PROOF OF FACTS: Capital v. Income

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1. Distinguishing Between Capital and Income

What it the difference between capital and income, and what is the relationship between them? This should be Basic Economics 101, but this distinction has become an economic riddle that few seem inclined to solve.

1. Labor creates capital.
2. Invested capital generates income.
3. Riddle solved.

The distinction between capital and income is explained in the 1913 Congressional Record when the income tax was being created from the then ratified Sixteenth Amendment.

https://www.govinfo.gov/content/pkg/GPO-CRECB-1913-pt4-v50/pdf/GPO-CRECB-1913-pt4-v50.pdf

In addition, a copy of the entire congressional debates on the Sixteenth Amendment in 1909 before ratification can also be found at the following:

Sixteenth Amendment Congressional Debates, Exhibit #02.007
https://sedm.org/Exhibits/EX02.007.pdf

The Senators who revived the income tax after the ratification of the Sixteenth Amendment in 1913 had to distinguish between capital and income when enacting the outcome of the amendment into law. Therefore, they had to define their terms and clarify the correct distinction between income and principal (capital). This clarification is found in their debates on the subject of the proposed Sixteenth Amendment.

When the people of the country granted to Congress the right to levy a tax on incomes, that right was granted with reference to the legal meaning and interpretation of the word “income” as it was then or as it might thereafter be defined or understood in legal procedure. If we could call anything income that we pleased, we could obliterate all the distinction between income and principal. Whenever this law comes to be tested in the courts of the country, it will be found that the courts will undertake to declare whether the thing upon which we levy the tax is income or whether it is something else.

[1913 Congressional Record, Vol L, Part 4 pg. 3843, Senator Cummins]

The reason that the distinction has become a kind of riddle is because this distinction is not an economic distinction. Here we are dealing with “income” and “principal” as defined or understood “in a legal and not economic context.” These are legal distinctions, not economic distinctions. Here we speak of “income” and “principal” as defined by the Supreme Court, not Adam Smith in his book “The Wealth of Nations” upon which the Constitution was written. This legal or constitutional distinction exists because “income” and “principal” are taxed differently. Income and principal are the two categories of money and somewhere this got lost in our economic education. All money must fall into one of these two categories. The Senators make a clear distinction between these terms numerous times during Sixteenth Amendment Congressional debates:

If it were within the power of Congress to enlarge the meaning of the word “income,” it could, as I suggested a moment ago, obliterate all difference between income and principal, and obviously the people of this country did not intend to give to Congress the power to levy a direct tax upon all the property of this country without apportionment.

[1913 Congressional Record, Vol L, Part 4 pg. 3844]

Income and principal (property) must be legally separate from each other because they are taxed differently. This is because the Sixteenth Amendment applies to the income, not to the principal (property). Americans did not give to Congress to the power to tax all principal (or property) without apportionment. Income taxes, in fact are NEVER on PROPERTY alone because that would be a taking in violation of the Fifth Amendment Takings Clause.

Since the word “income” appears in the Constitution, only the courts can define its meaning. Both the Congress and the U.S. Supreme Court have acknowledged this legal fact:

The people have granted us the power to levy a tax on incomes, and it will always be a judicial question as to whether a particular thing is income or whether it is principal.

[1913 Congressional Record, Vol L, Part 4 pg. 3844]

[I]t becomes essential to distinguish between what is and what is not “income,” as the term is there used, and to apply the distinction, as cases arise, according to truth and substance, without regard to form. Congress cannot by any definition it may adopt conclude the matter, since it cannot by legislation alter the Constitution.

[Eisner v. Macomber, 252 U.S. 189, 206 (1920);
SOURCE: https://scholar.google.com/scholar_case?case=6666969430777270424]

After the 16th Amendment was ratified in 1913, “income” is in the Constitution, which means Congress cannot define it. The Court also explains that the distinction between capital and income must be maintained:

Whatever difficulty there may be about a precise and scientific definition of “income,” it imports, as used here, something entirely distinct from principal or capital either as a subject of taxation or as a measure of the tax.

[Doyle v. Mitchell Bros., 247 U.S. 179, 185 (1918);
SOURCE: https://scholar.google.com/scholar_case?case=1447070231071484109]

What is the distinction between income and principal? Principal and capital are synonyms and may be used interchangeably, but there is a clear distinction between income and principal. The strict legal distinction between capital and income must be enforced because a tax on income is subject to the authority of the Sixteenth Amendment, but a tax on capital is not. The Constitutional meaning of “income” in the Sixteenth Amendment does not include money that is capital.

