Additive Assertions

by Larken Rose 

Proving a "theory" requires a comprehensive explanation of the evidence, while rebutting a theory only requires poking a hole in it. Unfortunately, that fact leads to a psychological disadvantage for the proponent of any conclusion or theory. If someone throws up four or five points of criticism at a theory, any one of which could destroy the theory, the spectator has to make sure EACH of those points is invalid. 

We see that constantly with the 861 evidence. The status quo folk are constantly attempting to poke holes in the issue, using a wide variety of claims and assertions (which often contradict each other). Unless the spectator is familiar enough with the issue to see the flaw in EACH attack, the method of "additive assertions" works very well, since it is bound to at least raise doubt in the mind of the average viewer. 

"861 is only for foreigners." "861 is only about avoiding double taxation." "861 is only for those who have domestic and foreign income." "861 says your income is taxable anyway." "Whatever 861 says, 61 says your income is taxable." "Congress can tax anything they want." 

Even if each and every one of such claims can be disproven (and they can), such a volley of claims will creative additive doubt in the minds of most spectators to the debate. Psychologically, the "burden of proof" is then on us to dissect each claim, even if NO support was given for any of them. In other words, we have to prove a negative, over and over again, against a never-ending stream of baseless assertions. Chances are, everyone except those with a solid UNDERSTANDING of the issue will just decide it's too confusing, and give up (which is what the status quo folk are hoping for). 

I'll just use ONE example for this message. A fairly frequent claim among the status quo brigade, that has shown up in IRS form letters, opinions of some tax professionals, etc. (and on Monday night's show), is the claim that the reason for Section 861 is to avoid "double taxation," by giving people a credit if they had to pay some OTHER country a tax on the same income. (For example, a U.S. citizen working in Canada could be taxed on his income by Canada, AND by the U.S.) 

The mere ASSERTION that that is what 861 is about, without any support given for such a claim, will make people doubt. "Maybe it IS just about that. Who knows?" So then it falls on US to disprove the claim, even though no one bothered to prove it first, or even support it, before asserting it. So here goes: 

The current Section 861 came from Section 217 of the Revenue Act of 1921. Neither Section 217, nor any related regulations, said ONE WORD about double taxation, or foreign taxes, or foreign tax credits. In 1939, the section was 119. Again, neither 119 nor any of the related regulations said ONE WORD about double taxation, or foreign taxes, or foreign tax credits. In 1954, the section became 861, substantially the same as it is now. And guess what... neither 861, nor any of the related regulations, said ONE WORD about double taxation, or foreign taxes, or foreign tax credits. 

It was not until 1978, when 26 CFR 1.861-8 became 30 pages long, that the regulations mentioned the foreign tax credit, in relation to ONE of the "specific sources or activities" which generate taxable income. And there still isn't the slightest hint that the sections are ONLY about that. 
(There ARE sections that prevent "double taxation": Section 901 and following, not 861.) 

So... should we believe that the sections are only for something they DIDN'T MENTION AT ALL for over half a century? Um... no. But since someone MADE UP that claim, it needed to be refuted. And that's the prolem. Anyone can make up any assertion they want, and if the average listener just assumes that the assertion even MIGHT be accurate, we will be faced with a never-ending stream of such assertions. That is why UNDERSTANDING is so important. I know a lot of you instantly recognized the "double taxation" claim as pure, unadulterated BUNK. But I'm also sure many of you--probably most--weren't sure. Once again, those who merely "believe" something are easily swayed, while those who UNDERSTAND something aren't. Trouble is, being in the second category takes a lot more effort. 

Sincerely, 

Larken Rose

To watch the Video on the 861 Evidence, click here

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