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July 13, 1999 - Bill Cooper
56:34
Legality of Taxes #4
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Time Text
Lights out on this hour.
This is our hour as we die.
I'll have to follow. He's as hollow as the tide.
Life's end would it look to me, a better life, so to be.
I'll have to follow. He's as hollow as the tide.
Life's end would it look to me, a better life, so to be.
Life's end would it look to me, a better life, so to be.
I'll have to follow. He's as hollow as the tide.
Life's end would it look to me, a better life, so to be.
I'll have to follow. He's as hollow as the tide.
Life's end would it look to me, a better life, so to be.
I'll have to follow. He's as hollow as the tide.
I'm William Cooper and you're listening to the Hour of the Tom, once again.
Oh Well, folks, we continue with episode number four of the Legality of Taxes Symposium.
That was held recently in Washington, D.C.
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They wouldn't call last night, but they called today.
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Okay, folks, get ready, because here we go.
Well, I don't know what's wrong, so I'm going to have to put on some music here.
And, uh, until I can figure it out.
Bye, Cracky.
And I will figure it out.
Okay, while I figure this out, you listen to this music, and I'll be right back.
He grabs a cigar, on his facial mark, and lights it up like a ray of light.
He's a hero!
Husband's name on the western flame, he makes the difference, way to go!
on the western plain, it makes a difference where you go.
Sing a lulla, and a bella, at the bar.
Here it is.
What is that?
the okay folks here it is
is filing pay taxes direct taxes
Thank you.
So if the income tax goes down, because the people never really did ratify the income tax amendment, which means we're back to the original Constitution, unamended.
We're back to, for instance, Article 1, Section 9, Clause 4.
Which gave to Congress the power to tax the people in two ways.
With indirect taxes, such as excise taxes, taxes on cigarettes and liquor and other things that we could avoid as an indirect tax.
The Constitution also gave Congress the power to impose direct taxes.
Taxes we could not avoid, like an income tax.
But Congress When the people gave Congress that power, excuse me, in 1789, they did so with an important condition.
Any direct tax that Congress was going to impose on the people had to be apportioned.
Meaning if California had 10% of the people, California had to come up with 10% of the revenue of that particular tax.
Brilliant provision by the forefathers.
Making it extremely difficult for the federal government to impose direct taxes on us that we could not avoid.
Direct taxes were not imposed on Americans.
Congress tried in 1894, they passed a tax, an income tax, without apportionment, ignoring the Constitution.
The Supreme Court, as Larry has pointed out, struck it down in 1895 in the Pollack case.
Saying it's not apportioned.
It's unconstitutional.
The forces who wanted an income tax didn't rest.
Eventually, in 1909, they prevailed upon Congress and got Congress to pass a proposed amendment to the Constitution to basically repeal the apportionment provision, allowing Congress to impose a direct tax on the people without apportionment.
That became The proposed, or the purported, Sixteenth Amendment.
But it required three-fourths of the states to ratify it.
And as we've learned, there's very strong evidence that Philander Knox, the Secretary of State in 1913, committed fraud in proclaiming that it had been ratified.
Well, this issue will be settled, I'm sure, eventually.
But if the income tax goes down, or direct taxes go down, Not just the income tax, but the Social Security tax.
What then?
Well, there are many other taxes.
Many other ways that Congress can tax the people.
Indirectly.
Approaches to taxation that people can avoid.
There are think tanks across the land that have, and politicians, Statesmen that have been proposing tax reform for some time.
One of the America's premier think tanks is the Heritage Foundation.
And they have economists who have become experts on these various approaches to taxation.
Not just direct taxes, but indirect taxes.
As well.
And, we at the Foundation, and of course this panel, we understand that if the income tax goes down, there may be a replacement, or there may have to be a replacement.
Of course.
But, our position is, that will be, that's a political decision.
That will be resolved through the Given-Taken Society.
Politics is consensus.
The consensus may come down on a sales tax, or an economic fee, a transaction tax, a land value tax, whatever.
But this conference, this symposium, would not be complete, we don't think, without some discussion.
We don't want to leave anyone in the audience the impression that We're for striking down, or anyone is for striking down the income tax, and recognizing the disorder that would follow if there was nothing to take its place.
So let's now listen to one of the premier economists in the country, senior economist and fellow at the Heritage Foundation, talk to us about at least one of these alternatives.
