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The federal tax code is confusing, but that
can be expected since it consists of code. Albert could have understood
it if he had a computer to data mine the code.
The code is precisely accurate. We can show
you how to make exact measurements using text data-mining to verify:
1) what is written, 2) what is not written, and 3) precisely
where it is located, easily. See How to Search.
However, to begin with... it may be easier
to see what the confusion is all about by showing you a comparison
between the Federal income tax and Florida State income tax. Here,
we focus on deductions, and a common Principle of Statutory Construction,
"Expressio
unius est exclusio alterius", which essentially says "If
an item is not in a list, it has been excluded from the statutes
coverage, purposefully". The entire code for both Florida
and the Fed will be used, but for our purpose here, the code in
the Constitution will not be utilized. |
Poor Albert, he didn't have a computer.
Pay it, or lose it. |
Many people are aware Florida state doesn't have
an income tax, but you might not know it by reading their law. This
is a side-by-side comparison of the laws AND regulations for the US
Federal income tax, and Florida state income tax, shown in 7-steps.
Unless the tax codes are methodically searched as a code-system and
diagrammed (more),
it's difficult to see that citizens are excluded from income tax in
both cases.
The Codes show that US citizens do owe a tax, but only upon 'foreign
earned income' (10 files). This correctly and accurately makes you,
"In general, liable to the income taxes imposed by the Code,"
however, the real question is... liable for what.
COMPARING: US FEDERAL TAX
against FLORIDA STATE TAX -
(in 7 easy steps)
1.
The Federal government and Florida
both have power, or authority to collect taxes.
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| FEDERAL |
FLORIDA |
US Constitution Amendment XVI "The
Congress shall have power to lay and collect
taxes on incomes, from whatever source derived" |
Florida Title XIV Taxation 220.701 "Collection
authority.--The department shall collect the taxes
imposed by this chapter" |
2.
Federal law imposes a tax upon taxable income,
in Florida it's net income [Federal law also used to refer to
it as net income]. If you wish, you can use these image links
to follow along (open each in a new window or tab by right-clicking). |
| FEDERAL LAW - United States Code, Title 26 |
FLORIDA STATE
TAX LAW - Title 14 |
| Tax
imposed
26 USC Sec. 1
"There is hereby imposed on the taxable income
of - [(a) every married individual,
(b) every head of household, (c) every... unmarried individual,
(d)... (i.e. citizen)] a tax"
|
Tax imposed
220.11 (1)
"A tax measured by net income is hereby imposed
on every taxpayer ... for the privilege of conducting
business, earning or receiving income in this state, or
being a resident or citizen of this state."
[How can it be "on every taxpayer...
for... being a citizen"? Florida has no State income tax.
Yet, a tax on every citizen is actually written into Florida law,
like the imposing Federal law, opposite.] |
3.
Taxable income means gross income minus deductions.
Gross income means all income.
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| FEDERAL LAW |
FLORIDA STATE
LAW |
|
26 USC Sec. 63
(a) "the term 'taxable income' means gross income
minus the deductions allowed"
26 USC Sec. 61
(a) "General definition ... Except as otherwise provided
... 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;... "
|
196.012 Definitions.
(10) "Gross income means all income from whatever
source derived, including, but not limited to, the following
items... : earned income, income from investments, gains derived
from dealings in property, interest, rents, royalties, dividends,
annuities, income from retirement plans, pensions, trusts, estates
and inheritances, and direct and indirect gifts."
[So, it's "all income" in
both cases, but "minus the deductions allowed"] |
4.
There
are many "deductions" to examine (916 files
in 2004). Federal law says "Except as otherwise provided",
so we continue searching for 1) deductions, and 2) the list of
taxable income.
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| FEDERAL LAW |
FLORIDA STATE
LAW |
|
['...as otherwise provided'? ]
26 USC Sec. 863.
"Special rules for determining source
(a) Allocation under regulations
Items of gross income... and deductions,
other than those specified in sections 861(a) and 862(a), shall
be allocated or apportioned to sources within or without
the United States, under regulations prescribed by the
Secretary."
[But, USC 861 and 862 only have one deduction.
So where are the plural - 'deductions'?] |
[Net income is "adjusted federal income", 220.12]
<---- moving to federal side, focusing on deductions |
5.
USC 863 tells us that more "deductions" exist,
and "shall be allocated... under regulations prescribed by
the Secretary". USC 863's corresponding regulation
is CFR 863.
