Tax analogy anyone could understand

Over lunch two friends were discussing the government's recent round of tax cuts: "I'm opposed to those tax cuts," the retired college instructor declared, "because they benefit the rich. The rich get much more money back than ordinary taxpayers like you and me and that's not fair."

"But the rich pay more in the first place," the businessman argued, "so it stands to reason that they'd get more money back." He could tell that his friend was unimpressed by this meager argument. Even college instructors are a prisoner of the myth that the "rich" somehow get a free ride in America. Nothing could be further from the truth. Let's put tax cuts in terms everyone can understand.

Suppose that every day ten men go to a restaurant for dinner. The bill for all ten comes to $100. If it was paid the way we pay our taxes, the first four men would pay nothing; the fifth would pay $1; the sixth would pay $3; the seventh $7; the eighth $12; the ninth $18. The tenth man (the richest) would pay $59. The ten men ate dinner in the restaurant every day and seemed quite happy with the arrangement until the owner threw them a curve.

"Since you're all such good customers, he said, I'm going to reduce the cost of your daily meal by $20." Now, dinner for the 10 only costs $80. The first four are unaffected; they still eat for free. Can you figure out how to divvy up the $20 savings among the remaining six so that everyone gets his fair share? The men realize that $20 divided by 6 is $3.33, but if they subtract that from everybody's share, then the fifth man and the sixth man would end up being paid to eat their meal. The restaurant owner proceeded to work out the amounts each should pay under the same assumptions: Now the fifth man also paid nothing, the sixth pitched in $2, the seventh paid $5, the eighth paid $9, and the ninth paid $12 leaving the tenth man with a bill of $52 instead of $59.

Outside the restaurant, the men began to compare their savings. "I only got a dollar out the $20," complained the sixth man, pointing to the tenth, "and he got $7!"

"Yeah, that's right," exclaimed the fifth man. "I only saved a dollar, too. It's unfair that he got seven times more than me!"

"That's true," shouted the seventh man. "Why should he get $7 back when I got only $2? The wealthy get all the breaks!"

"Wait a minute," yelled the first four men in unison. "We didn't get anything at all. The system exploits the poor."

The nine men surrounded the tenth and beat him up. The next night he didn't show up for dinner, so the nine sat down and ate without him. But when it came time to pay the bill, they discovered something important. They were $52 short!

And that, boys, girls, and college instructors, is how America's tax system works. The people who pay the highest taxes get the most benefit from a tax reduction. Tax them too much, attack them for being wealthy, and they just may not show up at the table any more. After all, there are lots of good restaurants in Switzerland and the Caribbean.

Here's another one for those who think that they are doing their duty while paying their income tax: Think again.

Dear Federal Government,

PLEASE PROSECUTE ME.

I, Larken Rose, have not filed a federal income tax return for 1997 or any subsequent year. This is not because I am protesting any law, or because I do not want to pay my “fair share”; it is because I refuse to be a victim of the biggest financial fraud in history. I also refuse to remain silent while government lawyers illegally defraud my fellow Americans.

People by the thousands are learning that the “conventional wisdom” about the federal income tax is just plain wrong. As more and more Americans are discovering that the law itself shows that the income of most Americans is not taxable, DOJ and IRS officials are desperately trying to distract from the issue by dishonestly portraying it as a frivolous “tax protestor” argument, and by trying to silence (via court injunctions) those who publicize the issue. This summary shows why the IRS and the DOJ refuse to have an open, honest discussion about what the government’s own regulations say:

Point 1: The federal income tax applies only to one’s “taxable income,” not to all income, and the income tax regulations (e.g. 26 CFR §§ 1.861-1(a)(1), 1.861-8(a)(1), 1.863-1(c)) clearly show that one’s taxable domestic income is to be determined under the rules of 26 USC § 861(b) and the related regulations beginning at 26 CFR § 1.861-8. (Other sections explain when income from outside of the U.S. is taxable.)

Point 2: So why does it matter whether we use those sections to determine our taxable domestic income? Because more than 80 years of statutory and regulatory history prove beyond any doubt that 26 USC § 861(b) and 26 CFR § 1.861-8 show income to be taxable only when it comes from certain types of international or foreign commerce. In other words, contrary to what “everyone knows,” most Americans do not receive taxable income, and do not owe federal income taxes.

