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Income Taxes: Legit or Not?

Arguments Against


Thursday, March 28, 2013
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NO STINKING TAXES: I’m ever so relieved to learn that I needn’t fill out a tax return this year. That’s because Santa Barbarans I know have assured me that the federal income tax is not only illegal but unconstitutional and utterly un-American.

Imagine that, after all these years of me sending money to Washington and Sacramento. Do I get a refund?

Barney Brantingham

I’ve also heard that “experts” insist the IRS can’t require you to report income from illegal activities, because that would violate the Fifth Amendment shielding you from self-incrimination. Clever argument. Naturally, the IRS counters: “Frivolous. Pay up.”

A similar argument was put some years ago by a very rich guy: “The income tax law is a lot of bunk. The government can’t collect legal taxes from illegal money.” That’s what gangster Al Capone claimed after feds went after him to tax his huge bootlegging profits.

The U.S. Supreme Court begged to differ with Al, who was found guilty of tax evasion and failure to file a return. Capone’s unsavory reputation worked against him. The 1929 Saint Valentine’s Day Massacre was fresh in the public’s minds. Seven members of a Chicago Irish North Side gang were gunned down by Italian mobsters from Capone’s South Side gang. The resulting investigation included Detroit’s Jewish Purple Gang, which was apparently not involved. (Diversity via bullets, I guess.)

In 1931, a judge sentenced Capone to 11 years behind bars. Today, he’d probably get a year wearing a GPS anklet.

The main argument I’ve heard is that the 16th Amendment, setting up the whole income tax back in 1913, was never properly ratified by enough states. According to tax protesters, Ohio was not legally a state at the time it voted. (Courts disagree. It’s complicated.) Protesters will argue ’til doomsday that this and a zillion other pettifogging reasons mean that the whole tax thing is baloney. Paying taxes is “voluntary,” they claim, in an argument that runs to phone-book length.

So, if I can’t use the taxes-are-illegal dodge, about the only thing left is what the big boys do: cheat, bribe Congress to add even more loopholes, or hide the money overseas. Steve Pybrum, a Santa Barbara CPA, was recently found guilty of failing to report more than $1 million by routing his income through a bogus nonprofit called The Foundation for Harmony and Happiness. Feds say he used the money to rent a mansion and buy a plane, a fishing boat, and an SUV. Pybrum is appealing.

As for the time-tested gambit of hiding your money in a foreign country, feds have long tried to get at the practice, with limited success and limited enthusiasm. But a goof by a Swiss tax adviser named Beda Singenberger has given U.S. authorities a surprise windfall: incriminating info for about 60 of his clients. He accidentally included the list in a letter, and it got around. Now the feds are picking them off, one by one, according to Bloomberg News. One man, an 83-year-old exile from Nazi Germany, pleaded guilty to hiding $5.7 million and was sentenced to three months of house arrest. A retired Army surgeon, Bronze Star recipient, and Desert Storm field surgeon was hiding a mere $1.5 million nest egg. He pleaded guilty and will be sentenced next month.

Singenberger was charged with conspiracy to cheat the IRS. He lives in Switzerland, a county that does not have an extradition treaty with the U.S., so it remains to be seen whether he’ll ever show up in court.

Closer to home, an L.A. guy named William Gomez-Corzo was sentenced to 54 months in federal prison for filing more than 1,000 phony tax returns and collecting $1.3 million. But Gomez-Corzo, 52, will have to give it back, if he still has it. The sentence includes two years in the slammer for using a dead man’s ID to obtain a passport.

Then there’s the sometimes-violent tax-resisters movement, frequently characterized by antigovernment, racist, and quasi-religious elements. In 1991, Dean Harvey Hicks launched a mortar attack on a Fresno IRS center. In 1993, someone tried to destroy a Santa Barbara IRS office by pumping explosive propane gas through a broken window. An employee smelled gas and called police. No one was arrested or hurt.

Okay, okay, the tax is probably legit. But rather than fill out forms, I just called my reliable tax guy. Let him crunch numbers. You’re welcome, Uncle Sam. (But I can’t afford any more of your crazy wars.)

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Comments

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dou4now (anonymous profile)
March 28, 2013 at 7:26 a.m. (Suggest removal)

If you pay Federal Income Tax, welcome to the top 50%. Because most people don't pay it. That's why many politicians don't have any reservations about raising it. They know it won't affect their constituencies one iota and it won't cost them any votes in the process.

Botany (anonymous profile)
March 28, 2013 at 7:40 a.m. (Suggest removal)

Well, Botany, about 22% of those who pay no federal income taxes are older Social Security recipients who aren't paying taxes on their social security income. According to the Economist [http://www.economist.com/blogs/democracyinamerica/2011/07/tax-fairness] those under 65 who don't pay any federal income tax make less than $20,000 per year... pretty hard to survive on that AND pay federal income tax. With child tax credits and so on, this accounts for more Americans who don't pay.
Don't forget that those 50% you refer to certainly do pay taxes: payroll taxes, state taxes, capital gains taxes, and sales taxes.
In my line of work, I come in contact with many of the so-called 1% and in private talk lots speak laughingly about how they don't pay federal income taxes through various semi-legal dodges I'd summarize as saying they hide the money offshore. Where is their patriotism and love of their country?
I've been paying my federal income taxes, without complaint, since 1967.

DrDan (anonymous profile)
March 28, 2013 at 8:59 a.m. (Suggest removal)

If they start taxing hate and bitterness Botany is in real trouble.

Ken_Volok (anonymous profile)
March 28, 2013 at 12:19 p.m. (Suggest removal)

You got me all wrong Ken. I'm a good natured positive individual. I just believe in thinking for myself, not have the government doing it for me.

Botany (anonymous profile)
March 28, 2013 at 12:50 p.m. (Suggest removal)

To illustrate the problem, consider this:

At the discretion of the IRS, any American citizen can be audited.

However, not even the Congress or the President would dare to audit the Federal Reserve Bank.

The income tax is wealth re-distribution from the working classes to the ruling classes. It was instated in 1913 along with the Federal Reserve Bank. We have been slaves for 100 years, and counting.

native2sb (anonymous profile)
March 28, 2013 at 1:32 p.m. (Suggest removal)

Good point, "native2sb," only marred by the thorough absence of fact.

If you would like to see just one of several recent independent audits of The Fed, as required by law, you may visit:
http://www.federalreserve.gov/monetar...

And here's an additional audit as required by Congress:
http://www.federalreserve.gov/oig/def...
[Deloitte's audit --pdf] http://www.federalreserve.gov/oig/fil...

binky (anonymous profile)
March 28, 2013 at 2:15 p.m. (Suggest removal)

The banks run the country.

Ken_Volok (anonymous profile)
March 28, 2013 at 2:20 p.m. (Suggest removal)

I feel very safe knowing my taxes are not only funding the wars that make the world safe from violence, but also the nice people who will enforce the National Defense Authorization Act which will protect our freedoms.

billclausen (anonymous profile)
March 28, 2013 at 3:23 p.m. (Suggest removal)

Ya binky I feel great knowing the Fed is essentially auditing itself. When was the last time they counted OUR gold bars in Fort Knox?

loonpt (anonymous profile)
March 29, 2013 at 10:09 a.m. (Suggest removal)

@DrDan, that Economist link is excellent and worth repeating:

http://www.economist.com/blogs/democr...

EastBeach (anonymous profile)
March 30, 2013 at 9:37 a.m. (Suggest removal)

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