Never mind that in the currently ongoing election primaries, Congressman Ron Paul is barely showing in the polls, or that his chances of getting nominated, let alone winning the presidential election, look less than dim. Never mind as well that many, including myself, do not agree with everything Paul advocates.
Win or lose I nonetheless happen to be one who believes that, at the very least, an important part of Paul’s value at this point is that of confirming to us what he knows as an insider about the income tax corruption in Congress. This is a corruption I have written about extensively and which for many years a majority of Americans have known existed. In this respect alone, Paul’s insider knowledge about income tax corruption in Congress is most valuable.
So apart from how Paul performs in the primaries, it is important that he has at least participated in the process so as to catch sufficient media attention to tell us what he knows as a Congressional insider. His showing, however slight, has also served the valuable result of establishing a highly motivated following that will carry on the revolution he started regardless of whether he gets nominated and regardless of what the November election results will be. Because the “status quo” in any society is always dominant prior to change, every revolution necessarily starts from a minority position which is followed by extended struggle before final victory is reached.
As a representative to the U.S. Congress, Ron Paul represents the Texas 14th Congressional District. In the currently ongoing political primaries, Paul has quickly become a hero to many Americans who for years have been looking for someone with insider knowledge who, among other things, will tell the truth about the notorious, deep-seated income tax corruption in Congress. Of particular interest here is a constitutional corruption pertaining to the income tax, which from the beginning of the system, many in Congress have known about, while at the same time have continually ignored. Finally! It has taken an insider and someone of the high moral caliber of Congressman Ron Paul to confirm and expose it.
Well, does this mean that I can now stop filing income tax returns because the system is corrupt? Not according to Ron Paul. He warns that, as corrupt as the income tax is, its laws are still in force and still have teeth that can surely cause plenty of damage through IRS enforcement to anyone who refuses to comply with these laws. In view of this, Paul extends a caution to those bold ones who would consider resisting our corrupt income tax: that they should be prepared for the expected consequences of suffering some kind of painful loss as a result. At the very least, this may entail the loss of peace of mind and, at worst, the loss of valuable property confiscated and/or freedom behind bars. For this reason, Paul insists that the safest way to bring about change for the better in the tax system is to do it the lawful way, namely, through political action, by voting for candidates who are willing to fight for a purging of the system.
While Paul does not have a blanket endorsement from me, I nonetheless consider him a person of high integrity, especially as seen in the bold way he has chosen to take on the major media-government complex, the establishment that in truth manipulates and controls this country.
But just what is the constitutional corruption in the income tax that Ron Paul is referring to? In all that I have seen and heard of Ron Paul, he seems to have referred to this corruption only in general terms and suggests that the solution to the problem is to repeal the U.S. Constitution’s 16th Amendment and eliminate the I.R.S. The 16th Amendment is the amendment on which our current income tax is generally assumed to be based.
While Paul has not given us enough precise detail pertaining to the income tax corruption that he refers to, in my book on the subject, I reveal specifically the legal root of income tax corruption that Paul, at least in part, refers to. (See FOOTNOTE 1.) In this article, I can only give an extended summary of what this corruption involves. We begin with the following brief statement of the issue:
Under current income tax law, Congress, through legislative abuse, has in effect stripped American workers of their constitutional right to claim either their labor or their right to work as their “income-producing property.” The effect this has had is that American workers have been deprived of their legal right under income tax law to deduct the costs of their personal labor (the skilled and intelligent human energy and time workers sell to employers in exchange for compensation). These types of deductions for “cost of goods (or products) sold,” which are now allowed only for businesses, would include for workers expenditures for such living necessities as food, shelter and proper health maintenance.
As incredible as this statement may sound to some, it is all based on established American legal precedent that can be found in any public or private law library of sufficient size. Following are the main concepts involved and the legal authorities that support them:
LABOR AND/OR THE RIGHT TO WORK AS FORMS OF PROPERTY
State courts, including State Supreme Courts, have had no problem declaring the obvious, that human labor is property. As early as 1910, we see the Supreme Court of the State of Washington declaring that labor is not only property but even “capital”:
“Can it be said with any degree of sense or justice that the property which a man has in his labor which is the foundation of all property and which is the only capital of so large a majority of the citizens of our country is not property; or, at least, not that character of property which can demand the boon of protection from the government? We think not.”
