Omar Bennett
The Sixteenth Amendment (Amendment XVI) to the United States Constitution, passed by Congress on July 2, 1909, and ratified on February 3, 1913, grants Congress the authority to impose and collect a Federal income tax without apportioning it among the states based on population. The amendment was proposed by Senator Norris Brown of Nebraska and introduced by Senator Nelson W. Aldrich of Rhode Island. It was the result of a series of political events, including the Civil War, which saw the first income tax in 1861, and the 1895 Supreme Court case of Pollock v. Farmers' Loan & Trust Co., which ruled that Congress could not impose taxes on personal property or income. The Sixteenth Amendment overruled this decision and established the legality of income tax in the US, with the first tax collection day taking place on March 1, 1914.
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What You'll Learn
The 16th Amendment
> The Congress shall have the 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.
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Federal income tax history
The history of federal income tax in the United States dates back to the Civil War, when President Lincoln signed into law a revenue-raising measure to fund the war expenses. This measure, enacted in 1862, created the role of Commissioner of Internal Revenue and introduced the nation's first income tax. A flat tax of 3% was levied on incomes between $600 and $10,000, while incomes exceeding $10,000 were taxed at a rate of 5%. However, due to public opposition, Congress reduced the tax rate in 1867.
In 1872, the income tax was repealed, but it didn't disappear entirely. During the late 19th century, various groups, including the Populist Party, advocated for a progressive income tax at the federal level. In 1894, the Wilson Tariff Act briefly revived the income tax and established an income tax division within the Bureau of Internal Revenue. However, the following year, the Supreme Court ruled this new income tax unconstitutional, arguing that it was a direct tax not apportioned among the states based on population.
In 1909, President William Howard Taft proposed a 2% federal income tax on corporations and supported a constitutional amendment to authorise the levying of income taxes. This proposal culminated in the 16th Amendment to the United States Constitution, which was passed by Congress in 1909 and ratified on February 3, 1913. The 16th Amendment established Congress's authority to impose a federal income tax without apportioning it among the states based on population.
The ratification of the 16th Amendment and the passage of the 1913 Revenue Act marked a significant shift in taxation. Income tax brackets were introduced, and the top individual marginal income tax rate gradually increased over time, especially during war years. By the early 1940s, the top income tax rate surpassed 90%, peaking at 94% in 1944.
Since 1987, the top income tax rate has fluctuated within the 30%-40% range. The IRS has undergone various reforms and restructurings, such as the expansion of taxpayer rights and the reorganisation of the agency into divisions aligned with taxpayer needs. Additionally, the Tax Reform Act of 1986, signed by President Reagan, was a significant piece of tax legislation with 300 provisions that took three years to implement.
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Income tax legality
The 16th Amendment to the United States Constitution, ratified on February 3, 1913, established Congress's right to impose and collect a federal income tax. This amendment was passed in 1909 in response to the 1895 Supreme Court case of Pollock v. Farmers' Loan & Trust Co., which ruled that Congress could not impose taxes on personal property or income without apportioning the sum among the states according to population.
The 16th Amendment states that "Congress shall have the 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 overruled the Supreme Court's previous ruling and allowed for the imposition of a federal income tax without considering population.
The legality of income tax has been a contentious issue, with some individuals and groups arguing that it is unlawful. Various arguments have been put forward, including claims that it violates the First, Fifth, and Thirteenth Amendments. For example, some contend that taxpayers can refuse to pay income taxes based on religious or moral grounds, invoking the First Amendment. Others argue that income tax constitutes an unlawful seizure of property without due process, violating the Fifth Amendment. Additionally, there have been claims that income tax is a form of servitude, contradicting the Thirteenth Amendment.
However, these arguments have been addressed and rejected by courts. Cases such as Adams v. Commissioner and United States v. Ramsey affirmed that religious beliefs do not provide a basis for refusing to pay income taxes. The Supreme Court has also ruled that the Fifth Amendment is not a limitation on the taxing power conferred upon Congress, upholding the legality of income tax.
The implementation of income tax in the United States has evolved over time, with the first income tax levied during the Civil War. This initial income tax was repealed in 1872, but the concept was later revived with the passage of the Wilson-Gorman Tariff Act in 1894, which included a 2% income tax on incomes over $4,000. This tax was also short-lived, as it was declared unconstitutional by the Supreme Court in 1895. However, the push for a progressive income tax continued, and with the ratification of the 16th Amendment in 1913, the legality of income tax was solidified, leading to the formal collection of income taxes in the United States.
