HISTORY OF THE 16TH AMENDMENT

Strange as it may seem, the Sixteenth Amendment (which gave the American people the affliction 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.

The Founding Fathers had rejected income taxes (or any other direct taxes) unless they were apportioned to each state according to population. Nevertheless, an income tax was levied during the Civil War and upheld by the Supreme Court on the somewhat tenuous reasoning. When another income tax was enacted in 1893, the Supreme Court found it unconstitutional. In connection with the two Pollock case reviewed in 1895, the Court declared that the act violated Article I, section 9 of the Constitution.

During the following decade, however, the complexion of the Court changed somewhat, and so did public sentiment. There was great social unrest and the idea of a tax to "soak the rich" began to take root among liberals in both major parties. Several times the Democrats introduced bills to provide a tax on higher incomes but each time the conservative branch of the Republican party killed it in the Senate. The Democrats used this as evidence that the Republicans were the "party of the rich" and should be thrown out of power, forcing President William Howard Taft to acknowledge in political speeches that income taxes might be all right "in principle", but it was well known among close associates that he was strongly opposed to such a tax.

In April 1909, Senator Joseph W. Bailey, a conservative Democrat from Texas who was also opposed to income taxes, decided to further embarrass the Republicans by forcing them to openly oppose an income tax bill similar to those which had been introduced in the past. He introduced his bill expecting it to get the usual opposition. However, to his amazement, Teddy Roosevelt and a growing element of liberals in the Republican party came out in favor of the bill and it looked as though it was going to pass.

Not only was Bailey surprised, but Senator Nelson W. Aldrich of Rhode Island, the Republican floor leader, frantically met with Senator Henry Cabot Lodge of Massachusetts and President Taft to work out a strategy to demolish the Bailey tax bill. Their own party was split too widely to permit a direct confrontation, so the strategy was to pull a political end run. They announced that they favored an income tax but only if it were an amendment to the Constitution. Within their own circle, they discussed how it might get approval of the House and the Senate, but they were quite certain that it could be defeated in the more conservative states-three-fourths of which were required in order to ratify the amendment.

Thus, the Democrats were off guard when President Taft unexpectedly sent a message to Congress on June 16th, 1909, recommending the passage of a consitutional amendment to legalize federal income tax legislation.

The strategy threw the liberals into an uproar. At the very moment when their Bailey bill was about to pass, the Republicans were coming out for an amendment to the Constitution which would probably be defeated by the states.

Congressman Cordell Hull (D-Tenn., and later Secretary of State under FDR) saw exactly what was happening. He took the floor to excoriate the Republican leaders. Said he:

"No person at all familiar with the present trend of national legislation will seriously insist that these same Republican leaders are over-anxious to see the country adopt an income tax...What powerful influence, what new light and deep seated motive suddenly moves these political veterans to 'about face' and pretend to warmly embrace this doctrine which they have heretofore uniformly denounced?" {1}

He went on to expose what he considered to be a political trick. He needn't have been so concerned. The slogan of "soak the rich" automatically aroused Pavlovian salivation among politicians both in Washington and the states. The Senate approved the Sixteenth Amendment with an astonishing unanimity of 77-0! The House approved it by a vote of 318-14.

When Republican Congressman Sereno E. Payne of New York, who had introduced the amendment in the House, saw that this end run was turning into a winning touchdown for the opposition, he was horrified. He went to the floor and openly denounced the bill he had sponsored. Said he:

"As to the general policy of an income tax, I am utterly opposed to it. I believe with Gladstone that it tends to make a nation of liars. I believe it is the most easily concealed of any tax that can be laid, the most difficult of enforcement, and the hardest to collect; that it is, in a word, a tax upon the income of honest men and an exemption, to a greater or lesser extent, of the income of rascals; and so I am opposed to any income tax in time of peace...I hope that if the Constitution is amended in this way the time will not come when the American people will ever want to enact an income tax except in time of war." {2}

The end run of the Republican leadership did indeed backfire. State after state ratified this "soak the rich" amendment until it went into full force and effect on February 12, 1913 (Ed.note: Mr. Bill Benson, in his book "The Law That Never Was" has since documented massive...and outcome changing...federal interference in the certification of the votes of the individual state legislatures. The votes for and against from Kentucky, for instance, were switched by then Secretary of State Philander Knox.)