Jones v. Leslie, 112 P. 81 (1910).
This concept of human labor as legal property is so well-established as a legal principle in American law that people have been sent to prison over the issue. A relatively recent example of this is something that occurred in Chattanooga, Tennessee in 1990.
Between 1987 and 1991, stories were appearing in the “Chattanooga Times” about a municipal scandal in the city of Chattanooga, Tennessee. This was happening as the newspaper sought to keep the public informed concerning an event which was creating a considerable sensation in Chattanooga and its legal community. A city employee at the management level had been brought under criminal indictment. Others involved in the criminal incident were also indicted.
The criminal indictments and prosecution had originally developed as a result of investigations conducted by the newspaper’s own reporters. By the time the upheaval began to settle, a school management employee and his underling had been jailed, a municipal court judge and a former county commissioner had been indicted and another school employee had committed suicide.
The principal defendant on whom the entire criminal prosecution had centered was Alvin H. Brown. Previous to his legal problems, Brown had been employed in the capacity of service director of the operations and maintenance department of the Chattanooga City School System. Brown was convicted of embezzling public property in the form of employee labor that had been purchased by the City through the wages the employees were receiving. Brown had city employees under his command do personal work for him and his girl friend while the employees were being paid by the City. As such, the employee labor that Brown diverted for his own personal use was property owned by the city of Chattanooga. On appeal, and in accord with this concept, the appellate court ruled in 1990 as follows:
“The time and labor provided by the employees of the Chattanooga City School System were purchased with public funds and thus became property, with an easily determined value, which belonged to the city. The appellant converted the proceeds of those public funds to his own use to repay favors and create a more comfortable home for himself and his girl friend. The statute was sufficiently clear to have placed the appellant, or any other public official, on notice that the embezzlement of the labor of employees of the State of Tennessee, or any county or municipality therein, is a criminal act.”
State v. Brown, 791 S.W. 2d 31, 32 (1990).
Given this legal recognition of labor as property, the concept is therefore not a mere theory of economics or an impractical academic philosophy. Nor is it an issue of semantics, or even a mere “tax protester theme.” It is a fact of law. Since the 1800s-for over a century-state courts throughout this country have applied the principle in their decisions.
With this as a backdrop, we will now briefly consider the development of the concept of labor in economic and judicial history up to the present.
HISTORY AND THE PROPERTY CONCEPT OF LABOR
Various authorities from antiquity to modern times have affirmed the property rights of labor. John Locke (1632-1704), the English philosopher upon whose theories of government this country was founded, wrote of human labor:
“Though the earth and all inferior creatures be common to all men, yet every man has a property in his own person; this nobody has any right to but himself. The labour of his body and the work of his hands, we may say, are properly his.”
John Locke, “Second Treatise: Of Civil Government,” Of Property, ch. V, “Two Treatises of Government” (1690), 27.
This concept of property as something embodied in a person stands in sharp contrast with physical objects such as buildings, lands, equipment, and with other inanimate objects which, in conventional economics, is generally referred to as property or capital assets.
Citing Adam Smith (1723-1790), the renowned Scottish economist who wrote the classic work on capitalism, “Wealth Of Nations” (1776), U.S. Supreme Court Justice Field, expressed the following relative to human labor in a concurring opinion:
“It has been well said that, ‘The property which every man has in his own labor, as it is the original foundation of all other property, so it is the most sacred and inviolable. The patrimony of the poor man lies in the strength and dexterity of his own hands…'”
Butchers’ Union v. Crescent City Livestock, 111 U.S. 746, at 757 (1884).
Ten years earlier, U.S. Supreme Court Justice Swayne expressed the same concept of human labor as property in a dissenting opinion:
“Property is everything which has an exchangeable value, and the right of property includes the power to dispose of it according to the will of the owner. LABOR IS PROPERTY, and as such merits protection. The right to make it available is next in importance to the rights of life and liberty. It lies to a large extent at the foundation of most other forms of property, and of all solid individual and national prosperity.”
Slaughter-House Cases, 83 U.S. 36, at 127 (1873), emphasis added.