2. What is Capital?

Capital comes from labor, either through employment or business activity; labor creates capital. Employment earnings and business profits are capital. Capital is a category of financial gain that is separate and distinct from income: Some financial gains are capital and other financial gains are income. All financial gains are one or the other.

Capital is a store of wealth and money is capital in its most basic financial form. The money one receives in exchange for their own labor is not a financial gain or a profit, but an equal exchange of one type of capital or property for another. That exchange of one form of capital for another is recognized in 26 U.S.C. §83 as NOT producing profit and therefore “income”. The Senators explain that too:

The earnings of any person from any occupation or profession would, if not spent in like manner, become principal. If by professional effort any person should earn a given sum annually and he spends half of it, he saves the other half. The half so saved in turn becomes principal. That principal is property.

[1913 Congressional Record, Vol L, Part 4 pg. 3843]

EARNINGS that are saved and not spent become PRINCIPAL. When distinguishing between income and principal, earnings that are saved are principal. Principal is synonymous with money that is property. The amount is irrelevant. If a CEO earns $20 million a year and spends half and saves the other half, the $10 million saved is the principal. This is the money the player has available to invest if he chooses. This $10 million that is saved is property. This $10 million that is property cannot get confused with money that is taxed as income as the Senators observed during debate:

If we make a mistake and include in our designation of what is “income” something which is not income, but is property, then, of course, the court would come in and settle that controversy

[1913 Congressional Record, Vol L, Part 4 pg 3845]

If the CEO spends all $20 million, then the player can never have any principal to invest. The Senators provide other examples illustrating the distinction between capital and income:

Mr. CRAWFORD. I should like to ask the Senator if he seriously asserts that politicians have an income?

Mr. WILLIAMS. Well, after they get through with the year they have not much left. [Laughter]

Mr. BRANDEGEE. No net income.

Mr. WILLIAMS. But they have at least had a salary and an opportunity to have an income.

[1913 Congressional Record, Vol L, Part 4 pg. 3838]

This exchange makes little sense today, considering the way these terms are deliberately equivocated to unlawfully expand the application of the income tax. Today, “salary” and “income” have become synonyms, whereas in the exchange above, the salary represents capital, and depending how that capital might be invested, would give a Senator the opportunity to have an income. The salary is not income. This observation from Senator Lodge is similar:

Of course the men of small earnings and small incomes pay taxes to the Government of the United States in the indirect form.

[1913 Congressional Record, Vol L, Part 4 pg 3839]

Here is another example of how the proper distinction in terms income and principal has been eliminated with equivocation. As in the previous example, “earnings” and “incomes” have also become synonyms although, according to truth and substance, “earnings” are capital, not income. These examples illustrate that a salary and earnings are a receipt of capital exchanged for another kind of capital of equal value, but they are are separate and distinct from an income as PROFIT from capital.

3. The conversion of capital into money

Life and labor are a person’s most valuable capital assets.

“The Supreme Court has recognized that ‘the right to work for a living in the common occupations of the community is of the very essence of the personal freedom and opportunity’ that the Constitution was meant to protect.”

[Cornwell v. California Bd. of Barber Cosmetology, 962 F. Supp. 1260, 1271 (S.D. Cal. 1997);
SOURCE: https://scholar.google.com/scholar_case?case=11363274287979230549]

The Supreme Court has recognized the distinction between “income” and the conversion of capital (labor) into money.  In Doyle, the Court observed:

Starting from this point, the learned Solicitor General has submitted an elaborate argument in behalf of the government, based in part upon theoretical definitions of “capital,” “income,” “profits,” etc., and in part upon expressions quoted from our opinions in Flint v. Stone Tracy Co., and Anderson v. Forty-Two Broadway, with the object of showing that a conversion of capital into money always produces income, and that, for the purposes of the present case, the words “gross income” are equivalent to “gross receipts,”

[Doyle v. Mitchell Bros., 247 U.S. 179 (1918);
SOURCE: https://scholar.google.com/scholar_case?case=1447070231071484109]

“Gross income” is NOT equivalent to “gross receipts.” The Court reminded the government that:

Income may be defined as the gain derived from capital, from labor, or from both combined.

