Nothing quite tests the boundaries of American citizenship than paying federal income taxes each April 15. However, while begrudgingly paying them is a necessary evil, the vast majority of Americans do not appreciate the unique twist in Constitutional law and American history which created the system. It is a story which includes “activist judges”, a “populist Congress”, and several presidential elections in which its was a central issue. Few people will believe presidents not only got elected promising to impose federal income taxes, even the straight-thinking people of Nebraska in 1911 overwhelmingly agreed to our present-day income tax system. Hard to find anyone who would not want a “do-over” or “mulligan” on it.
Prior to the Sixteenth Amendment’s enactment in 1913, the federal government could only directly tax an individual’s income if the tax was equal on everyone in a state; and, the total amount collected from the state was proportional to that state’s population to the whole of the United States. [Art. 1, sec. 9, cl. 4] For instance, if Nebraska’s population was 1% of the US population, the total amount collected from the state [by everyone paying the same amount] could be no more than 1% of everything collected from all of the states.
In 1895 the US Supreme Court struck down as unconstitutional a tax system imposed by Congress which resembles our present system. The Court was attacked as being made up of “activist judges”. In response to the Court’s decision, a bi-partisan populist coalition in Congress spearheaded an 18 year battle which culminated in the ratification of the Sixteenth Amendment. This Amendment proposed to allow a direct tax on individual income. Not fully appreciating exactly what they were doing in the long run, by 1913 42 of the 48 states agreed to the Amendment. Uniquely, support for the Amendment was greatest in the Western [now red] states and the strongest opposition was in the Eastern [now blue] states. The states Virginia and Pennsylvania, original colonies and the home of the original “tax dispute”, refused even to consider the Amendment. Even 95 years later, the Virginia legislature has never mentioned it.
Today the innocent-appearing 30 words of the Sixteenth Amendment have given birth to the 5.6 million words of the tax code. [This is seven times larger than the King James Bible.] These 3,387 pages of statute do not include the 13,458 pages of regulations promulgated by the IRS, nor any of the thousands of court decisions which have interpreted the 17,000 pages.
The Sixteenth Amendment is a lesson to those who forget the importance of the Constitution, and its ultimate significance in everything we do as a free people. It is also a lesson in the importance of remembering its history and better appreciating the sheer brilliance of the original framers. Sometimes it is better to defer to James Madison’s “Virginian” judgment.