The sales tax, it's got some credibility on the Hill, that a bill introduced, I believe it was introduced on April 15th, by Congressman Trafican and Towson.
We're not endorsing that approach, but to give you some idea of what people are doing by way of tax reform, Let's hear from Dan Mitchell, a senior fellow, a senior economist at the Heritage Foundation.
Thank you very much, Bob.
And I want to welcome everyone here.
I know a lot of you have come from outside of Washington, and so I wanted to add my welcome to Washington, D.C., America's work-free drug zone.
And I want everyone to sort of stop and take a deep breath, because There's a little bit of freedom in the air.
Not quite yet, but Congress is about to go out on their 4th of July recess, or as they call it, a district work period.
And since Will Rogers so aptly said that no man's life, liberty, and property are safe while the legislature is in session, I think we can shortly expect that no bad laws will be imposed upon us during that period when they are all out of town on their district work period.
I'm here to talk about what are the alternatives, what might happen if some of the events discussed by other panelists come to pass.
Folks, before you get all wrapped up in what you are about to hear, let me warn you.
What Daniel Mitchell is about to propose is not only unconstitutional, but extremely dangerous to our freedoms.
For those of you who know and understand the Constitution as I do, you will spot the unconstitutionality of this proposal instantly.
And then as you listen to him as he goes along, you will also spot the danger.
Tremendous danger to us all.
I don't know how the Heritage Foundation can call this man What he has just been introduced to be.
Unless, number one, none of them have studied the Constitution and, in truth, could not possibly know anything about it.
Or, number two, this is a subversive proposal meant to do the damage that, if it ever becomes law, it is most certain So pay attention to this, and understand that a national sales tax, or a flat tax, is unconstitutional.
And they've been talking about the unconstitutionality of it through this whole presentation.
It's a direct tax.
The federal government does not have the authority given to them by the Constitution to tax you at your cash register within the territorial boundaries of your state.
They only have authority over interstate commerce and international commerce to levy excise taxes and only upon the first sale within that international or interstate commerce.
So, if you don't understand all this, get out your copy of the Constitution and study it thoroughly, and listen to this guy, and understand that he could be proposing this innocently, not
understanding the limits placed upon the federal government by the Constitution
for the United States of America, or he could be the enemy.
We have viewed, at the Heritage Foundation, we have viewed the tax system through a prism of the Constitution.
Not in the sense of the issue talked about here, but in the sense that we believe that a tax system should fulfill the Constitution's promise of equal treatment under the law.
In other words, the law should apply equally to all.
Now, what this means is that there should be no special treatment or subsidy or reward for some people who happen to have a special access to the powerful in Washington, and neither should there be any special penalty Imposed upon those who happen to be in disfavor among the elites in Washington.
And that means that you should have a system that doesn't penalize you on the basis of how you earn your income.
It shouldn't penalize you on the basis of how you spend.
And it shouldn't penalize you on the basis of the level of income or wealth or consumption that you have.
You want the law to treat everyone equally.
And what does that mean?
It means that whatever your tax code is, it should tax economic activity only one time, and it's bad enough to give the government one bite at the apple, don't get them twice, and then tax at one rate.
And if you have a tax code that fulfills those two very simple principles, you're going to have something that, as an economist, I would love to drone on endlessly about how that's going to be good for our economy, but perhaps even more importantly, from a moral and from a philosophical and a constitutional perspective, We will have satisfied the notion of equal treatment under law.
Now, much of what the Heritage Foundation has done within the guidelines of those principles has been to work on the flat tax.
But what happens if, knock on wood, good news happens?
And somehow the courts or the politicians say, well, you can't have any direct tax on income, and that means even a simple, fair, low-rate income tax or the flat tax can't happen.
What does that mean?
Well, fortunately, there is more than one way to skin the cat.
Now, mind you, when you were out there talking earlier, Bob, what would happen if the income tax went away? I do briefly
get tempted to think that we could somehow survive, as this country survived
from 1776 to 1913, with neither a sales tax or an income tax, but I guess,
maybe a little old-fashioned.
I mean, if we didn't have any kind of big broad-based tax, we might not have any money
to get the corrupt socialist governments to prop up their economies around the world.
We might not be able to pay people to have children out of wedlock and destroy families in the inner city.
We might not have money for the Department of Education that bonds down teachers with red tape so they have a harder time educating our kids.
And so, of course, I guess we do need some revenue source so the government can continue to carry out all these very important functions.
