Exactly 100 years ago today the 16th amendment to the U.S. Constitution was ratified.
With its adoption, any lingering doubt about the federal government's authority to tax individual incomes was eliminated. During the Civil War, an income tax had been levied and was in effect until its repeal in 1872, because its revenues were no longer needed. Another similar tax was legislated thereafter, but in 1895 the U.S. Supreme Court ruled in Pollock v. Farmers' Loan that such a direct tax was improper since it was not apportioned among the states and their citizens and was therefore unconstitutional.
Does this leave you confused about the authority of Congress of levy taxes on income? If so, the 16th Amendment to the U.S. Constitution, which took effect on February 3, 1913, supersedes the prior ruling of the Supreme Court. And now we pay income taxes.
In fact, the clear and unambiguous language of the 16th Amendment states the present day power of the Congress succinctly:
"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."
So now each year millions of U.S. citizens file income tax returns and pay lots of taxes. Millions more Americans must file returns but need to pay very little in income taxes. And finally, millions of other Americans are required to file income tax returns but pay nothing.
Many Unhappy Returns --- Millions of Them is a great summary of how and why the 16th Amendment to the Constitution was enacted. Here's a brief excerpt:
"A century ago, on Feb. 3, 1913, the 16th Amendment to the Constitution
authorizing a federal income tax was ratified. But the amendment's adoption was
more an accident than an act of political will, and tinkering with the
Constitution was not even required for the federal government to tax Americans'
The country's first income tax was implemented to raise money during the
Civil War. The tax was repealed in 1872 because the revenues were no longer
needed. . . .
Before World War II, only one-third of the population earned enough to be
subject to the income tax. After the war, the tax still affected only half the
population. As late as 1947, farmers paid little or no income tax even when
crops were good—it was generally accepted that they kept no books and were not
expected to do much paperwork.
Over the years, the personal exemption and standard deduction have not kept
pace with inflation, so today 70% of the population is subject to income taxes.
Almost 60 million returns, mostly under $20,000 in gross income, pay no income
tax, largely the result of the earned-income and child tax credits. The
individual income tax today raises $950 billion annually through 144 million tax
returns. Of this, the top 40 million returns pay about $856 billion and the
bottom 104 million returns only about $94 billion.
The U.S. could easily reduce the tax-filing population to pre-World War II
levels by dropping two-thirds of taxpayers from the drudgery of filing annual
returns. . . .
Happy 100th anniversary to my 40 million fellow taxpayers who pay by far the lion's share of personal income taxes collected by the federal government knows best gang. Aren't we lucky to be celebrating such a joyous occasion today?
And Happy 100th anniversary as well to those other 104 million filers of income tax returns, regardless of whether you have to pay a little or nothing at all.
Knowing that our money is being well spent and redistributed on our behalf by our duly elected "public servants" is such a comfort. Or is it?
So instead of celebrating today, maybe we should all just sit down and cry like the little boy shown in the picture above.