- 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 had
Page: Previous 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 NextLast modified: May 25, 2011