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| FEDERAL REGULATIONS
(CFR) |
FLORIDA STATE |
26 CFR Sec. 863-1
"Allocation of gross income ...
(c) Determination of taxable income. The taxpayer's
taxable income from sources within or without the United States
will be determined under the rules of
Sec. 1.861-8 through 1.861-14T for
determining taxable income from sources within the
United States."
["the rules... for determining taxable income"
(1 file found). Only one regulation in the CFR contains this term
- among millions of words. It clearly commands "taxable income...
will be determined under the rules of Sec. 1.861-8"] |
[Net income is "adjusted
federal income", 220.12]
<---- continuing with federal side,
how to determine taxable income |
6.
Next,
examining 861-8, we see the "specific guidance" (1 file)
for the rules for deductions. The term, specific guidance,
is written only once in the entire Income Tax, in sec. 861.
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| FEDERAL REGULATIONS |
FLORIDA STATE |
|
26 CFR 861-8
"Computation of taxable income..."
(a)(1) "Scope. This section provides specific
guidance ... prescribing rules for the allocation...
of... deductions of the taxpayer. The
rules contained in this section apply in determining taxable
income of the taxpayer... See... (f)(1) of this section
for a list..."
(2) "A taxpayer... is required to allocate deductions
to a class of gross income"
(3) "a 'class of gross income' ...may consist of
one or more items... of gross income
enumerated in section 61, namely:
(i) Compensation for services, including fees, commissions,
and similar items;
(ii) Gross income derived from business;
(iii) Gains derived from dealings in property;
(iv) Interest;..."
(4) "... Gross income ... may include, or consist
entirely of, excluded income. See paragraph (d)(2)
of this section"
(b) "Allocation--(1) ...gross income to which a specific
deduction is definitely related is referred to as a "class
of gross income'' and may consist of one or more items of gross
income. See... paragraph (d)(2) of this section
which provides that a class of gross income may include
excluded income."
(d)(2) "For guidance, see Sec. 1.861-8T(d)(2)". |
Florida State Income Tax
[Net income is "adjusted federal income", 220.12]
<---- continued with federal,
how to determine taxable income |
7.
Saying
the above once again - "This section provides specific guidance...
[and ] Gross income [including income enumerated in the given
list] ... may include, or consist entirely of, excluded income...
For guidance, see Sec. 1.861-8T(d)(2)"
And finally, Federal law compared
to its Florida equivalent.
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| FEDERAL |
FLORIDA STATE |
|
[What
is taxed: Federal - the exact list, determined by measurable
and repeatable results, see How to Search]
26 CFR Sec. 861-8T(d)(2)
(i) the following rules shall apply to take account of income
that is exempt or excluded...with respect to allocation and apportionment
of deductions.
(ii) ...the term exempt income means any income that is, in whole
or in part, exempt, excluded, or eliminated for federal income
tax purposes.
(iii) Income that is not considered
tax exempt. The following items are not ... exempt,
eliminated, or excluded...and, thus [...thus are
taxable]:
(A) foreign taxpayer
(B) DISC or a FSC
(C) possessions corporation...
(D) Foreign earned income as defined in section
911 and the regulations thereunder |
[What
is taxed: in Florida - the exact list, also determined
by measurable and repeatable results, see How to Search]
[Federal regulations use many pages to
show what Florida law can show in a fraction of pages.]
220.02 Legislative intent.-- (1) It is the intent
of the Legislature in enacting this code to impose a tax
upon all
corporations,
organizations,
associations, and other
artificial entities... Subject ... for the privilege
of conducting business, deriving income, or existing
|
| |
|
| FEDERAL |
FLORIDA STATE |
|
Result: An individual citizen is not
taxed on domestic income.
|
Result: An individual citizen is not
taxed on domestic income.
|
What happened... to "A tax...
imposed on every taxpayer... being... a citizen", on "all income"
in Florida?
In each case, we are eventually shown the exact list
of what is taxed. Both Florida and the Feds make it clear, but in the
federal tax, "the following items are not ... excluded" [read are
taxable].
Ultimately, we find that only GROSS INCOME
is "all income from whatever source." As you can see, TAXABLE
INCOME is a completely different subject and must
be specifically listed. What is taxed is listed in the Florida
code, and it is also listed in the Code of Federal Regulations.
| According to
the Principles of Statutory Construction, if a list in a statute
does not include a particular item, it has been excluded
from the list, and is "excluded from the statute's coverage
or application."
