The Power To Tax ...

I didn’t see any headlines heralding the anniversary, but I noted it nonetheless. Feb. 3 was the 100th anniversary of ratification of the 16th Amendment to Constitution. It enshrined the income tax in federal law.

It’s not the sort of date I would normally notice. But I was neck-deep in a tax trial in federal court. The United States was prosecuting my client, Donna Bello, and another defendant, Jill Platt, for their role in something called “gifting tables.” The government charged them, among other things, with impeding the ability of the government to ascertain taxes owed.

That struck me as a an odd sort of criminal charge. The law is that you can be guilty of obstructing IRS efforts to determine taxable income even if you owe no taxes. Just how in the world did I become one of the crops on this tax plantation?

I recall my surprise in law school decades ago. All income is within the government’s reach. To put it in the words of the Supreme Court, any accession to wealth is taxable. That means that you owe taxes on a portion of every dollar hitting your hands, unless Congress says otherwise. We’ve developed a complex tax code. At last count, it and associated regulations and rulings fill almost 80,000 pages.

I suspect most folks think that once they earn a dollar and pay tax on it, they are free to do with their money what they want. But consider the following: Your decision to give money to another person creates income for them. Money circulating in the economy is one big revenue stream to the tax man.

Doesn’t that stand on its head the notion that the federal government has limited powers? Isn’t the power to tax the power to destroy?

In the gifting table cases, hundreds, if not thousands, of women across the state gambled on a provision of the tax code they thought might keep money out of the hands of the tax man. Federal law permits a person give a gift of up to $14,000 per year to another. The recipient need not report it as income, so long as the giver intends it as a gift, with no strings attached. In the turgid language of our courts, a gift springs from a disinterested and detached generosity.

To get on one of the tables, a person gave a gift of $5,000 to a person at the head of the table. Participants advance to a rank of four, then two, and finally arrived at the top position. Once a person at the top received eight gifts, the table dissolved, with the women in the rank of two now occupying the top position of new and separate tables. The person exiting the top then was free to join another table by starting all over with a $5,000 gift on a new table.

Scores of women testified in court in the past month about the tables. Many described it as a wonderful experience, meeting with other women for purposes of mutual support and sisterhood. A handful testified that they were unhappy with the tables. No one testified that they thought they would gain a return by giving money to another. Every participant joined a table and knew that in order to get a return, they had to participate.

Unlike Bernie Madoff’s empire, no one stayed at the top collecting money from folks unaware of what was going on.

The government smelled revenue in the gifting tables and it set its sights on several of the senior members.The government says the tables are pyramid schemes. Participants say otherwise. Wednesday, a jury of 12 sided with the government.

My client now faces a prison sentence, and back tax payments.

We tried to defend on the basis of good-faith belief that the tax code wasn’t violated, and that participation of lawyers and at least one federal law-enforcement agent would make a reasonable person believe everything was legitimate. We also tried to put on evidence of sometimes confusing and muddled advice the women received from lawyers.

The jury never heard from several witnesses, who appeared with lawyers of their own. The witnesses pleaded the Fifth Amendment right against self-incrimination and we were unable to present to testimony about lawyers’ winking at their participation on the tables.

Only the government can grant immunity to witnesses. In this case, the government offered immunity to one witness, who testified against our clients. We complained that it was unfair for the government to have the right to grant immunity to the witnesses it liked, while withholding immunity from witnesses it did not like. This got us nothing but a potential issue on appeal.

The jury made short work of our defense. The verdict depresses me. I might not join a gifting table, but those who joined were informed about what they were doing, and participated, often for years, while enjoying the fellowship of the group.

I had hoped the jury in the gifting tables case might be troubled by a government using double standards and animated by the principle that it is entitled to a piece of every dollar that finds its way into our pockets. We’ve come a long way since the founding of the republic. Trust and obey is the new national anthem.


Truth, Justice and Other Illusions

SIGMUND FREUD was rarely accused of being too timid. Religious ideas are illusions, he wrote. God and the notion of an afterlife are mere products of our wishes. They are no less real for being illusory. Call them necessary fictions.