Well, what is the alternative?
There is an alternative that I think very clearly satisfies those principles that I laid out earlier And that's a national sales tax.
Now, before I tell you what a national sales tax is, let me tell you what it isn't.
Because if I tell you what it isn't, that's going to tell you that it's a pretty good idea.
First of all, it's not 17,000 pages of code and regulations that accompany our income tax.
And this, by the way, doesn't include all the tax court decisions and IRS letter rulings.
It is not 5.5 million words, many of them inconsistent with each other, that define our current income tax code and regulations.
It is not the 569 different forms that our current income tax requires that are available on the IRS's own webpage.
And to give you actually an idea of how bad the system is, I just can't resist, it's one of my, I guess it's not a favorite anecdote, maybe it's a least favorite anecdote.
In 1997, Money Magazine Said the hypothetical family's tax return to professional tax preparers.
CPAs.
People who presumably knew what they were doing.
They got back 45 answers.
All 45 were different.
All 45 were wrong.
And fewer than 1 in 4 were even within $1,000 of the right answer.
And by the way, who even knows whether Money Magazine's panel of experts came up with the right answer.
And this actually caused a little bit of a stir in Washington.
Our elected officials got right to business, and they passed the 1997 Taxpayer Relief Act.
I think the only relief it gave was to tax lawyers and accountants, because that one law created 285 new sections
of tax law and amended 824 others.
And so when Money Magazine in 1998 did the same survey of sending out a hypothetical family's tax return, and
remember, hypothetical family.
Not General Motors, not Bill Gates, but a hypothetical family.
This time, they got back 46 answers.
Once again, all 46 were different from each other, and all 46 were wrong.
And this time, Instead of just one in four being within $1,000 of the alleged correct answer, the closest answer to the alleged correct answer was off by $610, and the average mistake was more than $5,000.
That's the tax code that we have today.
This is what a national sales tax would not be.
And by the way, of course, I love the fact that under our current tax code that your normal constitutional protections do go out the window.
You are presumed guilty until you prove yourself innocent.
So in other words, you have fewer constitutional protections than Timothy McVeigh and O.J.
Simpson and everyone else out there who robs, kills, rapes, murders, pillages, you name it.
Of course, I guess what the IRS does is pillages, but I'll try to keep those editorial comments out of here.
So that's what National Retail Sales Tax isn't.
What is it?
What it is, is very simple.
And I'll just assume that it's a 20% rate.
You know, obviously the rate would depend on the size of the government.
But, since I'm not a math genius, let's keep 20% in case I have to do any calculations.
A 20% tax on all final consumer purchases of goods and services.
Now this is a little bit different than what you're probably familiar with if you're from one of the 45 states with a sales tax.
Everything would be taxed.
In most states, for instance, if you don't tax services.
In most states, you have special penalties on some products, like tobacco, that are viewed as politically incorrect.
But the view of a National Retail Sales Act is that we want to fulfill that constitutional promise of equal treatment, and so you don't want special subsidies for some products or services, special penalties imposed on others.
So one flat, low rate imposed on all final consumer purchases.
Why do I say final consumer purchases?
Why not purchases from one business to another?
You don't tax purchases from one business to another because that causes cascading and double taxation.
And it creates an incentive then for businesses to become just giant vertically integrated conglomerates.
And the example that I will give you that I think makes the most sense, at least to me, is that if we tax the sale from the tree farmer, I don't know what you call tree farmers, but the tree farmer, to the lumber mill, and then you tax again the transaction from the lumber mill To the furniture maker, and then you tax the transaction from the furniture maker to the wholesaler, and then again from the wholesaler to the retailer, and then you levy another tax at the level of the retailer.
Guess what?
You're taxing the one product that the consumer buys at the end, what, five or six times.
And that would obviously create a huge incentive for one company to simply vertically integrate and have all of those operations under one roof.
And we don't want the tax code to be dictating how the economy is functioning.
We want the tax code to do one thing and one thing only.
Collect whatever amount of money the government demands, hopefully a small amount, but that's up to the political process, and to do so in a way that is going to be as least intrusive and as least damaging and as least distortionary to the economy, while also fulfilling the promise of treating all citizens equally under the law.
What sort of compliance would you have with the National Retail Sales Tax?
You, as an individual, would have none.
Zip.
Nada.
No more tax system for you.
