It doesn't have the power of law to tax such income. It doesn't have the jurisdiction to do so.
So, what about the income of Americans living and working only in one of the several states of the union? Does the government have the power to tax their income? Maybe - or maybe not, but that's no the issue here. The real issue is not whether it has the theoretical power to tax them (a constitutional issue) but the whether it actually DID tax their income by these provisions of the IRC as it is currently written. That makes it an issue of statutory "construction" (i.e., interpretation).
Enter the Supreme Court decision in Gould v. Gould, 151 US 249 (1917). The Court there used the age-old, fundamental principle of statutory construction that requires taxing statutes to "specifically point out" any object of taxation. Anything not so pointed out is simply not taxed. "In case of doubt they are construed most strongly against the government, and in favor of the citizen."
The big problem faced by tax molesters (those who judicially persecute so-called tax "protesters") is the fact that there is no provision in the IRC that specifically points purely domestic income out as being "taxable income." Yet, Section 1 of the IRC states very clearly that the tax is imposed on taxable income, only. (On the other hand, a foreigner's domestic income and an Americans foreign income are specifically pointed out as entering into the computation of "taxable income", namely in Subchapter N of the Code.)
Clearly, the government demands that ordinary Americans pay what it claims to be "their taxes" - or else! The "reality" of the "tax" as something most Americans are afraid to ignore is undisputed. However the legality of the collection of this tax from people who earn income that is not specifically pointed out as "taxable" (those who earn only purely domestic income) is most definitely open to debate, to say the least - even if the courts currently don't agree with that position.
As far as the courts are concerned, the lynchpin of the entire debate is not an issue of law but an issue of legal philosophy. Supreme Court decisions since Brushaber and Gould have tended to "lean" away from the principles upon which those cases were decided - but the Court has never overruled or even openly questioned them.
In the process of these judicial "leanings", political expediency appears to have won the upper hand. From essentially stating that if the government don't say so, it ain't taxed (as in Gould) the Court has created a labyrinth of questionable precedent that leads all the way to "if the IRC doesn't specifically exclude income, then it IS taxed" As in the case of Commissioner v. Glenshaw Glass Co., 348 U.S. 246 (1955).
These two positions are impossible to reconcile on a purely jurisprudential basis. Luckily for the government - so far - they have not been properly juxtaposed by any lawyer in any case that has been decided by a federal appellate court. As a result, the Supreme Court was never actually faced with the choice of either (a) openly abandoning an age-old, constitutional principle of statutory construction (by expressly overruling Gould), or (b) upholding Gould and admitting Glenshaw is in conflict with it - and thereby exposing the fraud perpetrated by some in the federal government in collecting a "tax" from milions of people who, by law, never owed it.
As Congressman Paul has indicated in the first presidential primary debate: Americans must decide what form of government they rally want: an all-powerful nanny state devoid of any real limitations, or a limited government founded in constitutional principle. The latter choice upholds the rule of law. The former constitutes the naked law of the rulers. Ron Paul stands on principle. His opponents, on the other hand, will probably "lean" right alongside the Supreme Court toward political expediency.
This election cycle is in essence a battle between those who stand versus those who only "lean."
By the law of gravity, the "leaners" cannot stand on their own for long. They must always be propped up. What props them up is a segment of our population that is addicted to government handouts and socialistic schemes. This election will clearly show whether the "leaners” and their “proppers" really do outnumber those of us who stand.
The vast majority of recent poll results after the first presidential GOP primary debate show that America still prefers to stand on its own two feet - if only it is given a real choice. The "feet" they stand on are the Constitution and the Bill of Rights - and Ron Paul is America's choice.
That is why tax molesters fear Ron Paul - except that it isn't really Ron they fear. It's Lady Liberty. It's America herself.
Ron just woke her up.
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