But Freud was cautious, even coy, about government and justice.

After writing about religious illusions, he had this to say about justice: “Must not the assumptions that determine our political regulations be called illusions as well? ... The author does not dispose of the means for undertaking so comprehensive a task.”

Let me help Freud along. Consider the recently released Justice Department memorandum asserting that the executive branch has the right to kill Americans without judicial review.

Released this month, it was written prior to the 2011 drone attacks that killed Anwar al-Alaki, his 16-year-old son and two other American citizens in Yemen. There was no judicial determination of guilt, not even judicial review. Senior officials decided these victims were members of al-Qaida and they were killed by remote control.

They were killed to keep you feeling safe and secure from terrorists. Many Americans are outraged. Where does the administration draw the line? If it can kill those it decides are a threat, how can a decision like that be appealed? Isn’t summary execution anathema to transparency and democratic virtues?

Such killings are a direct assault on our values. Yet most of us are prepared to tolerate the affront, even to embrace it, so long as we are not required to learn too much about it. Government killing is sort of like sex in the parental bedroom. If we don’t look or listen, we can pretend it doesn’t happen — we just want mom and dad to be happy.

I am with the American Civil Liberties Union in feeling disgust over these drone attacks. There ought to be lines beyond which government cannot go. Summarily killing us is one such line.

But to most Americans, the killings are no big deal. Why is that?

Political ideas and ideals reflect what philosophers might call instrumental values. In other words, our commitments to due process of law, to liberty or to equality are all means to other ends.


We say we cherish these ideals and that we are prepared to fight and to die for them. But rhetorical flourishes don’t pay the rent. Most folks, most of the time, are far more attuned to their interests than their ideals.

How else to explain the juxtaposition of the Declaration of Independence’s bold claim that all men are created equal with the practice of slavery? This paradox was resolved at the time by a rhetorical trick: All men are created equal, by golly; but who said blacks are men — aren’t they something less?

There will be no mass outrage about killings of Americans alleged to be affiliated with terrorists. They have declared war on us. We can distance ourselves from them, and cluck our tongues, pretending that they brought death upon themselves, and that our ideals remain sacrosanct. This is the same sort of Freudian illusion that calls death but the gateway to eternal life.

Only tyrants kill on command. Letting the administration define who it can kill without review is much like resolving the anomaly of slavery at the time of the founding by merely deciding that blacks aren’t human.

Such word games and deceit are inevitable because there is no explaining the whys and wherefores of how we come to live in groups. Always, the imperatives of the herd confront the demands of individual conscience. What makes the policemen’s wielding of a gun in the name of the law so different from the gang-bangers use of the same weapon? Only ideas and ideals.

Truth, justice, the American way? Illusions all — no less necessary and real, but illusions. We are prepared to trade our ideals for security.

But baring our teeth and snarling too loudly is frightening. We are trapped between the dark nature of our desires and the daylight need to justify ourselves in rhetoric that hides the beast within.

We cannot abide an unrestrained killing machine and call it good. Security from our enemies today becomes tomorrow’s murder of the inconvenient or merely unpopular.

A new court to review executive branch decisions to kill is necessary. The separation of powers doctrine demands no less.

It is the only idea we have to prevent our government from killing us because we pose a threat to someone’s idea of what the country requires to feel safe and secure.




About Norm Pattis

Norm Pattis is a Connecticut based trial lawyer focused on high stakes criminal cases and civil right violations. He is a veteran of more than 100 jury trials, many resulting in acquittals for people charged with serious crimes, multi-million dollar civil rights and discrimination verdicts, and scores of cases favorably settled.

Personal Website


Law Firm Website


I believe that the state is a necessary fiction and that failing to combat it is the first step toward tyranny.
– Norm Pattis


Nothing in this blog should be considered legal advice about your case. You need a lawyer who understands the context of your life and situation. What are offered here are merely suggested lines of inquiry you may explore with your lawyer.

Pattis Video