Truth about Illinois income tax

The Nature and Scope of the Illinois Income Tax

by Rick Wos
Illinois Delegate to the Continental Congress 2009
The insane and immoral increase in the Illinois Income Tax in the recent Lame Duck session has compelled me to share with each of my fellow Illinoisans exactly what the “law” says concerning the income tax, and who it applies to. Or in legal terms; The nature and scope of the income tax statutes. This article is not advice, but rather the sharing of certain undeniable facts.
Who the hell has time to read the income tax statutes? Nobody! And that is exactly what our rotten oppressive government wants. The income tax statutes are intentionally written in confusing and convoluted language, for the purpose of discouraging and dumbfounding the few people that actually find the time to read them. However, the laws are written in English and are understandable by the average Joe, IF a few rules for interpreting statutes are understood.
The Illinois Income Tax Act (IITA) was enacted in 1969 and is found at 35 ILCS 5/101. The actual “income tax” is imposed in only one place, at 35 ILCS 5/201(a), which states;
“Tax Imposed. (a) In general. A tax measured by net income is hereby imposed on every individual, corporation, trust and estate for each taxable year ending after July 31, 1969 on the privilege of earning or receiving income in or as a resident of this State….”.
The tax imposed is “on the privilege of earning or receiving income”, and NOT on anything else. One rule for interpreting a statute has been long established by the Illinois Supreme Court, which states “[A] `statute should be so construed, if possible, that no word, clause or sentence is rendered meaningless or superfluous.’” (City of Mount Carmel v. Partee (1979), 74 Ill.2d 371, 376, quoting People ex rel. Barrett v. Barrett (1964), 31 Ill.2d 360, 364-65.) City of East Peoria v. Group Five Dev. Co., 87 Ill.2d 42, 429 N.E.2d 492 (1981).
Therefore, the tax imposed is clearly a tax on a “privilege”, or a “privilege tax” ( more on this later).
Immediately after the enactment of the IITA, the law was challenged and went to the Illinois Supreme Court for interpretation in the same year of 1969. Before reading what the High court said about the income tax, we should learn what it means when the court interprets a specific statute, which is as follows;
“after this court has construed a statute, that construction becomes, in effect, a part of the statute and any change in interpretation can be effected by the General Assembly if it desires so to do.” (51 Ill.2d 452, 456, 283 N.E.2d 465.)”
Nat’l Realty & Inv. Co. v. Dep’t of Rev., 144 Ill. App.3d 541, 549- 550 (1986).
“Further, once the Illinois Supreme Court has construed an act of the legislature, that construction becomes, in effect, a part of that law and any change in the construction is a matter for the legislature. Mitchell v. Mahin (1972), 51 Ill.2d 452, 456, 283 N.E.2d 465.” Wolters v. Johnson, 114 Ill. App.3d 546 (1983).
So, according to the Illinois Supreme Court, once they rule upon the meaning of a statute, that interpretation becomes part of the law itself and the public is bound to follow the law according to what the High court says the law means.  If the Legislature disagrees with the court’s interpretation, they can change the law to negate or clarify what the court stated. So in the case of Thorpe v. Mahin, the court thoroughly analyzed the meaning [nature] of the IITA, and who it applies to [scope]. The following is relevant portions of the decision;
“In Hale v. Iowa State Board of Assessment and Review, 302 U.S. 95, 58 S.Ct. 102, 82 L.Ed. 72, the Supreme Court observed: “The question as to the nature of such a tax has come up repeatedly under state constitutions requiring taxes upon property to be equal and uniform, or imposing similar restrictions. Many, perhaps most, courts hold that a net income [1]tax is to be classified as an excise. [Citing cases.] `The tax levied on income is not a property tax, * * *.’ [Citing cases.] * * * True, there are courts in other states that teach a different doctrine. [Citing cases including Bachrach.]” (302 U.S. 95, 104_05, 58 S.Ct. 102,105, 82 L.Ed. 72, 78.) “While there is authority to the effect that an income tax is a `property tax’, and that a tax on the income from property is a tax on the property, the view generally taken is that an income tax is not a tax on property, but is more within the category of excise taxes, and that a tax on income is not a tax on the source of the income.” (85 C.J.S., Taxation, sec. 1089.) “The prevailing view appears to be that an income tax is not a tax on `property’ within the meaning of such provisions.” (State constitutional provisions governing property taxes.) 27 Am. Jur., Income Taxes, sec. 19.”
Thorpe v. Mahin, 43 Ill.2d 36, 40-41 (1969)
“We hold that under section 2 of article IX of our constitution the General Assembly has the power to impose a tax on the privilege of earning or receiving income in or as a resident of Illinois.”