The closest you come to a tax system as a consumer, as an individual, under a National Retail Tax Act, is you buy products.
And there's a tax that's part of that product.
And by the way, it's very important, that tax should be visible.
You don't want to make the mistake that the European socialist stagnant economies have made with value-added taxes that are built into the price of a product and so when you buy it, you don't know how much the government is taking from you.
Whereas if you have a very clear National Retail Sales Tax, where it's on your cash register receipt that you pay 20% more because the government wants to spend this money, then you have a way of deciding, is this price that I'm paying too much for government?
Is government giving me 20 cents on the dollar worth of goods and services?
Now, I would think the answer would be no.
We put pressure to bring that rate down.
But again, that's a question for the political process.
So you would have nothing to do with the tax code as an individual.
If you're a business, You would basically do what you do now if you're in one of the 45 states with a sales tax.
Except it would be much simpler because you wouldn't have to calculate which products have taxes and which products don't.
You would simply collect 20% on everything you sell.
You would submit a monthly statement or form to the tax collection authority.
And by the way, you could have this tax collection authority actually done at the state level.
Or you could have it be done federally.
The sales tax legislation that has been offered and discussed in Washington proposes to give a commission for states to actually be the collection agency.
And so you wouldn't even need anything remotely resembling the IRS that we have now in Washington.
And that literally is it.
I mean, I'd love to talk for another hour explaining all the details and intricacies of the National Retail Sales Tax, but there aren't any.
We can have a simple tax code if we make a decision that we want to get politicians out of the business of trying to steer our behavior and micromanage the economy.
And we can have a simple tax code if we decide that we want a tax system that treats everyone equally.
All the complications, all the mess, all the distortions that we have with our current income tax all exist because we have deviated from those principles.
And so it's really up to us.
Do we want the simplicity?
Do we want the fairness?
And if we don't get rid of the 16th Amendment, you can get that through a flat tax, or you can get it through a sales tax, and you certainly would only get it through a sales tax if we can somehow get rid of the 16th Amendment.
And actually, I do want to give one word of caution.
Just getting rid of the 16th Amendment, I fear, is not enough, because we won that case in 1895, the Pollock case, but only by a 5-4 vote.
And that was back when the Supreme Court justices probably knew there was such a thing as the Constitution.
I worry that if you have people like David Souter deciding this case today, He would say, oh, well, the Constitution already gives us the right to levy an income tax.
That decision back in 1895 was a mistake.
So I encourage all of us, let's not just fight to put the 16th Amendment six feet under the ground in a lead-lined casket surrounded by concrete with salt over the earth.
Let's try to put something in the Constitution making it unambiguously clear, so clear that even David Souter can't rule otherwise, that an income tax can never come back to haunt America.
Let me go ahead and close, I guess, on an optimistic note.
Again, there's not a whole lot more to discuss on a sales tax because it's so simple.
I actually think that even if we don't succeed with what we're trying to do with the 16th Amendment and the income tax, that events are moving in our direction.
And why do I say this?
I say this because of the Internet.
And it's not for the reason that was discussed earlier, that information is more freely available.
I mean, I think that's great.
The American people do have a chance through the Internet of finding things that the elites don't want them to know.
But I think the beauty of the income tax from the internet, from the perspective of the income tax, is that with each passing year it is becoming harder and harder and harder for the Internal Revenue Service to enforce a tax code that is so fundamentally broken and corrupt in terms of the values it has.
When you have the internet, all you have to do is just go to one of those search engines and type in tax shelter.
Frankly, the number of replies you get will be dictated simply by whatever the maximum capacity is of that server, whether they give you 10,000 replies, 100,000 replies.
It used to be that rich people, that the income tax was largely voluntary for rich people in the sense that they could always go to Bermuda, the Cayman Islands, Hong Kong, Netherlands and Tillys, the Isle of Man.
There are all sorts of places that rich people have always been able to go to hide their income and assets from the government.
Which is one of the reasons why, of course, the class warfare people were always so wrong when they said that we need to have higher tax rates to soak the rich.
But, of course, it actually turned out that the supply sides were right all along.
You lower tax rates and the rich wind up paying more because they find it, all of a sudden, it's not as profitable for them to hide their money overseas and to hide their money in tax shelters.
But the point is, is that the tax shelters and the tax havens and the ways to protect income and assets that used to be an exclusive preserve of the rich are now increasingly becoming More and more something that's available to the average American.
