July 4th’s Opinion on Amendment 16
The United States was built by rugged individuals who created a government to protect their rights and freedoms. They had recently escaped a nation that abused and used their people and their freedoms to create a nation of their own which valued the basic fundamentals of economic and civil liberties. However, some 140 years after establishing their independence in 1913, those fundamentals were violated.
The 16th amendment of the United States constitution allows Congress to levy an income tax without apportioning it among the states. During the Civil War, the United States government had laid an income tax among its people in order to fund the war. However, at the end of the war, it was abandoned. That being said, the desire to pass a graduated income tax grew. You see, previously the only way the government was being funded was through tariffs and excise taxes on certain goods so the federal government was looking for anyway they could increase their purchasing power.
The problem with the current method of government income was that the tariffs were that they taxed goods, so people who relied on their income more short term, would see higher prices. During the late 19th century, many lower income citizens who were spending their money quicker were preaching that they were being unfairly taxed, as the tariffs unproportionally affected them. There becomes a call of action from interest groups from the lower end such as the socialist party call for an income tax called the Wilson Gorman Tariff Act of 1894. The act had provided that profits in excess of $4,000 would be taxed at 2 percent. This new income tax was considered unconstitutional by some and brings up an important Supreme Court case: Pollock vs Farmers’ Loan and Trust Company.
Charles Pollock, a citizen of Massachusetts, owned 10 shares of Farmers’ Loan and Trust Company. As a shareholder, Pollock was not happy to know that the company had been taxed and brought up that the income tax was a direct tax without apportionment, which at the time was unconstitutional. The Supreme Court sided with Pollock and eventually, the Wilson-Gorman Tariff Act of 1894 was abolished. This closed down a huge source of income for the federal government, who now needed a new way to fund their growth.
Many progressive Republicans had argued that a larger centralized government would play a positive role in growing the economy. They argued that with a bigger government, there needed to be more funding past the tariffs already in play so they looked back to income tax to solve their problems. They were pushing for more power to the government and less to the people: something our rugged forefathers fought hard to prevent.
At first, various political organizations started by farmers such as the Grange and the Greenback Party advocated for a graduated income tax. One significant Supreme Court case was that of Comisioner vs Glenshaw Glass Company. The case argued on what was considered income to establish what can and can’t be taxed. The Supreme Court laid out the modern understanding for “gross income” and determined that anything of value whether it be property, food, or anything else that proves accession to wealth can be taxed. This way, people could not avoid income taxes through paying their workers in apples, houses, or any other form of currency.
It wasn’t until when Senator Nelson W Aldrich proposed a constitutional amendment to establish income tax that it was taken into consideration. Only one decade previous, that same Senator described income tax as “communistic”. Within the House of Representatives, Aldrich’s proposal passed unanimously and was sent to states for further ratification. Although it needed 36 states to be fully passed, 42 agreed and the 16th amendment was officially passed on February 25th, 1913. The people of the United States had little say in whether the amendment would be passed or not. It’s not hard to see it as Congress giving themselves permission to impose graduated tax against citizens.
After the amendment was ratified, many Supreme Court cases centered around it arose. For example, in 1916, there was a very similar case to Pollock’s called Stanton vs Baltic Mining Company. In the case, John R. Stanton owned shares in Baltic Mining and argued that the income tax act did not include anything about the depletion of a mine’s ore therefore, the tax they were paying was a direct tax not covered by the 16th amendment. However, this time around, the court rejected his arguments and upheld the constitutionality of the income tax under the 1913 Revenue act.
Aldrich’s proposal also inspired Woodrow Wilson to sign into law a centralized banking system that we know as the Federal Reserve. Today, the federal income tax has skyrocketed out of control and even more so, quantitative easing from the Federal Reserve has caused the United States dollar to plummet.
Although income tax started out in the single digits, we now regularly see 37% of income being stolen by the government. Many of the US tax dollars go to politicians who are incapable of efficiently spending the money. Many times, it feels as if they are pouring taxes into the “money hole” for it never to be seen again. For example, $500,000 tax dollars went to blowing up Mississippi beaver dams. The same amount went to wiping our brown tree snakes in Guam. Senator Harry Reid even proposed a “cowboy poetry festival”. Some of the ways that the government spends their citizens’ money doesn’t even sound real like how $2.6 million went to training American prostitutes how to drink responsibly. Overall, a large centralized government is no way to run an economy.
The Federal Reserve is part of this centralized economic system. Year after year, they print trillions of dollars causing crippling inflation within the United State’s economy. In places like Zimbabwe and Venezuela, carts full of trillions of Zimbabwe dollars and Venezuelan bolivars are littering the streets as trillion dollar bills are being devalued to less than the paper they are printed on. If we continue down the path of overtaxing our citizens combined with massive quantitative easing, we may very well see our economy look like theirs.