Up to our modern times, other authorities and court jurisdictions have expressed themselves in the same manner as Justice Field and Justice Swayne with respect to labor as property. Consider the following from the legal publication “Corpus Juris Secundum”:
“Under some authorities a man’s labor or right to labor is property…The property which one has in his own labor includes what is produced by way of wages and salary, that is, anything acquired as a gain or profit from labor.”
73 Corpus Juris Secundum, 1983 ed., s.v. “Property,” Ã‚Â§12. See also, Vol. 34A of the legal publication “Words and Phrases,” s.v., “Property (Labor)”
Based on how the concept of “property” is legally defined, it stands to reason that labor should be considered property. This is true in view of the fact that labor meets all the criteria of how property is defined under American law. The standard legal definition of property includes everything which can be owned, “corporeal or incorporeal, tangible or intangible, visible or invisible, real or personal; everything that has an exchangeable value” (see, Black’s Law Dictionary, 1979 ed., s.v. “Property”). An employee’s labor belongs to or “is owned” by the employee. It is, as such, the capital property of the employee. In addition, that such labor has “exchangeable value” is obvious from the fact that employers pay salaries or wages in exchange for it.
Not only is human labor property, but under American law, the mere “right to work” is also property of the employee, and this, in a constitutional sense. See, for example, the ruling in 1959 in the U.S. Supreme Court case of Greene v. McElroy:
“[T]he right to hold specific private employment and to follow a chosen profession free from unreasonable governmental interference comes within the ‘liberty’ and ‘property’ concepts of the Fifth Amendment.”
Greene v. McElroy, 360 U.S. 424, 492 (1959)
SO WHERE’S THE INCOME TAX PROBLEM?
We could raise constitutional issues to show where income tax corruption is to be found. I do this in my book. But here, all that is needed is to show what the practical result of the corruption is to know the ugly nature of the corruption and how damaging are its monetary impacts on American workers. We begin by looking at what Section 212 of the United States Internal Revenue Code has to say that is pertinent to the issue. Following is the language of this Federal statute:
“EXPENSES FOR PRODUCTION OF INCOME. In the case of an individual, there shall be allowed as a deduction all the ordinary and necessary expenses paid or incurred during the taxable year-
(1) for the production or collection of income;
(2) for the management, conservation, or maintenance of PROPERTY HELD FOR THE PRODUCTION OF INCOME [emphasis added]; or
(3) in connection with the determination, collection, or refund of any tax.”
The income tax problem (or the corruption in the system) emerges and becomes horribly clear when an employee attempts to claim that his or her labor and/or the exercise of his or her right to work is “income producing property” or “property held for the production of income” under the meaning of Section 212 of the United States Internal Revenue Code. The I.R.S. rejects such a claim and our corrupt Congress and corrupt federal courts back the I.R.S. interpretation. Of course, they have to….They need the money…The constitutional rights of the citizens of this country are expendable…Aren’t they? Congress and the whole U.S. government come first and the workers are last… Aren’t they? At least, so our government believes and the masses of submissive ones among us accept this. Our government counts and vitally depends on such passive (if not fatalistic) acceptance for the system to survive.
The result of this denial of the applicability of Section 212 to a worker’s labor is that employees are prevented from deducting “all the ordinary and necessary expenses paid or incurred during the taxable year” for “the management, conservation, or maintenance” of their “property held for the production of income.” These types of deductions for “cost of goods (or products) sold,” which are now allowed only for businesses, would include for workers-as we will soon confirm-expenditures for such living necessities as food, shelter and proper health maintenance.
But why should business alone get the break under Section 212 that is denied to the workers? On the basis of all the legal authorities we have reviewed so far, we have seen repeated declarations come from both state courts and the U.S. Supreme Court telling us in a most clear and unambiguous manner that labor and the right to work is an employee’s property-even constitutionally so-and Section 212 of the United States Internal Revenue Code does not on its face make a distinction as to what forms of property are included and what forms are excluded. It simply says “PROPERTY (held for the production of income).”
Now, since the property that employees use to produce income is their labor and the exercise of their right to work, who can deny that employees have “income producing property”? The answer is no one but the IRS and the courts. How do they do it? We will now see the scandalous and the horrible extent and nature of income tax corruption that we are pointing to.
