- 13 - a citizen of the State of Hawaii, he worked in the State of Hawaii, his employer is from the State of Hawaii, his employment activity took place in the State of Hawaii, and he was paid in the State of Hawaii. He agreed with the following summary by the Court of his argument: “I take your argument to be that a United States citizen, a resident of Hawaii, working in Hawaii for a U.S. corporation, earning a salary or wages, is not taxable under the Internal Revenue Code on that compensation as income, is that your position?” He responded: “Yes, Your Honor. My position is that it is intrastate income and that the Internal Revenue Code does not reach intrastate income.” He further explained: “I can’t find a constitutional power of Congress to tax that [intrastate] income.” He added: [I]n essence, Your Honor, I am stating that a U.S. person earning income from a U.S. source, whether it be interstate or intrastate, while he’s in the United States, as long as it’s not from a federal possessions corporation or a –- involved, or federal government involved, that would not be taxable income as defined and as stated in the regulations, Code of Regulations; and it would * * * be considered * * * exempt income. He stated that he found support for his analysis in section 861 and the regulations thereunder. He agreed with the Court that his analysis led to the conclusion that a vast amount of the wages and interest paid to U.S. citizens and residents is not taxable under the Internal Revenue Code. He conceded, however, that he found no support for his reading of section 861 and the regulations in any reported case. Indeed, he stated that he hadPage: Previous 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Next
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