Talk:Income tax in the United States
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[edit] The meaning of income
I don't think the Conner v. United States discussion is on the mark. The court's ruling in that case has nothing to do with the fact that compensation isn't a wage. Rather, its holding is that the taxpayer must gain something to have income. If I resell a bottle of wine I purchased for $100 at a price of $100, it is absurd to say I have income of $100. Similarly, if my $100k fair-market-value house burns down and I am reimbursed for $100k, it is absurd to say the $100k is income. Moreover, under the 16th Amendment, taxation on such receipts may not be constitutional, because only income may be taxed, and income requires net gain to the taxpayer.
--Rmalloy 03:46, 17 December 2005 (UTC)
Very true!--BB69 Talk 04:59, 19 December 2005 (UTC)BB69
[edit] Material moved over from the article page for discussion
What is the significance of any of the following? The liabilities for tax evasion are directly created by Congress, not merely sanctioned. BD2412 T 17:14, 29 November 2005 (UTC)
It is directly significant because if the IRS can not create any criminal offense or any liability, then they can not collect or say what is an offense. Show the Statute at Large which created a specific LIABILITY for taxes imposed by subtitle A.--bb69 17:20, 29 November 2005 (UTC)BB69
2 Am Jur 2d, page 129 (1962)
Administrative Law Section 301. -- Particular applications.
In application of the principles that the power of an administrative agency to make rules does not extend to the power to make legislation and that a regulation which is beyond the power of the agency to make is invalid, it has been held that an administrative agency may not create a criminal offense or any liability not sanctioned by the lawmaking authority, and specifically a liability for a tax [fn 2] or inspection fee. [bold emphasis added]
Footnote 2: 2. Commissioner of Internal Revenue v. Acker, 361 U.S. 87, 4 L.Ed.2d 127, 80 S.Ct. 144 (1959); Roberts v. Commissioner of Internal Revenue, 176 F.2d 221, 10 ALR.2d 186 (9th Cir. 1949) (... regulations “can add nothing to income as defined by Congress.” citing M.E. Blatt Co. v. United States, 305 U.S. 267, 279, 59 S.Ct. 186, 190, 83 L.Ed. 167 (1938)); Independent Petroleum Corp. v. Fly, 141 F.2d 189, 152 ALR 928 (5th Cir. 1944) (... the power to make regulations does not extend to making taxpayers of those whom the Act, properly construed, does not tax); Indiana Dept. of State Revenue v. Colpaert Realty Corp., 231 Ind. 463, 109 NE.2d 415 (no power to render taxable a transaction which the statute did not make taxable); Morrison-Knudsen Co. v. State Tax Com., 242 Iowa 33, 44 NW.2d 449, 41 ALR.2d 523 (use tax).
Liability for the payment of the sales tax is controlled by statute; it cannot be controlled by rulings or regulations of the board. Acorn Iron Works v. State Board of Tax Administration, 295 Mich. 143, 294 NW 126, 139 ALR 368. Annotation: 139 ALR 380 (“retail sale”).
As the Supreme Court held in Brushaber v. Union Pacific R. R. Co, , the amendment did not expand the federal government's existing taxing power -- because the government had always had the power to tax income -— but rather removed any requirement for apportionment of income taxes (meaning profit or gain from any source) among the states on the basis of population. + As the Supreme Court held in Brushaber v. Union Pacific R. R. Co, , the amendment did not expand the federal government's existing taxing power but rather removed any requirement for apportionment of income taxes (meaning profit or gain from any source) among the states on the basis of population.
- The modern interpretation of the Sixteenth Amendment taxation power can be found in Commissioner v. Glenshaw Glass , in which the Court held that Congress had the power to tax any increase in an individuals wealth from any source, and that Congress had intended to impose a tax on all such gains unless they were specifically exempted in the tax code.
- What, exactly, is questionable about Glenshaw Glass? The Court was crystal clear in its opinion in that case. BD2412 T 17:30, 29 November 2005 (UTC)
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- What's questionable is the interpretation of the court case instead of posting exact quote from case. If an interpretation is going to be posted then a clarification is allowed as well.--bb69 17:53, 29 November 2005 (UTC)BB69
The following statement from the article is questionable.
"The Court then enunciated what is now understood by Congress and the Courts to be the definition of taxable income, "instances of undeniable accessions to wealth, clearly realized, and over which the taxpayers have complete dominion." Id. at 431."
Chief Justice Warren had completed his theoretical discussion and was moving on to an application of the law to the facts of the case. The description given was not of income in general, but of the damage award under consideration in the case. He was not defining income, merely noting that it would be absurd if "undeniable accessions to wealth, clearly realized, and over which the taxpayers have complete dominion" were not income.
