States that impose income taxes: Are payers of federal income taxes being defrauded?

[Weston White]

Under federal supremacy, the actions of our general government is superior to those of the individual state governments—that is respective to its constitutional authority and proper context—thereby the federal government has first-call on the imposition of all forms of taxes and taxation, which at present is commonly accomplished through stoppage at the source (i.e., W-4 withholdings and was initially referenced as being a “forced-loan” within Congressional Reports while debating for this tactic back in the 1940’).

So although one may earn $50,000 a year (for example), at least on paper, that individual is first taxed by around $6,000-8,000 by the federal government and thereafter are again taxed by about another $1,000-$2,000 by their state of residence, effectively affording them only about $40,000 of actual or net income after surrendering their (sordidly statute quo) income taxes.

However, income tax collecting states are (and have been) taxing that individual upon their whole sum of $50,000, for which $6,000-8,000 of that was never at any time within the possession, custody, or control of that person—it is merely documented on paper and transferred to the U.S. Treasury by their employer(s), and held in trust until one files their federal tax return and their tax filing is approved by the IRS.

Also realizing a potential issue that would result in imposing even graver financial burdens upon individual—being that in the past Congress has in fact and on more than one occasion imposed income tax rates that exceeded 90%—what would be the resulting situation for individuals should the federal government impose an increased individual income tax rate of 75%, while their state imposes an individual income tax rate of 15%, effectively leaving that individual with a mere 10% of their total financial ability per annum?

So is it a valid concern that income tax collecting states have been mandating the imposition of state income taxes upon every individual’s gross sum (e.g., $50,000) of reported income as opposed to their net sum (e.g., $42,000-44,000) remaining after federal income taxation?

[Sonny Tufts]

This is nothing new. The federal income tax, for example, is imposed on gross wages even though for most people 7.65% of that amount is taken out for FICA and Medicare taxes. Similarly, the federal estate tax is imposed on the entire taxable estate, even though a portion will have to be used to pay the estate tax. The technical term for this is "tax-inclusive", which means the tax base includes the amount of the tax. The gift tax, on the other hand, is tax-exclusive, which means it's imposed only on the amount the donee receives, not on the full amount that the donor is out of pocket.

You should keep in mind that state income taxes are deductible on one's federal return, so that the tax base isn't the same for federal and state purposes. In addition, a handful of states allow a deduction for federal income tax; see the chart at http://www.taxadmin.org/FTA/rate/ind_inc.pdf

[Weston White]

Well that only raises many additional concerns that are related to the federal income tax, such taxing a total sum multiple times (e.g., double-taxation on steroids), when the reality is once a class of tax has been imposed the sum is subsequently reduced upon each separate imposition, it cannot be logically thought to be "frozen"--and further emphasizing in most cases none of the sum held in trust, through the tyrannical action of forced withholdings, could rightly be found to ever belong to the employee; being that at no time did the employee in following the legal requirements for maintaining a valid W-4 on file with their employer's payroll, ever have any degree of possessive authority over it. Additionally, those sums are further taxed (all over again) when taken for use by the employee, such as in receipt of unemployment benefits and in certain cases SSI benefits (e.g., while receiving additional incomes).

Further points of contention includes:

Federal income tax forms do not provide a simple designated field to include the deduction of state income taxes, thus it would seem the only permitted way is to itemize your tax return using a 1040 in-part with a complex Schedule A, thus requiring most filers to pay extra for a tax preparer (which is also deductible--but deductions impose statutory thresholds and limitations so using them are not beneficial in all cases). And likely neither do state income tax forms or instructions readily permit for such federal deductions.

The only truly constitutional means of taxing wages within the scope of the Sixteenth Amendment, which is to operate indirectly upon the source, is to impose the tax not upon employees, but upon employers based on the total sum of wages they have paid out to their employees on a quarterly basis, for example. This taxing method has been read into case law, which is based upon long discussed theories stated by political economists, presumably being originally postulated by Dr. Smith. And employer's are already accustomed to the mechanism of wage withholdings so the major step in implementing such a process has already been accomplished.

[mrsat_98]

Income tax applies to federal employees working in federal areas and by law anyone or any area they get thier sites on is a federal employee working in a federal area. Off icers of corporations are taxed as well because all corporations are construed to be created in a federal state. Study the Buck act very thoroughly. Also everything that the governmentt gets its sights on is considered a corporation unless it denies it.

Those who deny this are very simply not doing enough research.