Sunday, April 11, 2010

Federal Income Tax and the Sixteenth Amendment

With April 15 nearly upon us, we thought we'd take a look at some of the rhetoric and initiatives challenging the federal government's authority to lay and collect income taxes.  The Sixteenth Amendment, of course, authorizes Congress to impose an income tax:

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. 

That amendment overturned the Supreme Court's 1895 ruling in Pollock v. Farmers' Loan & Trust Co.  Pollock ruled that taxes on rental income and dividend income were "direct" and thus subject to the requirement under Article I, Section 9, that "[n]o Capitation, or other direct, Tax shall be laid, unless in Proportion to the Census or Enumeration herein before directed to be taken."  The case expanded the definition of "direct tax," which was originally designed to protect slave owners from capitations on slaves, and thus effectively ruled out any progressive income tax.  (The Court's approach in Pollock was at odds with its earlier, narrower approach defining "direct" in Hylton v. U.S. (upholding a tax on the use of carriages as an indirect tax) and Springer v. U.S. (upholding the income tax that Congress enacted during the Civil War).)

There's a lot of talk among libertarians and other small government types (including the Tea Partyers) that attacks the federal income tax and the Sixteenth Amendment.  (Google "tea party and sixteenth amendment," or "repeal sixteenth amendment" for a flavor.)  Some, like takebackusa.com, which claims an affiliation with the Tea Party movement, seem to argue that the Sixteenth Amendment is illegitimate because of the way it passed:

Strange as it may seem, the Sixteenth Amendment (which gave the American people the afflication of confiscatory income taxes) was never supposed to have passed.  It was introduced by the Republicans as part of a political scheme to trick the Democrats, but it backfired.

And moreover, it violates other constitutional values:

Congress [in implementing the Sixteenth Amendment] went beyond mere enacting an income tax law and repealed Article IV of the Bill of Rights, by empowering the tax collector to do the very things from which that article says we were to be secure.  It opened up our homes, our papers and our effects to the prying eyes of government agents and set the stage for searches of our books and vaults and for inquiries into our private affairs whenever the tax men might decide, even though there might not be any justification beyond mere cynical suspicion.

(according to the web-site, quoting T. Coleman Andrews, former IRS commissioner).

Others, like Grover Norquist and Hillsdale College President Larry Arnn for The Claremont Institute, argue for repeal of the Sixteenth Amendment as a way to limit the federal government:

The income tax has another major fault: It undermines the Constitution's arrangement for limiting government.  The Internal Revenue Service simply has no proper place in our constitutional system.

There are two House Resolutions that would repeal the Sixteenth Amendment or abolish personal income tax.  And there are bills in the House and the Senate that would replace the income tax with a national consumption tax, to be administered by the states, and to abolish the IRS by statute.  The bills would eliminate the national sales tax if the Sixteenth Amendment were not repealed.

SDS

http://lawprofessors.typepad.com/conlaw/2010/04/federal-income-tax-and-the-sixteenth-amendment.html

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