Certain writers such as Alfred Hinsey Kelly and Winfred Audif Harbison (authors of "The American Constitution: Origins" [New York: Norton, 1970]) rejoiced that this amendment "shifted the growing burden of federal finance to the wealthy."{3} Nothing could be further from the truth!

The wealthy, especially the super-wealthy, had anticipated this development and had created a clever device to protect their riches. It was called a "charitable foundation". The idea was to cosign the ownership of wealth, including stocks and securities, to a foundation and then get Congress and the state legislatures to declare all such charitable institutions exempt from taxes. By setting up boards which were under the control of these wealthy benefactors they could escape the tax and still maintain control over the disposition of these fabulous fortunes.

Long before the federal income tax was in place, multimillionaires such as John D. Rockefeller (who once said "I want to own nothing and control everything"), J.P. Morgan and Andrew Carnegie had their foundations set up and operating. The next step was to make certain that the new tax bill passed by Congress contained a provision specifically exempting their treasure houses from taxation.

The tax bill which the Sixteenth Amendment authorized was introduced as House Resolution 3321 on October 3, 1913. It turned out to be somewhat of a legislative potpourri for tax attorneys, accountants and the federal courts. In the ensuing years, untold millions of dollars have been spent trying to figure out exactly what this tax law, and those which followed it, were intended to provide. However, tucked away in its inward parts was that precious key which safely locked up the riches of the super wealthy. Here are the magic words under Section 2, paragraph G:

"Provided, however, that nothing in this section shall apply...to any corporation or association organized and operated exclusively for religious, charitable, scientific or educational purposes." All of the foundations of the super-rich were designed to qualify under one or more of these categories.

When the first income tax was sent out to the people, the Congress chortled confidently that "all good citizen will willingly and cheerfully support and sustain this, the fairest and cheapest of all taxes." That was the cute little monkey part. After all, the first tax ranged from merely 1% on the first $20,000 of taxable income and was only 7% on incomes above $500,000. Who could complain?(Ed. note: In 1994 "dollars" that $20K is now over $250K and the $500K is today over $6 million!)

At first, scarcely anyone did. Little did they know that before the tinkering was done in Washington, this system would be described by many Americans as the most unfair and expensive tax in the history of the nation. Within a few years, it had become the principal source of income for the federal government.

In the beginning, hardly anyone had to file a tax return because the tax did not apply to the vast majority of America's work-a-day citizens. For example, in 1939, 26 years after the Sixteenth Amendment was adopted, only 5% of the population, counting both taxpayers and their dependents, was required to file returns. Today, more than 80% of the population is under the income tax.

The collection process was greatly facilitated in 1943 by a device created by FDR to pay the costs of WWII. It was called "withholding from wages and salaries". In other words, the tax was collected at the payroll window before it was even due to be paid by the taxpayer. Economists point out that this device, more than any other single factor, shifted the tax from its original design as a tax on the wealthy to a tax on the masses--mostly the middle class. Investigations disclosed that the truly wealthy pay relatively little or no income tax at all.

Some idea of how the cute little monkey grew into a gorilla is perceived from the fact that nearly half of all federal revenue is now raised by income taxes. Furthermore, the higher brackets are literally confiscatory--but by "due process", of course, under the Sixteenth Amendment. Rates have been as high as 94% in the upper brackets during wartime, and even in peacetime they are presently 50%. (Ed. note: This piece was apparently written when the top rates were higher than in 1992. Not to worry, however: Watch for higher rates coming soon to an IRS office near you!) Medium income people up through the upper middle class pay between 12 & 35%. Nevertheless, at all levels it has become sufficiently burdensome to discourage the attainment of basic economic advantage which most Americans seek.

The most damaging aspect of the Sixteenth Amendment is the fact that it vitiated the unalienable rights provided in the 4th Amendment. This is the amendment which protects privacy--privacy of the home, business, personal papers and personal affairs of the private citizen. None of these are disturbed by a poll (head or capitation) tax because it is so much per person regardless of the circumstances, but when the tax is based on income, the IRS is assigned the most unpleasant task of making certain that everyone pays his fair share. This task is physically impossible without prying into the private papers, private business and personal affairs of the individual citizens. By any standard, it is a miserable assignment. Furthermore, it is impossible to run audits and surveys of all taxpayers and so the audits seldom check more than 2% of them.