Now, I'm not saying that this is fair and right.
I do think that laws should apply equally to all, and everyone should obey those laws, assuming they are moral and just laws.
And when you have a tax system that is as bad as the one we have now, and individuals are being able to hide their money and evade the responsibilities they have under the law, that simply creates a more onerous and more oppressive regime among the tax collection authorities and the politicians, because they are trying harder and harder to get that same amount of money.
And that, to me, is why I am hopeful, I won't guarantee it by any means, but I am hopeful that the fact that it is becoming increasingly easy for people to hide their money from an unjust and unfair tax system, I'm hoping, not because they'll understand what's right, but simply for self-preservation and the desire to keep that money coming in that they can then spend to help themselves get re-elected.
I am hoping that the politicians will realize we can't keep the income tax anymore.
And actually, everyone else gave their website.
I want to encourage you to find one thing.
We put out a book at the Heritage Foundation, The IRS vs. the People.
And Richard Rahn, and a lot of the chapters, most of them actually focus on flat tax, but one of the chapters was by Richard Rahn, former Vice President and Chief Economist of the U.S.
Chamber of Commerce.
And his chapter was on this very topic of how the politicians are going to have no choice But to get rid of the current tax system for this argument of self-preservation.
And if you go to www.heritage.org, you can get this book, as well as, of course, all the other papers we've done.
I've done a paper, Flat Tax or Sales Tax, Win-Win Choice for America.
Heaven knows we must have hundreds of papers on there, and so if you have lots of time on your hands, feel free to scroll on forever.
But I definitely want people to get a hold of the Richard Rahn article in that book, The IRS vs. the People.
Because that chapter, I think, is a very optimistic, very uplifting look at what the Internet is going to mean for finally giving us tax freedom.
And I guess in closing, I want to sort of add my words to the spirit that's already been expressed up here.
Think back to, what was it, 1774?
Not only am I not a math genius, but I'm not a history genius either, but I think that's when Lexington and Concord took place.
When you had Americans, I guess at that time, British subjects, Who took up arms against the most powerful empire the world had ever seen because they valued their liberty.
And then when you had the Founding Fathers sit down to write the Declaration of Independence, these were people of means.
These were the successful people.
And then when you had the Founding Fathers sit down to write the Declaration of Independence, these were people of means.
These were the successful people, the elite of their day.
And they decided, we're going to go ahead and risk everything.
Matter of fact, I'll probably butcher it in paraphrasing it, but they said, we pledge our lives, our fortunes, and our sacred honor.
And if they, who had so much, and who were the elite of their day, could put everything on the line, and risk everything, including their very lives in some cases, in order to fight for freedom, then for heaven's sake, can't all of us Not pledge our lives and our fortunes and our sacred honors even, but let's at least give a little bit of time to spread the word about freedom and what freedom would mean and how we can have a tax system that is better than the awful one we have today.
Thank you very much.
Thank you very much, Dan.
I want to remind you that this is the time for you to pass your Questions of panel members and we'll get to those in just a moment.
My friends at the Libertarian Party will say that there's an alternative to the current income tax that we haven't talked about here today.
I think Dan did reference it.
I don't know that they've named it, but I have.
They call it the no-action alternative.
Strike down the one you have now and take no action to replace it.
As Dan has pointed out, this would be a good way to force the government to prioritize their spending.
Do we want to subsidize, for example, unwed mothers, or do we want to fix the roads?
Under the current system, they get to do most anything they want to do.
Okay, let's see, we have a few questions.
How much time do we have?
Enough time, good.
Let's, uh, question here for Bill Benson.
Bill Benson, in spite of all that you have suffered at the hands of the federal government, Would you do it all again?
And Bill, you'll need to come to the microphone.
Bob, ladies and gentlemen, and people that are watching this all over this country, I
would suffer it ten times over without a question of a doubt.
No harm.
You understand?
All right, one for Larry Becraft.
If I do not file with the IRS, and I get a computer-generated letter from them,
how do I go about protecting my private property?
Complicated questions is difficult to answer.
When you get a computer-generated letter from the IRS, where is your return?
You haven't filed.
Basically what they're going to do is they're going to send around a special agent if you become one of the people that are targeted for criminal investigation.
They could ultimately investigate what you made and bring charges against you.
And the alternative, instead of going the criminal route, the government might go, or the IRS might go the civil route.
What they'll do is they'll send you a 90-day letter.
