A Taxing Amendment, The Revenue Act

1259 words - 5 pages

Before the 16th Amendment, a federal income tax was technically illegal, as stated in Article I, Section
9 of the Constitution : “No capitation, or other direct, tax shall be laid, unless in proportion to the census
or enumeration herein before directed to be taken.” Therefore, the federal government had to rely on
land sales, excise taxes, and tariffs to raise revenue. In times of crisis, however, these measures were
simply not enough. During the Civil War, when the Union desperately needed funds, Congress passed
the Revenue Act (1861), which included a provision for the nation’s first income tax. Out of necessity,
the Supreme Court overlooked the act’s unconstitutionality. The first rate was a 3% tax on all incomes
over $800, or $21,000 in 2013 dollars, but in 1862 Congress amended the act and introduced a multi-
tiered system, with a 3% tax on all incomes up to $10,000 and a 5% tax on any over that amount. In
addition, the duty was deducted directly from the worker’s paychecks so that they would never miss the
money. Congress knew it could not collect the blatantly unconstitutional tax any longer than was
necessary, so in 1872, a few years after the close of the war, the Revenue Act was repealed. However,
the idea of an income tax could not be abolished. There were many, especially among the farmers in the
south and west, who believed that the wealthy eastern bankers and industrialists were not paying their
fair share. At the urging of these malcontents, Congress passed another income tax bill in 1894 that
imposed a 2% tax on all incomes over $4000, or $21,000 in 2013 dollars. The Supreme Court
immediately struck it down as unconstitutional. This action still did not kill the idea, and progressive
reformers, especially in the Democratic party, continued to support it.
Income tax bills continued to be introduced, but were always blocked by the conservative
congressmen, usually in the Republican party. The Democrats used this against the Republicans, labeling
them the “party of the rich.” In an attempt to save face, President Taft came out in support of the
income tax “in principle,” but continued to oppose it privately. The Democrats knew the Republicans did
not truly favor the tax, and, in an effort to expose their duplicity, Senator Joseph Bailey introduced yet
another income tax bill in 1909. He expected the Republicans to oppose it and embarrass themselves.
Taft and his conservative consorts realized what Bailey was doing and devised a plan: they would
support the income tax, but only if an amendment was first made to the constitution to ensure its
legality. They were confident that ¾ of the states would never ratify such an amendment, and so the
issue would be put to rest. Thus, on June 16th, 1909, Taft recommended the 16th amendment to
Congress. A twelve hour debate of the resolution followed on July 12, 1909. The proponents, mostly
Democrats with some progressive Republicans,...

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