It has never been necessary that a taxpayer have complete dominion over an accession to wealth, or that it be clearly realized by the taxpayer in order for it to be income to that taxpayer. In UNITED STATES v. MITCHELL, 403 U.S. 190 (1971), a woman was held to have received income for purposes of the income tax despite having an, at best, incomplete knowledge of the income, much less complete dominion over it. Withheld income tax and social security tax are part of an employee's gross income despite his having little dominion over the former and none over the latter.
You need to look elsewhere for the definition of income. Note: The above commentary was inserted by an editor at IP address 152.216.3.5 on 25 January 2006.
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- Dear editor at 152.216.3.5:
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- The term "complete dominion" as used by the Court in Glenshaw Glass has a more technical legal meaning than the one you are using. For purposes of U.S. income tax law, the woman in the Mitchell case -- actually the "women" in the case -- did have "complete dominion" over the income realized in their cases -- as that term is used in Glenshaw Glass. Similarly for purposes of taxability under U.S. income tax law, I certainly have "complete dominion" over all my wages -- even the withheld Social Security tax, Medicare tax, and Federal income tax portions I never actually see or touch. The property law concept underlying the tax law discussed here is that property law is "relational." For example, as between me and everyone else in the world, I do have complete dominion over my own wages (including the withheld part) for purposes of Glenshaw Glass. The term "dominion" as used in Glenshaw Glass has a technical legal sense and not the more colloquial sense I believe you are ascribing to it.
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- And, yes, for purposes of U.S. income tax law, the term "realized" is also something of a term of art. The general rule is that income must be "realized" to be includible in gross income under Internal Revenue Code section 61. (Income doesn't necessarily have to be realized in the form of money, cash, etc., but there generally does have to be a "realization" event before the income can be "recognized" for tax purposes.)
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- Glenshaw Glass is one of the very first court cases that almost every tax lawyer studies. It is a leading case. The quote from Glenshaw Glass regarding "instances of undeniable accessions to wealth, clearly realized, and over which the taxpayers have complete dominion" is so pervasively repeated by American legal scholars as an example of a definition of income that, I argue, it is eminently appropriate in the main article in Wikipedia. Famspear 15:27, 26 January 2006 (UTC)
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- Glenshaw Glass is almost as good as the Woodsam case. GG also stands for the proposition that ANY ACCESSION to wealth is gross income unless otherwise excluded. Woodsam let in a silly rule that secured loans were not income. If you are able to borrow borrow than the adjusted basis, you have realized the capital gain and have complete use of the money. I.e. buy a house a ten dollars, it goes up in value to a million dollars. Instead of selling, you take a nonfrecourse secured loand of half a million dollars. You have effectively realized a half million dollar gain because you have the cash. Daniel Shaviro has argued for an anti-Woodsam rule. John wesley 13:25, 4 May 2006 (UTC) But then again, he is Haigs-Simon, guy. John wesley 13:25, 4 May 2006 (UTC)
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[edit] What was used before?
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Please help improve this article or section by expanding it. Further information might be found on the talk page or at requests for expansion. This article has been tagged since January 2007. |
Before the US started collecting a personal income tax, what was (were) the source(s) of funding for the federal government? Are those revenue sources still being used, and how much do they generate compared to income taxes?
- Mostly import/export tariffs, I think. I don't have numerical references at my fingertips. -- Beland 01:59, 4 May 2006 (UTC)
[edit] Puerto Rico
What are the rules for PR? John wesley 15:21, 28 April 2006 (UTC)
[edit] Added non-compliant tags
This article is compromised by a gigantic libertarian tract that has been dumped in the middle of it. Needs immediate attention.--Nydas 17:18, 7 May 2006 (UTC)
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- Dear fellow editors: I have reverted the entire mess that was dumped into the article on 7 May 2006 by a new user (“BobHurt”). Much of the dump appears to have been copied and pasted wholesale from a web log at http://triallogs.blogspot.com/2005/08/larken-day-five_112388333289521432.html -- in addition to being a massive violation of Verifiability and Neutral Point of View. Tag removed. Yours, Famspear 19:06, 7 May 2006 (UTC)
[edit] Another huge text dump
On 7 May 2006, a user named Supremelaw virtually wiped out the article on Income tax in the United States with a huge, POV text dump apparently copied at least in part from http://www.supremelaw.org/sls/31answers.htm or http://home.satx.rr.com/truthamerica/The%20Truth%20About%20The%20IRS.htm. I reverted the text dump. Also, see comments on this talk page regarding another text dump on 7 May 2006, that one by a user called "BobHurt". Yours, Famspear 20:24, 7 May 2006 (UTC)
