The LIE About YOUR Income


The Supreme Court has determined and held that:


'Income may be defined as the gain derived from capital, from labor, or from both combined,' provided it be understood to include profit gained through a sale or conversion of capital assets…, Eisner v. Macomber, 252 U.S. 189, 207-208 (1920)


     The essential element to income being a realized GAIN or PROFIT on assets, capital, or labor (or combination), and NOT MERELY the earning of dollars.


     We are all completely familiar with how this works when we buy and sell stock.  First, we buy the stock for $25, and then later, we sell the stock for $40.   How much income is there?  Well, we take the sale price of the stock ($40) and subtract the purchase price of the stock ($25 - the basis), to arrive at a figure of $15 gain, or profit, or income per share.  Then we multiply that profit times the number of shares we bought and sold to arrive at the gain or profit upon which income tax may be alleged to be due.  And the government itself recognizes this accounting as proper, and will only ask for tax on the $15 gain or profit, not the whole $40 sale price, as identified by the Supreme Court in this Eisner decision.


     Please NOTICE that in order to calculate the taxable income it is necessary to subtract the BASIS (costs) from the SALE PRICE (receipts).   The IRS will NOT demand tax on the whole $40 sale price in the example above, but rather will only demand tax on the $15 profit, or gain.


     Again, we are completely familiar with how this works with the corporations.  Exxon and Chevron, it recently has been announced, are each currently earning over 110 billion dollars a quarter.  Is that the figure they will state on their tax returns as their income for the quarter?  Absolutely NOT.  First they are going to deduct, rent, leases, wages, bonuses, contract salaries, office supplies, phone bills, electric bills, gas bills, insurance expenses, meals, hotels, etc., on 1,000 offices and 100,000 employees all across the planet.   Next they are going to deduct actual losses, asset depreciations, non-performing loans, research costs, drilling costs, shipping costs, energy costs, emergency costs, security costs, spill response and clean-up costs, interest costs, etc.  Did I leave anything out, oh yea, about 20 pages worth, but you get the picture.   You can be sure that when they are done deducting their allowable expenses they will only have a few billion (11) as income to pay tax on, and will not declare the entire 115 BILLION THEY EARNED in the quarter as taxable income.   Does anybody want to take this bet?   And, of course it will all be perfectly legal, won’t it?


     AGAIN, please notice that in order for the corporation to calculate the taxable income it is necessary to subtract the BASIS (costs) from the corporate EARNINGS (receipts).   And again, the IRS will NOT demand tax on the whole $110 billion earned, but rather will only demand tax on the calculated profit or actual gain that was realized over the year after all expenses are deducted from the earnings.


     So, we see a common requirement in calculating taxable income.  One must subtract the COSTS from the EARNINGS to deduce the gain, which is the only taxable income.  It is NOT THE EARNINGS that are the income subject to the tax, BUT THE GAIN within those earnings which is defined as the taxable income.




Don’t you have any costs associated with providing your labor, like a place to sleep every night?  Oh yea, and maybe some food to eat?  Got any other costs in your life?  I know I have a few.


     Do you have any costs associated with maintaining your employment?  Like maybe your mortgage?  NOT just the interest on the mortgage, BUT THE WHOLE DAMN THING!  How about food, do you need to eat in order to work?  How many times a day?  How about getting to work, got any costs there?  Telephone bills?  Utility bills?  Got any Losses?  They are all completely deductible to the corporations, WHY NOT YOU?    How about those kids of yours, any expenses there?  Do they wear clothes, or eat?  How about your health, got any expenses there?  Can you work without your health?  Everything you have to spend to live a normal life (or to maintain the life you are used to), should be a deductible expense, just like it is for the corporations.


     The income tax is not imposed on wages or your earnings, per se, but only on the income  – which is defined as the gain or profit, and which is not defined as the whole wage.  It is the profit or gain that is subject to the income tax, not simply the earnings. 


     So how do you separate out any gain portion from a labor wage to identify what part of the salary is taxable profit?  This is the question the government has conveniently forgotten to provide the answer to, in order to unlawfully convert this tax from an indirect tax on capital profits, to a communistic tax on labor.


     The government conveniently converts this entire tax system into a communistic system of control over labor, when it converts the indirect income tax imposed on capital gains (or profits), into an unconstitutionally direct tax on labor.  Particularly so, when it refuses to recognize or admit any costs or basis to be deducted or applied to the earnings of a laborer in order to determine the gain portion of the labor wage that might be subject to an income tax. 


