Guest Essayist: James D. Best, author of Tempest at Dawn, a novel about the 1787 Constitutional Convention, and Principled Action, Lessons from the Origins of the American Republic

Amendment XVI:

The Congress shall have 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.

Reform or Revision?

The infamous XVI Amendment gave the national government the authority to tax income … from whatever source derived. Income tax has always been divisive. In the early twentieth century, the amendment was promoted with the phrase “soak the rich,” and the level of progressiveness in the tax codes has been contentious ever since. Many feel that it is only fair that those with more money should pay the lion’s share, while others think fairness means that every American should contribute at least something to the national coffers.

In Federalist 10, James Madison wrote, “The apportionment of taxes on the various descriptions of property is an act which seems to require the most exact impartiality; yet there is, perhaps, no legislative act in which greater opportunity and temptation are given to a predominant party to trample on the rules of justice.” For the hundred years that the XVI Amendment has been in place, exact impartiality has been a rarity.

There are many odious aspects of our current income tax. T. Coleman Andrews, commissioner of the IRS under Eisenhower said, “It opened up our homes, our papers and our effects to the prying eyes of government agents.” An IRS appeal is through tax courts without juries, and if a taxpayer loses, the individual must pay before suing the government. Congress relishes playing three-card Monte with the tax code by deftly moving taxes up, down and sideways, while slipping loopholes to favored constituents. Tax policy seldom has any relationship to economic growth, keeping markets free, or preserving personal liberty. For those of us who are recordkeeping impaired, the laws are a nightmare and a huge waste of valuable time. And last, we work and struggle to make ends meet, and instead of getting thanks for all the money we send to Washington, there’s always some politician trying to make us feel guilty because we didn’t send more.

Should the XVI Amendment be reformed or revised? Probably. Revision of the XVI Amendment could potentially fix many issues about the application of income tax, but it would not resolve our growing debt issues. The federal government spends about a quarter of our national production, much of it financed with debt that has climbed to unfathomable levels. Reforming or revising the XVI Amendment might squeeze the revenue side, but it won’t guarantee spending restraint. The government has no restrictions on borrowing or printing money.

Congress has shown that it won’t fix the tax code or spending. As we’ve witnessed since the Tax Reform Act of 1986, tax cuts and simplification only buy a short recess from offensive rates and burdensome regulations.

Without an ironclad restraint, government will continue to tax and spend recklessly. If permanent change is desired, it will require amending the Constitution. The real question is what kind of constitutional reform is needed. It’s possible we could have a public debate and resolve the fairness issue once and for all. For example, a flat tax would be good for the individual and boost economic growth, but most Americans have come to believe progressive rates equate to fairness. Another proposed reform would repeal the XVI Amendment in favor of a national sales tax—sometimes called the fair tax. Critics have pointed out that these reforms have their own problems, but even if they present an improvement, they seem unlikely to get out of Congress or be ratified by thirty-eight state legislatures.

If the goal is to make income tax fairer or trade it for a different tax, then a revision of the XVI Amendment could do the trick. However, if the goal is to collapse the deficit—and eventually the debt—then reform needs to address both the income and spending sides. This means that revision of the XVI Amendment should probably be done in conjunction with a Balanced Budget Amendment. A consolidated reform approach would provide the best chance of ratification and fixing our country’s finances. Alas, that would take leadership. Where is Alexander Hamilton when you need him?

James D. Best is the author of Tempest at Dawn, a novel about the 1787 Constitutional Convention, and Principled Action, Lessons from the Origins of the American Republic.

May 11, 2012

Essay #60


5 replies
  1. suzie clary
    suzie clary says:

    I thought the XVI Amendment was never actually ratified. If this isn’t the case, then what is it I am so confused about? I have read over the years that income tax is not legal because the amendment was not legally ratified. I also understand property tax is illegal because a person cannot own personal property if they have to pay to keep it. Help.

    • Ralph T. Howarth, Jr.
      Ralph T. Howarth, Jr. says:

      You might be thinking of the “illegal 14th”. The 14th did not ratify on the same amendment as different versions of the 14th circulated among the states.

  2. Marc W. Stauffer
    Marc W. Stauffer says:

    The kind of reform we are talking about will be difficult and contentious….even dividing. Our country has been on a long drunk with tax and spend and we may have to hit bottom until we want to fiscally “dry out”. I know that the leadership for tax and debt reform is out there……I just don’t know if we are ready to elect those that will have the character to accomplish it.

  3. Robert Sommers
    Robert Sommers says:

    Hmm. This didn’t have the intellectual neutrality of many of the other essays. Not sure how I feel about that. cof cof flat tax cof.

    • Ralph T. Howarth, Jr.
      Ralph T. Howarth, Jr. says:

      Flat tax is also unconstitutional because Congress is only authorized to impose excise taxes…taxes specified on particular goods; not a general tax on all goods.


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