Confusion Reigns

It has become axiomatic that the size of the United States federal income tax code grows larger by the year (if not by the minute). Unfortunately, this is what American citizens have come to expect by the bloated State. It’s as if we’re living through My 600-lb Life or 1000-lb Sisters, but without the intervention. Tax preparation services is now a 13.9 billion dollar industry. Clearly, if the average person was capable of confidently filing their tax return, we wouldn’t have an industry with higher revenue than the gross domestic product of a small country.

There are a number of examples of how this plays out. In United States v. Critzer, 498 F.2d 1160 (4th Cir. 1974), the case concerned the legality of the conviction of an Indian for tax evasion. The Bureau of Indian Affairs had informed Mrs. Critzer that the money she derived from real property located within a reservation was not taxable; Mrs. Critzer relied upon this advice and did not report that income. Much to her surprise, the IRS took an opposing position and indicted and secured her conviction for tax evasion. This conviction was reversed for the reason that the uncertain character of this realm of law averted any conviction:

While the record amply supports the conclusion that the underreporting was intentional, the record also reflects that, concededly, whether defendant's unreported income was taxable is problematical and the government is in dispute with itself as to whether the omitted income was taxable.

Perhaps the most remarkable portion of the court’s decision is that the government convicted someone when their own supporting position was internally consistent! The more I research the history of the income tax, the less shocked I am to discover such statements. There’s more:

We hold that defendant must be exonerated from the charges lodged against her. As a matter of law, defendant cannot be guilty of willfully evading and defeating income taxes on income, the taxability of which is so uncertain that even co-ordinate branches of the United States Government plausibly reach directly opposing conclusions. As a matter of law, the requisite intent to evade and defeat income taxes is missing. The obligation to pay is so problematical that defendant's actual intent is irrelevant. Even if she had consulted the law and sought to guide herself accordingly, she could have had no certainty as to what the law required.

Once in a while, the people see that the Emperor has no clothes. This is one of those moments. The tax law is so uncertain that the United States Government itself reaches directly antithetical findings. It is cases like this that allow us to go behind the curtain and see that the Wizard is not what as he wants us to believe. One more sentence from this case is worth noting:

It is settled that when the law is vague or highly debatable, a defendant- actually or imputedly- lacks the requisite intent to violate it.

Wow. The tax code is so vague and case findings so contradictory that the average citizen can’t be found guilty for violating tax law!

A stark-naked Emperor.
A wizard fumbling behind a curtain designed to confuse.
Are these characters we should fear?