There are many things wrong with this approach. Worst of all, it puts the government tax collectors in the gorilla role and intimidates citizens who are unlucky enough to be audited with the feeling that they are "victims" of an unfair system.

The IRS also finds it difficult to avoid the attitude that each taxpayer is a cheat, even a criminal, who must somehow be cornered and caught. This has brought the structure of the entire income tax collection process into question.

For example, the underground economy of monetary transactions (which is conducted without records) is well known. It is estimated that losses in federal revenues from this underground economy are at least $100 billion per year. (Ed. note: Probably closer to $200-300 billion!) Obviously, this is not fair to those who are paying their share. Then there is an estimated $65 billion per year which is lost because it is not reported. This is considered unfair. There is a lot of padding on expense accounts, which is estimated to reduce the tax total by another $18 billion. Other operations, both legal and illegal, jumps the total up a few billion more.

There has also been extensive criticism of the prosecution of tax cases. The appeal is through a system of tax courts which are without juries. In order to get a tax case into a regular court where there is a jury, the citizen must pay the tax and then sue the government.

Thousands of complaints have also poured into the IRS concerning the tactics used by some of its agents. Citizens feel they are treated as criminals rather than suspects who are innocent until proven guilty.

T. Coleman Andrews served as commissioner of IRS for nearly 3 years during the early 1950s. Following his resignation, he made the following statement:

"Congress [in implementing the Sixteenth Amendment] went beyond merely 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.

"The income tax is bad because it has robbed you and me of the guarantee of privacy and the respect for our property that were given to us in Article IV of the Bill of Rights. This invasion is absolute and complete as far as the amount of tax that can be assessed is concerned. Please remember that under the Sixteenth Amendment, Congress can take 100% of our income anytime it wants to. As a matter of fact, right now it is imposing a tax as high as 91%. This is downright confiscation and cannot be defended on any other grounds.

"The income tax is bad because it was conceived in class hatred, is an instrument of vengeance and plays right into the hands of the communists. It employs the vicious communist principle of taking from each according to his accumulation of the fruits of his labor and giving to others according to their needs, regardless of whether those needs are the result of indolence or lack of pride, self-respect, personal dignity or other attributes of men.

"The income tax is fulfilling the Marxist prophecy that the surest way to destroy a capitalist society is by - _steeply graduated_ taxes on income and heavy levies upon the estates of people when they die.

As matters now stand, if our children make the most of their capabilities and training, they will have to give most of it to the tax collector and so become slaves of the government. People cannot pull themselves up by the bootstraps anymore because the tax collector gets the boots and the straps as well.

"The income tax is bad because it is oppressive to all and discriminates particularly against those people who prove themselves most adept at keeping the wheels of business turning and creating maximum employment and a high standard of living for their fellow men.

"I believe that a better way to raise revenue not only can be found but must be found because I am convinced that the present system is leading us right back to the very tyranny from which those, who established this land of freedom, risked their lives, their fortunes and their sacred honor to forever free themselves..."{4}

REFERENCES {1} Congressional Record-House, July 12,1909,p.4404 {2} Congressional Record-House, July 12,1909,p.4390 {3} Original edition, p.626 {4} The Utah Independent, March 29, 1973

THERE IS A BETTER WAY. GIVEN THE CURRENT LEVEL OF UNDERSTANDING AMONG THE AMERICAN PEOPLE, AN IMMEDIATE RETURN TO THE FULLY CONSTITUTIONAL CAPITATION, HEAD OR POLL TAX WOULD NOT BE POSSIBLE AT THIS TIME. THERE IS, HOWEVER, AN INTERIM STEP: THE REPLACEMENT OF THE CURRENT INCOME TAX WITH A FEDERAL CONSUMPTION TAX LEVIED AT THE POINT OF PURCHASE.

