ThiTaxation is a fundamentally immoral and very flawed policy.
Here are some things to think about: The following is from Wikipedia:
"Tariffs were the largest source of federal revenue from the 1790s to the eve of
World War I"
Income tax
See also: Income tax in the United States#Legal history
The history of income taxation in the United States began in the
19th century with the imposition of income taxes to fund war efforts.
However, the constitutionality of income taxation was widely held in
doubt until 1913 with the ratification of the
16th Amendment.
[
edit] Legal foundations
Article I, Section 8, Clause 1 of the United States Constitution assigns
Congress
the power to impose "Taxes, Duties, Imposts and Excises," but Article
I, Section 8 requires that, "Duties, Imposts and Excises shall be
uniform throughout the United States."
[12]
In addition, the Constitution specifically limited Congress' ability
to impose direct taxes, by requiring it to distribute direct taxes in
proportion to each state's census population. It was thought that
head taxes and
property taxes
(slaves could be taxed as either or both) were likely to be abused, and
that they bore no relation to the activities in which the federal
government had a legitimate interest. The fourth clause of section 9
therefore specifies that, "No Capitation, or other direct, Tax shall be
laid, unless in Proportion to the Census or enumeration herein before
directed to be taken."
Taxation was also the subject of
Federalist No. 33 penned secretly by the Federalist
Alexander Hamilton under the
pseudonym Publius.
In it, he explains that the wording of the "Necessary and Proper"
clause should serve as guidelines for the legislation of laws regarding
taxation. The legislative branch is to be the judge, but any abuse of
those powers of judging can be overturned by the people, whether as
states or as a larger group.
The courts have generally held that direct taxes are limited to
taxes on people (variously called "capitation", "poll tax" or "head
tax") and property
[13]. All other taxes are commonly referred to as "indirect taxes," because they tax an event, rather than a person or property
per se.[14]
What seemed to be a straightforward limitation on the power of the
legislature based on the subject of the tax proved inexact and unclear
when applied to an income tax, which can be arguably viewed either as a
direct or an indirect tax.
[
edit] Pre-16th Amendment
In order to help pay for its war effort in the
American Civil War, the
United States government imposed its first personal income tax, on
August 5,
1861, as part of the
Revenue Act of 1861 (3% of all incomes over US $800; rescinded in 1872). Congress also enacted the
Revenue Act of 1862,
which levied a 3% tax on incomes above $600, rising to 5% for incomes
above $10,000. Rates were raised in 1864. This income tax was repealed
in 1872, but a new income tax statute was enacted as part of the 1894
Tariff Act.
[15]
At that time, the
United States Constitution
specified that Congress could impose a "direct" tax only if the law
apportioned that tax among the states according to each state's
census population.
[16]
In 1895, the
United States Supreme Court ruled, in
Pollock v. Farmers' Loan & Trust Co., that taxes on
rents from real estate, on
interest income from personal property and other income from personal property (which includes
dividend
income) were direct taxes on property and therefore had to be
apportioned. Since apportionment of income taxes is impractical, the
Pollock
rulings had the effect of prohibiting a federal tax on income from
property. Due to the political difficulties of taxing individual wages
without taxing income from property, a federal income tax was
impractical from the time of the
Pollock decision until the time of ratification of the Sixteenth Amendment (below).
[
edit] 16th Amendment
Amendment XVI in the
National Archives
Main article: Sixteenth Amendment to the United States Constitution
In response to the Supreme Court decision in the
Pollock case, Congress proposed the
Sixteenth Amendment, which was ratified in 1913,
[17] and which states:
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.
The
Supreme Court in
Brushaber v. Union Pacific Railroad, 240 U.S. 1 (1916),
indicated that the Sixteenth Amendment did not expand the federal
government's existing power to tax income (meaning profit or gain from
any source) but rather removed the possibility of classifying an income
tax as a direct tax on the basis of the source of the income. The
Amendment removed the need for the income tax on interest, dividends
and rents to be apportioned among the states on the basis of
population. Income taxes are required, however, to abide by the law of
geographical uniformity.
A comedic representation by
Clifford K. Berryman of the debate to introduce a sales tax in the United States in 1933 and end the income tax
Congress enacted an income tax in October 1913 as part of the
Revenue Act of 1913,
levying a 1% tax on net personal incomes above $3,000, with a 6% surtax
on incomes above $500,000. By 1918, the top rate of the income tax was
increased to 77% (on income over $1,000,000) to finance
World War I.