--While I do not agree with the text dump, I think that there should be a section added to the article pertaining to some of the points brought up about the legitamacy of the income tax in the US. There is a movie coming out called "America: from Freedom to Fascism" dealing with this topic and using many credible sources and arguments. [note: Above comment was posted by user Nytemunkey on 13 June 2006]
Actually, there is already an article in Wikipedia for arguments about the validity of the Federal income tax: Tax protester arguments. Yours, Famspear 21:42, 13 June 2006 (UTC)
- Considering how strong some people's emotions are about the income tax, shouldn't there be a link in the main page to the protester arguments? I think it might help reduce the amount of text dumping into this article; they would see that the alternative views are also presented (not everyone immediately believes/accepts the neutral POV and inclusionist philosophy of Wikipedia). I'm annotating an essay, and came into this page because I couldn't figure out where the discussion of the anti-income tax movement was. Without the link in the main article, I'll have to add a separate link to the protester POV in what I'm writing. I can't do it right now myself because I'm operating under severe time constraints. Maybe I can remember to come back and do it, this is insurance. :) I'd actually prefer that someone else write it, though; legal stuff isn't my forte.--Tygerbryght 23:48, 27 November 2006 (UTC)
[edit] Revert apparent copyright violation
On 25 June 2006 certain material was added to the article, much of it apparently copied from http://www.papillonsartpalace.com/decoding.htm
for which copyright is claimed by WorldNetDaily.com
I removed the inserted material. Yours, Famspear 17:07, 26 June 2006 (UTC)
[edit] maximum tax bracket
whats the maximum % of tax that americans pay on income tax? [Question posed by anonymous user at IP 81.149.143.157.]
For the year 2005 for individuals, the highest Federal marginal tax rate for income tax is 35%. See Progressive tax. In the early 1950s the rate was above 90%. Yours, Famspear 01:03, 20 August 2006 (UTC)
- To clarify, this is just "income taxes" and does not add in payroll taxes (7.5% by employee and 7.5% by employer) up to $90,000. It also does not take into account taxes that are passed down through products such as excise and corporate taxes. So the Maximum tax bracket under the income tax system does not equal tax burden. Morphh 02:25, 20 August 2006 (UTC)
Yes, and it also does not include the effect what some call "double taxation" of shareholder's income -- income taxed at the corporate level and then again when the dividend is paid to the shareholder. (By the way the payroll tax is actually 7.65% for employee and 7.65% for employer, with the $90,000 income limit applying only to 6.2% of each, and no dollar limit on the income to which the remaining 1.45% of each applies.) Yours, Famspear 02:40, 20 August 2006 (UTC)
Also, the $90,000 limit was for 2005 wages. For 2006, it's $94,200, and it keeps changing with inflation. Yours, Famspear 02:45, 20 August 2006 (UTC)
[edit] General Question
Based soley on income tax who would end up with more after taxes, person A who made $326,452 (in the highest bracket 35%) or person B who made $326,450 (33%)? William conway bcc 16:08, 21 October 2006 (UTC)
- Understand that these are marginal rates, so the highest bracket is only applied to the amount of money in that range, not the entire income. In your example Person A is taxed at 35% only for his last two dollars. The answer to your question is Person A will end up with more after taxes, since he had higher income. It looks like you were using last year's brackets, so for this year, with the cut-off at $336,550:
- Person A nets 336,552 - 97,654 = $238,898 (29.02% of income)
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Income dollars x Rate = Tax owed 7,550 - 0 .10 755.00 30,650 - 7,550 .15 3,465.00 74,200 - 30,650 .25 10,887.50 154,800 - 74,200 .28 22,568.00 336,550 - 154,800 .33 59,977.50 336,552 - 336,550 .35 0.70 TOTAL 97,653.70
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- Person B nets 336,550 - 97,653 = $238,897 (also 29.02% of income, because the values are so close to each other)
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Income dollars x Rate = Tax owed 7,550 - 0 .10 755.00 30,650 - 7,550 .15 3,465.00 74,200 - 30,650 .25 10,887.50 154,800 - 74,200 .28 22,568.00 336,550 - 154,800 .33 59,977.50 TOTAL 97,653.00
- There is an example of this calculation in the article and a further discussion below. Hoof Hearted 14:47, 2 February 2007 (UTC)
[edit] The law of diminishing returns and marginal tax rates
An anonymous editor added the material shown below in bolding:
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- Contrary to a popular belief, there is no point at which one is better off earning less money (excepting, of course, those that believe in the law of diminishing returns). That is, because the marginal tax rate is always far less than 100%, an individual is financially "better off" realizing "more" income than "less" income, even though the marginal tax rate applicable to the highest level of income of that person increases as income increases.
