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Luís Nunes's avatar

Interesting! I expect soon we will be seeing how to get the taxmen throw at the NGOs. Especially foreign funded (or laundered) ones! 😉😁😁

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Arjun's avatar

The income tax doesn't apply to most people's earnings, only to those earnings which are effectively connected with exercise of federal privilege. The purpose of it is to help the Federal government fund itself through productive projects and profitable businesses which it can initiate and create.

So your section on that needs some correction. The income tax on "All That Comes In" is a myth.

I've written about this:

https://open.substack.com/pub/asodhani/p/income-tax-brief

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Fabius Minarchus's avatar

If the income tax isn't a direct tax, what is?

And be careful with the word "Privilege." It does not mean just income from government contracts. Many localities levy privilege taxes which are taxes for the privilege of doing business in the locality. They are generally fees based on the type of business. (Doing a quick search it appears that my state repealed state level privilege taxes in 2024.)

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Viddao's avatar

Personal income tax is a direct tax, that's why they had to pass a constitutional amendment to legalize it. The only way an income tax can even be argued to be an "indirect" tax is if it is a tax on wages.

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Arjun's avatar

The 16th didn't do that. It overturned a 1895 decision where the plaintiffs argued that the taxing of their income from property was a direct tax, and therefore was unconstitutional because it's a direct tax.

This guy wrote a nice history of it: https://open.substack.com/pub/gregorysutton/p/the-real-history-of-the-sixteenth

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Viddao's avatar

This is true. It was a controversial 5-4 decision. But one blunder with resorting to a constitutional amendment is that it basically validates the decision, because if it was just mistaken, then why would it need a constitutional amendment? The supreme court could have just changed its mind later.

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Arjun's avatar

For the same reason the 13th Amendment was needed.

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Viddao's avatar

Uh, I don't think so.

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Fabius Minarchus's avatar

OK, I have read your 1040 and attached note. I heard the argument you used somewhere around 20 years ago at a talk given to local Libertarians.

The man who gave the talk ended up in prison for failing to pay his taxes. Creative parsing of the English language does not exempt one from paying taxes. And the idea that the government can fund itself by just taxing those who receive government funds is mathematically absurd.

Please reconsider. Stay out of jail.

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Arjun's avatar

What argument did I and he use?

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Fabius Minarchus's avatar

That income taxes only applied to income from working for the federal government -- including federal contracts.

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