Income Taxes: Are they constitutional?
Article 1, Section 8, Clause 1 of the Constitution states “The Congress shall have Power to lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common defense and general welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States.” Article I, Section 9, Clause 4 states “No Capitation, or other direct tax shall be laid, unless in proportion to the Census or Enumeration herein before directed to be taken.” Based on these provisions in the Constitution of the United States an income tax is an indirect tax and therefore, is Constitutional. Due to the Pollock Case, the source of income holds a big weight in determining if the tax on it would be direct or indirect. The sixteenth amendment nullified this case, allowing for a tax on income from any source: direct or indirect. The amendment was ratified by forty-two of the forty-eight states that were part of the United States at the time. Some people fight this amendment and what it allows. They say that it is not constitutional because it was not ratified and that it does not give the power to levy taxes on incomes. In court though, these arguments do not hold up. Some say it is not allowed because it is a direct tax which is prohibited by the Constitution but as I stated earlier, income tax is NOT normally considered direct and even so, the sixteenth amendment does not mention if the income has to be one or the either. The purpose of an amendment is to make necessary changes to the Constitution, therefore, amending it to allow taxes: direct and indirect alike, is completely within the bounds of the law. The argument about ratification has to do with one of two things. Some say the states did not ratify and they were falsified to having done so. Others say differences in punctuation and capitalization from the document ratified and the one that was passed make it invalid. Both of these arguments have been ruled fraudulent when brought before a court. Ex: United States v. Benson, Brown v. Commissioner, Lysiak v. Commissioner, Miller v. United States. In cases such as Buchbinder v. Commissioner it is said that the amendment is void because it does not contain the word "repeal" and therefore, does nothing to amend the Constitution. This argument did not stand up in court either. To summarize, we read the words of the United States Tax Court in the case of Abrams v. Commissioner: "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."