The courts, the laws, and regs tell us that
we are "subject to" and "liable to" the income
tax, and accurately so, but when we see what we are subject
for, and liable for, we see what is really taxed.
It may apply to you, and it may not. Only by finding who, what,
when, where, and how, can we accurately determine any
tax. Such instructions and information are required, and thus,
are provide in the regulations.
Examine the scope
of taxable income and notice that the scope is found in a section
titled "Computation of taxable income". |
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US citizens do owe a tax, but only upon "foreign
earned income", hence "the remainder, if any, shall
be included in full as taxable income". Most US citizens don't
have foreign earned income, which is why CFR 61(b) can tell us that
- "more common items... are... excluded... entirely."
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Attention Researchers
If any link has disappeared, try to copy and
paste the link address at http://www.archive.org
-- DISCLAIMER --
* The intended purpose of this website is
to data mine on a computer the Internal Revenue Code, and the
Code of Federal Regulations, Title 26, for the "codes" (e.g.
taxable income, gross income, excluded income, eliminated income,
exempt income, deductions, allocation, apportionment, etc),
for rules, and instructions, for determining income tax. The
results have been published throughout this website. It should
be evident that these search methods can be applied to any Title
of Law, or large volume of text, and in any country that
has codified laws and rules. See How to Search.
There is nothing for sale at WhatisTaxed.com.
Information posted at WhatisTaxed.com is not intended to be
and should not be considered as legal advice, it is posted solely
for educational purposes. The reader should not rely on information
provided herein to determine tax, even if you see that it is
written in the law, and believe it to be accurate. (Those who
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Those who speak truth to power have always paid heavily for
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Do Not accept this website as tax advice, it is tax research
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Contact Us.
We Do Not sell, promote, or advise anything,
except the data-mining and reading of tax code with an appropriate
code-tool, a computer.
We Do ensure that we find every occurrence of
a particular code-term, to establish precisely what is written,
and what is not written in the law. When we say no
other rule or statutes exists - for example, regarding excluded
income, we show you how many files contain this term and
how we searched for it with a computer. You can confirm ANY
of the laws, rules, and terms yourself, and you should because
it is your duty to know and follow the law.
You are
responsible for doing your own taxes.
Questions: If you have questions, try asking
your Congressperson or Senator.
Have your lawmaker explain these search results ...
- "eliminated income" - Sec. 1.861-8(d), 1.861-8(d)(2),
1.861-8T(d)(2)
- "eliminated items" - Sec. 1.861-8T(d)
- "excluded income" - Sec. 1.861-8 and 1.861-8T
- "income that is exempt or excluded" - Sec. 1.861-8T(d)(2)
- "specific sources" - Sec. 1.861-8(a)(1)
- "specific guidance" - Sec. 1.861-8(a)(1)
- "how to determine taxable income" - Sec. 1.861-8(a)(1)
- "the rules [of Sec. 1.861-8 ...] for determining taxable
income" - Sec. 1.863-1(c)
- "income that is not considered tax exempt" [taxable
income] - Sec. 1.861-8T(d)(2)(iii)
Have them explain ...
- Why are such specific instructions, which are located almost
exclusively in Sec. 861, frivolous?
- If lawmakers are going to give the Treasury Secretary
power ("under regulations prescribed by the Secretary"
- 26 USC 863), to create laws for items of income
and deductions, then why is most of the CFR code valid, but
not Sec. 861 code?
- What other definition of "exempt income" is there?
According to code, there is only one, defined in Sec. 1.861-8T(d)(2)(ii).
And, it's followed immediately by the list of income that
is not exempt (i.e. taxable).
Find your Congressperson: http://www.house.gov
Find your Senator: http://www.senate.gov
Answers: If you want answers, you can try
asking the press, the American
media and foreign
media.
* TheCode of Federal Regulations:
When searching, we pay close attention to the rules in 26 CFR,
because the law (USC) gives authority to the CFR (regulations).
Both the USC and CFR confirm this authority [easily find this
authorization with your computer].
"the Federal Income Tax Regulations
(Regs) are the official Treasury Department interpretation of
the Internal Revenue Code" (Internal Revenue Manual,
4.10.7.2.3.1).
The Code of Federal Regulations are the rules, written in plain
English, which both the public and the IRS must follow:
"The Service is bound by the
regulations." (Internal Revenue Manual, 4.10.7.2.3.4).
Since "the Service is bound," we can be sure that
we are playing by the same rules. It does not require a law
degree to understand them. See How to Search and Search Examples.
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