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Links that work...

(originally launched into cyberspace on 01/30/2003)

In my last message (about Playing Against Cheaters), the links were messed
up. Here are the correct links:

Sorry about that.

Larken Rose
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"Pass It On"

(originally launched into cyberspace on 01/28/2003)

Dear List Subscriber,

I just looked over the "opinion" by judge Conner in the injunction case
against Thurston Bell. I'll do a point-by-point rebuttal soon, but there
was a different issue about psychology/propaganda which it illustrates well.

At least 95% of the form letters, press releases, or other attempts to
refute the 861 evidence, both by government officials and private sector tax
professionals, are nothing more than "cut and paste" quotations from what
someone ELSE said. Someone makes an assertion, and no matter how provably
wrong it is, or how little support in the law there is for it, the
intellectually lazy status quo proponents (government and otherwise) just
parrot the same line, as if quoting someone ELSE making a mistake qualifies
as an authoritative rebuttal.

The history of the government's attempts to refute the 861 evidence looks
less like an explanation, and more like a rumor: the Tax Court makes some
lame accusation that the issue is "frivolous" (as in the Aiello case). The
Tax Court then quotes ITSELF making that accusation, as if that proves
something. (On one case it was even a Tax Court "judge" quoting one of his
OWN prior assertions as an authority.) Then the Tax Court quotes itself a
few more times. Then IRS form letters start to quote the Tax Court
accusation (while failing to mention that the IRS does NOT consider Tax
Court rulings to be binding). Then the DOJ writes "press releases" that
parrot it. Then Congressmen send out form letters parroting it. And so on
and so on. It's a long parade of intellectally-lazy "quoters," with
each claim relying on the one before, and the first one relying on NOTHING.
(A former federal prosecutor, Terry Croghan, enlightened me to this tendency
of officials to want to just find someone ELSE to quote, rather than putting
in the effort to come up with some substantive response on their own.)

However, in the brief that the DOJ filed a while back in this case (on which
they based their request for a preliminary injunction), they apparently did
a little homework of their own. (Very little.) Someone looked up Section
861 (imagine that), but didn't bother looking into it, or learning the scope
and purpose of those sections. The DOJ then argued something that the IRS
Chief Counsel is very careful NOT to argue: that Section 861 shows the
domestic income of most Americans to be taxable.

To be fair, that's an easy mistake to make when looking at Section 861 by
itself (without bothering to decipher the related regulations, or looking up
the history of the section). The following link shows the flaw in the claim
that 861(a)(3) means that MY income (and yours) is taxable:

As I said, I only just looked over judge Conner's "opinion" in the Bell
case, and he took the intellectually lazy, legally negligent approach of
basically quoting the DOJ's mistake as if it were gospel. A main focus of
his claim that the 861 evidence is "frivolous" is 861(a)(3), and the related
regulations at 1.861-4. The above link shows how wrong he was (and my
rebuttal to his "opinion" will do it more thoroughly), but the point here is
the LAZINESS of the judge.

I saw, with my own eyes, Thurston Bell hand a copy of "Theft By Deception"
to the judge. I heard, with my own ears, the judge say he would review it.
Many of you who have seen the video, in particular Step Six ("Intent To
Deceive"), will know that judge "Conner" either LIED when he said he would
watch it, has a really bad memory, or is a dishonest criminal. (I won't
bother to guess which at the moment.) He had--and still has--abundant
evidence proving that 861(a)(3) is NOT saying that the wages of all
Americans are taxable. And he ignored it all, or never looked at it.

Again, as far as I know, IRS Chief Counsel has NEVER argued that 861(a)(3)
is about the income of the average American. They know better. But when
some ignorant DOJ lawyer quotes it, because he didn't do his homework, our
supposedly-independent judicial "public servants" then just "cut and paste"
the DOJ SCREW-UP, and sign off on it. "Judge" Conner did not "judge"
anything. My five-year-old could have done what he did: cut out something
someone else wrote, paste in on another page, and put his name under it.

And now I understand WHY David Cay Johnston--propagandist for the New York
Times--changed his tune recently. He is now doing a "cut and paste" from
judge Conner's screw-up (which was a cut-and-paste from the DOJ's screw-up).

