I just recently got on Facebook — and this week, I was invited to join the Fair Tax group. I've always felt that the income tax system is irreparably broken — but I believe in having the facts to back up your claims, so here's a rant about all the reasons why the income tax is unconstitutional, wasteful, and just plain wrong.
Not Part Of The Original Plan
If you think that personal income tax has always been an inherent part of our American system — perhaps written into the Constitution — you are sadly misinformed. Our founding fathers were staunchly opposed to taxing individuals on their private income. The taxation of productivity is actually quite anti-capitalist, and was seen as a disincentive to helping our fledgling country grow. The Constitution was written to promote taxing consumption (via tariffs on the import of goods and indirect excises on corporate profits) rather than wages — a more fair and equitable way to raise the revenues needed for running our federal government. Alexander Hamilton stated in "The Federalist #21" that, "It is a signal advantage of taxes on articles of consumption, that they contain in their own nature a security against excess. They prescribe their own limit; which cannot be exceeded without defeating the end proposed, that is, an extension of the revenue." The goal was to protect citizens against unfair taxation by their government (a major concern while under British rule). We managed to do just fine as a nation for 124 years without a national income tax. So what changed?
Article 1, Section 2, Clause 3 and Article 1, Section 9, Clause 4 of the Constitution decreed that Congress could impose a "direct" tax (meaning taxes paid directly to the federal government) only if the law apportioned that tax according to each state's population. So if the government wanted to collect a million dollars in taxes, it had to determine how many people resided in the country (by means of a census), divide that million dollars equally among the total population — then figure out how many people were in each individual state, and assign each state its portion of the tax based on the population. But the STATES were responsible for paying this tax, not the individual. The states, in turn, were free to charge citizens a property tax to cover their portion of the debt. But again, this was an indirect tax, and it was tied to consumption. The more property you owned, the more tax you paid — if you owned no property, you were exempt from the tax. This is how a direct tax is legally and Constitutionally collected.
Article comments
1 - Dave Nalle
An interesting article, with some good historical information and worthwhile concerns about taxation. However, I'm afraid your interpretation of Section II, B of the 1913 income tax law is incorrect and it's an error which has landed a number of people in jail.
Read this more carefully and watch the sentence structure as I go through and explain it.
"the net income of a taxable person shall include"
These are the things it "shall include:"
"gains, profits, and income"
This is where those things can come from:
"derived from salaries, wages, or compensation for personal service of whatever kind and in whatever form paid, or from professions, vocations, businesses, trade, commerce, or sales, or dealings in property, whether real or personal, growing out of the ownership or use of or interest in real or personal property, also from interest, rent, dividends, securities, or the transaction of any lawful business carried on for gain or profit, "
And lest you think this is a complete list, it makes it clear that every other kind of unspecified income can also be taxed:
"or gains or profits and income derived from any source whatever, including the income from but not the value of property acquired by gift, bequest, devise, or decent..."
So in fact, what it clearly says is that any form of income or gains can be taxed from any source whatever.
So the claim that the income tax does not apply to personal income is entirely spurious.
Dave
2 - Robert M. Barga
1) the court has ruled that the Constitution origionally allowed income taxes
2) Reread the paciific railroad case, it actually says it doesn't expand the right because they already had it
3) The fair tax does not work, here is why
4) do more research, you seem simply to have seen the argument for it and ignore the countless arguments against it
3 - Joanne Huspek
Interesting article, even if it contains some flaws.
4 - Dr Dreadful
Indeed, Joanne. And one key flaw is this:
"It's obvious that the mindset in this country was very different in 1913. Americans were preparing to enter the Great War -- and folks were happy to do their duty, contributing their hard-earned dollars to the war effort."
Except that the US didn't enter the war until 1917. Indeed, in 1913 the concept of becoming embroiled in a European war was anathema to most Americans. So the notion that the government was somehow able to take advantage of jingoism to railroad an income tax bill through Congress is a bit of a nonsense.
5 - Robert M. Barga
Dreadful, don't point that out, it harms this disillusioned argument
6 - Clavos
The FairTax may not be the solution (although I haven't seen anything, to convince me of that, including Barga's site), but what we have now is nothing short of a disaster and a ripoff of the middle class.
7 - Robert M. Barga
I listed how it is an increase in the taxes, how it will not work, and how it is regressive
to me, that means it is not the solution
I am all for less taxes, but we need to cut down on spending first (No point in increasing the deficit)