Anonymous asked in Business & FinanceTaxesUnited States · 1 decade ago

Why do we have to pay income taxes?

No were in the internal revenue code is the definition of the world "income". How can we pay a tax on something that's not even defined? Now for people that are going to state that they have the Definition of "gross income" and ect. We have a income tax. Not a gross income tax. So how can we tax something that's not defined? Couldn't you pay in peanuts if you wanted too?


I heard food in prison is pretty nasty actually. And I'm asking what gives them legal backing to collect this tax without defining it. I never said I would do so. Though how do you collect a tax without defining the thing your going to tax? That seems pretty impossible to me. But if you could give me a link to with someone that brought that argument to the supreme court and lost, it would be much apreciated and would answer my question

Update 2:

Wayne Z, is that definition a Supreme Court Ruling?

12 Answers

  • 1 decade ago
    Favorite Answer


    Gross income defined....

    General definition

    Except as otherwise provided in this subtitle, gross income means all income from whatever source derived, including (but not limited to) the following items:

    (1) Compensation for services, including fees, commissions, fringe benefits, and similar items;

    (2) Gross income derived from business;

    (3) Gains derived from dealings in property;

    (4) Interest;

    (5) Rents;

    (6) Royalties;

    (7) Dividends;

    (8) Alimony and separate maintenance payments;

    (9) Annuities;

    (10) Income from life insurance and endowment contracts;

    (11) Pensions;

    (12) Income from discharge of indebtedness;

    (13) Distributive share of partnership gross income;

    (14) Income in respect of a decedent; and

    (15) Income from an interest in an estate or trust.

    Court rulings:

    Reese v. United States, 24 F.3d 228, 231 (Fed. Cir. 1994) “an abiding principle of federal tax law is that, absent an enumerated exception, gross income means all income from whatever source derived.”

    Brushaber v. Union Pacific R.R., 240 U.S. 1 (1916) upheld the constitutionality of federal income tax


    Commissioner v. Glenshaw Glass Co., 348 U.S. 426, 429-30 (1955) – referring to the statute’s words “income derived from any source whatever,” the Supreme Court stated, “this language was used by Congress to exert in this field ‘the full measure of its taxing power.’ . . . And the Court has given a liberal construction to this broad phraseology in recognition of the intention of Congress to tax all gains except those specifically exempted.”

    Commissioner v. Kowalski, 434 U.S. 77 (1977) – the Supreme Court found that payments are considered income where the payments are undeniably accessions to wealth, clearly realized, and over which a taxpayer has complete dominion.

    Cheek v. United States, 498 U.S. 192 (1991) – the Supreme Court reversed and remanded Cheek’s conviction of willfully failing to file federal income tax returns and willfully attempting to evade income taxes solely on the basis of erroneous jury instructions. The Court noted, however, that Cheek’s argument, that he should be acquitted because he believed in good faith that the income tax law is unconstitutional, “is unsound, not because Cheek’s constitutional arguments are not objectively reasonable or frivolous, which they surely are, but because the [law regarding willfulness in criminal cases] does not support such a position.” Id. (emphasis added). On remand, Cheek was convicted on all counts and sentenced to jail for a year and a day. Cheek v. United States, 3 F.3d 1057 (7th Cir. 1993), cert. denied, 510 U.S. 1112 (1994).

    United States v. Becker, 965 F.2d 383, 389 (7th Cir. 1992) – the court found defendant’s contention that wages are not income to be “ridiculous.”

    United States v. Sloan, 939 F.2d 499, 500 (7th Cir. 1991) – in rejecting defendant’s argument that the revenue laws of the United States do not impose a tax on income, the court recognized the “Internal Revenue Code imposes a tax on all income.”

    United States v. Connor, 898 F.2d 942, 943-44 (3d Cir.), cert. denied, 497 U.S. 1029 (1990) – the court stated that “[e]very court which has ever considered the issue has unequivocally rejected the argument that wages are not income.”

