Sixteenth Amendment


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Sixteenth Amendment

The Sixteenth Amendment to the U.S. Constitution reads:

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.

Congress passed the Sixteenth Amendment to the U.S. Constitution in 1909, and the states ratified it in 1913. The ratification of the amendment overturned an 1895 U.S. Supreme Court decision that had ruled a 2 percent federal flat tax on incomes over $4,000 unconstitutional (pollock v. farmer's loan & trust co., 157 U.S. 429, 15 S. Ct. 673, 39 L. Ed. 759). Article I of the Constitution states that "direct taxes shall be apportioned among the several states … according to their respective numbers." By a 5–4 vote, the Court in Pollock held that the new Income Tax was a direct tax insofar as it was based on incomes derived from land and, as such, had to be apportioned among the states. Because the law did not provide for Apportionment, it was unconstitutional.

The decision was unpopular and took the public by surprise because a federal income tax levied during the U.S. Civil War had not been struck down. Critics contended that the conservative majority on the Pollock Court was seeking to protect the economic elite. Industrialization had led to the creation of enormous corporate profits and personal fortunes, which could not be taxed to help pay for escalating federal government services. The Democratic Party made the enactment of a constitutional amendment a plank in its platform beginning in 1896.

The language of the Sixteenth Amendment addressed the issue in Pollock concerning apportionment, repealing the limitation imposed by article I. Soon after the amendment was ratified, Congress established a new personal income tax with rates ranging from 1 to 7 percent on income in excess of $3,000 for a single individual.

Further readings

Jensen, Erik M. 2001. "The Taxing Power, the Sixteenth Amendment, and the Meaning of 'Incomes'." Arizona State Law Journal 33 (winter).

Oring, Mark, and Steve Hampton. 1994. "Cheek v. United States and the Tax Protest Movement: An Historical Reassessment of the Sixteenth Amendment." University of West Los Angeles Law Review 25 (annual).

Cross-references

Apportionment; Income Tax.

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Thus, the Sixteenth Amendment allowed Congress to levy an income tax without apportioning it among the states or basing it on census results.
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Holcombe and Lacombe (1998) claim that the government growth that dominated the twentieth century could not have occurred without the Sixteenth Amendment.
This raises the possibility that some fundamental tax reforms, involving the replacement of the income base with a consumption base, could be unconstitutional as unapportioned direct taxes not authorized by the Sixteenth Amendment (because they are not imposed on "incomes").
A starting point for many tax defiers' constitutional claims has been the Sixteenth Amendment itself.
The original ruling in Murphy I was widely criticized by legal and tax practitioners, scholars, and other commentators, who asserted that the decision ignored Congress's power to tax and would subject the courts to numerous challenges under the Sixteenth Amendment as to the definition of "incomes.
The main argument of taxation protesters like Schulz, involves the Sixteenth Amendment which states: "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.
The Sixteenth Amendment to the Constitution now allows a federal income tax without apportionment among the states.
On February 3, 1913, the Sixteenth Amendment to the Constitution was ratified; it provides Congress with the power to levy and collect taxes on income from whatever source derived.
The Sixteenth Amendment (1913) empowered Congress to levy taxes on "income from whatever source derived," without apportioning the revenue among the states.