RSS Feeds
Facebook
Twitter
Ten Financial Urban Myths Print
Thursday, 6th July 2006 (by J.D.)This article is about Odds and Ends
MSN Money has a list of ten financial urban myths. Do you believe any of the following? If so, it may be time to change your mind.
- You can float a check longer if you use red ink. The color of ink makes no difference. Besides, if the bank can’t read the check, it’ll be returned an you’ll be charged extra fees.
- You don’t have to pay income tax — it’s illegal. I’ve heard variations on this: “You only have to pay if you start paying, so don’t start.” They’re wrong.
- I’m under 18, so I can’t be held accountable for a debt. Untrue. Minors can’t sign contracts, but banks won’t issue credit cards to minors without an adult co-signer.
- My hotel key card has my credit card information. Simply not true.
- Boycotting a few gas brands brings gas prices down. A myth. People don’t understand the mechanics of large industries.
- It’s better if you don’t sign the back of your credit card. Some people believe this helps prevent against identity theft, but the opposite is true. It’s easier for a thief to use an unsigned card: he just signs the name himself.
- You can make a lot of money by helping a foreigner solve his money problems. Does anyone actually believe this?
- You can opt out of having credit bureaus give your information to anyone who asks. Not true. You can opt-out of pre-approved credit card offers, though.
- You can buy your way out of points on a speeding ticket.
- Hotel Bibles often have $100 bills tucked inside them.
I’ve never heard any of these, though some are plausible enough that I might have believed them. Remember: any time you hear about something that might be too good to be true, verify it through an impartial third party.
[via Young and Broke]
July 6th, 2006 at 10:33 am
In Illinois, if you pay an extra fee on your ticket, you can attend a class and not get points for your first infraction. The class is now offered on the internet in Illinois. The fee is something like an extra $30, and is only available for people speeding less than 20 mph over the limit, running a stop sign, etc., not for more serious offenses.
July 6th, 2006 at 10:37 am
Here in Oregon, I don’t think we have points. I’m 37 years old, and completely unclear on the concept. Time for a trip to google…
July 6th, 2006 at 10:48 am
Me thinks the last one should read “hotel Bibles“. In any case, still untrue. I should know. I check everytime, just to make sure.
July 6th, 2006 at 10:52 am
How embarrassing. And I just wrote an entry in my personal blog today about how bad my spelling has been lately…
July 6th, 2006 at 12:41 pm
What about writing in indelible ink on the back of your credit card “MUST ASK 4 ID!”?
July 6th, 2006 at 1:10 pm
I love the income tax thing…I always think “more power to you” when I hear someone espouse that stand.
For your amusement, here’s the original 1040 form:
http://www.interocitor.com/archives/000286.html
It’s actually understandable. Odd.
July 6th, 2006 at 1:48 pm
could you please show me the exact law that requires me to pay income tax? I have never viewed it.
Aaron Russo’s new movie America: Freedom to Facism does a prett y good job of asking that question. Not even the IRS commissioner could answer that question.
July 6th, 2006 at 2:03 pm
I have found cash in TWO hotel bibles. It was in $20 bills, but I still took it.
July 6th, 2006 at 2:27 pm
Article I, Section 8 of the United States Constitution:
“The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States;”
July 6th, 2006 at 2:43 pm
Oh, and then there’s the 16th Amendment:
“The 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.”
July 6th, 2006 at 3:42 pm
What makes you think that you may be able to buy your way out of points on speeding tickets in Australia? Simply not true.
July 6th, 2006 at 3:57 pm
Ah, something got lost in the translation from the original article to my summary. The original article said: “[This] popular e-mail advice originated in Australia. Maybe it works for Aussies, but Americans aren’t so lucky.”
July 6th, 2006 at 4:32 pm
VinTek
There is a big diference between a law and the Constitution.
Sure congress has permission to make a law regarding collecting income tax. Has such a law ever been put through congress?
Meanwhile I will continue to pay my income tax, because I don’t like the idea of people telling me when I can see the sky.
July 6th, 2006 at 8:53 pm
PsychoPenguin,
The Constitution of the United States is considered the highest law of the land. The 16th Amendment has not only been ratified by Congress, it has been signed by the President and ratified by the States. Are you telling me that you’re not accepting the Constitution as law? Any lawyer, judge or first year law student would tell you otherwise.
July 6th, 2006 at 10:03 pm
Re: where the law says you must pay taxes.
Check Title 26, section 6012. Maybe it’s out of context, but it seems fairly clear to me.
Also of some interest is section 861, which defines what is taxable income. You can access both here:
http://www.law.cornell.edu/uscode/#SECTIONS
July 7th, 2006 at 7:43 am
In Florida and Texas, you can take a class to avoid getting points from your speeding ticket. In Georgia, if you have to go to court, you can plead “No Lo Contendo” or “No Lo” and you will not get points on your license.
July 7th, 2006 at 8:31 am
Who says lawyers aren’t good for anything? Mine just forwarded this link:
http://www.irs.gov/businesses/small/article/0,,id=106498,00.html
Basically: you do have to pay income tax, and there are plenty of laws on the books that say so.
