The Power to Tax…
"The power to tax is the power to destroy". These are the words of Daniel Webster and Chief Justice John Marshall who lived in the days of the Founders.
Americans have recently witnessed the Supreme Court upholding a legislative act passed by congress that is one of the most oppressive measures in our Nation’s history.The Founders’ formula for individual freedom not only excluded this kind of taxation, but the Constitution they wrote specifically forbade Congress from doing the very thing the Supreme Court said they could do.
It is another powerful example of what has happened as we have ceased studying the Founders’ freedom formula and have let powerful, anti-American philosophies enter into our thinking and transform our great Nation before our very eyes. Here is how it happened.
The Founder’s Fear of the Power to Tax
One of the driving forces motivating the Founders to declare independence 236 years ago was the oppressive nature of King George’s taxes. The Founders knew governments had to have financial means to survive. But their study of history proved that it is the nature of almost all men who come to power, to abuse the people by taking more and more from them through government taxation. It was for this reason that the first government of the Unites States of America (the Articles of Confederation) contained no power in the national government to levy any kind of tax. If taxes were to be levied they would be by the states, and the national government would then request each state to voluntarily give its fair share to the National government.
It was not long after the Revolutionary War began that the Founders realized this system was too weak. General Washington was in the field seeing his men starve, freeze, and die. His pleadings to Congress for more help were answered mostly by an apologetic excuse that the states had been requisitioned and it was up to them to send Washington the needed provisions. Some did and some didn’t. No one knew the desperate need for more energy or power in the federal government than George Washington. Nevertheless, it would be many years before he would see that happen. Meanwhile, he had a war to fight and the inability of Congress to raise the necessary funds was one reason we almost lost the war for independence.
The Founders’ lessons about taxation
As a result of many years of trial and error, the Founders learned some powerful lessons about taxes:
- Just taxing the states is impractical, since the only way to enforce such taxation is to send in an army.
- There is a difference between direct and indirect taxes. Direct taxes are levied on a person or his property and must be paid by the individual. Indirect taxes are levied on things and are paid indirectly by those collecting the taxes on goods sold. Direct taxes are harsher and sometimes involve force to collect. Indirect taxes are more discretionary.
- It was felt that the federal government’s limited roles would be supported entirely by tariffs on imports. The Founders did not anticipate the government needing to reach inward to the people for support in ordinary times.
- It was recognized, however, that in an emergency such as war, there would be less imports on which to collect tariffs. At the same time the demands for money would necessarily increase. It was for this reason that the Founders provided a way to tax the people directly in dire emergencies.
- In these very limited situations where taxes would need to be collected from the people or the states, the allocation would be on one basis and one basis only – population. It would be done according to census or enumeration. Taxes would not be based on any other premise – not on income, not on wealth, not on inheritance, not on those who chose to buy a certain product or not buy a certain product – only on counting people. It would be as simple and unobtrusive as counting heads!
Constitutional limitations on the power to tax
The Founders felt so strongly about the need to control government officials in their desire to get more money that they put the following restrictions on the taxing power right into the Constitution:
Article I, Section 2:
“Direct taxes shall be apportioned among the several states … according to their respective numbers.”
Article I, Section 9:
“No capitation [tax of so much per person regardless of circumstances] or other direct tax shall be laid except in proportion to the census or other enumeration herein before directed to be taken.”
With these limitations in mind, the Founders felt confident that future generations would be spared the heavy-handed oppression of tax collectors who would invade one’s privacy and confiscate large portions of a person’s property.
The Sixteenth Amendment destroys
Constitutional Safeguards against abusive taxation
The very wording of the Sixteenth Amendment to the Constitution shows how the restrictions on the power to tax have been completely eliminated:
“The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several states, and without regard to any census or enumeration.”
With the ratification of the Sixteenth Amendment to the Constitution, the precious protections from power-hungry politicians were destroyed. As a result, Congress has used this unlimited taxing power to impose all kinds of taxes on the American people on whatever basis they chose – income, wealth, inheritance, and yes, even choices they make concerning what they buy or don’t buy, even health insurance. And the Court has ruled it doesn’t even have to be uniform; it can be graduated and even discriminatory. It is whatever the Congress passes. This position would have been repulsive to the Founders but their protections were destroyed in the Sixteenth Amendment. Since then Americans have been subjected to the same intimidation and property confiscation as were our colonist ancestors who rebelled.
