The Constitution: Wages, Income Tax, And You

The United States Constitution's 16th Amendment, ratified on February 3, 1913, grants Congress the authority to impose and collect federal income taxes without apportioning them among states based on population. This amendment, which came about due to political maneuvering and a desire to fund the Civil War, marked the start of formal income tax collection in the US. It has been the subject of much controversy, with some arguing that it infringes on various amendments, including the 1st, 5th, and 13th. Despite this, federal courts have upheld the 16th Amendment, stating that income taxes can be levied on accessions to wealth and that wages, salaries, and commissions are included in this definition.

Explore related products

The Constitution of the United States of America: The Declaration of Independence, The Bill of Rights

$9.99 $9.99

The Fourteenth Amendment And The States: A Study Of The Operation Of The Restraint Clauses Of Section One Of The Fourteenth Amendment To The Constitution Of The United States

$24.95

State Constitutional Politics: Governing by Amendment in the American States

$11.99 $17.99

Constitution of California: Enriched edition. Foundational Principles of California Governance

$1.99

J.K. Lasser's Your Income Tax 2025: For Preparing Your 2024 Tax Return

$13.99 $26.95

J.K. Lasser's Your Income Tax 2026: For Preparing Your 2025 Tax Return

$26.95

The Sixteenth Amendment

> "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."

Income tax history

The history of income tax in the United States can be traced back to the 19th century, when income taxes were first imposed to fund war efforts. The financial requirements of the Civil War prompted the first American income tax in 1861, with Congress placing a flat 3% tax on all incomes over $800. This was later modified to include a graduated tax. However, Congress repealed the income tax in 1872.

In 1894, Congress enacted a 2% tax on income over $4,000 as part of a high tariff bill. However, this was quickly struck down by the Supreme Court. Despite this setback, the idea of an income tax persisted, and it became a part of the Democratic Party Platforms under the leadership of three-time presidential candidate William Jennings Bryan.

In 1909, progressives in Congress once again attached a provision for an income tax to a tariff bill. This time, conservatives proposed a constitutional amendment, believing that an amendment would never be ratified. Surprisingly, the 16th Amendment was ratified by one state legislature after another and took effect on February 25, 1913.

The 16th Amendment established Congress's right to impose a federal income tax and settled the constitutional question of how to tax income. The Revenue Act of 1913, passed after the amendment's ratification, reinstated the federal income tax. Since then, the top rate of the income tax has had a significant impact on the American economy. When the top rate has been high, economic activity has tended to decline as those with money and capital seek to protect their assets and income streams. On the other hand, reducing the top tax rate has led to astonishing reversals, with the rich investing their money back into the economy.

Refusal to pay income tax

Tax resistance, or the refusal to pay tax, has a long history, with some suggesting that it played a significant role in the collapse of several empires, including the Egyptian, Roman, Spanish, and Aztec. In the US, tax resistance has taken the form of opposition to the American Civil War, the war in Vietnam, and other wars. The refusal to pay income tax is often based on moral or religious grounds, or opposition to the government and its policies.

Reasons for Refusal

There are several reasons why people refuse to pay income tax. Some argue that wages, tips, and other compensation for personal services are not "income" because there is no taxable gain when exchanging labour for money. This argument has been deemed fictitious by the Internal Revenue Service (IRS), which states that "compensation for services" is taxable under Section 861 of the Internal Revenue Code.

Others claim that the payment of taxes is "voluntary," citing the Supreme Court case Flora v. U.S. However, the IRS clarifies that "voluntary" means taxpayers have the right to pay their taxes independently rather than having the government impose its calculations.

Some also argue that filing a tax return violates the Fifth Amendment's self-incrimination clause. While this amendment protects taxpayers from revealing an illegal source of income, it does not protect them from disclosing the income amount.

Additionally, some taxpayers invoke the First Amendment, claiming that federal income taxes violate their religious or moral beliefs, or their objection to funding certain government programs. However, the First Amendment does not provide a right to refuse taxes on these grounds, as affirmed in court cases such as Adams v. Commissioner and United States v. Ramsey.

Legal Consequences

While individuals have the right to refuse to pay taxes, there are legal consequences for doing so. The IRS can impose penalties of $5,000, a 20% penalty, and a 75% civil fraud penalty. Additionally, individuals can be held criminally liable for tax evasion and tax avoidance.

Strategies for Resistance

For those who choose to resist income taxes, there are various strategies. Some reduce their income below the tax threshold by adopting a simple living lifestyle, while others refuse to pay certain taxes that are considered especially noxious or that present a symbolic target, such as the telephone federal excise tax.

When filing taxes, resisters can include a letter explaining their refusal, citing reasons such as conscience, economic and moral consequences of war, nonviolence beliefs, or redirection of taxes to non-military purposes. However, it is important to follow the proper procedures to avoid being considered a "frivolous filer" and incurring additional penalties.

Overall, while tax resistance has a long history and various justifications, it is important to understand the legal requirements and potential consequences when considering refusing to pay income taxes.