IF YOU THINK THE CURRENT SYSTEM IS GREAT, DO NOTHING. I ASSURE YOU THAT IT WILL BECOME EVEN "GREATER" STILL. IF, HOWEVER, YOU BELIEVE THAT AMERICA IS TOO PRECIOUS TO BE FURTHER DAMAGED, BOTH ECONOMICALLY OR MORALLY, BY THE PRESENT SYSTEM, YOU HAD BETTER GET BUSY. YOUR KIDS AND GRANDKIDS WILL THANK YOU.

WANT TO HELP? RUN “FAIRTAX” THROUGH A SEARCH ENGINE, FIND ONE OF THE GROUPS PROLIFERATING AROUND THIS ISSUE, PLUG IN AND WORK TO MAKE IT HAPPEN.

Two quotations for you to ponder while considering what level of involvement is right for you:

"As life is action and passion, it is required of a man that he be involved in the action and passion of his times lest he be judged NEVER TO HAVE LIVED." Oliver Wendell Holmes, Jr.

“We believe a man should be concerned about public as well as private affairs, for we regard the person who takes no part in politics not as merely uninterested but as useless.” –Pericles (Citizen of Athens)

DO NOTHING – AS ADVOCATED BY SOME OF THE MINDLESS MYRMIDONS OF MEDIOCRITY OF AND WHEN YOU LEAVE THE PLANET – AND, DESPITE RUMORS TO THE CONTRARY, WE ALL DO – IT WILL BE AS THOUGH YOU’D NEVER BEEN HERE (i.e., USELESS) or DO SOMETHING!

Join with the several millions of Americans who are ready to make this essential change happen by joining one of the growing number of grass-roots organizations now working for this important change in the way we do business in what used to be the “…land of the free and the home of the brave…”

We may never have another shot at ridding ourselves of a tax system an ostensibly free people ought never to have tolerated in the first place. We can spend a few bucks (thanks to the same gang of conspirators who ALLEGEDLY saddled us with the income tax, we no longer have any "dollars" but that's another story)— now or pay later with even more of our wealth -- AND our remaining freedoms. The choice is yours!

Senator Nelson W. Aldrich of Rhode Island, the Republican floor leader, frantically met with Senator Henry Cabot Lodge of Massachusetts and President Taft to work out a strategy to demolish the Bailey tax bill.

Aldrich was there at Jekyll Island for the secret meetings that spawned the private, for profit corporation known as the Federal Reserve. I doubt he worked very hard to scuttle the income tax. ALL the money generated by the income tax goes to the Federal Reserve, to pay them for the use of our own currency plus interest.

Get rid of the income tax but don't replace it with anything. 90% of government spending is unconstitutional anyway. If they need any money beyond what can raised be from tariffs, duties, and excise taxes then they can ask for voluntary donations. If it really is important people with be glad to give.

The 16th Amendment does not make an income tax legal.

Rather, a tax on wages is an indirect tax already permitted.

There was a supreme court case on a tax on rent on property. The court properly held that a tax on rent for a property was close enough to a tax on property to be considered a direct tax, and thus only legal if levied in proportion to population.

The 16th Amendment permitted a tax on income, from what ever source, overriding that supreme court decision.

You are correct that the income tax is nothing short of Marxism. The power of the federal government comes from the consent of the governed. For example, the people have assigned the right to national defense to the Federal Government. The states have allowed the federal government to regulate interstate commence to create a cohesive interstate system.

The people did not originally surrender their income to the federal government. In essence that is what an income tax does, you give all your income to the government and it allows you to keep some of what you make (sound familiar? Obama, were gonna let the middle class keep more of what they make). No longer should we look at a tax rate, but rather a income return rate. The federal government doesn't tax you 25%, it gives you 75% of what you earned. At this point, it can't even be considered your income.

But the Marxism argument now goes further thanks to the Supreme court. Now the government can force behavior not by unconstitutional mandate, but by constitutional TAX.

Time for the FAIR TAX- take the power away from the government- repeal the 16th amendment.

Thank you for posting history of 16A. And also taking into consideration the history of federal taxation as the Founding States had intended, note that not only were most of the delegates to the Constitutional Convention wealthy, George Washington a Bill Gates of his time, but by signing the Constitution the delegates committed themselves, their wealthy friends, and all other wealthy ctizens to uniquely paying the taxes to run the federal government. This is evidenced by the following excerpt from Thomas Jefferson's writings.