This is intellectual laziness at its finest, and David Cay Johnston is the
best example. I QUOTED to him the history of Section 861. I showed him
that the predecessor statute (Section 217 of the Revenue Act of 1921)
obviously was NOT saying that "compensation for services performed in the
United States" was taxable for EVERYONE. I walked him through the changes
over time, where 217 became Section 119, which then became the current 861
and following. I showed him how the regulations show that the scope of the
law had NOT changed, and how the GENERAL wording of Section 861 STILL only
shows domestic income (including compensation for services performed in the
U.S.) to be taxable when derived from CERTAIN ACTIVITIES (activities which
must of us are NOT engaged in).

Then, I asked a couple really simple questions (though these are

1) Did he agree that in 1921, Section 217 was NOT saying that MY
"compensation for services performed within the United States" was taxable?
(Anyone with basic reading comprehension would have to agree.)

2) Had the scope of the section CHANGED since then, to suddenly include ALL
"compensation for services performed in the United States"? (And if so,
when?) I gave him numerous citations showing that the scope has NOT
changed, despite the fact that the STATUTE of 861 alone and out of context
now gives an incorrect impression.

Those two simple steps demolish his reliance on 861(a)(3)... and judge
Conner's reliance on 861(a)(3)... and the DOJ reliance on 861(a)(3).

So what was Mr. Johnston's response? He didn't answer either question. He
didn't even try. Instead, he referred to all the CITATIONS OF LAW as
"irrelevant minutia," and then proceeded to parrot the various accusations
of how the issue is "frivolous," "absurd," "stupid," etc.

It seems that the debating skills of both the media and the government (ALL
THREE BRANCHES) consists of "whisper down the lane." The DOJ wrote a legal
brief that made numerous major mistakes. Here is my rebuttal to that brief,
which I handed to Evan Davis (DOJ attorney) myself:

Did they rebut it? Nope. Did they have any response? Nope. Did they
CORRECT their glaring screw-up about 861(a)(3)? Nope. They stuck to their
story, regardless of how provably bogus it was.

And then what happened? Then a lazy "judge" who had a copy of "Theft By
Deception" in his possession (and thus had conclusive proof that the DOJ had
screwed up) repeated the screw-up in his "opinion." Then a lazy "reporter,"
who had access to the video, and my rebuttal to the DOJ brief, and the
explanation of 861(a)(3) (linked to above), and a CUSTOM EXPLANATION TO HIM
PERSONALLY, and half a dozen other things proving that the DOJ AND THE JUDGE
HAD SCREWED UP, just parroted the same screw-up again. (It appears that Mr.
Johnston prefers the "rulings" of mere mortals who have gavels and robes, to
actual EVIDENCE.)

This is what we are up against. These people don't THINK; they parrot.
They can spout the words, but they know nothing of the SUBSTANCE. (The many
who have tried to get a substantive conversation out of David Cay Johnston
know what I mean.) They spout the line of the last parrot who spouted it.
If you try to address something that the previous parrot did not address,
they fall apart. Just like an African Gray (parrot), they can do a
monologue which sounds sort of like they understand what they are saying.
But you'd have an easier time getting a rational DISCUSSION of the issue out
of your furniture, than you would out of these "reporters" and "judges."

This is how most people think... or DON'T think. They have BELIEFS, and
they are scared to death of questioning them. They have monologues to
justify their beliefs, but react irrationally and often viciously when you
show them EVIDENCE that doesn't fit their beliefs. They are comfortable
parroting what their fellow believers say, but they freak out when there is
a substantive, logical challenge to their beliefs. They react with
accusations, insults, threats, etc.

The good news is that that NEVER holds the truth off forever.

"All truth passes through three stages. First, it is ridiculed, second it is
violently opposed, and third, it is accepted as self-evident." (Arthur


Larken Rose
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[ June 23, 2003, 06:07 AM: Message edited by: 3rdEar ]

More Evidence

(originally launched into cyberspace on 01/26/2003)

Dear List Subscriber,

In my opinion, we have all the evidence we need (and a lot more) to prove
the 861 "issue" to be corrected, and that the income tax laws are being
grossly misapplied. However, I always like new evidence to pile on. In the
last couple days, I was pointed to two new interesting bits of info:

1) I saw some people quoting the Supreme Court as saying that the term
"whatever source derived" in the 16th Amendment didn't really mean WHATEVER
source derived (meaning there are limits on what the feds can tax). At
first I thought the quote might be bogus. Well I looked it up, and dang if
it ain't real. (My apologies for forgetting who first quoted this to me.)

