Anaya Nolan
The legality of income tax has been a topic of debate for centuries, with some arguing that it is a form of slavery and a violation of constitutional rights. The 16th Amendment to the U.S. Constitution, ratified in 1913, established Congress's right to impose a federal income tax, stating that The Congress shall have the power to lay and collect taxes on incomes, from whatever source derived. This amendment was a result of a series of political events and court rulings, including the Supreme Court case of Brushaber v. Union Pacific Railroad, which removed the requirement that income taxes be apportioned among the states. While some still argue that income tax is illegal, citing various legal and constitutional grounds, the majority view is that income tax is a valid and necessary component of the modern nation-state's ability to function.
| Characteristics | Values |
|---|---|
| Is income tax law illegal? | No, it is legal. |
| What makes it legal? | The 16th Amendment of the U.S. Constitution |
| What does the 16th Amendment state? | "The Congress shall have the power to lay and collect taxes on incomes, from whatever source derived." |
| What are the consequences of not paying income tax? | Fines, arrest, and imprisonment |
| Is filing a tax return mandatory? | No, but paying taxes is. |
| Can taxpayers refuse to file federal income tax returns on the grounds that it violates the Fifth Amendment? | No, the Supreme Court has stated that a taxpayer cannot "draw a conjurer's circle around the matter." |
| Is income tax considered an "excise tax"? | Yes, it is based on the receipt of money by the taxpayer. |
| Who proposed the 16th Amendment? | Senator Norris Brown of Nebraska and Senator Nelson W. Aldrich of Rhode Island |
| When was the 16th Amendment passed and ratified? | Passed by Congress on July 2, 1909, and ratified on February 3, 1913 |
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What You'll Learn
Income tax is legal under the 16th Amendment
The Sixteenth Amendment, ratified on February 3, 1913, grants Congress the authority to impose an income tax without determining it based on population. The official text of the amendment states:
> The Congress shall have the 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 amendment's key impact was shifting how the federal government received funding for its operations. Before the Sixteenth Amendment, the federal government relied primarily on "regressive" tariff duties and excise taxes as its main sources of revenue. The amendment's supporters argued that income tax would be a more equitable way to raise funds from those less well-off.
The Sixteenth Amendment addressed the issue of apportionment, which was a requirement for "direct" taxes. The Supreme Court had ruled in 1895's Pollock v. Farmers' Loan & Trust Co. that income tax was a "direct" tax, and therefore had to be apportioned among the states. The Sixteenth Amendment removed this requirement, allowing Congress to impose a direct tax on "wages, salaries, commissions, etc. without apportionment".
While the Sixteenth Amendment is often cited as the source of congressional power to tax incomes, some argue that it did not grant this power but instead removed the requirement for apportionment. The power to tax incomes, they argue, is derived from Article I, Section 8 of the Constitution. Nonetheless, the Sixteenth Amendment has been upheld as legalising a direct, non-apportioned income tax.
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The First Amendment does not protect against it
The First Amendment to the United States Constitution provides that "Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances."
Some tax protesters have argued that the imposition of income taxes violates the First Amendment freedom of speech. However, the First Amendment does not provide a right to refuse to pay income taxes on religious or moral grounds or because taxes are used to fund government programs opposed by the taxpayer. The courts have rejected this theory, ruling that "Congress has taxed compensation for services, without any regard for whether that compensation is derived from government-licensed or specially protected activities."
The Supreme Court has also addressed constitutional challenges to tax laws related to the First Amendment. In United States v. Schiff, the court said that the First Amendment does not immunize witnesses from testifying about their income tax returns. Similarly, in United States v. Brown, the Supreme Court held that the self-incrimination privilege under the Fifth Amendment cannot be used to avoid filing an income tax return.
While some individuals or groups may claim that taxpayers can refuse to pay federal income taxes based on their religious or moral beliefs, this position is considered frivolous and mistaken. The First Amendment does not protect against the legal requirement to pay income taxes, and courts have consistently upheld the constitutionality of income tax laws in the face of First Amendment challenges.
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The Fifth Amendment does not protect against it
The Fifth Amendment to the United States Constitution protects citizens from self-incrimination. However, this does not mean that citizens can refuse to file an income tax return or provide financial information.
In the case of United States v. Sullivan, the United States Supreme Court ruled that a taxpayer could not invoke the Fifth Amendment as the basis for refusing to file a federal income tax return. The Court stated that a taxpayer could not ""draw a conjurer's circle around the whole matter by his own declaration that to write any word upon the government blank would bring him into danger of the law." This ruling has been affirmed in subsequent cases, including United States v. Schiff and United States v. Carlson.
The courts have clarified that the Fifth Amendment privilege does not immunize all witnesses from testifying. Only those who assert that answering a particular question would tend to incriminate them are protected. The questions on income tax returns are neutral on their face, and therefore privilege may not be claimed against all disclosure.