Drag you into tax court, or you will have to go to tax court.
And you'll probably end up with a whole bunch of big bucks that the IRS will attempt to collect from you.
Now, in situations like that, you can consult people like Bill Conklin.
And they can try to work out some arrangements.
You know, try to minimize your damage.
All of this will continue.
I look across the tax movement, and I see a bunch of people that are, you know, like I described a few moments ago.
They want to hide.
They want to avoid.
Well, if you're not out there actively trying to do something to bring this thing to an end, that type of activity of the criminal investigations and the civil investigations will continue.
The only way to stop it is for you to do something.
And we can stop it.
As I said, you know, let's take five years and let's apply ourselves.
Let's attack What we perceive as the ills of America, and clearly the tax system is one of the great problems in America, and if we will lift a finger, if we will do something like the Civil Rights Movement did, they went out there in a very small, or smaller, faction of the American people, than we are, brought about change in their favor.
If you want to avoid Getting that little notice from the IRS.
If you want to avoid getting that tax bill, if you want to avoid being criminally prosecuted, there is but one way for us to end it.
It has to go out there and bring the tax to an end.
Nothing more, nothing less.
We have a related question for Bill Conklin.
If we do not file a 1040 in April 2000, when contacted by the IRS, how should we then proceed?
Well, like Larry said, the IRS can proceed two ways, both civilly and criminally.
And they don't go criminally in most cases, but they do in some.
What I suggest in my book and what I think is that people have to take an approach that they're comfortable with.
I think far too many people in this country do one of either two things.
They do nothing or they jump into an approach they don't understand and take a risk that's too high.
The IRS can seize assets.
They can garnish your wages down to about $300 a month.
They can take your house.
They can tow your vehicles away.
And if you resist them towing your vehicles away, they can arrest you for interfering with government property and put you in jail.
The amount of power they have is absolutely unbelievable.
So you've got to understand that when you take this on.
So, how you respond to that letter depends on what approach you want to use.
If you've decided to take an approach as a non-filer, first of all, you should do it on the advice of counsel.
You should never do that without having an opinion letter from an attorney.
If you have an opinion letter from an attorney stating that you waive your Fifth Amendment rights when you file a return, well, obviously you can't be required to waive your Fifth Amendment rights.
One way to respond to that letter, considering, assuming you understand all the implications, which would probably have to be discussed in your individual case, one way to respond to that letter is a cover letter attaching opinion letters from attorneys and other professionals.
And that cover letter states, according to counsel, I filed all required returns and I'm in compliance with the law.
Okay?
If you write a letter back calling the IRS all kinds of names and stating that you're not going to file returns, anything you say can be used against you in a criminal case.
If the IRS needs to prove that you haven't filed a return, it's not too hard to prove it if you write them back a letter and say, I'm not going to file.
I didn't file.
Unfortunately, a lot of people take very dangerous and very hardcore positions they don't understand.
They argue the law with the IRS.
Well, the United States Attorney on cross-examination can beat them up real bad because he's going to understand the law better than the individual who's read some $30 book, which is probably wrong on the law anyway.
You have to be very careful.
In my book, I suggest that if you're an employee, you do not file an exempt or inflated W-4.
The reason, and I've worked on dozens of criminal tax cases, the reason that all employees that I've seen have been indicted is because of the exempt W-4, not because of not filing the tax return.
And actually, it's an inconsistency to file an exempt W-4 and then not file a return if your argument is the Fifth Amendment, because the government can't require you to file the W-4 either.
And if you don't file a W-4 with the employer, the employer will call the IRS up and say, what should I do?
And the IRS will just say, withhold them at one or withhold them at zero.
And then if you want to argue a matter of law about the income tax, you can argue that later in a refund lawsuit, which is safer because it puts you in the driver's seat.
The individual who wants to take an extremely hardcore position needs to remember the song, I believe it was Janis Joplin, that said, once freedom is just another word for nothing left to lose.
The guy who really understands his position, has the advice of counsel, and has nothing left to lose, and is willing to spend a little time in a federal camp if it comes to that, is the only guy that should be on the front, very front lines of this movement.
And that's just the way it is.
Unfortunately, I don't think most people understand that, but that is the way it is.
Thank you.
Don't you have another moment of truth approaching with the information that you now have about the validity of the 16th Amendment and the absence of a statute compelling one to file and pay taxes, income tax?
Do you intend to file in April of 2000?