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Taxing Clause in Article I
The Taxing Clause, or the "Spending Clause", in Article I, Section 8, Clause 1 of the US Constitution grants Congress the authority to "lay and collect Taxes, Duties, Imports, and Excises" to provide for the country's common defence and general welfare. This clause is listed first because the Framers decided, and the ratifiers of the Constitution agreed, that Congress must possess this power.
The Taxing Clause was established to address the collective action failures of the Articles of Confederation, which lacked a grant of power to the central government to lay and collect taxes. The inability to independently raise revenues left Congress vulnerable and severely underfunded, threatening national security.
The power to tax is a concurrent power of the federal government and individual states. The scope of Congress's taxing power has been substantially curtailed by judicial decisions with respect to the manner in which taxes are imposed, the objects for which they may be levied, and the subject matter of taxation. For example, Article I, Section 9, Clause 5 provides that no tax shall be laid on articles exported from any state.
The Sixteenth Amendment, ratified in 1913, further established Congress's right to impose a federal income tax. This amendment was proposed by President William Howard Taft, who suggested a 2% federal income tax on corporations. The amendment was ratified by 36 states, and on February 25, 1913, Secretary of State Philander Knox certified that it had been properly ratified.
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Taxpayer refusals
The 16th Amendment to the United States Constitution, passed by Congress on July 2, 1909, and ratified on February 3, 1913, established Congress's right to impose a federal income tax. Article XVI of the amendment states:
> The Congress shall have the 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.
Despite this, some taxpayers refuse to pay federal income taxes, invoking various legal theories and constitutional amendments to justify their stance. Below are some common arguments made by taxpayers who refuse to pay income taxes, along with explanations of why these arguments are not valid reasons for non-payment.
Religious or Moral Grounds
Some individuals or groups claim that taxpayers may refuse to pay federal income taxes based on their religious or moral beliefs or objections to using taxes to fund certain government programs. They invoke the First Amendment and, often, the Religious Freedom Restoration Act (RFRA) in support of their position. However, the First Amendment does not provide a right to refuse to pay income taxes on religious or moral grounds. This has been affirmed in court cases such as Adams v. Commissioner and United States v. Ramsey.
"Taking" of Property Without Due Process
Some taxpayers argue that the collection of federal income taxes constitutes a "taking" of property without due process of law, in violation of the Fifth Amendment. However, the United States Supreme Court has stated that the Fifth Amendment is not a limitation upon the taxing power conferred upon Congress by the Constitution.
Self-Incrimination
Taxpayers also contend that they do not have to file returns or provide financial information because of the protection against self-incrimination found in the Fifth Amendment. However, this argument has not held up in court, and individuals who refuse to provide financial information can be held criminally liable for tax evasion or tax avoidance.
Servitude
Another argument made is that compelled compliance with federal income tax laws is a form of servitude in violation of the Thirteenth Amendment. However, this argument has not been successful, and individuals who intentionally avoid paying or reporting taxes can be charged with tax evasion or income tax fraud.
Invalid Ratification of the 16th Amendment
Some taxpayers argue that the Sixteenth Amendment to the United States Constitution was not properly ratified and, therefore, does not authorize a direct non-apportioned federal income tax on United States citizens. However, the amendment was ratified by the requisite number of states on February 3, 1913, effectively establishing Congress's right to impose a federal income tax.
While individuals may present various legal theories and arguments to justify their refusal to pay income taxes, these reasons are not legally valid. Taxpayers do not have any rights to refuse to pay income tax that is owed to the federal government. Those who fail to pay their taxes may face penalties, interest, and, in some cases, criminal charges for tax evasion or tax fraud.
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Frequently asked questions
The 16th Amendment, passed in 1909 and ratified in 1913, grants Congress the power to impose and collect federal income tax without apportioning it among the states on the basis of population.
The United States uses a progressive income tax method where the marginal tax rate increases as income increases. For example, in 2024 and 2025, taxpayers will be subject to higher tax rates based on their income.
The first income tax in the US was levied to pay for the Civil War. Congress placed a flat 3% tax on all incomes over $800.
The federal government currently collects over $500 billion in income taxes each year, a significant increase from the $71 million collected in 1913.