I’ll make this the subject of a main entry in the future…
July 7th, 2006 at 9:56 am
Just to clarify, prior to the passage of the 16th Amendment to the Constitution, Congress had the ability to levy taxes (and did so frequently, but primarily on an ad hoc basis), however, prior to that time the income tax was considered something of a taboo. As a result, it was felt that a specific authorization in the Constitution was required. Thus was born the 16th Amendment. As one person pointed out, above, simply because the Constitution says that Congress can do something does not mean that it has chosen to do that.
For those persons who’ve never “seen” the anything that requires them to file taxes, lets consider the following: 26 USC 6011 requires a person to file a return if they are liable for taxes. How do you know if you’re liable for taxes? 26 USC 1 will tell you, but here’s the gist of it: (a) There is hereby imposed on the taxable income of (1) every married individual… (2) every individual not married or a surviving spouse, tax according to the attached tables. Then it lists the “tax brackets”. You can decide which bracket you fall into.
Keep in mind that an individual’s obligation to pay taxes to their state government is completely separate from their obligation to the federal government.
Thus endeth your civics lesson for today.
Lawyer Dave
July 7th, 2006 at 10:34 am
In Missouri, you can have tickets “fixed.” We have little places like the Traffic Law Center that you take your ticket into and they do all the lawyering or whatever and for a small chunk of change (generally a little more than just paying off the ticket would’ve been) your moving violation gets reduced down to a non-moving violation. In the long run you save money because your insurance doesn’t go up. … and no points on your license. Sometimes, if it is a bad violation or you’ve had multiple, then you’ll have to take a driving school course (1-2 days) as a condition of the settlement.
July 7th, 2006 at 3:01 pm
I understand the 16th amendment wasn’t properly ratified
Article I, Section 8 of the United States Constitution also states Congress may only collect taxes for 2 years.
Section 26 of the USC also states what areas it applies to. Oregon isn’t a district, territory or other Congress governed area.
Is nobody going to respond to the fact that even the IRS commissioner when questioned, could not point to the law?
http://www.freedomtofascism.com/ for the movie coming out
or let’s talk about Vernice Kuglin … http://www.google.com/search?q=vernice+kuglin&start=0&start=0&ie=utf-8&oe=utf-8&client=firefox-a&rls=org.mozilla:en-US:official
let’s take a look at her trial. For 9 years she didn’t pay. Sent a letter each year to IRS asking for the law that compelled her.
When the IRS took her to court they didn’t show the judge the law and she walked away.
Why wouldn’t the IRS have just opened the books and shown the law to the judge? I would have thought that would be the easiest way to find her guilty of not paying…
I am really not asking to be a jerk. I would really like to have an open debate about it without any one simply assuming that what everyone does is the correct thing. Sometimes what the herd is doing isn’t the right thing. Just cause everyone does it, doesn’t make it right.
I have no problem with State and even now, county taxes. I just happen to think our government ran fine pre IRS. It was much more under the power of the people than the other way around.
July 7th, 2006 at 3:36 pm
#6 is WRONG: Put CHECK ID on the back of the card. Every so often, it’ll get checke, preventing fraud. If the theif see it, he’ll be less likely to use it. Lastly, the thief won’t know how to sign your name and it’ll be easier to dispute when the signature is obviously not yours.
Of course, this only works for off-line transactions. On-line, you are screwed no matter what.
July 7th, 2006 at 8:45 pm
“Article I, Section 8 of the United States Constitution also states Congress may only collect taxes for 2 years.”
Not true. Clause 12 of Section 8 is as follows: “To raise and support Armies, but no Appropriation of Money to that Use shall be for a longer Term than two Years;” The 2 year period only refers to the appropriation of tax money for defense; it does not refer to the collection of taxes.
“I understand the 16th amendment wasn’t properly ratified”
Your understanding is flawed. This argument is based on the premise that all federal income tax laws are unconstitutional because the Sixteenth Amendment was not officially ratified, or because the State of Ohio was not properly a state at the time of ratification. This argument has survived over time because proponents mistakenly believe that the courts have refused to address this issue.
The Law: The Sixteenth Amendment provides that Congress shall have the power to lay and collect taxes on income, from whatever source derived, without apportionment among the several states, and without regard to any census or enumeration. U.S. Const. Amend. XVI. The Sixteenth Amendment was ratified by forty states, including Ohio, and issued by proclamation in 1913. Shortly thereafter, two other states also ratified the Amendment. Under Article V of the Constitution, only three-fourths of the states are needed to ratify an Amendment. There were enough states ratifying the Sixteenth Amendment even without Ohio to complete the number needed for ratification. Furthermore, the U.S. Supreme Court upheld the constitutionality of the income tax laws enacted subsequent to ratification of the Sixteenth Amendment in Brushaber v. Union Pacific R.R., 240 U.S. 1 (1916). Since that time, the courts have consistently upheld the constitutionality of the federal income tax.
“Section 26 of the USC also states what areas it applies to. Oregon isn’t a district, territory or other Congress governed area.”