I wonder if a few people are listening to the answer to this question.
I think I told you during my speech, and I've told many people that I've spoken to, I have searched far and wide and used every bit of my own expertise and training to try to find a federal law that requires me to file a federal income tax return.
I have not been able to find I've also approached my agency that I used to work for and asked for some clarification.
I got a very curt letter that gave me a little report that said your answer is on page 13 and we don't want to talk to you anymore.
My plan right now is to not file a tax return in April of 2000, unless or until someone from my government will show me, so that then I can show everyone else where that law is.
Is that too much to ask?
Here's a question for Dan Mitchell.
Where does the 20% national tax estimate come from?
Without the cost of the bureaucracy of IRS, we should be able to make it much lower.
7 to 10% or lower.
or lower?
Well, the IRS is a very big bureaucracy, but even once you factor in even the non-IRS tax
compliance costs that the government has, you're basically dealing with a maximum figure
of $10 to $13 billion, which, considering that we have a budget of, what, $1.8 trillion,
frankly, just, you know, getting rid of 95% of the IRS, which a good tax reform plan could
do, isn't quite in and of itself going to save enough money to allow a noticeably lower
rate.
Now, there is another aspect to this, though, which is the fact that you're going to get
rid of all the compliance costs imposed upon the private sector.
The Tax Foundation here in Washington estimates that the compliance costs of the income tax
alone exceed $150 billion.
That's the lawyers, the accountants, the man-hours, and so on and so forth, that it simply takes
just to get your tax return to Washington.
You know, that's not the money you have to, that you actually give the government.
That's simply what it costs you to give the money.
It's sort of like a tax on a tax.
And all that money, or the vast, vast majority, over 90%, again, according to the Tax Foundation,
of those costs would disappear under a low, simple, fair tax system like the retail sales
tax or a flat tax.
And so unquestionably, you know, that's a big amount of money, but again, compared to 1.8 trillion dollars, not going to make a big, big difference.
The two things that you have to keep in mind when you're looking at what the rate would be for a low, simple, flat rate tax system, Such as the National Retail Sales Tax or Glass Tax.
The things you have to keep in mind is how big do you want your government to be?
I think we should go back to the enumerated powers that our founding fathers gave to the federal government.
And then we wouldn't have a lot of the programs and agencies that the federal government has.
And we could have a much, much lower tax rate.
But maybe we're not going to win those battles.
And then you also have to factor in when you're setting that tax rate.
Are we going to consider the real world to be real?
And by this I mean that if you get rid of our current tax code which punishes work, which punishes savings, which punishes investment, which has these huge compliance costs, you are going to get a faster growing economy.
And when you have a low rate and people are working and saving and investing more, and when people are bringing their money back to America from tax shelters and from tax havens, You are going to generate more economic activity, which means you're going to have what's called the supply-side effect.
Now, the media has demonized that so-called supply-side effect, but it's very real and very true.
And let me give you just one little set of statistics here.
In 1980, when the top tax rate was 70%, the evil rich, the top 1%, were paying 17% of the tax burden.
were paying 17% of the tax burden.
Well, by 1988, the top tax rate had fallen from 70% all the way down to 28%.
No question about it, the rich got by far the biggest tax cut during the 1980s.
And what did that mean for tax collections from the rich?
Remember, in 1980 they were paying 17%?
What were they paying in 1988?
According to all the class warfare people who said the rich made out like bandits, their share of the tax burden must have dropped to what?
10%?
5%?
It turns out that according to IRS data, The top 1% went from paying 17% of the tax burden when the rate was 70% to paying 27% of the tax burden when the rate had dropped 28%.
Unambiguous, clear proof that if you want to soak the rich, Cut tax rates and bring them low so people have no incentive to hide, shelter, and under-report their income.
And what that shows in sort of a global economic sense is that if you have a low, simple, fair tax system like you get with the retail sales tax or a flat tax, you can have a rate Significantly below what's called the revenue neutral static rate, which of course assumes that people don't react to the tax code.
And so whether or not it can be 20%, whether it can be 15%, whether it can be 17%, you know, I don't know the exact answer because we do have to figure out what size of government we should have, and we do have to figure out what the protected new economic activity from a fair low-rate tax system would be.
So I picked 20% more just as an illustration, but that will give you a rough idea of where it can be.
Let's not forget that the income tax and the payroll tax account for about $1.5 trillion.