"The rich alone use imported articles, and on these alone the whole taxes of the General Government are levied (emphasis added). … Our revenues liberated by the discharge of the public debt, and its surplus applied to canals, roads, schools, etc., the farmer will see his government supported, his children educated, and the face of his country made a paradise by the contributions of the rich alone, without his being called on to spend a cent from his earnings." --Thomas Jefferson to Thaddeus Kosciusko, 1811.

So I'll argue that the federal government can get as corrupt as it wants to. After all, not only was the federal government the toy of the rich which commoners weren't paying for, but our pioneering ancestors had their guns to protect themselves from Congress.

Also, consider that not only did the wealthy founders possibly intend for the wealthy to help police federal government spending to keep their taxes low, but also taking Congress's Article I, Section 8-limited powers into consideration, Justice John Marshall had officially clarified that Congress is prohibited from laying taxes in the name of state power issues, essentially any issue which Congress could not officially address under Section 8.

"Congress is not empowered to tax for those purposes which are within the exclusive province of the States." --Justice John Marshall, Gibbons v. Ogden, 1824.

So although there is now an understandable push for fair taxes, I not only like the idea that, historically, our ancestors not only did not pay federal taxes, but there was also Justice Marshall's long-forgotten precedent that Congress cannot lay taxes for anything that it cannot justify under its Section 8-limited powers. So I say let the federal government once more become the play toy of the rich, the rich uniquely paying federal taxes, Congress allowed to ignore Justice Marshall's clarification of Congress's limited power to lay taxes to whatever extent the rich are willing to tolerate.

overriding that supreme court decision.

The 16th Amendment did not override the Supreme Court decision.

The 16th Amendment removed the founder's wise protection against direct taxation. The 16th Amendment removed the provision to levy taxes in proportion to the population.

I know that the income tax is supposed to be an indirect tax

The Income Tax is and is supposed to be a direct tax. The 16th Amendment removed the provision in Article 1. Section 9. calling for “No Capitation, or other direct, Tax shall be laid, unless in Proportion to the Census or Enumeration herein before directed to be taken”.

Article XVI. 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.

The easiest way to explain is that prior to the 16th Amendment if the government wanted to incur a $50 million expenditure they would tax the state’s $50 Million. If the population were 50 Million then the tax would be $1 each paid by the state. A truly remarkable system of taxation. Imagine today when the Congress is noodleing over $300 Billion program knowing that each citizen would be paying $1000. I think a lot more thought would go into the spending than it does now.

Only for taxes derived from income from what ever source.

A tax on most income is and was an indirect tax, not affected by the constitutional restriction on direct taxes.

The money already accumulated by John D. Rockefeller et al would not have been ‘income’ either. It would have been accumulated. Money gained from interest on that accumulation could have been taxed as income, and should be.

A lot of people don’t understand the difference between direct and indirect taxes.

Direct tax is directly on you. An example is a poll tax, or a tax on property that you own.

An indirect tax is a tax on activity. Wages are derived from the activity of work. Per the 16th Amendment, taxes can be derived from income, from what ever source. This practically has the effect of treating all taxes on income as an indirect tax. Direct taxes, such as fines on property you already have, or money you already made, would be a direct tax.

I submit that one argument against Obamacare is its tax is not based on activity, and so must be apportionied by population.

That was not yet so argued, to my knowledge and belief. Since it was ruled constitutional ‘as a tax’ then it could be overturned by a mere majority of the Senate, not subject to filibuster, and it would be subject to the constitutional limitations on direct taxes.

The 16th Amendment did not overturn Pollack v Farmers Loan and Trust. Also, the 16th amendment through the various other income tax cases ruled that income for tax purposes is an indirect tax from corporate profits (the sometimes heard wages not being income is a corollary of that argument). In order to get an understanding of that, one must read Irwin Schiff's writings on the Pollack case and the later 16th amendment.

The Internal Revenue Service -- as Irwin Schiff explains -- is merely the fist that smashes one's face. It is our corrupt judiciary and congress (think Chuck Shumer and Al Franken) that give this agency carte blanche t0 do all sorts of illegal activity.

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