Even on my worst day I'm not gonna do the digging to prove someone else's point. LOL!
I'll verify your sources all day long. But in the art of persuasion, the person making the assertion must present credible and verifiable evidence in order to persuade.
I said it was Constitutional, then I quoted the Constitution! How much sourcing do you require?
I watched your evidence once and listened to it again just to make sure I understood. I did. Nothing new there.
Moonbat propaganda. Blah, Blah, blah....
I don't want you to prove my point i'd like you to prove yours.
Prior to the U.S. Supreme Court decision in the case of
Pollock v. Farmers' Loan & Trust Co.,
157 U.S. 429 (
1895),
aff'd on reh'g,
158 U.S. 601 (
1895) all income taxes had been considered to be
excises (indirect taxes) required to be imposed with geographical uniformity; such taxes were not required to be apportioned by state according to population (as are direct taxes).
[6]
The
Wilson-Gorman Tariff Act of 1894 attempted to impose a federal tax of 2% on incomes over $4,000. Derided as "un-Democratic, inquisitorial, and wrong in principle,"
[7] it was challenged in
federal court. Until that time, direct taxes had been deemed to include only capitations, or poll taxes (taxes directly on persons) and taxes imposed on property
by reason of its ownership (generally, ordinary
ad valorem property taxes). Until 1895, all income taxes regardless of the
sources of the incomes had been considered indirect taxes ("excises").
[8]
[edit] The Pollock case
In the case of
Pollock v. Farmers' Loan & Trust Co. the
Supreme Court declared certain income taxes taxes on income from property under the 1894 Act to be
unconstitutionally unapportioned
direct taxes. The Court reasoned that a tax on
income from property should be treated as a tax on "property by reason of its ownership," and should therefore be required to be apportioned. The reasoning was that taxes on the rents from land, the dividends from stocks and so on burdened the property generating the income in the same way that a tax on "property by reason of its ownership" burdened that property.
This meant that, after
Pollock, while income taxes on wages (as indirect taxes) were still not required to be apportioned by population, taxes on interest, dividends and rent income were required to be apportioned by population. The
Pollock ruling made the
source of the income (e.g., property versus labor, etc.) relevant in determining whether the tax imposed on that income was deemed to be "direct" (and thus required to be apportioned among the states according to population) or, alternatively, "indirect" (and thus required only to be imposed with geographical uniformity).
During this period from 1895 to 1913 when the Sixteenth Amendment was ratified, while Congress could have re-imposed taxes on income from labor and other non-property sources without apportionment by population, imposing taxes on interest, dividends and rent income would not have been practical (as the dollar amount of income from interest, dividends and rent would virtually never be exactly the same amount for each and every taxpayer in the United States for any year). The Congress was unwilling to impose an income tax on labor and other non-property sources without also imposing a tax on income from property and taxes on income from property were no longer realistic. The
Pollock ruling made imposition of an income tax politically unfeasible from 1895 until the ratification of the Sixteenth Amendment. At the same time, the Congress was reflecting the growing concern among many elements of society that the wealthiest Americans had consolidated too much economic power.
[9]
In his dissent to the
Pollock decision, Justice Harlan stated:
When, therefore, this court adjudges, as it does now adjudge, that Congress cannot impose a duty or tax upon personal property, or upon income arising either from rents of real estate or from personal property, including invested personal property, bonds, stocks, and investments of all kinds, except by apportioning the sum to be so raised among the States according to population, it practically decides that, without an amendment of the Constitution two-thirds of both Houses of Congress and three-fourths of the States concurring such property and incomes can never be made to contribute to the support of the national government.
[10]
[edit] Ratification process
The
Socialist Labor Party advocated for a graduated income tax in 1887.
[11] The
Populist Party "demanded a graduated income tax" in their 1892 platform.
[12] The Democratic Party, led by
William Jennings Bryan, advocated the income tax law passed in 1894,
[13] and proposed an income tax in their 1908 platform.
[14] President Taft proposed a constitutional amendment in an address to Congress to allow federal income taxes on individuals and an excise tax "upon the privilege of doing business as an artificial entity and of freedom from a general partnership liability enjoyed by those who own the stock" on
June 16,
1909.
[15][16]
The resolution proposing the Sixteenth Amendment was passed by the
Sixty-first Congress and submitted to legislatures of the several states on
July 12,
1909. Support for the income tax was strongest in the western states, and opposition was strongest in the northeastern states.
[17] The governor of New York,
Charles Evans Hughes, who a few years later became a Supreme Court justice, opposed the income tax amendment because he believed "from whatever source derived" implied that passage would confer the federal government with the power to tax state and municipal bonds and thus excessively centralize government power.
[18]
The presidential election of 1912 was contested between three advocates of an income tax.
[19] On
February 25,
1913, the
Secretary of State Philander Knox proclaimed that the amendment had been ratified by the necessary three-quarters of the states, and thus had become part of the Constitution. An income tax, the
Revenue Act of 1913 was shortly passed by Congress.