I'd like to gloat over this particular one (though I didn't find it),
because it so closely matches what I have said about the 16th Amendment for
ages: it has to be read in light of the REST of the Constitution; it isn't a
stand-alone law giving Congress the power to tax everything on the planet.
Well in case you didn't believe me, here is the Supreme Court saying it:

"The Court has hitherto consistently held that a literal reading of a
provision of the Constitution which defeats a purpose evident when the
instrument is read as a whole, is not to be favored... [and one of the
examples they give is...] 'From whatever source derived,' as it is written
in the Sixteenth Amendment, does not mean from whatever source derived."
[WRIGHT v. UNITED STATES, 302 U.S. 583 (1938)]

How's that for an amazing admission? For support, they cite another case
(Evans v. Gore), and here are some quotes from that case (emphasis added):

"[T]o enable Congress to reach all TAXABLE income more conveniently and
effectively than would be possible as to much of it if an apportionment
among the states were essential, the Sixteenth Amendment was proposed and
ratified. In other words, the purpose of the amendment was to eliminate all
occasion for such an apportionment because of the source from which the
mode of EXERCISING it."

The court mentions that the governor of New York "expressed some
apprehension lest [the 16th Amendment] might be construed as EXTENDING THE
TAXING POWER TO INCOME NOT TAXABLE BEFORE," but that those who proposed the
amendment described its purpose proving that was not the case. Back to
Evans v. Gore, the court went on...

"Thus the genesis and words of the amendment unite in showing that it DOES
all occasion otherwise existing for an apportionment among the states of
taxes laid on income, whether derived from one source or another."

(I'm not sure why they beat this point to death like they did, but I'm glad
they did.)

"It is not, in view of recent decisions, contended that [the 16th Amendment]
rendered anything taxable as income that was not so taxable before." [EVANS
v. GORE , 253 U.S. 245 (1920)]

So if "from whatever source derived" DOESN'T MEAN "from whatever source
derived" literally, as the Supreme Court says, then how about the statute
based on that amendment (now 26 USC § 61)? Well, most of you already know
that the REGULATIONS for decades have shown that Constitution itself limits
the scope of the otherwise broadly-worded statute. And that leads to the
second bit of new info...

2) Most of you know that the older regulations defining "gross income"
specifically pointed out that some income was exempt, not because of any
statute, but because it was "under the Constitution, not taxable by the
Federal Government" (26 CFR § 39.22(b)-1 (1956)). Since then that has
disappeared from the corresponding regulations, which now just talk about
some income being "excluded by law" (26 CFR § 1.61-1), but doesn't say WHAT
"law" that includes. (It doesn't mention the Constitution by name.)

There is a current regulation I already knew about, at 26 CFR § 1.265-1,
that talks about income being exempted by the income tax statutes, and OTHER
income being exempt for federal income tax purposes "by any other law," but
it too did not specifically mention the Constitution. Thanks to a discovery
by Peter McCandless, I now know that the current regulation DO mention the
Constitutional exemptions (though not in the general definition of "gross

In case you think I'm making this up, go to the following link on the
Government Printing Office site and click on Section 1.312-6:

Here is part of that section (emphasis added):

"(b) Among the items entering into the computation of corporate
earnings and profits for a particular period are all income exempted by
CONSTITUTION, as well as all items includible in gross income under
section 61 or corresponding provisions of prior revenue acts."

In other words, figuring out the total corporations yearly earnings (not
just their taxable earnings) for purposes of that section, they were to add
up the income includable as "gross income" under Section 61, all income
exempted by statute, AND the income exempted by the Constitution itself.
Notice the three distinct categories. Well gosh, how are we to know what is
Constitutionally exempt? Or better yet, what is NOT exempt? Go read 26 CFR
§ 1.861-8T(d)(2) and it will tell you.

The evidence continues to pile in; the status quo defenders continue to
ignore it (while chanting "frivolous" as loud as they can); and the truth
continues to spread. The question is not IF the truth will win out; only
WHEN it will.