And to replace that, you're not going to be able to get away with a 10% tax unless you're
going to reduce the size of government, which in and of itself, of course, is a good thing.
Thank you.
And there's a question for me.
Thank you.
We have attended this very informative symposium and we would like to know what is next.
The IRS and the federal government have refused to acknowledge the invitation to attend and rebut the research presented here today.
What happens next?
It is very disturbing to me personally and to the foundation that we have presented this evidence to the government.
By the way, ladies and gentlemen, since you missed the first 30 or 45 seconds of the beginning of this symposium, you never knew who the Master of Ceremonies is.
His name is Robert Schultz.
Robert Schultz, and he's with We the People Foundation for Constitutional Education, which apparently has something to do with the Heritage Foundation, and I thought maybe that you would be interested in knowing that.
This is the gentleman who is speaking now.
...of the political branches to the President himself and to The leaders of the two houses of Congress.
In May, again in May, a very respectful letter submitting copies of these reports and requesting that they be here to participate in this symposium.
We need to get to the truth.
No response.
In early June?
A follow-up letter.
No response.
It's a very serious matter.
Jefferson said, when government steps outside of the boundaries that the people have put around government, when they take one step outside, he said, they take possession of a boundless Field of power.
Not capable of definition any longer.
No longer capable of definition.
So fundamentally, it's a question of sovereignty.
Who's sovereign?
Are the people sovereign or is the government sovereign?
Can government act unrestrained, outside of the limits that we, the people, have placed around it?
Very heavy question.
It's not the first time, it's not the first time that government has ignored, turned a blind eye and a deaf ear to the will of the people, as expressed in our constitutions, both state and federal.
Government is, in the minds of many, out of control of the people.
There is a need to bring them back under control.
Not just on this issue, but in many other issues.
So it's a question, I think, what do ordinary citizens do?
Ordinary non-aligned citizens do when they are confronted with governmental wrongdoing.
Larry Becraft, as you have heard, was the attorney Representing plaintiffs in a series of cases, 1985 and 86.
I have reviewed those cases.
I'm in my 20th year of closely evaluating governmental behavior, comparing that behavior with the constitutions, state and federal, and then confronting, before the courts, improprieties, conflicts, behavior by the government that seems to be outside of these boundaries.
So I was very interested on the 16th Amendment, on this issue.
What have the courts said?
What's happened in the courts?
And so I reviewed these cases.
I was delighted to see Larry Beecraft's name as an attorney representing plaintiffs in most of those cases.
And that's why he's here today.
But as I... I was starved, stunned.
By what I'd read.
It's clear, if you read those cases, you line them up and you read one after the other, you see precisely when Bill Benson's evidence first made its way into a case.
And when it was first presented, the argument of the attorneys was, there's no 16th Amendment!
Look at all these procedural errors!
And the courts ruled Federal Court of Appeals ruled dismissing the cases based upon a doctrine.
The doctrine of conclusive presumption.
What they were saying was, look, the Secretary of State back in 1913 declared, proclaimed it ratified.
The 16th Amendment was ratified.
That's it.
Case closed.
It was interesting, as you read the cases, the attorneys said... went back into court on another case and they introduced another argument.
And they said, but... the Secretary of State committed fraud in making that proclamation.
Now, this is a more serious charge.
One that's more difficult for the courts to say, you know, To apply the conclusive presumption argument to dealing with fraud.
And it was in those cases that the Federal Court of Appeals said, this is a political question.
Can you imagine?
Co-equal independent branch of the government, the judiciary, saying it's a political question.
They're presented with the facts.
They know what the law is.
You apply the law to the facts, that's the job of the court.
Fundamental role is of the judiciary, in my opinion, is to see that the other two branches, the political branches, are kept in their constitutional places.
It's a political question.
Go talk to Congress about it.
Of course, we heard they went to Congress and they said it's up to the courts.
Isn't one of the definitions of treason, I hesitate, I don't like to use the word, but isn't one of the definitions of treason When two or more of the branches work together, cooperate in a collective decision to deny people their constitutional rights.
And that's it for tonight, folks.
Tomorrow night we'll back it up again so that we'll keep the continuity of Mr. Schultz's presentation.
He is the master of ceremonies.
And I hope you will join me.
Good night.
God bless you.
Annie, Pooh, and Allison, I love you.
I miss you.
You're always in my thoughts.
May God love and protect you wherever you are.
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