According to the
United States Government Printing Office, the following states ratified the amendment:
[20]
- Alabama (August 10, 1909)
- Kentucky (February 8, 1910)
- South Carolina (February 19, 1910)
- Illinois (March 1, 1910)
- Mississippi (March 7, 1910)
- Oklahoma (March 10, 1910)
- Maryland (April 8, 1910)
- Georgia (August 3, 1910)
- Texas (August 16, 1910)
- Ohio (January 19, 1911)
- Idaho (January 20, 1911)
- Oregon (January 23, 1911)
- Washington (January 26, 1911)
- Montana (January 27, 1911)
- Indiana (January 30, 1911)
- California (January 31, 1911)
- Nevada (January 31, 1911)
- South Dakota (February 1, 1911)
- Nebraska (February 9, 1911)
- North Carolina (February 11, 1911)
- Colorado (February 15, 1911)
- North Dakota (February 17, 1911)
- Michigan (February 23, 1911)
- Iowa (February 24, 1911)
- Kansas (March 2, 1911)
- Missouri (March 16, 1911)
- Maine (March 31, 1911)
- Tennessee (April 7, 1911)
- Arkansas (April 22, 1911), after having previously rejected the amendment
- Wisconsin (May 16, 1911)
- New York (July 12, 1911)
- Arizona (April 3, 1912)
- Minnesota (June 11, 1912)
- Louisiana (June 28, 1912)
- West Virginia (January 31, 1913)
- New Mexico (February 3, 1913)
Ratification (by the requisite thirty-six states) was completed on
February 3,
1913 with the ratification by New Mexico. The amendment was subsequently ratified by the following states, bringing the total number of ratifying states to forty-two of the forty-eight then existing:
37. Delaware (
February 3,
1913) 38. Wyoming (
February 3,
1913) 39. New Jersey (
February 4,
1913) 40. Vermont (
February 19,
1913) 41. Massachusetts (
March 4,
1913) 42. New Hampshire (
March 7,
1913), after rejecting the amendment on
March 2,
1911 The following states rejected the amendment without ever subsequently ratifying it:
- Connecticut
- Florida (rejected the amendment after it had already been ratified by three-fourths of the states)
- Rhode Island
- Utah
The following states never took up the proposed amendment:
- Pennsylvania
- Virginia
[edit] Pollock overruled
The Amendment overruled the effect of
Pollock.
[21] That essentially means that when imposing an income tax, the Congress may impose the tax on income from any source without having to apportion the total dollar amount of tax collected from each state according to each state's population in relation to the total national population.
[22] In
Abrams v. Commissioner, the
United States Tax Court stated: "Since the ratification of the Sixteenth Amendment, it is immaterial with respect to income taxes, whether the tax is a direct or indirect tax. The whole purpose of the Sixteenth Amendment was to relieve all income taxes when imposed from [the requirement of] apportionment and from [the requirement of] a consideration of the source whence the income was derived."
[23]
[edit] Case law
The federal courts' interpretations of the Sixteenth Amendment have changed considerably over time and there have been many disputes about the applicability of the amendment.
[edit] The Brushaber case
In
Brushaber v. Union Pacific Railroad,
240 U.S. 1 (
1916), the Supreme Court ruled that (1) the Sixteenth Amendment removes the
Pollock requirement that certain income taxes (such as taxes on income "derived from real property" that were the subject of the
Pollock decision), be apportioned among the states according to population;
[24] (2) the Federal income tax statute does not violate the Fifth Amendment's prohibition against the government taking property without due process of law; (3) the Federal income tax statute does not violate the uniformity clause of Article I, section 8 of the U.S. Constitution (relating to the requirement that excises, also known as indirect taxes, be imposed with geographical uniformity).
[edit] The Kerbaugh-Empire Co. case
In the Supreme Court case of
Bowers v. Kerbaugh-Empire Co.,
271 U.S. 170 (
1926), Mr. Justice Butler stated:
It was not the purpose or the effect of that amendment to bring any new subject within the taxing power. Congress already had the power to tax all incomes. But taxes on incomes from some sources had been held to be "direct taxes" within the meaning of the constitutional requirement as to apportionment. [cites omitted] The Amendment relieved from that requirement and obliterated the distinction in that respect between taxes on income that are direct taxes and those that are not, and so put on the same basis all incomes "from whatever source derived". [cites omitted] "Income" has been taken to mean the same thing as used in the Corporation Excise Tax of 1909 (36 Stat. 112), in the Sixteenth Amendment, and in the various revenue acts subsequently passed. [cites omitted] After full consideration, this court declared that income may be defined as gain derived from capital, from labor, or from both combined, including profit gained through sale or conversion of capital.