Understanding the term in this natural and obvious sense, it cannot be said that a conversion of capital assets invariably produces income

[Doyle v. Mitchell Bros., 247 U.S. 179, 185 (1918);
SOURCE: https://scholar.google.com/scholar_case?case=1447070231071484109]

When a capital asset as property is converted into money, the money remains a capital asset but takes a different form than the capital that produced it:

When the act took effect, Appellant’s timber lands, with whatever value they then possessed, were a part of its capital assets, and a subsequent change of form by conversion into money did not change the essence.

[Doyle v. Mitchell Bros., 247 U.S. 179, 187 (1918);
SOURCE: https://scholar.google.com/scholar_case?case=1447070231071484109]

The timber is a capital asset and when it is converted into money. The essence isn’t changed and therefore the money is also a capital asset.   On this subject, the U.S. Supreme Court observed:

The sale outright of a mining property might be fairly described as a mere conversion of the capital from land into money

[Stratton’s Independence v. Howbert, 231 U.S. 399, 414-415 (1913);
SOURCE: https://scholar.google.com/scholar_case?case=11971357151204259952]

The conversion of capital into money might produce income if there is a valid gain or profit. However, the mere conversion of capital from one form to another of equal value is not income:

“Yet it is plain, we think, by the true intent and meaning of the act, the entire proceeds of a mere conversion of capital assets were not to be treated as income.”

[Doyle v. Mitchell Bros., 247 U.S. 179, 184-185 (1918);
SOURCE: https://scholar.google.com/scholar_case?case=1447070231071484109]

The principles expressed above are applicable to all capital assets, including one’s own labor. When labor is converted into money, the money is likewise capital. Abraham Lincoln, in his First Annual Message to Congress, observed:

“Labor is prior to and independent of capital. Capital is only the fruit of labor, and could never have existed if labor had not first existed.”

[Abraham Lincoln, First Annual Message Dec 2, 1861;
SOURCE: https://www.presidency.ucsb.edu/documents/first-annual-message-9]

Thomas Jefferson said something similar:

“With all [our] blessings, what more is necessary to make us a happy and a prosperous people? Still one thing more, fellow citizens–a wise and frugal Government, which shall restrain men from injuring one another, shall leave them otherwise free to regulate their own pursuits of industry and improvement, and shall not take from the mouth of labor the bread it has earned. This is the sum of good government, and this is necessary to close the circle of our felicities.”

[Thomas Jefferson: 1st Inaugural, 1801. ME 3:320;
SOURCE: https://www.famguardian.org/Subjects/Politics/ThomasJefferson/jeff0650.htm]

Government and legal authorities stating that capital is the fruit of one’s labor are being edited out of existence to support the false government narrative that all earnings are “income.” This has been done in the present version of I.R.C. 61(a) by removing the following language that appeared in I.R.C. 1939 Section 22(a) as we talk about later in section 8 of this article:

“SEC. 22. GROSS INCOME.

(a) GENERAL DEFINITION.—“Gross income” includes gains, profits, and income derived from salaries, wages, or compensation for personal service, of whatever kind and in whatever form paid, or from professions, vocations, trades, businesses, commerce, or sales, or dealings in property, whether real or personal, growing out of the ownership or use of or interest in such property; also from interest, rent, dividends, securities, or the transaction of any business carried on for gain or profit, or gains or profits and income derived from any source whatever. In the case of Presidents of the United States and judges of courts of the United States taking office after June 6, 1932, the compensation received as such shall be included in gross income; and all Acts fixing the compensation of such Presidents and judges are hereby amended accordingly.”

[1939 Internal Revenue Code;
SOURCE: https://www.givemeliberty.org/docs/TaxResearchCD/TaxActs/1939IRCode.pdf]

Financial capital is the fruit of one’s labor and usually comes in the form of a paycheck. At the end of a work week, 40 hours of life’s capital has been exhausted and in exchange, one receives 40 hours of financial capital. The paycheck restores capital so at the end of the week, one has the same amount of capital as at the beginning. The capital is merely in a different form and the “change of form by conversion into money did not change the essence”.

When life and labor are converted into money as a financial asset, the money remains capital. Employment earnings are the “entire proceeds of a mere conversion of capital” from labor into money and are in no true sense income in a constitutional sense.  In a practical sense, if investment earnings are income and employment earnings are also income, then:

1. There is no capital in personal finance
2. None of us literally own ourselves.
3. We are chattel property of the government and slaves in violation of the Thirteenth Amendment prohibition against involuntary servitude.

The result of the above is financially and constitutionally absurd. Describing employment earnings as “earned income” is an attempt to obliterate all the distinction between income and principal and ENSLAVE US ALL.

The Supreme Court affirmed that a person’s labor is property:

“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.”