The way the I.R.S. gets around the applicability of Section 212 to employee labor is simply by quashing such employee claims of applicability whenever employees make these claims in their income tax returns. The I.R.S. simply demands that the filing taxpayer retract such a claim and threatens to impose monetary penalties if the taxpayer fails to make the required retractions. This happened to me. I was fined thousands of dollars for doing exactly this. The I.R.S. preferred to do this rather than prosecute me for criminal fraud. They knew that if they put my case before an impartial jury of ordinary citizens, the horrible truth of income tax corruption I knew-and would tell the jury in my defense-would then blow out into open, public exposure.
If the taxpayer files a complaint in Tax Court, this Court simply tells the taxpayer that his or her labor is not property; it is merely “behavior performed by human beings in exchange for compensation.” But at the same time, this Court will fail to cite legal authority or precedent to justify such a definition or to explain the existence of long-established legal authorities which we have seen here and which unambiguously contradict the definition (see, Reading vs. Commissioner, 70 T.C. 733). I filed several complaints in several federal district courts and took two of the complaints all the way to the U.S. Supreme Court with the same result.
You ask, “How could the courts do this if they are the same courts that said labor was property”? First of all, I would answer simply by essentially repeating what I said above: “They have to do this….They need the money…The constitutional rights of the citizens of this country are expendable…Aren’t they? Congress and the whole U.S. government come first and the workers are last… Aren’t they? At least, so our government believes and it counts on the masses of submissive ones among us to accept this.”
But secondly, if you have actually asked this question, it means that you now are beginning to see why I say that even the federal courts are corrupt. When it comes to the income tax, the federal courts find ways to back its corruption, even if it takes turning their backs in outright disregard or suppression of the very evidence they have supplied us through their rulings in the past. This is all part and parcel of the income tax corruption this nation has been saddled with and we the American workers are the saddled mules they ride on and beat on the butt to keep running and slaving our lives away for their perks in self-awarded salary raises, fat pensions and give-away pork barrels to secure their political interests. If you skeptics out there who love the income tax and your precious annual “refunds” question the truth of this, I dare you to read my book and look at the documentation of all that the federal courts did in my cases, including the shamefully exalted U.S. Supreme Court.
COST OF LABOR SOLD DEDUCTIONS
Some have argued that employees have no choice. They have to eat and pay mortgage or rent to produce their labor energy and stay alive whether they sell their labor or not. Some of the energy they produce is spent on their own personal activities. But the Tax Court in the Reading case cited above did not raise this as a problem. In fact, the Court provided logic as to why an employee claim of the applicability of Section 212 to their labor could in itself be considered reasonable. Following is how the Court explained this:
“Of course we recognize the necessity for such items as food, shelter, clothing, and proper health maintenance. They provide both the mental and physical nourishment essential to maintain the body at a level of effectiveness that will permit its labor to be productive.”
Reading, 70 T.C. at 733-734.
So the idea of an employee claiming his or her living expenses as deductible costs of labor sold is not in and of itself unreasonable. The real problem, said the Court, is not an issue of personal expenses. Instead, the real issue is proving that what you sell to produce income is something of the nature of property. In the case of labor sold in exchange for income, we have seen how the Court went on to deny erroneously and corruptly that this is property. This is what the Court expressly referred to as being “the flaw” (Id., at 733).
But now we have seen there is indeed ample legal precedent to show that labor and the right to work are undeniably constitutionally protected forms of property (see U.S. Constitution, Fifth Amendment). We also have become aware that it is the disregard, illegal evasion and failure to acknowledge these facts by our government which in truth is the real “flaw” and actual root of corruption, not only in the income tax but also in Congress and in the federal courts all the way to the shamefully corrupt U.S. Supreme Court. I say “shameful” at least insofar as what this highly exalted Court has done to (or failed to do for) the laboring workers of this country.
1 – John C. Garrison, “The New Income Tax Scandal: How Congress Hijacked the Sixteenth Amendment” (Philadelphia: Xlibris Corporation, 2005)
[tags]income tax corruption, Congressman Ron Paul, US tax reform, author John Garrison, eNewsChannels articles, IRS enforcement[/tags]