Larken Rose
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SHORT Summary

(originally launched into cyberspace on 01/26/2003)

Dear List Subscriber,

As many of you have noticed, I'm not exactly a master of brevity when it
comes to the 861 evidence. I always want to pile on a ton of citations,
logic, etc., proving every little step. In doing so, sometimes I overwhelm
the reader, and drown him in legalese before he ever gets to the punchline.

So this message is a test, to see if I can really do a SHORT summary of the
861 evidence. (Last time I tried, my "short" summary was about five pages
long.) So here goes...


There are two routes to the truth in the lawbooks concerning the very
limited nature of the federal income tax:

1) The issue of exempt income.
2) The issue of when domestic income is taxable.

I will summarize them separately:


For ages and ages, the income tax laws have included a very broadly-worded
general definition of "gross income," which would seem to include all income
from everywhere. (Generally speaking, "gross income" becomes "taxable
income" after subtracting deductions.) There are a few types of income that
Congress specifically exempted from income taxation, such as life insurance
proceeds and gifts, but the STATUTES passed by Congress do not specifically
exempt the income of most Americans. (This is why the tax professionals
think most of us owe the tax.)

However, the Supreme Court says that every statute is to be read in light of
the Constitution, and the regulations (past and present) show that some
types of income NOT exempted by any statute are nonetheless exempt from
taxation because of the Constitution itself.

The regulations, past and present, specifically list what is NOT exempt from
taxation (i.e. what IS taxable), and while those lists always include the
domestic income of FOREIGNERS, and certain FOREIGN income of Americans, they
do NOT include the income of the average American. That is because the
income of the average American is EXEMPT from taxation.


In addition to the general definition of "gross income," the income tax laws
have included (for more than 80 YEARS) sections which specifically said when
income from WITHIN the United States is taxable. Currently it is found in
Section 861 of the tax code, and the related regulations. (Section 862
describes when income from OUTSIDE of the U.S. is taxable.)

Section 861 and its regulations (and 80 years of predecessors) show the
domestic income of foreigners to be taxable, in addition to the income of
certain people doing business in federal possessions, but do NOT show the
domestic income of the average American to be taxable. Again, that is
because such income is NOT taxable. (The Supreme Court says we are not to
ASSUME that taxing statutes apply to things not "specifically pointed out.")


Hey, that was almost short! (I just barely survived writing it.)

However... I need to add one more thing, to address something that has often
come up recently. There is some confusion (and it was by design) about the
scope and purpose of Section 861 and its regulations. Some insist that only
people who have foreign AND domestic income should be looking there...
though they can never find any CITATION supporting such a claim. Some claim
that Section 861 DOES show the income of the average American to be taxable
(though IRS Chief Counsel does not argue such a thing, because they know how
weak that claim is). So here is a little more in-depth summary of how 861
and following work:

Section 861(a) and the related regulations from 1.861-2 through 1.861-7 say
what kinds of income count as income from WITHIN the United States, and
Section 862(a) and related regulations say what kinds of income count as
income from OUTSIDE of the United States. (In the case of income that comes
partly from inside and partly from outside the U.S., Section 863 gives rules
about how to divide up such income into "within" and "without" income.)
These are often called the "source rules."

As the status quo defenders are quick to point out, those "source rules" do
NOT say that the income of the average American is exempt. They also do not
say that the income of a billion people in China is exempt from U.S.
taxation (though of course it is). The "source rules" in 861 and 862 say
NOTHING about exactly what income is actually TAXABLE; they only distinguish
between "within" income and "without" income. One who looks at the
generally-worded "source rules" (in particular Section 861(a)(3) of the
statutes and Section 1.861-4 of the regulations) is likely to come away
thinking that ALL pay for services performed in the United States is subject
to tax.

(Step Six of "Theft By Deception" shows how the law was intentionally
changed over time to make such a misreading not just possible, but very
likely. But the history of the section leaves no room for doubt.)

However, the NEXT step is to determine when income from within the United
States is actually TAXABLE, and that is done under 26 CFR § 1.861-8. That
convoluted and mangled section (and again, that was by design) only shows
income from within the U.S. to be taxable when it comes from certain
"specific sources and activities" listed in 26 CFR § 1.861-8(f)(1), which
are all related to INTERNATIONAL and FOREIGN commerce. (That is commerce
which IS under federal jurisdiction, but which most of us do NOT get our
income from.) Again, the history of the sections really solidify the truth
about this, whereas the current 1.861-8 is as likely to give someone a
headache as it is to tell them how the law works.


