The power to tax is the power to destroy. When Justice Marshall wrote these words in 1819 (echoing the words of Daniel Webster) he was expressing what could be considered a prophetic statement–those who have the power to tax wield enormous power over everyday lives, power that is apt to be abused.

This mistrust of those who hold the tax and power is nothing new. Looking back at the New Testament, those who witnessed Christ’s acts noted the skepticism that abounded because among those Jesus surrounded himself by where tax collectors, who were commonly reviled.

But in the modern era, in the United States, the architects of the 16th amendment (the amendment that gave the federal government the power to directly tax income) were probably unaware of the potential for abuse that such power could create. The power of the Internal Revenue Service today is enormous, reaching into areas of American life never envisioned by those who initially created it, powers that exemplify the essence of executive branch overreach.

For many years, the abuse of power was straight-forward—even mundane.  Politicians would use the IRS to bully or punish their enemies, either by illegally reviewing tax returns to find damaging information, or by targeting those enemies for auditing or tax-related legal action.  President Nixon, for example, was accused of engaging in this behavior in the second article in the Articles of Impeachment that were drawn up against him.

It is the IRS’ involvement in political speech, however, that has given rise to the greatest opportunities for its power to be abused.

The passage of the 1954 Internal Revenue Code formalized a variety of categories of not-for-profit organizations.  While this section, 501C, applied to charitable organizations, it also oversees groups involved in a variety of research, education, and public policy advocacy as well, the two most-known being 501C(3) groups and 501C(4) groups.  “C(3)s” can study public policy, analyze it, and even engage in advocacy.  But they cannot engage in electoral politics, and as a result, donations to these groups are tax-deductible.

501C(4) organizations, on the other hand, can engage in greater amounts of public policy advocacy, and can engage in the political process.  This is why donations to them are not tax-deductible (and, conversely, the fact that donations to C(4)s are not tax-deductible is prima facie evidence that, contrary to those who are critical of such organizations, these groups can and do get involved in politics!).

Because individuals who create these kinds of organizations must (generally) seek approval from the Internal Revenue Service (in order to gain the benefit of not-for-profit status), it gives the IRS an incredible amount of power when it comes to the exercise of free-speech rights, rights to redress the government for grievances, rights to freedom of assembly (all rights guaranteed by the Constitution).

As we saw in the “IRS-Tea Party Scandals”, the IRS was able to be used as a tool (one of several, but perhaps the most-important) in efforts by the Obama Administration to stifle opposition speech.  As people all across the country were inspired by the Tea Party movement and horrified at the prospect of Obamacare, hundreds of groups were created to speak out on these issues, many of whom took the step to apply to the IRS for tax-exempt status.

What we now know is that the IRS, possibly under orders from the White House, took the extraordinary measure of issuing guidance to put these organizations under greater scrutiny, to slow-down the approval of their applications and to put other organizations under the bureaucratic microscope. Some people waited years for their organizations to be approved (if they were approved at all), while others spent thousands of dollars to fight back against an operation whose goal was to silence them.

When caught, rather than apologize, the IRS took the arrogant step of attempting to codify the criteria they used to target these groups, and to peel back their ability to keep their donors away from the public eye. Understand, organizations such as these are under no obligation to make their donors public.  They can, if they want to (and if their donors allow it), but most organizations recognize the importance of protecting the confidentiality of their supporters.

It all comes down to the reality that, in addition to abuses of power such as these, donors can (and are) harassed.  It is something the Supreme Court recognized in 1958 in the case of NAACP v. Alabama—in which the High Court ruled that Alabama had no right to get the names of the NAACP’s donors (recognizing that Alabama only wanted these names so that those donors can be harassed).

Yet here we are, in 2015, and those in power are once again trying to get those names so that individuals can be harassed.  The American Legislative Exchange Council is one organization whose donors have been under fire—and it is clear that someone at the IRS shared confidential donor information with members of Congress.  And the IRS has been caught disproportionately applying “gift tax rules” to conservative donors—something Congress is working to fix legislatively.

Thankfully, as the IRS was attempting to formalize the criteria they were using to target conservative groups, they were slapped by some unlikely adversaries.  Despite the fact that an unprecedented number of individuals had submitted letters to the IRS in opposition to their 501C(4) rule changes (more than twice the number of all the letters submitted to the IRS during the previous seven years, combined!), the strongest opposition came from the NAACP itself.

Recognizing the enormous power of the IRS and the potential for that power to be abused, the NAACP was very clear:  were the IRS to enact they changes they were proposing, it would criminalize much of the work of the NAACP.

The power to tax is the power to destroy—and the NAACP recognizes that those who have the power to tax wield enormous power of the rights of individuals, and that power must be constrained.

Andrew Langer is President of the Institute for Liberty, and host host of the LangerCast, which can be found at (!langerpopp/cdo6 )

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3 replies
  1. Ron
    Ron says:

    Seven of the 85 Federalist Papers concerned the “General Power of Taxation,” reflecting the fact that the colonists were fearful of the power that taxation gave those who were in a position to use that power and that the colonists needed to be convinced that the taxation powers to be granted to the new federal government would not be abused.

    Taxation today is not used primarily to fund the operations of government, but primarily for social and financial engineering by both the Congress and the President. In today’s federal budget, government operations are not called mandatory spending, but rather discretionary spending. Mandatory spending is the term used to fund all the social welfare programs. We’ve got it all backwards!

  2. barb zack
    barb zack says:

    An important read today, given Tax Day! What the IRS had done, with the support of the Obama administration, is criminal and violates EVERY principle this Country was founded on. the chilling effects on free speech and the right to assemble is Orwellian in nature. We must find it within us, today especially, to fight the forces of evil within our own Country. Conservatives must find OUR voices, the way Liberals found theirs and push back, hard. Truer words: “the power to tax is the power to destroy”.

  3. Ralph Howarth
    Ralph Howarth says:

    I have been looking for the source on the 16th Amendment debates of the day but I keep running into similar content; but I remember reading how one of the objections to the income tax was that it would become invasive and be a way for the government to run peoples lives, and even to threatening religious liberty. Proponents said no because the 16th Amendment was advertised to the public as a correction to the Income Tax Cases (Pollock v. Farmers’ Loan & Trust Co.) of 1895. In those cases, the courts decided income tax on property was unconstitutional unless it was apportioned as a direct tax. The intent of the income tax was by the then definition of Income meaning “passive income” rather than wages income because wages, in that context, was not considered property but a transaction where instead of buying a loaf of bread or a bushel of corn, you were buying labor. Now the founders certainly never intended wages to be taxed by the federal government; but jurisprudence eventually arrived at treating wages as NOT property like land, or other forms of estate. In truth, the first years of income tax indeep only affected the wealthiest who gained income from investments and not from wages. But true to form of the federal government, laws were latter passed that went about taxing income wages.

    Now we are at a juncture where the federal government emits defacto law that it cannot constitutionally enact by virtue of the tax code. It is not a law, it is a tax, so they say. Then laws are drawn around the implementation of that tax, tax credit, or fine. And it does have a chilling effect on religious liberty. Churches cannot gain a non-profit, tax exempt status unless they can prove that they do not exclusively benefit their members. So churches must be in a sense public in services to gain the tax exempt status. But “Public Accommodation” laws meant for housing and commerce now are being sued and applied to churches IF they serve the public regardless of their religious beliefs and rights of conscience. What we have by tax code, and tax exemption, is a fiat way of secularizing churches that require changing their beliefs and practices to suit the federal government regime in power.


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