It’s a state, and Congressional law does have jurisdiction over Oregon, as it does over the other 49 states.
July 7th, 2006 at 9:20 pm
Oh, I’d never heard of Vernice Kuglin before this, but it seems that despite her acquittal of criminal charges, on September 12, 2004, Kuglin entered a settlement with the IRS in the Tax Court in which she agreed to pay more than half a million dollars in back taxes and penalties. Kuglin v. Commissioner, Docket No. 21743-03.
Before we go on ad infinitum about this tax issue, please read http://www.irs.gov/pub/irs-utl/friv_tax.pdf first, or we’re going to talking about this forever.
July 8th, 2006 at 5:24 pm
Perhaps you should amend your post to clarify your lack of evidence in implying that Australia has a lower quality traffic laws than the US.
July 8th, 2006 at 7:22 pm
Better than that, Joe, I’ll just alter the offending text. It really doesn’t make sense unless you read the original article. I certainly didn’t mean to impugn our friends from down under!
July 11th, 2006 at 1:52 pm
Vintek:
Thanks for finding the ruling where she paid! That is exactly the information I needed to know. Funny though, only three pages show up when I google it. One is this blog, another associated with it (coleslaw) and the IRS. I am sure you can understand my difficulty finding the information.
as for the article in coleslaw…did you really need to be condescending and refer to me as ‘nutjob’? is it really in your best interest to call names? I had a serious question about Vernice. I really wanted to know the answer and hadn’t seen information regarding her actually paying taxes.
Thank you again Vintek for the info.
July 11th, 2006 at 8:08 pm
AB,
No problem. Glad to be able to provide new information. Vernice was new to me and it was interesting to read about.
Regarding Cole S. Law, I don’t think he was referring to you as a “nutjob.” Looking at his blog, his entry was made July 4th, 3 days before your entry here. I don’t think he was referring to you.
October 31st, 2006 at 10:12 am
“The Law: The Sixteenth Amendment provides that Congress shall have the power to lay and collect taxes on income, from whatever source derived, without apportionment among the several states, and without regard to any census or enumeration. U.S. Const. Amend. XVI. The Sixteenth Amendment was ratified by forty states, including Ohio, and issued by proclamation in 1913. Shortly thereafter, two other states also ratified the Amendment. Under Article V of the Constitution, only three-fourths of the states are needed to ratify an Amendment. There were enough states ratifying the Sixteenth Amendment even without Ohio to complete the number needed for ratification. Furthermore, the U.S. Supreme Court upheld the constitutionality of the income tax laws enacted subsequent to ratification of the Sixteenth Amendment in Brushaber v. Union Pacific R.R., 240 U.S. 1 (1916). Since that time, the courts have consistently upheld the constitutionality of the federal income tax.”
Yes, the constitution provides for two (2) types of taxation, direct and indirect, income taxation is neither, it’s a third form of taxation not sanctioned by the constitution and not apportioned. The other “laws” cited in the comments here are not laws but codes,statutes,and procedures. There IS NO LAW holding an average working American LIABLE for failing to file a federal income tax return.
But that wouldn’t stop them from arresting you I suppose, poor if you do, jailed if you don’t…
January 1st, 2007 at 10:36 am
VinTek - very informative, every claim backed up with indisputable proof, and every counter-arguement *thoroughly* refuted. And yet some will continue to think that if they yell loudly enough and with enough venom, that their faulty logic and inaccurate ‘facts’ will somehow become real.
“poor if you do, jailed if you don’t… ”
Absolutely Preposterous. Hogwash. Poor?
On a global level, the ’system’ under which we live has you enjoying a robust standard of living, relatively. The rewards of your daily travails likely far outweigh your actual toils. Countries with a similar or higher standard of living pay much more in income taxes (and in my experiences don’t whine about it so much), and folks in countries with no income taxes aren’t bragging about their standard of living.
February 1st, 2007 at 7:31 pm
16th Amendment
Could some one tell me if Austalia has the same Constution laws as United states. Please if possible could someone who known our system please advise us Australians, as it is getting hard, and harder to live with all the extra tax that they apply…
Would love to hear some true facts…
July 4th, 2007 at 12:32 am
I have never seem such a bunch of mis information and people that think they know something but don’t. The key to whether you are required to pay income tax is in the definition of the terms.
In the U.S. Code a word definition is the excepted meaning unless the definition is given in the code. If it is given in the code then that meaning and only that meaning is the definition.
Now look up the definition of words like income, gross income, employee, individual, person. Make sure you look in the section of the code interested in.
September 25th, 2008 at 12:27 am
there is no law saying you have to pay taxes. there are alot or laws is you avaid paying. so if you owe & they ask say iou. you did (ilegally) agree to taxes when you signed you ss card. never sign anything unless you read the contract. why do you think they make you sign. and they say you have to pay income tax (interest rent divetends) you`re paycheck is compinsation. rememeber your rights you don`t have to incriminate yourself. they have to prove it. good luck i`ll see you in prison. god bless all the soilders that died for our freedom.