Income Taxes: Where Did They Come From?
Income Taxes: Where Did They Come From?
By Jeri Atleson
When I say income taxes, what happens to you? Do you break out in a sweat? Do you get a headache? Do you stress over getting your tax returns done? For me, it’s yes, yes, and yes!!!! I’m guessing that I’m not too different than most people.
Have you ever given thought to why we pay income taxes in the first place? Or why the Internal Revenue Code is so complicated?
With this current economic and fiscal crisis gripping and crippling a lot of Americans, more and more people are starting to wonder these same questions. So let’s tackle the basics.
Have we always paid income taxes as Americans? No. The truth is that we did not start paying income taxes, on a Federal level, until 1913. The Sixteenth Amendment to the Constitution was proposed on July 12, 1909 and ratified on February 3, 1913. Until then, the law pertaining to taxation, including several decisions by the U.S. Supreme Court, had been in conflict since the Civil War.
With the passage and ratification of the Sixteenth Amendment, it became clear that Congress was (and is) to have power to assess and collect taxes on whatever income sources it chooses, without consideration to apportionment or population. What that means is that Congress made it legal and the states agreed through ratification (the only way to create an Amendment to the Constitution). This granted Congress the power to assess taxes in any way they see fit.
The portion of the amendment relating to apportionment and population is not so much an issue today, as it was when the Amendment passed. It pertained to direct taxes, of which there are none today.
However, what has resulted from the ratification of the Sixteenth Amendment is the Internal Revenue Code. The Internal Revenue Code is the accumulation of the laws on which we pay our taxes. Congress writes, debates, and passes legislation pertaining to the tax code. The President of the United States may choose to sign the legislation or veto it. If he signs it, that legislation is now law and part of the Internal Revenue Code.
OK. So now we know how and when it became legal for the Congress to pass legislation allowing them to tax and collect from us. The big question: why?
The answer is not about tax policy or financial policy. If it was as simple as common sense fiscal policy, there would be no personal income taxes assessed. There would be budgets that would not end in deficit year after year. That’s not how we run our households and that is not how government should run their house.
The truth of the matter is that the Progressive Income Tax is about income redistribution.
It is a mindset, a philosophy, an outlook on how life should be. Congress had to go through the amendment process in order to make taxing the citizens of the United States legal and constitutional. The states had to agree to granting Congress this power, through ratification. Have you ever thought why government – Federal or State – may want this power?
Remember what I said in the first article of this series. Government is not in the money making business. They are in the money taking business. With money taking comes serious responsibilities to the people they take money from.
There are some valid reasons for government to use taxpayer money. Government does serve a purpose in some instances. For example, government provides for the national defense. Who then should pay for the national defense? It’s only common sense that American citizens should pay for the privilege of a national defense.
Should you pay for your neighbor’s mortgage? Should you pay for bailouts of companies? The truth of the matter is that our taxpayer dollars are appropriated (designated) for these purposes. The TARP bill and the most recent stimulus bills are examples of this.
If you choose to help your neighbor stay in their home, that is quite noble and your choice. If it is decided for me to help someone in another state stay in their home, is that government’s place to decide that on my behalf?
This is the responsibility that comes with spending other people’s money. There is a role for government in the American people’s life. But understanding how federal personal income taxes came to be, how they work, and why they came to be is the first step in understanding how government works and in assessing whether government is taking our money and spending it wisely.