Thorpe v. Mahin, at page 45.
“In Flint v. Stone Tracy Co., the Supreme Court stated: “The thing taxed is not the mere dealing in merchandise, in which the actual transactions may be the same, whether conducted by individuals or corporations, but the tax is laid upon the privileges which exist in conducting business with the advantages which inhere in the corporate capacity of those taxed, and which are not enjoyed by private firms or [2]individuals. These advantages are obvious, and have led to the formation of such companies in nearly all branches of trade. The continuity of the business, without interruption by death or dissolution, the transfer of property interests by the disposition of shares of stock, the advantages of business controlled and managed by corporate directors, the general absence of individual liability, these and other things inhere in the advantages of business thus conducted, which do not exist when the same business is conducted by private individuals or partnerships. It is this distinctive privilege which is the subject of taxation, not the mere buying or selling or handling of goods, which may be the same, whether done by corporations or individuals.” 220 U.S. 107, 161_2, 31 S.Ct. 342, 353, 55 L.Ed. 389, 417_8.”
Thorpe v. Mahin, at pages 46-47.
“Second, we have the equally familiar rule that “It is our duty so to interpret the statute as to promote its essential purposes and to avoid, if possible, a construction that would raise doubts as to its validity.” (People v. Nastasio, 19 Ill.2d 524, 529; Pliakos v. Illinois Liquor Control Com., 11 Ill.2d 456; People v. Dale, 406 Ill. 238.)”
Thorpe v. Mahin, at page 51.
Therefore, in plain English, the Illinois Supreme Court has declared the “income tax” is an “excise tax”, which is synonymous with “privilege tax”. (Which the Illinois Legislature refers to the tax in Section 201(a) as a “privilege” tax. Most importantly, the Supremes have “construed” the “income tax” is a “corporate tax”, and “the tax is laid upon the privileges which exist in conducting business with the advantages which inhere in the corporate capacity of those taxed, and which are not enjoyed by private firms or [3]individuals”.
The Supremes have also told us that; “the view generally taken is that an income tax is not a tax on property, but is more within the category of excise taxes, and that a tax on income is not a tax on the source of the income.” So does the income tax apply to a citizen’s “labor”. Again, let’s turn to the Illinois Supreme Court in the following 2 cases;
Labor is property. The laborer has the same right to sell his labor, and to contract with reference thereto, as any other property owner.”                                               Gillespie v. People, 188 Ill. 176, 183 (1900).
“The property which every man has in his own labor, as it is the original foundation of all other property, so it is the most sacred and inviolable…
The enjoyment or deprivation of these rights… constitutes the essential distinction between freedom and slavery; between liberty and oppression.”
Frorer v. People, 141 Ill. 171, 183-184 (Sup. Ct. of Ill. 1892).
And, the United States Supreme Court is in perfect agreement with the Illinois Supreme court, as we read the following cases;
“The right of a person to sell his labor upon such terms as he deems proper is, in its essence, the same as the right of the purchaser of labor to prescribe the conditions upon which he will accept such labor from the person offering to sell it.”
Adair v. U. S., 208 U.S. 161, 174 (1908).
“The property which every man has in his own labor, as it is the original foundation of all other property, so it is the most sacred and inviolable. The patrimony of the poor man lies in the strength and dexterity of his own hands, and to hinder his employing this strength and dexterity in what manner he thinks proper, without injury to his neighbor, is a plain violation of this most sacred property.”
Butchers Union Co. v Cresent City Co, 111 U.S. 764, 767.
“The principle is fundamental and vital. Included in the right of personal liberty and the right of private property __ partaking of the nature of each __ is the right to make contracts for the acquisition of property. Chief among such contracts is that of personal employment, by which labor and other services are exchanged for money or other forms of property. If this right be struck down or arbitrarily interfered with, there is a substantial impairment of liberty in the long established constitutional sense. The right is as essential to the laborer as to the capitalist, to the poor as to the rich, for the vast majority of persons have no other honest way to begin to acquire property save by working for money.”
Coppage v. Kansas, 236 U.S. 1, 14 (1915).
With this knowledge we must consider two things; (1) “Labor is property” and the Illinois Supremes have stated that “an income tax is not a tax on property”. (2) The Supremes have declared that the income tax “is not a tax on the source of income”, and YOU ARE THE SOURCE OF INCOME, which means the compensation for your labor is not the subject of the income tax.
