If you troll about the internet long enough, you'll run into a facinating (if somewhat scary) subculture of tax protestors (of varying political stripes) who argue that various taxes (or, indeed, the entire tax code) are unconstitutional:
Around the web you can find scores of people and organizations touting the concept that there is no obligation to pay income taxes. They have dozens of theories, each kookier than the last. There is an eerie fascination to these theories, many of which are laced with so many references to the tax code and regulations that they have a veneer of plausibility that just might fool a very naive lay person. (Link with rebuttals to the more common arguments)
A recent DC Circuit decision likely will have the unintended effect of giving those folks new hope. Orin Kerr explains:
This morning the D.C. Circuit decided a fascinating case holding that the Constitution does not permit the federal government to collect income taxes on compensation for a non-physical work-related injury not related to wages or earnings.
In Murphy v. IRS, Murphy received $70,000 from the state of New York for anxiety suffered and injury to her reputation for being unlawfully "blacklisted" after becoming a whistleblower aaginst her former employer, the New York Air National Guard. The government wanted to tax the $70,000 as income, but Murphy claimed that it was not taxable either because it was excludable as compensation for "personal physical injuries" or because the Internal Revenue Code is unconstitutional for trying to tax such earnings as income.
Paul Caron has commentary, including a historical perspective by my friend and colleague Steve Bank.
Let a 1000 lawsuits bloom. Evey tax nut in the country is probably getting ready to file suit challenging some tax or another using Murphy as a template.
Some will protest my use of the term "nut." I quote Wikipedia:
Almost every United States Court of Appeals has made a blanket statement repudiating tax protester arguments. For example, see United States v. Buckner[3]:
- "For the record, we note that the following beliefs, which are stock arguments of the tax protester movement, have not been, nor ever will be, considered 'objectively reasonable' in this circuit:
- "(1) the belief that the Sixteenth Amendment to the Constitution was improperly ratified and therefore never came into being;
- "(2) the belief that the Sixteenth Amendment is unconstitutional generally;
- "(3) the belief that the income tax violates the Takings Clause of the Fifth Amendment;
- "(4) the belief that the tax laws are unconstitutional;
- "(5) the belief that wages are not income and therefore are not subject to federal income tax laws;
- "(6) the belief that filing a tax return violates the privilege against self-incrimination; and
- "(7) the belief that Federal Reserve Notes do not constitute cash or income."
I'd say people holding those beliefs qualify for the epithet.