[Butcher’s Union v. Crescent City Co., 111 U.S. 746, 757 (1884);
SOURCE: https://scholar.google.com/scholar_case?case=2843870813948488667]

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“Every man has a natural right to the fruits of his own labor, is generally admitted; and no other person can rightfully deprive him of those fruits, and appropriate them against his will…”

[The Antelope, 23 U.S. 66, 10 Wheat 66, 6 L.Ed. 268 (1825);
SOURCE: https://scholar.google.com/scholar_case?case=16310204168891487690]

Capital (money) is exchanged for one’s labor of equal value without profit. This is recognized in 26 U.S.C. §83. Any job, any trade any profession or occupation whatsoever is a source of capital by this mechanism. The money a person earns from their own labor, whether that means cutting grass or throwing touchdowns, is always capital with the same economic value as the labor that produced it.

All money by default is capital. Money in your wallet is capital. Money in your bank account is capital. Money in your employer’s bank account is capital. And, the change rolling around under your car seat is capital. When people pass money around, they pass around capital. While capital has many forms such as land, tools, factories, roads, et al., capital in the form of money is the most basic form of capital used by people every day.

4. What is income?

Income is a financial gain that comes from investment. Income is the “gain derived from capital,” it cannot be the capital itself. One must invest capital to receive an income.

The Supreme Court’s oft quoted definition of “income” is:

“Income may be defined as the gain derived from capital, from labor, or from both combined,” provided it be understood to include profit gained through a sale or conversion of capital assets.

[Eisner v. Macomber , 252 U.S. 189, 207 (1920);
SOURCE: https://scholar.google.com/scholar_case?case=6666969430777270424]

This definition describes an investment gain:

1. The gain derived from capital is an investment gain.
2. The gain derived from labor is an investment gain.
3. The profit gained through sale or conversion of capital assets is an investment gain.

The Court rebuked the government for trying to expand the meaning of “income” to include any financial “gain:”

The government, although basing its argument upon the definition as quoted, placed chief emphasis upon the word “gain,” which was extended to include a variety of meanings; while the significance of the next three words was either overlooked or misconceived. “Derived from capital”; “the gain derived from capital,” etc. Here, we have the essential matter; not a gain accruing to capital; not a growth or increment of value in the investment; but a gain, a profit, something of exchangeable value, proceeding from the property severed from the capital.

[Eisner v. Macomber , 252 U.S. 189, 207 (1920);
SOURCE: https://scholar.google.com/scholar_case?case=6666969430777270424]

Adopting a variety of meanings for “gain” in an attempt to tax capital as if it were income is not new because revenue agents have been in the business of confusing these ideas since at least Eisner. The government does the same thing today as it tries to tax any financial “gain” as income. “The gain derived from capital” is the essential matter when identifying a gain that qualifies as income. This whole definition is describing a gain “in the investment” not a gain from one’s own labor, which is the capital itself. The gain from capital, the gain from labor or the gain from the conversion of an asset is measured against the invested capital. This is how income is derived from capital. Income is not any financial “gain,” income is specifically the “gain derived from capital.” There can be no gain derived from capital, labor or both combined without first investing capital and then severing the gain from the invested capital. Without capital there can be no income. Income is an investment gain.

This explains why the income tax was almost exclusively associated with taxing the rich back in 1913. In those days, only the rich had an income. Only the rich had passive earnings from investments. The working man does not have an income. The working man only has capital: Earnings from his own labor.

5. A Source of Capital

Income is derived from a source of capital; without capital there can be no income.

The Sixteenth Amendment:

Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.   

[U. S. Constitution, Sixteenth Amendment;
SOURCE: https://law.justia.com/constitution/us/amendment-16/]

Income is derived from a source. The verb “derived” means to obtain from a parent substance. A thing is not derived from itself. Income cannot be derived from income. Section 61(a) of the Internal Revenue Code contains the same language:

General definition: except as otherwise provided in this subtitle, gross income means all income from whatever source derived, including (but not limited to) the following items:

Based on the sentence structure and meaning of the verb “derived” in the statute, there can be no “source of income” in a legal sense because income is derived from the source. The parent substance, the source, is capital. Thus, there is only a “source of capital.” If “source” meant “source of income” it would render 61(a) logically, grammatically, and economically absurd:

“Gross income means all income from whatever source [of income] derived…”

Income is not derived from income. Income is not derived form a source of income. Income is derived from capital, but the capital may originate from many different sources: Any job, any trade, any occupation, or profession whatsoever is a source of capital. Employment earnings are capital and capital must be invested to derive income. This is how income is derived from capital.

