Eleanor Finch
The 16th Amendment to the U.S. Constitution, ratified in 1913, established Congress's right to impose a federal income tax and led to the creation of the Internal Revenue Service (IRS). The IRS is responsible for administering tax laws and collecting revenue to fund the federal government. While the 16th Amendment granted Congress the power to levy income taxes, there have been various arguments made against it, including claims that it violates the 5th Amendment and that taxpayers can refuse to pay on religious or moral grounds. Despite these controversies, the United States has consistently collected income taxes since the ratification of the 16th Amendment.
| Characteristics | Values |
|---|---|
| Amendment Number | 16th Amendment |
| Date Proposed | June 16, 1909 |
| Date Passed by Congress | July 2, 1909 |
| Date Ratified | February 3, 1913 |
| Ratifying States | 42 out of 48 states |
| Non-Ratifying States | Connecticut, Rhode Island, and Utah |
| States That Did Not Vote | Pennsylvania, Virginia, and Florida |
| Amendment Purpose | To establish Congress's right to impose a federal income tax |
| Previous Tax Law | Income tax was considered a "direct tax" that had to be apportioned among the states based on population |
| Tax Rate in 1913 | 1% of net income for those earning over $3,000 per year |
| IRS Creation | The 16th Amendment led to the creation of the Bureau of Internal Revenue, later renamed the Internal Revenue Service in 1953 |
| IRS Role | The IRS administers tax laws and collects revenue to fund the federal government |
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What You'll Learn
The 16th Amendment
The text of the amendment is as follows: "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 passage of the 16th Amendment shifted the way the federal government received funding, with critics arguing that it enabled expansive federal government spending and facilitated central banking policies. Prior to the early 20th century, most federal revenue came from tariffs rather than taxes, although Congress had imposed excise taxes on various goods. During the late 19th century, progressive groups favoured the establishment of a progressive income tax, arguing that it was fairer for the wealthy to pay for taxes and tariffs that had previously been paid by the middle class and the poor.
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Federal income tax
The 16th Amendment to the US Constitution, ratified in 1913, established Congress's right to impose a federal income tax. This amendment came about in response to the 1895 Supreme Court case of Pollock v. Farmers' Loan & Trust Co., which held that a tax on the income derived from real or personal property could not be imposed without apportionment. The 16th Amendment removed this barrier, allowing Congress to levy an income tax without apportioning it among the states based on population.
Some individuals and groups have made various claims and arguments against the federal income tax, citing different constitutional amendments. These include claims that taxpayers can refuse to pay income taxes on religious or moral grounds by invoking the First Amendment, that IRS summonses violate the Fourth Amendment protections against search and seizure, and that federal income taxes constitute a "taking" of property without due process, violating the Fifth Amendment. However, courts have consistently rejected these arguments as frivolous and without merit.
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The First Amendment
Some individuals and groups claim that taxpayers may refuse to pay federal income taxes based on their religious or moral beliefs or their objection to using taxes to fund certain government programs. They invoke the First Amendment and the Religious Freedom Restoration Act ("RFRA") in support of this position. However, the First Amendment does not provide a right to refuse to pay income taxes on religious or moral grounds, nor because taxes are used to fund government programs opposed by the taxpayer. The First Amendment also does not protect commercial speech or speech that aids or incites taxpayers to unlawfully refuse to pay federal income taxes, including speech that promotes abusive tax avoidance schemes.
The IRS Nonprofit Muzzle Rule has been criticised for harming the First Amendment by diminishing freedom of speech to protect politicians and the IRS. The rule would have prohibited not-for-profit social welfare organisations from mentioning the voting records and names of many public officials, effectively preventing many organisations from functioning. However, Congress and the Courts, not the IRS, have the authority to define the boundary between electioneering and free speech protected by the First Amendment.
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The Fifth Amendment
Some individuals have refused to file federal income tax returns or have submitted tax returns without providing financial information, claiming that doing so would violate their Fifth Amendment rights. However, courts have consistently rejected this argument, holding that there is no constitutional right to refuse to file an income tax return on the basis of the Fifth Amendment. For example, in United States v. Sullivan, the Supreme Court stated that a taxpayer cannot "draw a conjurer's circle around the matter" and refuse to comply with the law by asserting a blanket right against self-incrimination.
In the context of IRS investigations, the Fifth Amendment privilege against self-incrimination can be invoked, but it must be done on a question-by-question basis. The taxpayer must demonstrate that they are faced with substantial and real hazards of self-incrimination. Blanket assertions of the privilege will not be successful.
In addition, courts have held that the Fifth Amendment does not protect against the requirement to keep records and prepare tax returns. In Kasey v. Commissioner, the Ninth Circuit rejected the argument that these requirements violated the taxpayers' Fifth Amendment rights and amounted to involuntary servitude prohibited by the Thirteenth Amendment.
Therefore, while the Fifth Amendment provides important protections in the context of IRS investigations and tax compliance, it does not provide a blanket right to refuse to file tax returns or provide financial information. Individuals must demonstrate a real and substantial risk of self-incrimination on a question-by-question basis to successfully assert their Fifth Amendment rights.
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The Thirteenth Amendment
> "Neither slavery nor involuntary servitude, except as a punishment for crime whereof the party shall have been duly convicted, shall exist within the United States, or any place subject to their jurisdiction. Congress shall have power to enforce this article by appropriate legislation."
Some individuals and groups have argued that the federal income tax laws violate the Thirteenth Amendment, claiming that the tax laws constitute a form of involuntary servitude. However, these arguments have been consistently rejected by courts as frivolous. In Porth v. Brodrick, the Court of Appeals clarified that even if the requirements of tax laws were to be considered a form of servitude, they would not fall under the category of involuntary servitude mentioned in the Thirteenth Amendment. The IRS has also addressed this argument, warning taxpayers of the consequences of pursuing claims on these grounds.
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Frequently asked questions
The 16th Amendment to the US Constitution, ratified in 1913, involves the IRS.
The 16th Amendment established Congress's right to impose a federal income tax without apportioning it among the states on the basis of population.
The 16th Amendment led to the creation of the Bureau of Internal Revenue, now known as the Internal Revenue Service (IRS), which is largely responsible for collecting the revenue needed to fund the United States federal government.
The 16th Amendment was proposed to address concerns about the consolidation of economic power by the wealthiest Americans and to shift the tax burden from tariffs, which were considered to unfairly tax the poor.
