within Subtitle A of the IRC and for that matter neither was the total sum, the whole, capital or revenue earned by the working class citizen, which is why there is a need for the various modes of tax classification as designated by the five Subtitles within 26 U.S.C., which are: ‘Income Taxes’ [Subtitle A], ‘Estate and Gift Taxes’ [Subtitle B], ‘Employment Taxes’ [Subtitle C], ‘Miscellaneous Excise Taxes’ [Subtitle E], and ‘Alcohol, Tobacco, and Certain Other Excise Taxes’ [Subtitle F].
TITLE 26 > Subtitle A > CHAPTER 1 > Subchapter B > PART I > § 61
§ 61. Gross income defined
(a) General definition
Except as otherwise provided in this subtitle, gross income means all income from whatever source derived, including (but not limited to) the following items:
(1) Compensation for services, including fees, commissions, fringe benefits, and similar items;
(2) Gross income derived from business;
(3) Gains derived from dealings in property;
(4) Interest;
(5) Rents;
(6) Royalties;
(7) Dividends;
(8) Alimony and separate maintenance payments;
(9) Annuities;
(10) Income from life insurance and endowment contracts;
(11) Pensions;
(12) Income from discharge of indebtedness;
(13) Distributive share of partnership gross income;
(14) Income in respect of a decedent; and
(15) Income from an interest in an estate or trust.
(b) Cross references
For items specifically included in gross income, see part II (sec. 71 and following). For items specifically excluded from gross income, see part III (sec. 101 and following).
Now for the finale to this post, I included the below for consideration:
TITLE 26 > Subtitle A > CHAPTER 1 > Subchapter B > PART I > § 64
§ 64. Ordinary income defined
For purposes of this subtitle, the term “ordinary income” includes any gain from the sale or exchange of property which is neither a capital asset nor property described in section 1231 (b) [IRC/26 U.S.C. 1231: ‘Property used in the trade or business and involuntary conversions’ – IRC/26 U.S.C. 1231(b): ‘Definition of property used in the trade or business’]. Any gain from the sale or exchange of property which is treated or considered, under other provisions of this subtitle, as “ordinary income” shall be treated as gain from the sale or exchange of property which is neither a capital asset nor property described in section 1231 (b).
Now if ‘ordinary income’ is “any gain from the sale or exchange of property which is neither a capital asset nor property”, then it would stand that ‘income’ as intended within Subtitle A of 26 U.S.C. is in the context of a gain from a capital asset, which of course dovetails, precisely, with the legal meaning of what are ‘gains’ and ‘profits’. Finally, to note, the below is the only known definition of ‘income’ actually found within the IRC/26 U.S.C. and is applicable only to four Subparts located within ‘Part I – Estates, Trusts, and Beneficiaries’:
TITLE 26 > Subtitle A > CHAPTER 1 > Subchapter J > PART I > Subpart A > § 643
D § 643. Definitions applicable to subparts A, B, C, and D
(b) Income
For purposes of this subpart and subparts B, C, and D, the term “income”, when not preceded by the words “taxable”, “distributable net”, “undistributed net”, or “gross”, means the amount of income of the estate or trust for the taxable year determined under the terms of the governing instrument and applicable local law. Items of gross income constituting extraordinary dividends or taxable stock dividends which the fiduciary, acting in good faith, determines to be allocable to corpus under the terms of the governing instrument and applicable local law shall not be considered income.
In closing, as you have been made aware by the above, “magic bullets” really do exist!