To be interpreted accurately, the statute must therefore be read:

“Gross income means all income from whatever source [of capital] derived….”

The Sixteenth Amendment must therefore be read:

Congress shall have power to lay and collect taxes on incomes, from whatever source [of capital] derived, without apportionment among the several States, and without regard to any census or enumeration.   

[U. S. Constitution, Sixteenth Amendment;
SOURCE: https://law.justia.com/constitution/us/amendment-16/]

“Source” = A source of capital.

Income and principal are two separate and distinct categories of financial or economic substance. Receipt of some money can be attributed to capital and other types of money received can be income. Money derived from one’s own labor is capital and money derived from investments (the “gain derived from capital”) is income. The distinction must be strictly enforced because they are taxed differently: Income is subject to the Sixteenth Amendment, but capital is not.

6. Individual Income And Business Income Are Derived From Invested Capital

Capital (money) is the fruit of labor and is usually received in the form of a paycheck. Once a person has acquired financial capital, it may be spent, it may be saved, or it may be invested. Invested capital produces income. The gain derived from an individual’s capital is individual income. The person who spends all of their capital and never saves or invests a dime, will NEVER have an income.

Business revenue are the business’ organic source of capital. Debt and selling stock is not the only way to raise business capital. Business operations produce profits and those profits are the business’ increased capital. The business may spend that capital, save that capital or invest that capital. Invested capital produces income. The gain derived from business capital is business income. The invested capital belongs to the business and so does the income derived from it.

The Supreme Court reminds us that:

“Manifestly this argument must be rejected, since the amendment applies to income only, and what is called the stockholder’s share in the accumulated profits of the company is capital, not income.

[Eisner v. Macomber , 252 U.S. 189, 219 (1920);
SOURCE: https://scholar.google.com/scholar_case?case=6666969430777270424]

Accumulated profits distributed to the shareholders are capital. If all those earnings are consumed running the business by making improvements, buying new equipment or providing raises for employees and none of the earnings are invested into a separate venture, then the business will NEVER have a profit and therefore income to ITSELF.

From this holding we can conclude: That the Supreme Court distinguishes between two types of money – capital and income; that the Sixteenth Amendment applies to income only; and that accumulated business profits distributed to shareholders and not retained by th corporation are capital and not income.

Both business and individual income are derived from invested surplus capital.

7. Chicken or the Egg: Which Comes First, Capital Or Income?

We live in a capitalist economy and nothing happens without capital. Employment earnings are one’s source of capital, which can be spent, saved or invested. It is from invested capital that one derives income. The relationship between them is simple. This should be Basic Economics 101. It only becomes complicated when taxing authorities, through craft and subterfuge, attempt to tax capital as if it were income. There is a deliberate attempt to edit the idea of capital out of our personal finances. Income is the product of invested capital: Without capital there can be no income. If it’s a chicken or the egg argument, the capital must come first.

Using alternate terms to describe money adds confusion. Describing money using terms like: Wages, salaries, tips, commissions, rents, royalties, dividends, etc., obscures the distinction between capital and income. All money, regardless how else it may be described, must fit into one of these two categories. Every dollar that comes into one’s possession is either the “gain derived from capital,” or it is the capital itself. Money cannot be anything else. Don’t get lost in the abstraction: All of these terms describe either capital or income, and in the end they all mean money:

Americans have forgotten the difference between capital and income and the confusion is so extensive that many Americans might be surprised to learn that their personal finances are capital. The idea of capital in personal finance has been almost completely erased from from our collective conscience. And yet, without capital there can be no income.

8. Congressional Equivocation that created this deliberate deception

Congress seems to have deliberately tried to create the confusion documented in this article by changing the definition of “gross income” over the years.

