The President's Tax Returns: What The Constitution Says

The Sixteenth Amendment to the US Constitution, which came into effect on February 3, 1913, grants Congress the authority to impose a federal income tax without having to determine it based on population. The amendment was proposed in 1909 by Senator Norris Brown of Nebraska and introduced by Senator Nelson W Aldrich of Rhode Island. It was passed by Congress on July 2, 1909, and ratified by 36 states on February 3, 1913, with the remaining states ratifying it shortly after. The amendment states that 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. This amendment settled the constitutional question of how to tax income and effected dramatic changes in the American way of life.

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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.

The Taxing Clause

The text of the Taxing Clause states that Congress has the power to "lay and collect Taxes, Duties, Imports, and Excises". This power is not limited to repaying Revolutionary War debts but is also prospective. The Framers of the Constitution agreed that Congress must have the power to tax without assistance from the states. This clause has been interpreted to mean that Congress has broad authority to levy taxes, with only a few express limitations.

The scope of Congress's taxing power has been curtailed by judicial decisions regarding the manner in which taxes are imposed, the objects for which they are levied, and the subject matter of taxation. For example, the Supreme Court has held that Congress may not tax people for exercising their right to free speech, as this would violate the Free Speech Clause.

There has been debate over the interpretation of the Taxing Clause, with two primary disagreements. The first concerns whether the General Welfare Clause grants an independent spending power or restricts the taxing power. The second pertains to the meaning of the phrase "general welfare". James Madison, in Federalist 41, argued for a narrow construction of the clause, asserting that spending must be tied to another specifically enumerated power. On the other hand, Alexander Hamilton took the view that Congress possessed robust power to tax and spend regardless of whether it could be viewed as carrying out another power of Congress. In 1936, the Supreme Court sided with Hamilton in United States v. Butler, establishing that Congress can use the Taxing Clause without tying it to another constitutional power.

The First Amendment

While the First Amendment protects freedom of speech, it does not protect commercial speech or speech that promotes unlawful tax avoidance. Individuals cannot use the First Amendment as a justification for refusing to pay federal income taxes or engaging in abusive tax avoidance schemes.

Additionally, the Fifth Amendment, which states that no person shall be "deprived of life, liberty, or property, without due process of law," has been interpreted by the Supreme Court as not conflicting with Congress's taxing power. The Court has rejected arguments that federal income taxes violate the Fifth Amendment's protection against deprivation of property without due process.

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The Fifth Amendment

Some individuals or groups claim that taxpayers may refuse to file federal income tax returns, or may submit tax returns on which they refuse to provide any financial information, because they believe that their Fifth Amendment privilege against self-incrimination will be violated. However, there is no constitutional right to refuse to file an income tax return on the ground that it violates the Fifth Amendment privilege against self-incrimination. The Supreme Court has stated that a taxpayer cannot "draw a conjurer's circle around the matter by his own declaration that to write any word upon the government blank would bring him into danger of the law".

In United States v. Sullivan, the United States Supreme Court ruled that a taxpayer could not invoke the Fifth Amendment's protections as the basis for refusing to file a required federal income tax return. The Court stated that if the form of return provided called for answers that the defendant was protected from making, he could have raised the objection in the return, but could not on that account refuse to make any return at all.

In Sochia v. Commissioner, the Fifth Circuit affirmed tax assessments and penalties for failure to file returns, failure to pay taxes, and filing a frivolous return. The court also imposed sanctions for pursuing a frivolous case. The taxpayers had failed to provide any information on their tax return about income and expenses, instead claiming a Fifth Amendment privilege on each line calling for financial information.

Judicial decisions

The Sixteenth Amendment, which was passed on July 2, 1909, and ratified on February 3, 1913, established Congress's right to impose a federal income tax. The amendment grants Congress the authority 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 amendment's ratification was the culmination of a series of political events and court decisions regarding the taxation of income. In 1894, Congress enacted a 2% tax on income over $4,000 as part of a high tariff bill. The Supreme Court struck down this tax in a five-to-four decision in Pollock v. Farmers' Loan & Trust Co., ruling that it was a “direct” tax and therefore required to be apportioned among the states. This decision set a precedent that influenced Congress's approach to income taxation for the next two decades.

In the years following the Pollock decision, Congress did not implement another federal income tax, partly due to concerns that any new tax would be struck down by the Supreme Court. However, the progressive wing of the Republican Party and the Democratic Party, under the leadership of William Jennings Bryan, consistently advocated for an income tax. In 1909, progressives in Congress attached a provision for an income tax to the Payne-Aldrich Tariff Act. Conservatives proposed a constitutional amendment, believing it would fail to gain sufficient ratification by state legislatures and thus kill the idea of an income tax.

Despite the initial opposition, the Sixteenth Amendment was eventually ratified by the required number of states, marking a significant shift in how the federal government received funding. The amendment's impact was far-reaching, and it settled the constitutional question of how to tax income, effecting dramatic changes in the American way of life.

While the Sixteenth Amendment clarified Congress's authority to impose an income tax, judicial decisions have continued to shape the interpretation and application of this power. For example, in Bailey v. Drexel Furniture Co. (Child Labor Tax Case, 1922), the Supreme Court curtailed the scope of Congress's taxing power by ruling on the manner in which taxes are imposed. Similarly, in United States v. Constantine (1935), the Court further defined the objects for which taxes may be levied. These and other judicial decisions have refined and constrained Congress's broad authority to lay and collect taxes granted by the Constitution.

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