Which Amendment Made Income Tax Legal?
The history of income tax in the United States is fraught with halts, starts, and judicial disputes.
Parliamentary taxes were one of the catalysts that sparked the American colonies’ battle for independence (“No taxation without representation!”). As a result, the initial draft of the new nation’s Constitution specified that people should not be subject to direct taxes.
Despite this, the first income tax in the United States was imposed roughly 60 years later to fund the Civil War. This tax was eliminated after the war ended, but it gave the federal government a taste for the cash that income taxes might provide. In 1894, a new income tax was enacted, reportedly to compensate for revenue lost due to tariff reductions in the United States. The general population was unimpressed. In the case Pollock v. Farmers’ Loan and Trust Co., the Supreme Court ruled that the tax was unconstitutional.
- One of the causes for the colonies’ quest for independence was taxation.
- The first income tax was used to fund the Civil War.
- The new income tax enacted in 1894 was intended to compensate for lost revenue from tariffs.
Understanding the 16th Amendment
To compensate for the failure, the government produced the 16th Amendment, which stipulates that “the Congress shall have jurisdiction to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without consideration to any census or enumeration.” The amendment was adopted in 1913, removing the legal impediments to enacting an income tax. Surprisingly, an income tax was imposed that year. The law was brought before the Supreme Court once again. Due to the constitutional amendments, the court declared on January 24, 1916, that income taxes were now permissible.
Income tax has been a constant feature of American life since that period. Long before the introduction of a permanent income tax or, much worse, a pay-as-you-go income tax, Benjamin Franklin bemoaned, “Nothing is certain but death and taxes.” Medical improvements have made progress in at least postponing mortality since then, but we’ve constantly lost ground on taxes.
Tax Protestors Dispute the Constitutional Legality of Taxes
Some protesters question the constitutional propriety of tax payments and the significant legal consequences that might result from failure to pay. Some people refuse to pay income taxes in protest, saying that it is unconstitutional and unlawful. The IRS has published The Truth About Frivolous Tax Arguments, which refutes some of the most prevalent tax protesters’ claims that paying income tax is unlawful, unconstitutional, or voluntary.
Some of these frivolous tax arguments include:
- Taxation is a kind of slavery that violates the 13th Amendment. Courts have determined again and again that this is not the case.
- Filing a tax return is entirely voluntary. This argument is predicated on the term “voluntary” being included in the Form 1040 instructions, which some tax protesters interpret as meaning that submitting the return is optional. In actuality, the usage of this term alludes to the fact that US taxpayers must submit their own returns rather than having the government do so on their behalf, as is done in several other nations.
- Taxation is an unconstitutional seizure of property that violates the 5th Amendment. Both Phillips v. Commissioner and Brushaber v. Union Pac RR affirmed the government’s ability to charge a tax under the Constitution.
Finally, courts frown down on frivolous tax arguments, and individuals who try to use them to avoid paying income tax usually wind up facing long jail terms for tax evasion.
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