The Supreme Court has used the authority of the Sixteenth Amendment to give unlimited power to Congress to tax and regulate the people for any reason and in nearly everything.
Not only does Congress have broad powers to levy taxes, but the Supreme Court has allowed the government to acquire several fringe benefits by ‘regulating’ some of the subject matter selected for taxation. For example:
“1. The federal government has been sustained in regulating the packaging of taxed articles to prevent fraud in the collection of the tax. This has included the packaging of tobacco, and oleo-margarine. The court justified these regulations under the clause which authorizes Congress to do anything which is ‘necessary and proper’ to carry out the provisions of its enumerated powers, and collecting taxes is one of them.
“2. For the same reason, the Supreme Court has allowed the federal government to impose rigorous restrictions on the manner in which certain things may be sold or transferred and has imposed heavy penalties on persons dealing with these items in any other way. This is the basis for the federal control of the means of dispensing drugs and selling firearms.
“3. Congress may tax any activity which is being carried on, even if it is illegal. These are referred to as federal licenses, for which a fee is paid. These ‘license’ taxes have been imposed on gambling equipment and on the accepting of wagers, regardless of whether these are permitted or prohibited by the United States or the particular state. This was the basis for allowing the government to levy a heavy tax on liquor dealers who operated in violation of state laws during the Prohibition era; also on slot machines which have been outlawed by a state.
“4. Federal taxation has even been used to suppress as well as regulate certain articles. This was the case with the imposition of extremely heavy taxes on machine guns initiated during the gangster era. It has been held that where the tax is imposed unconditionally, so that no other purposes appear on the face of that statute, the court has refused to inquire into the motives of the lawmakers and has sustained the tax despite its prohibitive side effects.” (The Making of America, p. 380)
Following the open-ended and unlimited nature of the Congress’s power to tax made possible by the passage of the Sixteenth Amendment, Chief Justice John Roberts justified his recent decision that the Affordable Health Care Act passed by Congress, otherwise known as “Obamacare” is constitutional. Said he:
“The federal government does not have the power to order people to buy health insurance…. The federal government does have the power to impose a tax on those without health insurance.”
Under the Founders’ restrictions placed upon Congress prior to the passage of the Sixteenth Amendment, this whole issue would never have been allowed to happen.
The people are relying too much on the federal judiciary
In the same recent opinion, Chief Justice John Roberts reminds the people that the ultimate decisions rest with the people themselves. He wrote:
“We (the Court) possess neither the expertise nor the prerogative to make policy judgments. Those decisions are entrusted to our nation’s elected leaders, who can be thrown out of office if the people disagree with them. It is not our job to protect the people from the consequences of their political choices.”
Perhaps a reminder is in order of the warning Thomas Jefferson gave about the danger of relying too much on the federal judiciary to solve issues which the people should be solving in their legislative bodies. Here are several quotes from our third president on the subject:
“You seem to think it devolved on the judges to decide on the validity [or the constitutionality] of the… law, but nothing in the Constitution has given them a right to decide…. But the opinion which gives to the judges the right to decide what laws are constitutional and what not, not only for themselves in their own sphere of action, but for the legislature and executive also in their spheres, would make the judiciary a despotic branch.
“The Constitution intended that the three great branches of the government should be coordinate, and independent of each other. As to acts, therefore, which are to be done by either, it has given no control to another branch…. It did not intend to give the judiciary … control over the executive…. I have long wished for a proper occasion to have the gratuitous opinion in Marbury v. Madison [which established the right of judicial review] brought before the public, and denounced as not law.
“My construction of the Constitution … is that each department is truly independent of the others, and has an equal right to decide for itself what is the meaning of the Constitution. in the cases submitted to its action; and especially where it is to act ultimately and without appeal.
“You seem … to consider the judges as the ultimate arbiters of all constitutional questions; a very dangerous doctrine indeed, and one which would place us under the despotism of an oligarchy. Our judges are as honest as other men, and not more so. They have, with others, the same passions for party, for power, and the privilege of their corps…. Their power [is] the more dangerous as they are in office for life, and not responsible, as the other functionaries are, to the elective control. The Constitution has erected no such single tribunal, knowing that to whatever hands confided, with the corruptions of time and party, its members would become despots. It has more wisely made all the departments co-equal and co-sovereign within themselves.”
Oh, for the original, beautiful, balanced, and limited Constitution our Founders gave us. May we all work tirelessly to restore it, for ourselves and for our posterity!