I reverted the edit, for two reasons. First of all, the law of diminishing returns can be roughly stated as being: "As one's effort increases, the marginal benefit of each unit of effort past a certain point becomes smaller and smaller." In an income tax system of progressive taxation -- where the marginal rates increase as one's income level increases -- the realization of higher and higher levels of income does generally result in an application of the law of diminishing returns -- after considering the tax collector's take, the taxpayer gets to keep a smaller and smaller share of each dollar (to use the U.S. example). However, as the article correctly points out, the individual is still financially better off realizing more and more income than in realizing less income. That's just basic mathematics.
Second, the individual's "belief" that, because of the law of diminishing returns (which, again, does in fact apply here) he or she is not better off financially does not change the fact that he or she in fact is better off financially. Again, this is simply mathematics. The only way the individual could be worse off financially is if the marginal tax rate were greater than 100%.
Whether a person feels subjectively that working for those last, extra, heavily-taxed dollars is worth the net marginal overall benefit aside from the financial benefit is a separate question -- one which only the individual can answer. Yours, Famspear 02:51, 11 December 2006 (UTC)
[edit] State and territorial income taxes
There is no mention in the section State and territorial income taxes about U.S. territories such as Puerto Rico and Guam whose citizens pay no federal income tax. The main article State income tax makes no mention of it either, and does not seem to be an appropriate page for this discussion. --Stux 17:27, 31 December 2006 (UTC)
- Good point - I'll add that in. Please expand if you have more knowledge on it. Morphh (talk) 19:19, 31 December 2006 (UTC)
[edit] Can we make articles for individual state taxes?
It seems like there should be something about it. Perhaps we can have a how to do section on taxes or something also.
- The articles on state taxes are State income tax, Sales taxes in the United States, and State tax levels. In regard to a "how to do taxes" section, this is outside the scope of Wikipedia. An encyclopedia does not offer "how to" advice. Morphh (talk) 20:40, 19 March 2007 (UTC)
[edit] Laugenour hoax
A user inserted the following material into the article:
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- In USA v Laugenour, case number 2:06-CV-00183-GEB-KJM, in the United States District Court for the Eastern District of California, the Laugenours in docket number 76 gave judicial notice of the "facts of the case" in which the DOJ attorneys admitted to acceptance of incentive money by officers of the court for convicting income tax case defendants. They also admitted to owing back to the people every dollar taken without a procedurally proper summary record of assessment, and they agreed that levies do not apply to the people in the private sector. They also agreed that the IRS agents intentionally put false information in Individual Master Files to make it seem that they owe income taxes when in fact they do not. The DOJ attorneys further admitted to status as common criminals with a pattern of fraud and extortion that exceeds the requirements of criminal and civil racketeering. These facts echo the sentiments of thousands of victims of crimes by IRS and DOJ employees against Americans who refuse to file returns for taxes they believe they do not owe.
The above material is tax protester rhetoric, is false, and has already been exposed in another talk page here in Wikipedia. The Laugenours were parties in the case. As parties, the Laugenours cannot give judicial notice of the facts of the case or of anything else, as explained below.
In the Laugenour case, the taxpayers filed a somewhat mangled version of a request for judicial notice under Rule 201 of the Federal Rules of Evidence. The above verbiage is based on the legally frivolous argument that the opposing side's failure to respond to the request somehow constitutes an "admission" of something. As previously noted on the talk page for the article on Income tax, there is a procedure under the U.S. legal system whereby a party can be deemed to have admitted a fact. Unfortunately, that procedure is not found in Rule 201. As explained below, a request by a party under Rule 201(d) does not result in an "admission" of anything. Indeed, a request under Rule 201 results in nothing unless the Court itself makes a ruling.
Rule 201(d) relates to requests made by one party that the Court itself judicially notice a particular fact. To qualify, however, the "fact", must be "capable of accurate and ready determination by resort to sources whose accuracy cannot reasonably be questioned" (Rule 201(b)). Examples of statements of facts of this kind would be: "Albany is the capital of New York" or "the sun generally rises in the east and generally sets in the west" or "spring is followed by summer."
By law, the judicial notice of adjudicative facts, if one is made at all, is made by only the court. The silence or acquiescence of an opposing party (such as a government lawyer) after the filing of a Rule 201(d) request does not result in any kind of "admission" under Rule 201; the silence or acquiescence also does not constitute a ruling by the court. The idea that the absence of a Department of Justice response to the Laugenours' assertions found in a Rule 201(d) request would constitute, by silence and acquiescence, an admission, agreement or confession of the Laugenours' assertions is without legal merit and is indeed legally frivolous. Yours, Famspear 16:43, 4 April 2007 (UTC)
