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Is Taxation Unconstitutional?: The Ironic Story of the 16th Amendment

The internet is full of arguments put out by “tax protesters” arguing that collection of income tax by the federal government is unconstitutional. Understandably, everyone wants to avoid paying taxes, but the notion that collection of a federal income tax is unconstitutional is simply not true. Here’s why…

The 16th Amendment to the U.S. Constitution, ratified in 1913, authorizes a national income tax: “The Congress shall have power to lay and collect taxes from incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.”

Why did Congress amend the constitution? Following the expiration of the 1864 War Revenue Act (which taxed incomes for 10 years to help fund the Civil War), tariffs were imposed on goods and imports. But those tariffs favored manufacturing interests of the Northeast and Midwest while Southern and Midwestern farmers and urban workers bore a huge burden paying higher prices for manufactured goods. Unrest ensued and the disenfranchised organized and proposed multiple ideas including a graduated income tax.

In order to lay the federal income tax idea to rest for good, in 1909 the conservative, Republican­controlled Congress approved a joint resolution for a constitutional amendment authorizing a national income tax, thinking it would never be ratified by the majority of states. Much to their surprise, by February of 1913, forty states had ratified the 16th Amendment to the US Constitution, paving the way for legislation to collect income tax from individuals. Later that year, the Underwood­Simmons Act ­ also known as the Revenue Act of 1913 ­ was passed by Congress, and a new era of tax collection began.

The income tax amendment and laws have been challenged numerous times in court, over various phrases and interpretations. But each challenge has been met with the courts upholding the constitutionality of the 16th Amendment. So if you really want to avoid paying higher federal taxes, your best bet is to hire a good accountant who will help you reduce your tax hit ­ legally.

For more information on the 16th Amendment and constitutional arguments, see:

  • The Tax Lawyer: Origins of the Modern Income Tax http://goo.gl/nVHlKl
  • IRS: The Truth About Frivilous Tax Arguments
  • http://www.irs.gov/pub/irs­utl/friv_tax.pdf
  • John Seigel’s Income Tax Protestor’s Page: http://goo.gl/MXT10J 

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