IRS employees across the country refuse to honestly address the issue, and instead resort to threats, evasions, and accusations, because their own law books expose the biggest financial fraud in history: the misrepresentation and misapplication of the federal income tax. (See www.taxableincome.net for more information.) The nationwide pattern of Gestapo-like tactics by the IRS and DOJ against those who speak the truth is shown in detail at www.Theft-By-Deception.com/declaration.html.

I will not stand by and allow myself, my family and my neighbors to be extorted simply because some power-happy bureaucrats huff and puff about all the nasty things they will do to anyone who does not “comply” with the IRS’ misapplication of the law. To the DOJ and the IRS I say this: You know I am among the most vocal about this issue. Stop terrorizing the American public, and come get me. Make an “example” of me. Surely if my position is “frivolous” and completely devoid of merit, then the DOJ attorneys can easily refute my position in front of a jury, and have me convicted and imprisoned. (I’m not exactly hiding, am I?) You already have what would be “Exhibit A” in my defense: my Theft By Deception video. So take your best shot.

www.Theft-By-Deception.com
It’s time for the fraud to end.

Click here for a printable version.

Click here for a PDF (Adobe Acrobat) version.

(Anyone may print, publish, or distribute the above notice--unaltered
and in its entirety--without having to ask me or tell me first. - Larken Rose)

The above notice has run in the following publications:
The Honolulu Advertiser (8/27/02, page B5)
The Idaho Observer (8/13/02, page 14)
The Texas City Sun (8/18/02, page 15A)

On August 14th and 15th, 2002, approximately 900 print-outs of the
above notice were handed out in front of the IRS and Department of
Justice buildings in Washington DC, including hundreds of copies being
personally handed to IRS and DOJ employees.

The following papers refused to run the above flier, even as a paid ad:
The Tampa Tribune
The St. Petersburg Times
The Kansas City Star
Idaho Statesman
Great Falls Tribune

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"After all, there are lots of good restaurants in Switzerland and the Caribbean."

Yet Another Reason Why The
Wealthy Are Leaving The USA

http://www.actionamerica.org/taxecon/privfactor.html

Every time another millionaire leaves the United States, the US tax base is reduced proportionately and the remaining taxpayers take another small hit. It is the total of all of those small hits that makes this issue significant. But, there is a side to this issue, in which each expatriation is much more significant and that could be potentially much more devastating. I'm not talking about just the wealthy any more. I'm talking about the super-wealthy. BILLIONAIRES!...

...In the discussion that followed, a whole new light began to shine. This billionaire, who I have reason to believe would rank in the top 100, of the 538 billionaires on the Forbes World's Richest People list, was not on the list at all, because of one reason. He chooses not to be. He chooses PRIVACY. But, as he pointed out to me, that would not be enough, if he were still a US citizen....

...As a US citizen, he would have to report to the IRS annually, ALL of his worldwide earnings, regardless of where in the world the income was generated or where it was banked. That would mean that ALL of the financial information necessary to trace his net worth would be accessible in one place. Years ago, as his net worth approached the level that would have placed him on the Forbes 400 Richest Americans list, he found that scenario to be unacceptable; hence, expatriation. Are you beginning to see where this is leading?...

...The point is, that beyond fear of the IRS and their confiscatory powers, the super wealthy have a far more powerful reason for choosing expatriation - their desire for Personal Privacy....

Foreign Wealth is Leaving Too

...It gets even worse. Because of the IRS implementation, earlier this year, of "Qualified Intermediary" (QI) Regulations, privacy concerned foreign billionaires (and millionaires), who have until recently been responsible for large amounts of foreign investment in the United States, are now moving their investments to more "private" jurisdictions, as well. The reason is simple. The QI Regulations require foreign financial institutions who invest client money in the United States to reveal the true identity of individual investors or lose the right to serve as a "Qualified Intermediary" for US investments. Those billionaires (and millionaires) who want to preserve their privacy are just directing those financial institutions to invest their money elsewhere....

...So now, not only is the IRS driving privacy concerned US billionaires out of the United States, with all of their investment capital and tax base, but they are driving privacy concerned foreign billionaires (and millionaires) to invest their wealth offshore, as well. In today's market, there are many other places where the wealthy can invest their money for a similar risk and return, without having to sacrifice their privacy as part of the price.

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