There, now I feel better, since my clarification tripled the length of my
summary. (Oops.) I hope that helps.


Larken Rose
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Ordering by phone & bumper stickers

(originally launched into cybersapce on 01/23/2003)

Dear List Subscriber,

I keep forgetting to mention that there is now a way to order the "Theft By
Deception" video by phone. It's actually not a number for ordering from us
(we still don't have such a thing); it's for ordering copies from the radio
show "The Power Hour." Here is the number for ordering:


Just say you're calling to order the "Theft By Deception" video.

In other news, we are now re-stocked on Theft By Deception bumper-stickers.
Again, here is all they say:
Time for the fraud to end.

If you want a free one, send an e-mail to the following address (the guy
there volunteered to help send them out), and be sure to include your
complete mailing address:

This email address is being protected from spambots. You need JavaScript enabled to view it.

If you want a bunch of them, you'll have to e-mail me directly (and I'll
probably take a zillion years to respond).


Larken Rose
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Pam Olson II

(originally launched into cyberspace on 01/23/2003)

Dear List Subscriber,

My previous message mentioned Pam Olson, and a bunch of you responded by
asking who Pam Olson is. Pam Olson is the current Assistant Secretary of
the Treasury for Tax Policy. While that title sounds fairly obscure, it's
actually the highest office at Treasury that has "hands-on" dealings with
the federal income tax regulations. Of all the government officials who
actually have a reason to understand the regulations, SHE is now at the top.

Here is the government page about the "Tax Policy" office:

And here is the page about Ms. Olson herself:

Shortly after she took office (after her predecessor unexpectedly and
inexplicably resigned... after someone pestered him about 861 for a year or
so), several HUNDRED people sent her letters asking her to answer a few
polite questions about how we should determine our taxable income. That
letter can be seen here:

Now, nearly three months later, as far as I can tell she didn't send anyone
any answers at all (not even bad ones). Keep in mind, she has immediate
access to ALL Treasury lawyers, and just about everyone else in the IRS or
the Treasury Department (she used to work for IRS Chief Counsel). If anyone
has the resources to answer the questions, it's her. So why the silence?
(You decide.)

Anyway, it's time to send the follow-up letter to Ms. Olson, to ask her YET
AGAIN to answer the questions. Here is the new letter:

Please note that this letter is written so that ANYONE can send it. It
doesn't matter whether you sent the first one; it doesn't matter if you know
anything about 861, or if you agree with it or not. Basically, there is
only ONE thing that matters: do you think the government should answer
polite, reasonable questions about what its own laws require? If so, then
by all means please send her the letter.

All you need to do is put in the date at the top of the letter, your name
and address at the bottom, and then print out three copies (or four if you
want to keep a hard copy for yourself). The main letter goes to Ms. Olson,
whose address is shown at the top of the letter, and copies should also be
sent to the two addresses shown at the bottom of the letter. (Note: Be sure
to include the third page--the six questions--with the letters.)

Also, if you do send the letter and want to be included on the list of those
who have sent it, please let me know your initials, the state you're in, and
the date the letter was sent, in this format:

"L.R. (PA) 1/22/03"

The whole endeavor should cost you about a buck in postage, and maybe ten
minutes to print the thing out. Can you think of any reason NOT to do it?
If you read the letter, you'll find it to be very polite and reasonable, and
I don't think anyone should be too embarassed or afraid to send it. (It
doesn't even say you AGREE with the issue; just that you think the questions
should be answered.) If you can't think of a reason not to, please put
together the letters and send them out now, while you're still thinking
about it. This WILL be worth it in the long run, even if she never answers.


Larken Rose
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(P.S. This is the last time we nicely ask Ms. Olson to answer. If she does
not respond this time, it will be time to turn up the heat. If she thinks
that this will just blow over, and that no one will notice that she isn't
doing her job, she is sadly mistaken. As one possibility, maybe she would
like to see a full-page ad in the Washington Times containing the above
letter to her.)

(P.P.S. For those of you who for whatever reason can't print out the letter
yourself, I'll soon post a way you can have them printed for you. And for
any who want to volunteer to print out copies for other people, please send
me an e-mail saying so.)