     BUT, THERE IS NO GAIN OR PROFIT when you labor for pay.  There is an equal exchange of property between two agreed parties.  An agreed amount of labor is exchanged for an agreed amount of dollars.  There is no profit or gain realized by either party to the transaction. Both parties to the agreement receive only exactly what they put into the agreement – and this is mutually agreed to by both parties, neither of which is ever willing to provide more than they must to balance what the other side is offering.  Their assets are merely converted from one medium to another (by the other party to the transaction), but their assets are not increased, and certainly NO GAIN is REALIZED from the labor, by the laborer!


     The only people who actually have a gain or profit on labor are the contractors that provide the labor to a client at a premium, for a price greater than the amount that the contractor actually pays the laborers actually doing the work.


     i.e.: Company X hires a laborer and pays him $60,000 a year for 2000 hours of work (employment).  Company X then provides the services of that laborer, under contract to the Defense Department let’s say, for $100,000 a year.  Who has income on the labor?  The laborer? – No.  He has no gain or profit, hence no income.  He gave up all of his time and hard work in an equal exchange of property, labor for dollars.  It is Company X that has the income.  They made a $40,000 gain and profit on the labor performed in the deal, and they have the taxable “income”.  The laborer did not earn a single penny of profit or gain, hence - has no income, and should owe no income tax on the fruits of the labor that was performed.


     Indeed, just like the corporations, the laborer certainly has costs and expenses associated with his labor, and in maintaining a state of readiness to work.   So, why is there no provision for individuals to claim all of the exact same type of operational and administrative costs and expenses that corporations claim regarding their existence without question, except for that lousy $3,050 exemption we get on the Form 1040?   My God, People, $3,000 is what it took to live in 1945.  Can you survive on $3,000 a year now?  They raised the tax rate, why didn’t they raise cost-of-living allowance provided by this so-called “exemption”?


Why is there no provision for individuals to claim the exact same basis costs that corporations deduct as costs without question?


Because this tax is about CONTROLLING YOU, not raising revenue for the government!  That’s WHY!


     It is absolutely INSANE for no BASIS to be applied and for no costs to be deducted from earnings derived from labor when the individual files a Form 1040 reporting the fruits of his human labor.  Why is the individual the only entity not allowed to deduct costs from earnings in order to calculate his taxable income when derived from LABOR.  EVERYBODY ELSE DEDUCTS THEIR COSTS to calculate the tax!  This discriminatory and prejudicial treatment effected by denying the citizens any reasonable amount of living expenses or costs to deduct from their LABOR (as a basis), while allowing the deduction of those costs and expenses within all the other algorithms for calculating taxable income, is completely prejudicial and improper, and results in an unconstitutional system that improperly taxes labor directly, instead of only taxing capital profits and "gains" indirectly, as was, and is still, promised in the propaganda promoting the income tax.   It effectively, completely transforms the income tax from a constitutional indirect tax on CAPITAL gains and profits, which is what was sold to the people in 1913 (and still is today), into an unconstitutionally direct, communistic tax on LABOR – which was never authorized or upheld by the courts, and has in fact, as shown in this website, NEVER ACTUALLY BEEN ENACTED INTO LAW. 


     The law and Congress, never intended for the American citizen to be taxed on all of his earnings and the fruits of his labor.   The early Supreme Court decisions make that absolutely clear.  The income tax was "sold" to the American people as being intended to be applied ONLY to the GAIN or PROFIT that actually constitutes INCOME, rather than to be imposed on all Americans' earnings, and on all of the fruits of our labors, which are simply not the true or proper subjects of the income tax. 


     In arguing that all labor earnings are directly taxable, and that there are no costs at all incurred in providing that human labor, except for that lousy $3,050, our government shows just how sick and mentally defective its thinking has become.  Do you want to know where they got their thinking from?  Then read the second plank of the Communist Manifesto – because that’s where they got it, and THAT’S WHAT THEY’RE PRACTICING – COMMUNISM.  They are not practicing the law as it is written, nor are they obeying the Constitution.


     This, of course, is one of the primary controlling “mechanisms” that has been fraudulently used by the Internal Revenue Service since 1944, when America first began withholding income tax (that, as we have shown, was not actualy owed) from citizens, under the new employment tax laws that had just been passed, to effectively reduce the American People to a state of involuntary servitude (even though they don’t realize it – which shows just how insidious these lies are), which has been made manifest by this absolute and direct, communistic control that the government has assumed over the fruits of our labor through the mal-administration of this income tax.



More on What Legally Constitutes “Income”,


And On Statutory Construction when imposing taxes,


And on how and why there is NO tax clearly Laid On the Citizen’s Income.