In some cases, individuals may be legally required to file reports that call for information that may be used against them in criminal cases. For example, in United States v. Neff, the Ninth Circuit affirmed a failure-to-file conviction because the taxpayer did not show that answering the tax form questions would have been self-incriminating. Similarly, in United States v. Daly, the Eighth Circuit rejected the taxpayer's Fifth Amendment claim due to their blanket refusal to answer any questions on the returns relating to income or expenses.
While the source of income may be privileged, the amount of income is not, and individuals must report the amount of their income on their tax returns. This distinction has been upheld in cases such as Kasey v. Commissioner, where the court rejected the argument that filing tax returns violated the Fifth Amendment privilege against self-incrimination.
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The Religious Freedom Restoration Act does not protect against it
The Religious Freedom Restoration Act (RFRA) does not protect against income tax law. The First Amendment to the United States Constitution states that citizens have the right to "freedom of speech" and to "petition the Government for a redress of grievances". However, this does not give citizens the right to refuse to pay income taxes on religious or moral grounds.
The Supreme Court of Indiana ruled that religious freedom is not a valid defence for tax evasion. This was in response to an appeal from Rodney Tyms-Bey, who argued that Indiana's RFRA protected him from paying his taxes. The Supreme Court unanimously refused to hear his appeal, stating that income tax laws must be followed by everyone as a responsibility of citizenship.
In the case of Adams v. Commissioner, the Third Circuit affirmed tax deficiencies and penalties for failure to file tax returns and pay tax. The Religious Freedom Restoration Act did not require that the federal income tax accommodate Adams' religious beliefs that payment of taxes to fund the military is against the will of God.
In United States v. Carlson, the Ninth Circuit held that the Fifth Amendment cannot be used to evade the tax return requirement. Carlson asserted the Fifth Amendment on his 1974 and 1975 year-end tax returns, claiming that he was entitled to the amendment's protection. The court disagreed, stating that an individual who seeks to frustrate the tax laws by claiming too many withholding exemptions is not protected by the Fifth Amendment.
While the Sixteenth Amendment is often cited as the "source" of congressional power to tax incomes, at least one court has ruled that it did not grant Congress this power. Instead, it removed the requirement that any income tax be apportioned among the states according to population.
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The Supreme Court has upheld income tax
The Supreme Court has repeatedly upheld income tax in the United States, despite some individuals or groups arguing that it is illegal and unconstitutional. The 16th Amendment to the U.S. Constitution, ratified in 1913, explicitly states that "The Congress shall have the power to lay and collect taxes on incomes, from whatever source derived." This amendment settled the constitutional question of how to tax income and granted Congress the power to impose a federal income tax.
The Supreme Court has affirmed the legality of income tax in several cases. In Brushaber v. Union Pacific Railroad (1916), the Court ruled that the 16th Amendment removed the requirement that income taxes be apportioned among the states according to population. The Court also ruled that the federal income tax statute does not violate the Fifth Amendment's prohibition against the government taking property without due process of law. Additionally, in Bowers v. Kerbaugh-Empire Co. (1926), Justice Pierce Butler stated that the 16th Amendment did not bring any new subjects within the taxing power.
In United States v. Sullivan (1927), the Supreme Court addressed the argument that filing an income tax return violates the Fifth Amendment privilege against self-incrimination. The Court rejected this claim, stating that taxpayers cannot refuse to file returns based on blanket assertions of the constitutional privilege against self-incrimination. Similarly, in Adams v. Commissioner (1999), the Third Circuit upheld tax deficiencies and penalties for failure to file tax returns and pay taxes, holding that the Religious Freedom Restoration Act did not exempt individuals from federal income tax based on religious beliefs.
While some people continue to challenge the legality of income tax, their arguments are often based on mistaken interpretations of the law or frivolous tax arguments. The IRS has published "The Truth About Frivolous Tax Arguments," which addresses and refutes common claims made by tax protestors, such as the belief that taxation is slavery or violates the 13th Amendment. It is important to note that the Supreme Court's rulings and the 16th Amendment clearly establish the legality and constitutionality of income tax in the United States.
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Frequently asked questions
No, income tax law is not illegal. The 16th Amendment of the U.S. Constitution, passed in 1909 and ratified in 1913, established Congress's right to impose a federal income tax. The text of the amendment states, "The Congress shall have the power to lay and collect taxes on incomes, from whatever source derived."
Some people argue that income tax is illegal based on a mistaken interpretation of court cases such as Gould v. Gould from 1917 and U.S. Code 861, which provides a partial list of what income is considered taxable. Others claim that the 16th Amendment is invalid because Ohio, the final state to ratify it, was never validly admitted to the Union. However, these arguments have been rejected by federal courts and individuals who refuse to pay income tax based on these beliefs may face legal consequences.
Refusing to pay income tax can result in fines, arrest, and imprisonment. In addition, the IRS may impose penalties for failure to file tax returns, failure to pay taxes, and filing frivolous returns. Individuals who pursue legal cases against the IRS based on frivolous arguments may also be sanctioned by the courts.