[edit] The Glenshaw Glass case
In
Commissioner v. Glenshaw Glass Co.,
348 U.S. 426 (
1955), the Supreme Court laid out what has become the modern understanding of what constitutes 'gross income' to which the Sixteenth Amendment applies, declaring that income taxes could be levied on "accessions to wealth, clearly realized, and over which the taxpayers have complete dominion." Under this definition,
any increase in wealthwhether through
wages, benefits, bonuses, sale of stock or other property at a profit, bets won, lucky finds, awards of
punitive damages in a lawsuit,
qui tam actionsare all within the definition of income, unless the
Congress makes a specific exemption as it has for items such as life insurance proceeds received by reason of the death of the insured party,
[25] gifts,
bequests, devises and inheritances,
[26] and certain
scholarships.
[27]
[edit] Income taxation of wages, etc.
The courts have interpreted the Sixteenth Amendment as standing for the rule that the Amendment allows a direct tax on "wages, salaries, commissions, etc. without apportionment."
[28]
[edit] The Penn Mutual case
Although the Sixteenth Amendment is often cited as the "source" of the Congressional power to tax incomes, at least one court has reiterated the point made in
Brushaber and other cases that the Sixteenth Amendment itself did not grant the Congress the power to tax incomes (a power the Congress has had since 1789), but only removed the requirement,
if any, that any income tax be apportioned among the states according to their respective populations. In the
Penn Mutual Indemnity case, the United States Tax Court stated:
In dealing with the scope of the taxing power the question has sometimes been framed in terms of whether something can be taxed as income under the Sixteenth Amendment. This is an inaccurate formulation [ . . . ] and has led to much loose thinking on the subject. The source of the taxing power is not the Sixteenth Amendment; it is Article I, Section 8, of the Constitution.
[29]
In that same
Penn Mutual Indemnity case, on appeal, the
United States Court of Appeals for the Third Circuit agreed, stating:
It did not take a constitutional amendment to entitle the United States to impose an income tax. Pollock v. Farmers' Loan & Trust Co., 157 U. S. 429, 158 U. S. 601 (1895), only held that a tax on the income derived from real or personal property was so close to a tax on that property that it could not be imposed without apportionment. The Sixteenth Amendment removed that barrier. Indeed, the requirement for apportionment is pretty strictly limited to taxes on real and personal property and capitation taxes.
It is not necessary to uphold the validity of the tax imposed by the United States that the tax itself bear an accurate label. Indeed, the tax upon the distillation of spirits, imposed very early by federal authority, now reads and has read in terms of a tax upon the spirits themselves, yet the validity of this imposition has been upheld for a very great many years.
It could well be argued that the tax involved here [an income tax] is an "excise tax" based upon the receipt of money by the taxpayer. It certainly is not a tax on property and it certainly is not a capitation tax; therefore, it need not be apportioned. We do not think it profitable, however, to make the label as precise as that required under the Food and Drug Act. Congress has the power to impose taxes generally, and if the particular imposition does not run afoul of any constitutional restrictions then the tax is lawful, call it what you will.
[30]
[edit] The Murphy case
On
December 22,
2006, a three-judge panel of the
United States Court of Appeals for the District of Columbia Circuit vacated
[31] its own unanimous August 2006 opinion in
Murphy v. Internal Revenue Service and United States.
[32] The original three judge panel then agreed to rehear the case itself. In its original August 2006 decision, the Court had ruled that
26 U.S.C. § 104(a)(2) was unconstitutional under the Sixteenth Amendment to the extent that the statute purported to tax, as income, a recovery for a non-physical personal injury for mental distress and loss of reputation not received in lieu of taxable income such as lost wages or earnings.
Because the August 2006 opinion was
vacated, the full court did not hear the case
en banc.
On July 3, 2007, the Court (through the original three-judge panel) ruled (1) that the taxpayer's compensation was received on account of a non-physical injury or sickness; (2) that gross income under section 61 of the Internal Revenue Code
[33] does include compensatory damages for non-physical injuries, even if the award is not an "accession to wealth," (3) that the income tax imposed on an award for non-physical injuries is an indirect tax, regardless of whether the recovery is restoration of "human capital," and therefore the tax does not violate the constitutional requirement of Article I, section 9, that capitations or other direct taxes must be laid among the states only in proportion to the population; (4) that the income tax imposed on an award for non-physical injuries does not violate the constitutional requirement of Article I, section 8, that all duties, imposts and excises be uniform throughout the United States; (5) that under the doctrine of sovereign immunity, the Internal Revenue Service may not be sued in its own name.
[34]
The Court stated that "[a]lthough the 'Congress cannot make a thing income which is not so in fact,' [ . . . ] it can
label a thing income and tax it, so long as it acts within its constitutional authority, which includes not only the Sixteenth Amendment but also Article I, Sections 8 and 9."
[35] The court ruled that Ms. Murphy was not entitled to the tax refund she claimed, and that the personal injury award she received was "within the reach of the congressional power to tax under Article I, Section 8 of the Constitution" -- even if the award was "not income within the meaning of the Sixteenth Amendment".
[36] See also the
Penn Mutual case cited above.
On April 21, 2008, the Supreme Court declined to review the decision of the Court of Appeals.
[37]