(originally launched into cyberspace on 05/4/2007)
I received a response from Professor Siegel to my two questions,
and I must say, I am quite impressed. I'm not impressed with his
answers, because he didn't answer either question. But I am
impressed with his quintessential lawyer-speak method of using lots
of words to NOT answer two simple yes-or-no questions. I'll give
you his entire response, with comments of mine inserted inside
brackets [like this]. Here goes:
- ----------< begin Siegel reply >-----------
> > 1) Did Section 217(a)(3) of the Revenue Act of 1925
> > mean that compensation for services performed in
> > the United States is taxable for ALL U.S. citizens?
First of all, I note that you are, as usual, overly focused on
studying arcane issues relating to what the law was many decades
[Wow, change the subject and insult the questioner. He's off to a
We are governed by the current law, not by what the law was in the
days of our grandparents. The 1920s Revenue Acts are long gone.
Yes, the old law may in some cases have some influence on the
interpretation of the current law, but what really matters is the
[For the record, both the Supreme Court (in the Wodehouse case) and
the Secretary of the Treasury (in Treasury Decision 8687) looked to
Section 217 to decide the correct interpretation of later statutes.
But again, he starts by complaining about the questions, even
though the questions connect it with the current law.]
However, for the sake of argument, I took a look at these old
acts. I don't see a Revenue Act of 1925, but I looked at the
Revenue Act of 1924, 43 Stat. 253, and the Revenue Act of 1926, 44
Unsurprisingly, I discovered that the income tax imposed by these
old laws, like the current income tax, applied to the domestic
income of U.S. citizens.
[So far, no answer to what I actually asked. And I won't let him
side-track the discussion by responding to every false statement he
Specifically, the answer to your question [Here we go!] is yes,
section 217 of the 1920s Revenue Acts, in connection with the other
sections, particularly section 213, did mean that compensation for
services performed in the United States was taxable for U.S.
[Wow, nice dodge! I didn't ask if that section, "in connection
with" anything else, said something. I didn't ask anything about
any other section. I asked if Section 217(a)(3) meant that domestic
wages are taxable for all U.S. citizens. Anyone can see that it
does NOT. So why wouldn't he just say "No," and then give his
explanation? Why change the QUESTION before answering it? Because
the honest answer ("No, it did not") would be hard to reconcile
with his previously stated position.]
You make the same fundamental error for these old Revenue Acts as
you do for the current Code: you focus only on the "sources"
section (the only section mentioned in your question), when you
should also be looking at the sections that define gross income.
[So apparently I got the QUESTION wrong. How does that work? I
won't bother pointing out all the things he gets wrong in these
paragraphs, which I've done before. Again, I don't intend to let
him change the topic of discussion in order to distract attention
from the fact that he completely dodged the question, but to be
fair I wanted to show his entire response.]
Section 213(a) of the old Acts provided that gross income "includes
gains, profits, and income derived from salaries, wages, or
compensation for personal service . . . of whatever kind and in
whatever form paid . . . ."
However, section 213(c) provided that "In the case of a nonresident
alien individual, gross income means only the gross income from
sources within the United States, determined under the provisions
of section 217."
Thus, the basic structure was the same as today's. Section 213(a)
was comparable to today's section 61. Section 213(c) was
comparable to today's section 2(d).
Then, as now, the Act first defined gross income as including
compensation for personal service, without any restriction as to
But then, as now, it provided that *for nonresident aliens*, gross
income means only gross income from sources within the United
Therefore, nonresident aliens needed to know which part of their
income was from sources within the United States. Section 217
answered that question. But, because there was no geographic
restriction in section 213(a), gross income for U.S. citizens
included compensation for services performed anywhere, as is true
under today's section 61.
The role of section 217, like the role of section 861 today, was to
determine which income was from sources within the United States.
Section 213, however, specified the scope of gross income: for
nonresident aliens, only income from U.S. sources [213(c)]; but for
U.S. citizens, all income without regard to geographic source
(The old Acts also put certain other taxpayers, such as U.S.
citizens subject to then-section 262, in the same position as
Section 217 was a little different from current section 861 in that
it only mentioned nonresident aliens (and others in special
categories). That just makes it all the clearer that U.S. citizens
did not need to determine which part of their income was from
sources within the United States because section 213(a) defined
their gross income without regard to geographic source.
[Note how he's back to implying that we don't need to look to 861.
Once again, he changes positions to try to cling to his incorrect
So the bottom line is yes, the income tax imposed in those days,
like the current income tax, applied to the domestic income of U.S.
citizens, because it defined their gross income without regard to
geographic source, as opposed to the gross income of nonresident
aliens, which, then as now, was limited to gross income from U.S.
[Nice "bottom line," except that's not what I asked. It was a
simple yes-or-no question, about one particular section, and he
refused to answer it, even though the answer is painfully obvious.
Why is that, do you suppose? Now, on to the second question...]
The answer to this question makes it unnecessary to answer your
- -------------< end Siegel reply >----------
Well, that makes two questions and zero answers.
Now, I don't mind people expounding to their heart's delight. I do
it quite often myself. But it's one thing to do that AFTER
answering a question, and another to do it INSTEAD OF answering a
question, which is what Professor Siegel did. The answer to the
first question is obviously "NO," but he refused to say that. As
for the second question, he used his prior tap-dance as an excuse
to not answer it. (I wonder how often his law students ask him a
question, only to have him tell them that it's "unnecessary" for
him to answer.)
I'd now like to quote myself, from a recent message:
"As I've often said, when watching the discussion of the 861
evidence, be mindful of human psychology as much as you are of the
law. In the next few days I will be asking Mr. Siegel TWO simple
questions. Watch carefully how he responds, and then decide if he
is to be "trusted" (which is a term he likes to bring up)."
Well, did he answer the questions, or did he tap-dance? This is why
the back-and-forth, question-and-answer method is so much more
informative than one-sided articles or speeches. (It's also why the
status quo experts so rarely agree to engage in a rational
discussion.) In a monologue you can make almost anything sound
convincing. It's on "cross-examination" that mistakes and untruths
get uncovered. And when someone dances around a question, changes
it, insults it, complains about it, or says answering is not
"necessary," what does that tell you?