Obamacare by the Numbers

On March 23, the House of Representative’s passed the Senate health care bill by a vote of 219-212. The House also passed a corresponding reconciliation bill, H.R. 4872, the Health Care and Education Reconciliation Act of 2010 by a vote of 220-211, which the Senate subsequently passed 56 to 43. It contains a raft of pork barrel and tax hikes to fund the trillion dollar cost of nationalizing medicine. Fifteen different tax increases totaling $400 billion are imposed under the bill. Americans for Tax Reform released the following breakdown of Obamacare:

The number of new tax increases in the healthcare bill: 19

The number of tax increases that unquestionably violate Obama’s “firm pledge” not to raise taxes on families making less than $250,000: 7

The tax increase over the first decade if the healthcare bill goes into effect: $497 billion

The top federal tax rate on wages and self-employment earnings under this bill: 43.4%

The annual tax hike for every man, woman, and child in America: $165

The top federal tax rate on early distributions from Health Savings Accts under this bill: 59.6%

The most parents of special-needs kids can save tax-free for tuition in Flexible Savings Accounts (currently, the amount is unlimited): $2500

Unchartered and perilous waters

by Larry R. Bradshaw

New tax mandates and penalties included in Obamacare will cause the greatest expansion of the Internal Revenue Service since World War II, according to Rep. Kevin Brady (R-TX), who stated that the Joint Economic Committee and the House Ways & Means Committee minority staff estimate up to 16,500 new IRS personnel will be needed to collect, examine and audit new tax information mandated on families and small businesses in the “reconciliation” bill passed by Congress this month. In addition to more complicated tax returns, families and small businesses will be forced to reveal more personal information to the IRS, provide proof of “government approved” health care and submit detailed sales information to comply with new excise taxes. ~ J.P. Freire

While much debate is being broadcast in regard to OBAMACARE, has it occurred to anyone that OBAMACARE cannot apply to the private sector within the exterior boundaries of the Union States?

Consider for a minute, that being the enforcement of OBAMACARE is under the jurisdiction of the Internal Revenue Service, it would be reasonable to assume that OBAMACARE is limited to the taxing jurisdiction of the Federal Government. Being OBAMACARE is not an excise tax on an activity regulated by the Bureau of Alcohol, Tobacco and Firearms, it must come under the jurisdiction of Subtitle “A” of the Internal Revenue Code of 1986.

Any return authorized by Subtitle “A” is considered an individual income tax return, including the Form 1040 U.S. Individual Income Tax Return, which is a MFT-30 “True Tax Class 2.” The Self-employment tax imposed under I.R.C. § 1401 is also reported on the Form 1040 U.S. Individual Income Tax Return, and both are listed on the Individual Master File Account. It must be noted that True Tax Class 2 has no information returns, and the Treasury Financial Manual states that Tax Class 2 is used to report estimated tax on taxable trust. This calls into question to whom does the Individual Income Tax apply? The United States Supreme Court answered this question. In the case District of Columbia v Murphy, 314 U.S. 441 (1941) the high Court copied Senator Overton’s statements to the President of the Senate conferees wherein he states; “Mr. President, I now call your attention to the fact that the individual income tax is imposed only on those domiciled within the District of Columbia.”

The limited jurisdiction of the Individual Income Tax under Subtitle “A” is further supported by the fact that the term “trade or business” which “net earnings from self-employment (I.R.C. § 1401) is predicated, is not defined in either the Social Security Act or the Internal Revenue Code of 1954. The IRS has admitted however that I.R.C. § 162 contains part of the definition. To find the complete definition you will have to look at the District of Columbia Code 47 § 1801-4, which supports the conclusion that the Individual Income Tax, Form 1040, MFT-30 Tax Class 2 only applies to those domiciled in the District of Columbia.

The IRS maintains some fifty-seven or so different data files on each Social Security Number, one of which is the Individual Master File, MFT-30, which lists only two employment categories; IRS and Federal. Another data file, the AMDISA, contains a “POD” (Post of Duty) code, which is only applicable to federal civilian and military employees, including vendors and independent contractors under contract with the Federal Government. While several of the fifty or so different data files contain the IRS and Federal employment categories, none of the data files contain employment codes for private individuals.

Being the District of Columbia is a National City belonging to the Nation, all persons under contract with the federal government are considered “domiciled” in the District of Columbia, and their venue of service is termed their “Post of Duty.” This would suggest that the Individual Master File, MFT-30 (Master File Tax), Form 1040 U.S. Individual Income Tax Return, is applicable only to IRS and Federal employees.

One could ask why there are two categories of employees on the IMF (Individual Master File). Are not IRS and federal employee one and the same? The answer may be “NO” considering the definition of Internal Revenue Agent found in 27 CFR 26.11, is: Internal Revenue Agent of the Internal Revenue Service of the Commonwealth of Puerto Rico.

While it is common knowledge that the Sixteenth Amendment allows Congress to tax income from whatever source derived, and sounds final to the average observer, even the IRS admits that there is taxable income and non-taxable income. Reason would dictate that the Sixteenth Amendment must be predicated on a filing requirement. See the United States Supreme Court case Central Illinois Public Serv. Co. v United States, 435 U.S. 21 (1978). Example: If the purported taxpayer receives only gifts for the taxable year, he would not have a filing requirement, and the Sixteenth Amendment would be a moot point.

The fact is, the Forms W-2, W-4, 1099 Misc. are all True Tax Class five (5) Estate and Gift Tax Information Reporting documents, which is Subtitle “B.” Estate and Gift Tax has its own Forms, specifically the 706 and 709. These two BMF (business master file) returns are retrievable via a Social Security Number which is noted on the Individual Master File as a BODC-SB (Business Operating Division Code-Small Business.) All other BMF Forms are retrievable via an EIN (Employer Identification Number) and listed on a Business Master File; not on an Individual Master File.

What does this mean? If a payer reports an amount to the IRS on Forms W-2 or 1099 Misc., that payer is reporting that he has given a gift to the recipient. The Secretary of the Treasury in like kind accepts the reported amount as a gift under 42 U.S.C. § 3535, and because gifts are non-taxable income, the gift tax under I.R.C. § 2501 is imposed on the donor, which makes the payer liable for the tax.

While the foregoing has been termed by some as unchartered and perilous, this author agrees that the facts listed above are unchartered waters. The question is; “to whom is it perilous”? This author, or the Federal Government and OBAMACARE?