    Lonsdale v. Commissioner, 661 F.2d 71, 72 (5th Cir. 1981) – the court rejected as “meritless” the taxpayer’s contention that the “exchange of services for money is a zero-sum transaction . . . .”

    Stelly v. Commissioner, 761 F. 2d 1113 (5th Cir. 1985) – the Fifth Circuit affirmed the Tax Court’s holding against the taxpayer’s argument that taxing wage and salary income is a violation of the constitution because compensation for labor is an exchange, not gain. The Fifth Circuit also fined the taxpayer for bringing a frivolous appeal.

    United States v. White, 769 F. 2d 511 (8th Cir. 1985) – the court issued a permanent injunction to prevent the promotion of the argument that there is no tax imposed on an exchange of property (labor) in an equal exchange for property (wages).

    United States v. Richards, 723 F.2d 646, 648 (8th Cir. 1983) – the court upheld conviction and fines imposed for willfully failing to file tax returns, stating that the taxpayer’s contention that wages and salaries are not income within the meaning of the Sixteenth Amendment is “totally lacking in merit.”

    United States v. Romero, 640 F.2d 1014, 1016 (9th Cir. 1981) – the court affirmed Romero’s conviction for willfully failing to file tax returns, finding, in part, that “[t]he trial judge properly instructed the jury on the meaning of [‘income’ and ‘person’]. Romero’s proclaimed belief that he was not a ‘person’ and that the wages he earned as a carpenter were not ‘income’ is fatuous as well as obviously incorrect.”

    Abdo v. United States, 234 F. Supp. 2d 553 (M.D. N.C. 2002), aff’d, 2003-1 U.S.T.C. (CCH) ¶ 50,483 (4th Cir. 2003) – the tax preparer prepared returns based on the argument that labor is an exchange for wages and not taxable. The court cited Connor, supra, when finding that the tax preparer misstated the law.

    McCoy v. United States, 88 A.F.T.R.2d (RIA) 7116, 2001 U.S. Dist. LEXIS 18986 (N.D. Tex. Nov. 16, 2001) – the court rejected the taxpayer’s argument that wages received were not income and described this position as meritless.

    Sumter v. United States, 61 Fed. Cl. 517, 523 (2004) – the court found the taxpayer’s “claim of right” argument as “devoid of any merit” and that section 1341 only applies to situations in which the claimant is compelled to return the taxed item because of a mistaken presumption that the right held was unrestricted and, thus, the item was previously reported, erroneously, as taxable income. Section 1341 was inapplicable to Ms. Sumter, because she had a continuing, unrestricted claim of right to her salary income and had not been compelled to repay that income in a later tax year.

    Abrams v. Commissioner, 82 T.C. 403, 413 (1984) – the court rejected the argument that wages are not income, sustained the failure to file penalty, and awarded damages of $5,000 for pursuing a position that was “frivolous and groundless . . . and maintained primarily for delay.”

    Reading v. Commissioner, 70 T.C. 730 (1978), aff’d, 614 F.2d 159 (8th Cir. 1980) – the court said the entire amount received from the sale of one’s services constitutes income within the meaning of the Sixteenth Amendment.

    Cullinane v. Commissioner, T.C. Memo. 1999-2, 77 T.C.M. (CCH) 1192, 1193 (1999) – noting that “[c]ourts have consistently held that compensation for services rendered constitutes taxable income and that taxpayers have no tax basis in their labor,” the court found Cullinane liable for the failure to file penalty, stating that “[his] argument that he is not required to pay tax on compensation for services does not constitute reasonable cause.”

    Wheelis v. Commissioner, T.C. Memo. 2002-102, 83 T.C.M. (CCH) 1543-45 (2002) – the court rejected the taxpayer’s frivolous argument that his wages were not taxable based on his belief that “[p]roperty (money) exchanged for property (labor not subject to tax)” is not subject to income taxation. The court stated that such claims have been “consistently and thoroughly rejected” by the courts and imposed a penalty against Wheelis in the amount of $10,000 for making frivolous arguments.