But let’s go further and examine whether a citizen’s “labor” is a “privilege” subject to the IITA. In the above cases, the Ill. Supremes say a citizen has the “right to sell his labor”, and that it is “the most sacred and inviolable” right, and that it “constitutes the essential distinction between freedom and slavery; between liberty and oppression”.
The U.S. Supremes repeatedly agree that it is a “right” for a citizen to labor, not a “privilege”. They state it is your“most sacred property”, and that “The principle is fundamental and vital”.
Wow! It seems clear enough! However, for those that are still foggy, let’s read more of what the Ill Supr Crt says about the subject;
“Compensation for labor can not be regarded as profit, within the meaning of the law. The word “profit”, as ordinarily used, means the gain made upon any business or investment – a different thing altogether from mere compensation for labor.”
Commercial League Association of America v. The People, ex rel., 90 Ill. 166, 173 (1878).
To make the point even clearer, read what the Supreme Court’s of Tennessee, Arkansas, and Oregon have to say on the subject of income tax on a citizen’s right to work [labor].
“It cannot be denied that the Legislature can name any privilege a taxable privilege and tax it by means other than an income tax, but the Legislature cannot name something to be a taxable privilege unless it is first a privilege. …
Since the right to receive income or earnings is a right belonging to every person, the right cannot be taxed as privilege.”
Jack Cole Company v. MacFarland, 337 S.W.2d 453, 455-456 (Sup. Ct. of Tennessee, 1960).
“The effect of this construction of our Constitution by all of our former decisions is that the Legislature has no power to declare as a privilege and tax for revenue purposes occupations that are of common right, but it does have the power to declare as privileges and tax as such for the state revenue purposes those pursuits and occupations that are not matters of common right, and to declare and tax as a privilege for state revenue any other subjects or sources of taxation that are not pursuits or occupations of common right.
Sims v. Ahrens, 271 S.W. 720, 733 (Supr. Ct. of Arkansas, 1925).
The individual [citizen], unlike the corporation, cannot be taxed for the mere privilege of existing. The corporation is an artificial entity which owes it’s existence and charter powers to the state; but the individuals’[citizen’s] rights to live and own property are natural rights for the enjoyment of which an excise cannot be imposed. 26 R. C. L. Taxation § 209, p. 236; Cooley Taxation (4th Ed.) § 1676; In re Opinion of the Justices, 195 Mass. 607, 84 N. E. 499.”
Redfield v. Fisher, 292 P. 813, 819 (Sup. Ct. of Oregon, 1930).
So what have we learned about the “law”? (1) It is no great mystery; (2) It is written in plain English and once you learn a few simple rules, it is easily understood.
So what do the facts and law tell us about the Illinois Income Tax Act [and it’s recent 66% rate hike]? (1) That it is a tax on a “privilege” [an excise tax]; (2) That it is applicable to “privileges” only, such as doing business in a corporate capacity; (3) That a citizen’s “right” to labor is not a “privilege” that is subject to the income tax; (4) That a citizen’s labor is “property” not subject to the income tax; (5) That a citizen is the “source” of his own labor and not subject of the income tax.
There is so much more to the meaning of the words in the Illinois Income Tax Act. So as to avoid writing an article that goes on for 100 pages, this article focused only on the one aspect that is most interesting and revealing.
Finally, what would happen if you interpreted the plain language of the law, understood the income tax doesn’t apply to a citizen’s labor, and lawfully stopped filing income tax returns? [If you have a weak stomach, stop reading here and go back to your television]
The answer is, you would find out that the United States is no longer “a nation of laws”, but instead, a nation of tyranny and oppression. A police state that recognizes none of your rights. You would find out that the court system is dead and gone, replaced with a corrupt political system to which no one knows what the law is, nor what it will be on any given day, and that the law is applied differently to each person depending upon his status and political clout in the corrupt system. You will learn that the agents and employees charged with enforcing the “laws” have no clue what they say or mean, and indeed, have never even read them, nor have any intention to do so. You will learn that due process of law is a thing of the past, and that your property will be arbitrarily taken in the same manner as routinely done on a daily basis in Illinois. You will learn that you have wasted your time reading the law and you should shut up and do as your told. You will learn that you, your home, your car, your money, and all your property is owned and controlled by a mindless corrupt ignorant political system that is nothing more than a puppet society run by the money changers [bankers].
But most importantly, you will learn that the only language that government speaks or understands is FORCE. Petitioning, voting, Tea parties, townhall meetings, protests, marches, etc, are all foreign languages to our government. The Founding Fathers recognized this and permanently installed the correct language for us to speak to our government, in both the United States Constitution [2nd Amend] and the Illinois Constitution [Article 12].
We need only to learn the language!