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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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