The top marginal tax rate was reduced to 58% in 1922, to 25% in 1925
and finally to 24% in 1929. In 1932 the top marginal tax rate was
increased to 63% during the
Great Depression
and steadily increased, reaching 94% (on all income over $200,000) in
1945. Top marginal tax rates stayed near or above 90% until 1964 when
the top marginal tax rate was lowered to 70%. The top marginal tax rate
was lowered to 50% in 1982 and eventually to 28% in 1988. During World
War II, Congress introduced payroll withholding and quarterly tax
payments.
[
edit] Development of the modern income tax
At first the income tax was incrementally expanded by the
Congress of the United States.
Inflation automatically raised many persons into tax brackets formerly
reserved for the wealthy until Congress began adjusting the income tax
brackets for inflation. Income tax now applies to almost ⅔ of the
population
[1].
The lowest earning workers, especially those with dependents, pay no
income taxes as a group and actually get a small subsidy from the
federal government because of child credits and the
Earned Income Tax Credit.
The federal government is now financed primarily by personal and corporate
income taxes. While the government was originally funded via
tariffs
upon imported goods, tariffs now represent only a minor portion of
federal revenues. Non-tax fees are generated to recompense agencies for
services or to fill specific
trust funds such as the fee placed upon
airline tickets for airport expansion and
air traffic control. Often the receipts intended to be placed in "trust" funds are used for other purposes, with the government posting an
IOU ('I owe you') in the form of a
federal bond or other
accounting instrument, then spending the money on unrelated current expenditures.
Net long-term
capital gains as well as certain types of qualified
dividend income are taxed preferentially. The federal government collects several specific taxes in addition to the general income tax.
Social Security and
Medicare are large
social support programs which are funded by taxes on personal earned income (see below).
[
edit] Treatment of "income"
Tax statutes passed after the ratification of the Sixteenth
Amendment in 1913 are sometimes referred to as the "modern" tax
statutes. Hundreds of Congressional acts have been passed since 1913,
as well as several codifications (i.e., topical reorganizations) of the
statutes (see
Codification).
The modern interpretation of the Sixteenth Amendment taxation power can be found in
Commissioner v. Glenshaw Glass Co. 348 U.S. 426 (1955).
In that case, a taxpayer had received an award of punitive damages from
a competitor, and sought to avoid paying taxes on that award. The Court
observed that Congress, in imposing the income tax, had defined income
to include:
gains, profits, and income derived from salaries, wages, or
compensation for personal service . . . of whatever kind and in
whatever form paid, or from professions, vocations, trades, businesses,
commerce, or sales, or dealings in property, whether real or personal,
growing out of the ownership or use of or interest in such property;
also from interest, rent, dividends, securities, or the transaction of
any business carried on for gain or profit, or gains or profits and
income derived from any source whatever.
[18]
The Court held that "this language was used by Congress to exert in
this field the full measure of its taxing power", id., and that "the
Court has given a liberal construction to this broad phraseology in
recognition of the intention of Congress to tax all gains except those
specifically exempted."
[19]
The Court then enunciated what is now understood by Congress and the
Courts to be the definition of taxable income, "instances of undeniable
accessions to wealth, clearly realized, and over which the taxpayers
have complete dominion." Id. at 431. The defendant in that case
suggested that a 1954 rewording of the tax code had limited the income
that could be taxed, a position which the Court rejected, stating:
The definition of gross income has been simplified, but no effect
upon its present broad scope was intended. Certainly punitive damages
cannot reasonably be classified as gifts, nor do they come under any
other exemption provision in the Code. We would do violence to the
plain meaning of the statute and restrict a clear legislative attempt
to bring the taxing power to bear upon all receipts constitutionally
taxable were we to say that the payments in question here are not gross
income.
[20]
In
Conner v. United States[21],
a couple had lost their home to a fire, and had received compensation
for their loss from the insurance company, partly in the form of hotel
costs reimbursed. The court acknowledged the authority of the IRS to
assess taxes on all forms of payment, but did not permit taxation on
the compensation provided by the insurance company, because unlike a
wage or a sale of goods at a profit, this was not a gain. As the court
noted, "Congress has taxed income, not compensation".
[22]
By contrast, at least two other Federal courts have indicated that
Congress may constitutionally tax an item as "income," regardless of
whether that item is in fact income. See
Penn Mutual Indemnity Co. v. Commissioner[23] and
Murphy v. Internal Revenue Serv.[24]