    Carskadon v. Commissioner, T.C. Memo. 2003-237, 86 T.C.M. (CCH) 234, 236 – the court rejected the taxpayer’s frivolous argument that “wages are not taxable because the Code, which states what is taxable, does not specifically state that ‘time reimbursement transactions,’ a term of art coined by [taxpayers], are taxable.” The court imposed a $2,000 penalty against the taxpayers for raising “only frivolous arguments which can be characterized as tax protester rhetoric.”

    Whether that satisfies you or not, that's good enough for the judges, if you take it to court.

    By the way, "gross" and "net" in this context are accounting terms. Gross income is income.

  • 1 decade ago

    The law does not have to define income. Congress specifically left it up to the courts to decide and the courts have said income is the "ascension to wealth" so pretty much anything, unless specifically exempted by law (gifts, loans, muni-bond interest) is considered income and subject to income tax.

    Tax protesters have made the same claims for almost 100 years and have never been successful in court.

    Edit- To my knowledge, the Supreme court has never decided to review a case involving the legitimacy of the income tax because it has always agreed with the lower court's decision and no lower court has ever said that there are flaws in the income tax law.

    This is another argument that tax protesters bring up that is without merit. They claim that the Supreme Court has never defined "income" but, the truth is, they don't have to.

    Other items that the Supreme Court has not ruled on:

    - Whether or not up is really up

    - Whether or not the sky is blue

    - Whether or not water is wet

    - Whether or not I am am smarter than a tax protester

    You see, just because the Supreme Court has not ruled on something, does not make it any less true.

  • Anonymous
    4 years ago

    I have to disagree with you even though I do pay a lot of income taxes. Your right to vote should not be eliminated because of your economic status. If you disagree with the current tax system let it be known by voting for candidates who share you belief that the tax system is wrong and needs to be fixed. Also contact your congressman and senator and let them know your view. I do not mind paying my taxes. I do not mind paying more if I earn more. What I do mind is people who want to demonize me for my success. A flat tax or a national sales tax would be a much better system than the current tax code. To start it would be a simple code instead of the thousands of pages in the current code. Second it would close the loopholes in the current system that allow some rich to avoid paying taxes. Third and most important it would mean every one would have some skin in the game. Finally if we all had to pay an equal % in taxes how many people who currently do not pay taxes would not agree with the idea of higher taxes

  • 1 decade ago

    Since gross income is the sum total of all income, you automatically have the definition of income - the definition of gross is "an overall total" - thus, by extension income is those portions of gross income that make up the IRS definition of gross income. Not exactly rocket science. If peanuts was defined as an approved subset of gross income, yes, you could pay in peanuts, but since it is not, you can't (not to mention peanuts are not legal tender).

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  • MadMan
    Lv 7
    1 decade ago

    We have to pay income tax because it is the law of the USA. Specifically, Title 26. And before you say that the US Constitution does not allow for the raising of an income tax, the "Necessary and Proper Clause", Article One, section 8, clause 18, allows the Congress to do whatever it feels it needs to do to run the country.

  • T E
    Lv 7
    1 decade ago

    you have to pay income tax because it is the law. if you dont pay, you be penalised or sent to prison

    income is from all sources - employment, business, property, etc - inside and and outside the country. it is also a net concept, as it is subject to various deductions allowed

    the definition is not in one sentence, but compised of many many detailed areas in the tax code (e.g., in the area of employment income, or business income, or foreign income), which in the end gives the definition of whether that income is subject to tax

  • Anonymous
    1 decade ago

    If you don't like it, then don't pay your taxes. Take your case to the supreme court and I'm sure they'll reference one of the dozens of similar cases they've heard over the years, and issue the same ruling.

    The good news is I hear the food in prison isn't as bad as it used to be.

  • Anonymous
    1 decade ago

    So those who chose not to work can have some of our money (the ones who do work). And so those who cannot hold jobs in the private sector can stay employed through the government.

  • Anonymous
    1 decade ago

    There is no point arguing with fools.

  • 1 decade ago

    Because Obama is president dang it.

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