1. The history of various Internal Revenue Code sections over its many versions is contained in:
   Derivations of Code Sections of the Internal Revenue Codes of 1939 and 1954, Litigation Tool #09.007
   https://sedm.org/Litigation/09-Reference/DerivOfCodeSectOfIRC.pdf
2. In the 1939 Internal Revenue Code, Section 22(a), “gross income” was defined as:
   “SEC. 22. GROSS INCOME.
   (a) GENERAL DEFINITION.—“Gross income” includes gains, profits, and income derived from salaries, wages, or compensation for personal service, of whatever kind and in whatever form paid, or from professions, vocations, trades, businesses, commerce, or sales, or dealings in property, whether real or personal, growing out of the ownership or use of or interest in such property; also from interest, rent, dividends, securities, or the transaction of any business carried on for gain or profit, or gains or profits and income derived from any source whatever. In the case of Presidents of the United States and judges of courts of the United States taking office after June 6, 1932, the compensation received as such shall be included in gross income; and all Acts fixing the compensation of such Presidents and judges are hereby amended accordingly.”
3. The 1954 code changed I.R.C. Section 22 of the 1939 code into Section 61, which is what it currently is.
4. The current section 61 uses the following language:
   “Except as otherwise provided in this subtitle, gross income means all income from whatever source derived, including (but not limited to) the following items:“
   [SOURCE: https://www.law.cornell.edu/uscode/text/26/61]
5. The U.S. Supreme Court in Commissioner v. Glenshaw Glass Co., 348 U.S. 426 (Supreme Court 1955) held:
   
   FOOTNOTES:
   [11] In discussing § 61 (a) of the 1954 Code, the House Report states:
   “This section corresponds to section 22 (a) of the 1939 Code. While the language in existing section 22 (a) has been simplified, the all-inclusive nature of statutory gross income has not been affected thereby. Section 61 (a) is as broad in scope as section 22 (a).
   
   “Section 61 (a) provides that gross income includes `all income from whatever source derived.’ This definition is based upon the 16th Amendment and the word `income’ is used in its constitutional sense.” H. R. Rep. No. 1337, supra, note 10, at A18.
   
   A virtually identical statement appears in S. Rep. No. 1622, supra, note 10, at 168.
6. So from I.R.C. 1939 Section 22(a) to 1984 I.R.C. we now have Section 61(a), Congress REMOVED the phrase “gains, profits and” in front of the word income in order to make you falsely believe that the tax is on all earnings. HOWEVER, the U.S. Supreme Court in Commissioner v. Glenshaw Glass Co., 348 U.S. 426 (Supreme Court 1955) above held that there was no change in the definition of “gross income” from the 1939 I.R.C. to the 1954 I.R.C., which is the same as the current 1984 I.R.C.
7. Therefore, “gross income” STILL means “gains and profits” and not all earnings, which are capital and principal rather than “income”. LIARS!

9. Conclusions and Summary

This topic focuses on two main ideas:

1. Employment earnings and business revenue are capital and
2. That capital must be invested to produce profit and therefore income in a Sixteenth Amendment or Constitutional sense.

This article does not address how these separate financial gains are taxed. To summarize:

1. Income and principal are two separate categories of financial assets.
2. Principal (or capital) is a financial asset that originates with labor. Earnings that are saved and not spent become principal.
   • Capital can be spent, saved or invested.
3. Income is a financial asset that comes from investment. Income is the “gain derived from capital,” it cannot be the capital itself.
4. Earnings are capital. An individual must invest surplus capital to generate an income.
5. Business revenue is capital. A business must invest surplus capital to generate a profit and therefore income in a constitutional sense.
6. The Sixteenth Amendment applies to income (profit), it does not apply to capital (property).
7. Income is a luxury. Nobody needs an income, but a person cannot survive without capital.
8. One’s own labor is capital. A paycheck is just an equal exchange of one type of capital for another that does not represent profit as recognized in in 26 U.S.C. §83.
9. Do not describe what you earn for your labor as a “gain” or “financial gain” of any kind, because you only create the false presumption that your paycheck is profit and therefore “income”. Its a financial asset, but not a financial GAIN.

If you would like exhaustive proof that your earnings from labor are not profit or income in a Sixteenth Amendment sense, see:

1. Sovereignty Forms and Instructions Online, Form #10.004, Cites by Topic: “Income”
   https://famguardian.org/TaxFreedom/CitesByTopic/income.htm
2. How the Government Defrauds You Out of Legitimate Exclusions for the Market Value of Your Labor, Form #05.026
   https://sedm.org/Forms/05-MemLaw/DefraudLabor.pdf
3. Proof that Involuntary Income Taxes on Your Labor are Slavery, Form #05.055
   https://sedm.org/Forms/05-MemLaw/ProofIncomeTaxLaborSlavery.pdf
4. PROOF OF FACTS: Proof that Your Human Labor May Not Lawfully Appear as Income on Your 1040NR Tax Return Without Your Consent, FTSIG
   https://ftsig.org/proof-of-facts-proof-that-your-human-labor-may-not-lawfully-appear-as-income-on-your-1040nr-tax-return/