“In a time of deceit telling the truth is a revolutionary act.”
– George Orwell
America: Freedom to Fascism is a 2006 film by Aaron Russo, which alleges among a variety of claims that income tax is illegal.
This documentary covers many subjects, including: the Internal Revenue Service (IRS), the income tax, Federal Reserve System, national ID cards (REAL ID Act), human-implanted RFID tags (Spychips), Diebold electronic voting machines, globalization, Big Brother, taser weapons abuse, and the alleged use of terrorism by government as a means to diminish the citizens’ rights.
The film’s claims about the illegality of the income tax in the United States have been critiqued as factually incorrect by some reviewers. The film has, however, developed a strong following.
Federal Reserve System issues and interviews in the film
The film spends a fair amount of time examining the Federal Reserve System, including its genesis and functions. The film asserts that the Federal Reserve System is a system of privately held, for profit corporations, not a government agency, and was commissioned to print fiat money on behalf of the federal government, at a fee ultimately paid for by the personal income tax (through service on bond interest). The film also refers to the fact that the United States dollar is not backed by gold, and claims that this means the dollar has no real backing other than future income tax payments. Consequently, the film proposes, Federal Reserve Notes represent debt instead of wealth.
According to the film, the Federal Reserve System operates by manipulation of what is sometimes referred to as the business cycle of economic expansion and retraction by putting new notes into circulation to increase the ease of obtaining credit, which devalues the currency, then compounds inflation by increasing interest (prime) rates. This manipulation, according to the film, is responsible for a 96% devaluation of American currency since it was made possible to increasingly sever the link with gold backing by the Federal Reserve Act of 1913. The film says that this process of creating new money and adding it to the money supply is known as debasement and is a cause of inflation. In this way, the film asserts that the Federal Reserve System simultaneously controls the supply of money and its value.
The central thesis of the film may be that this monetary policy is the strongest form of governance that has ever existed, and is central to the unconstitutional, global power ambitions of the interests that supposedly control the Federal Reserve System.
The film also asserts that the private interests it claims are controlling the Federal Reserve System have been present for generations. According to the film, however, most Americans are kept ignorant of how the Federal Reserve operates through actions of corrupt politicians and an increasingly centralized media. By using what the film calls legalistic and economic “mumbo-jumbo” terms such as ‘monetizing the debt’ or ‘adjusting monetary policy for increased fluidity of credit’, these interests, according to the film, conceal the true actions of the Fed behind veils of legitimacy.
The argument made in the film is that there is no reason why the Federal Reserve System should have a monopoly on the U.S. money supply. The film asserts that, “America got along just fine before the Federal Reserve came into existence” (which, in the film maker’s view, leads to the question of why the Federal Reserve System was created).
The film contends that the U.S. Congress has no control or oversight over the Fed, and hence has no control over the value of U.S. money. The film argues that Congressional control over the value of money is required by Article 1, Section 8 of the United States Constitution. The phrase in question (clause 5) states that the United States Congress shall have the power “To coin Money, regulate the Value thereof, and of foreign Coin…”
The film includes a call to action to abolish the Federal Reserve. In 2007, the Boston Globe stated that Congressman Ron Paul, “says he doesn’t agree with all the film’s arguments, but he says the film had ‘a huge impact’ on the support his campaign is drawing”, a reference to Paul’s presidential bid in 2007 and 2008.
Federal income tax issues and interviews in the film
Through interviews with various individuals including former IRS agents, Russo sets forth the tax protester argument that, “there is no law requiring an income tax”, and that the personal income tax is illegally enforced to support the activities of the Federal Reserve System.
One of the listed stars of the film, Irwin Schiff, was sentenced on February 24, 2006 to 13 years and 7 months in prison for tax evasion and ordered to pay over $4.2 million in restitution. In pre-sentencing documents filed with the court, Schiff’s lawyers had argued that he had a mental disorder related to his beliefs about taxation. Initially, the film portrays Mr. Schiff as a tax expert, though his qualifications and those of many other individuals in the film are not mentioned. Later in the film, Russo reveals that Schiff has gone to jail.
Mr. Schiff appears in the film for another reason as well. The filmmaker lampoons Judge Kent Dawson’s reaction to Schiff’s defense. The film alleges that the judge “denied Irwin the ability to prove to a jury that there was no law requiring Americans to file an income tax return. He denied Irwin the right to attempt to prove to a jury there was no law . . . by stating, ‘I will not allow the law in my courtroom.’” At 0:48:28 of the film, Mr. Russo introduces the judge and his statement.
Under the U.S. legal system, the general rule (with exceptions) is that neither side in a civil or criminal case is allowed to try to prove to the jury what the law is. For example, in a murder case the defendant is not generally allowed to persuade the jury that there is no law against murder, or to try to interpret the law for the jury. Likewise, the prosecution is not allowed to try to persuade the jury about what the law is, or how it should be interpreted. Disagreements about what the law is are argued by both sides before the judge, who then makes a ruling. Prior to jury deliberations, the judge, and only the judge, instructs the jury on the law.