Explore related products

H&R Block Tax Software Deluxe + State 2024 with Refund Bonus Offer (Amazon Exclusive) Win/Mac [PC/Mac Online Code]

$59.99

Taxes For Dummies: 2024 Edition

$18.09 $26.99

Kisston 50 Pcs Tax Return Folders Bulk 2 Pocket Gold Foil Stamped Income Tax Folders with Labels Business File Office Blank Organizer (Blue)

$30.99

J.K. Lasser's 1001 Deductions & Tax Breaks 2025: Your Complete Guide to Everything Deductible

$13.9 $25

Federal Income Tax (Examples & Explanations)

$52.59 $76.95

TurboTax Deluxe 2024 Tax Software, Federal & State Tax Return [PC/MAC Download]

$79.99

Taxpayer rights

The US Constitution does mention income tax, specifically in the 16th Amendment, which was passed in 1913. This amendment established Congress's right to impose a federal income tax. The amendment states:

> "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 power to collect income tax is also found in Article 1, Section 8, Clause 1 (also known as the Taxing and Spending Clause) of the US Constitution.

The IRS has adopted a Taxpayer Bill of Rights, which applies to all taxpayers in their dealings with the IRS. The bill outlines ten fundamental rights, which are as follows:

• The Right to Be Informed: Taxpayers have the right to receive clear and easily understandable communications from the IRS. They are entitled to clear explanations of the law and IRS procedures in all tax forms, instructions, publications, notices, and correspondence. They also have the right to be informed of IRS decisions about their tax accounts and to receive clear explanations of the outcomes.
• The Right to Quality Service: Taxpayers have the right to receive prompt, courteous, and professional assistance in their dealings with the IRS. They can also speak to a supervisor about inadequate service.
• The Right to Pay No More Than the Correct Amount of Tax: Taxpayers have the right to pay only the amount of tax legally due, including interest and penalties, and to have the IRS apply all tax payments properly.
• The Right to Challenge the IRS's Position and Be Heard: Taxpayers have the right to raise objections and provide additional documentation in response to formal IRS actions or proposed actions. They are entitled to a fair and impartial administrative appeal of most IRS decisions, including penalties, and to receive a written response.
• The Right to Appeal an IRS Decision in an Independent Forum: Taxpayers generally have the right to take their cases to court. They have the right to know the maximum amount of time they have to challenge the IRS's position, as well as the maximum amount of time the IRS has to audit a particular tax year or collect a tax debt.
• The Right to Finality: Taxpayers have the right to expect that any IRS inquiry, examination, or enforcement action will comply with the law and be no more intrusive than necessary, respecting all due process rights, including search and seizure protections.
• The Right to Privacy: Taxpayers have the right to expect that any information they provide to the IRS will not be disclosed unless authorized by the taxpayer or by law.
• The Right to Confidentiality: Taxpayers have the right to expect appropriate action against those who wrongfully use or disclose taxpayer return information.
• The Right to Retain Representation: Taxpayers have the right to retain an authorized representative of their choice to represent them in their dealings with the IRS. They can seek assistance from a Low-Income Taxpayer Clinic if they cannot afford representation.
• The Right to a Fair and Just Tax System: Taxpayers have the right to expect the tax system to consider facts and circumstances that might affect their underlying liabilities, ability to pay, or ability to provide information timely.

It is important to note that some individuals and groups have made claims or arguments against paying federal income taxes based on religious or moral grounds, or by citing alleged violations of their constitutional rights. However, these arguments have been deemed frivolous by the IRS and rejected by courts.

The taxing and spending clause

> "The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States."

This clause authorizes Congress to levy taxes for two purposes only: to pay the debts of the United States and to provide for the common defence and general welfare of the United States. The interpretation of this clause, particularly the meaning of "general welfare", has been a source of continued dispute and debate since the inception of the federal government.

Two primary authors of The Federalist Papers, James Madison and Alexander Hamilton, set forth two separate, conflicting interpretations. Madison, in Federalist 41, advocated for the ratification of the Constitution upon a narrow construction of the clause, asserting that spending must be at least tangentially tied to one of the other specifically enumerated powers, such as regulating interstate or foreign commerce, or providing for the military. On the other hand, Hamilton, in Federalist 34 and his 1791 Report on Manufactures, argued for a broad interpretation, viewing spending as an enumerated power that Congress could exercise independently.

Joseph Story, a constitutional scholar, concluded that Thomas Jefferson's view of the clause as a limitation on the power to tax was the correct reading. However, Story also agreed with Hamilton's view on spending, articulated in his 1791 report. Other constitutional scholars have argued that there was no one prevailing original understanding of the Spending Clause and that differences existed among the Framers, both in terms of whether the Clause was an independent grant of power and the scope of the meaning of "general welfare".

The Supreme Court did not weigh in on this debate until 1936, in United States v. Bailey v. Drexel Furniture Co. (1922), where the Court imposed a narrow interpretation of the Clause, holding that a tax on child labour was an impermissible attempt to regulate commerce. However, in NFIB v. Sebelius (2012), Justice Ginsburg spoke of the general welfare restriction as applying to both taxing and spending, while Chief Justice Roberts discussed the restriction only in terms of spending power.

Frequently asked questions