Posted by Jay P. Rutledge on October 03, 1997 at 11:10:22:
"26 CFR § 31.3401(c)-1 Employee.
(a) The term employee includes every individual performing services if the relationship between him and the person for whom he performs such services is the legal relationship of employer and employee."
I think people should be looking for the legal relationship which the IRC has in mind when it speaks of "legal relationship of employer and
employee", considering the following:
"All subjects over which the sovereign power of a state extends, are
objects of taxation; ... The sovereignty of a State extends to every thing which exists by its own authority, or is introduced by its
persmission;..." (p.435) Chief Justice John Marshall McCulloch v. Maryland 4 Wheat 418, (S. Ct. 1819)
In many instances, the Government is maintaining that "the legal relationship of employer and employee" "exists by its own authority, or is introduced by its permission." For example, if the industry is licensed or permitted, then the "legal relationship of employer and employee" in that industry "exists" by government's authority and "is introduced by its permission." Every company subject to OSHA or EPA inspection or permits is in this category.
Every enterprise which is subject to the Fair Labor Standards Act likewise has a "legal relationship of employer and employee" which "exists" by government's authority. This includes all companies required to pay minimum wage or recognize a union. Only companies which conform to this Act are "permitted" to create the "legal relationship of employer and employee."
Every industry which is franchised or exists only with government
approval likewise has a "legal relationship of employer and employee" which exists" by government's authority. Insurance Companies, Transportation Companies, Communication Companies: all exist solely by government's authority and create "the legal relationship of employer and employee" with its permission.
All of the rights to fruits of labor and free enterprise were common law rights. The government has taken virtually all "occupation" and "enterprise" out of the common law. Where a job exists directly or indirectly by government's authority, the "legal relationship of employer and employee" exists by government's authority and is taxable. All corporate jobs exist by government's authority because the corporation is a creation of the legislature. Government has likewise taken the "person" out of the common law by pre-emptive creation via birth registration of a public record of NAME upon
which rests the unrebutted presumption that JOHN DOE exists by
government's authority and that John Doe and JOHN DOE are one and the same. JOHN DOE is "legitimized" (i.e. "exists") in statute law by the "license" that "permitted" the civil law marriage of his parents. Certainly, every legal relation between employer and employee has the employee name of JOHN DOE. [The government stopped at enterprises of eight or fewer. This was possibly not an arbitrary cut off. There is possibly a court case somewhere.]
Every time people vote for government regulation they are attaching the taxing power onto the subject of the legislation because they are giving government the argument that the jobs in the regulated industry are permitted to exist by government's authority. This is a reaching argument, to be sure, but it is their argument. Argument like it, derived from McCulloch v Maryland ante, is the legal basis for American corporate socialism. The fine line between saying government creates the corporations in the industry and implying that government creates the industry is easily crossed.
Look at the order in which government built the Income Tax box. First corporations were brought into American law. Then, birth registration and marriage licensing was introduced. Then, State licensing of industry and professions under police power. Then, creation of "federal states" via the Buck Act and wholesale federal licensing and regulation of banking, industry, and agriculture in Roosevelt's first 100 Days. Then Social Security with a grant of concurrent jurisdiction from the federal to the State. Then, the income tax was imposed on "individuals".
Social Security is a legal relationship between the person and the federal government which is taxed. The "legal relationship between employer and employee" which "exists" by authority of State agencies is taxable by the State with or without Social Security, Buck Act, or any federal zones at all. New York levied an income tax around the turn of the century, I believe.
The mailbox at your house is federal property. I don't yet understand the necessity of the Zip Code for the federal enforcement scheme.
But, sure it is that most of those who are trying to understand income tax liability have only found a few strands of the legal web in which government has ensnared us.