Another listed star, Vernice Kuglin, was acquitted in her criminal trial for tax evasion in August 2003. This means she was not found guilty of a willful intent to evade income taxes. (A conviction for tax evasion requires, among other things, proof by the government that the defendant engaged in one or more affirmative acts of misleading the government or of hiding income.) Kuglin’s acquittal did not relieve her of liability for the taxes. Kuglin entered a settlement with the government in 2004 in which she agreed to pay over $500,000 in taxes and penalties. On April 30, 2007, the Memphis Daily News reported that Kuglin’s Federal tax problems continued with the filing of a notice of Federal tax lien in the amount of $188,025. The Memphis newspaper also stated that Kuglin has “given up her fight against paying taxes, according to a Sept. 10, 2004, Commercial Appeal story.”
The preview clip for the film includes assertions contradicted by official government publications regarding the activities and nature of such institutions as the Internal Revenue Service and the Federal Reserve System
Russo’s argument using the Fifth Amendment goes as follows:
Though the second premise is not completely correct, the main source of error lies in the first premise. If one truthfully reports one’s income, one does not incriminate oneself in the commission of a crime. However, falsely reporting one’s income is itself the commission of a crime. Put another way, the fifth amendment protects one from incriminating oneself if testifying truthfully will incriminate oneself in the commission of a crime. It does not offer a provision for lying.
The fifth amendment does, however, allow oneself to withhold the source of the income if doing so will incriminate oneself in the commission of a crime. One must still truthfully report the amount of the income.
See also Tax protester constitutional arguments
The film refers to both article 1 section 8 of the U.S. Constitution, which grants Congress the right to impose taxes, and disputes the legitimacy of the Sixteenth Amendment (see Tax protester Sixteenth Amendment arguments), which removes any apportionment requirement.
Other issues related to taxes
Some of the premises of the film include:
The filmmaker’s personal views on taxes
As of late July 2006, Aaron Russo’s biography on his website for the film stated: “The film is an exposé of the Internal Revenue Service, and proves conclusively there is no law requiring an American citizen to pay a direct unapportioned Tax on their labor.”
The New York Times article of July 31, 2006 states that when Mr. Russo asked IRS spokesman Anthony Burke (who according to the article was credited by Russo in the film) for the law requiring payment of income taxes on wages and was provided a link to various documents including title 26 of the United States Code (the Internal Revenue Code), filmmaker Russo denied that title 26 was the law, contending that it consisted only of IRS “regulations” and had not been enacted by Congress. The article reports that in an interview in late July 2006, Russo claimed he was confident on this point. In the United States “statutes” are enacted by Congress, and “regulations” are promulgated by the executive branch of government to implement the statutes. The statutes are found in the United States Code; and the regulations are found in the Code of Federal Regulations. The Treasury regulations to which Mr. Russo may have been referring are found at title 26 (“Internal Revenue”) of the Code of Federal Regulations, not title 26 of the United States Code. The argument that the Internal Revenue Code is not law, the argument that the Internal Revenue Code is not “positive law,” and variations of these arguments, have been officially identified as legally frivolous Federal tax return positions for purposes of the $5,000 frivolous tax return penalty imposed under Internal Revenue Code section 6702(a).
The article also discloses that Russo had over $2 million of tax liens filed against him by the Internal Revenue Service, the state of California, and the state of New York for unpaid taxes. In an interview with the New York Times; however, Russo refused to discuss the liens, saying they were not relevant to his film.
The film also raises questions such as:
The film shown at “Cannes”
Russo’s promotional materials state that the film was shown at “Cannes” in France. As of July 31, 2006, the web site (at http://www.freedomtofascism.com) states:
- America: Freedom to Fascism Opens to Standing Ovations at Cannes!
- The international audience at Cannes as well as the European media has been fascinated by Russo’s fiery diatribe against the direction America is heading [ . . . ]
According to a New York Times article by David Cay Johnston on July 31, 2006, however, the film was not “on the program” at the 2006 Cannes Film Festival itself; Russo actually rented an inflatable screen and showed the film on the beach at the town of Cannes during the time of the film festival.The New York Times article states: “Photographs posted at one of Mr. Russo’s Web sites depict an audience of fewer than 50 people spread out on a platform on the sand.”
Subsequently, it was exhibited in theaters in select U.S. cities.
In popular media
A review by the New York Times stated that “examination of the assertions in Mr. Russo’s documentary, which purports to expose ‘two frauds’ perpetrated by the federal government, taxing wages and creating the Federal Reserve to coin money, shows that they too collapse under the weight of fact.