Sunday, February 22, 2009

An Accidental Change to the Constitution: The 16th Amendment

If you note that this is a slightly different format from other posts, you're right. I wanted to refer to it in my next post, but realized I'd never transferred it to this blog from my previous blog. Though it was originally written in April 2007, the information is still both interesting and relevant.

If you enjoy history, the 16th Amendment is quite a wild ride. It doesn’t seem like it would be, but most people agree, it was a political stunt gone very awry. It was amendment proposed by people who opposed income tax to demonstrate their willingness to force egalitarianism on the rich to gain popularity and power. Ironically, they decided to force it to be an amendment because they didn’t think the three-fourths majority of the states would ratify it (some contend they never did, but that’s another story), but had it been passed simply as a law, it probably would have been struck down as unconstitutional, just as previous attempts at direct taxation without apportionment had been twice before.

Make no mistake, the 16th Amendment is the law, and you can’t dodge it by saying it was never ratified or that it is at odds with other parts of the Constitution, though those are both arguably true. Article I, section 9 of the Constitution is very clear.[1] Tax audits unconditionally violate the 4th Amendment.[2] Finally, special tax courts in which there’s no jury or defense counsel can’t even pretend to satisfy the 6th Amendment. [3] But don’t worry, your rights aren’t in jeopardy unless the government wants your money.

Prior to the 16th Amendment, income tax had only been permitted during times of war, because wars are expensive, but once exposed to that kind of income, the government really had trouble letting go, and constantly sought new ways to enlarge their budget so that they might wisely spend your hard-earned dollars on worthy projects like income redistribution, or in 2007, $4,500,000 for chitosan bandage component which utilizes natural compounds found in shrimp heads.[4] I can't possibly imagine any way the average American could have found a much more productive way to spend four and a half million dollars.

The sad part of all this is that none of it was necessary. There ways much fairer and simpler to fund a Federal budget. My favorite is the flat tax. I recognize that the modern world requires (at least) highways and a standing army, two projects that arguably might be better handled by private companies, but for now are the province of government. By 2007, 14 foreign nations and 8 of our domestic states had implemented flat tax systems (two of the states have it as an optional system).[5] I like this method of taxation because it’s transparent. The IRS and tax preparing agencies would mostly be out of work (sorry, I know it’s lucrative, but these are smart people who can find jobs elsewhere). It’s fair on a level that appeals to most people, and hard to cheat, so audits largely become a thing of the past, and there’s no need for special tax courts. Where it has been implemented, the flat tax has been successful, and allows more money to be used in the business of government, less in the maintenance of tax bureaucracies, special tax courts and bulky tax code.

As much as I like the flat tax, I have to admit there’s another solution that’s even more in keeping with the Constitution, and that’s a national sales tax, often called a fair tax. It’s even less intrusive and less costly. Nearly no IRS would be required, and no one would ever have to fill out a tax form. A “flat tax” is still graduated in that if one makes more, one pays more. Sure, if I’m paying my flat fifteen percent of, say $30,000 per year, that’s the same percentage as the guy who makes $30,000,000 per year, but I give only $4,500 to Uncle Sam, while he pays $4,500,000. A national sales tax of fifteen percent means I’ll pay the same amount of money as the rich guy if we buy the same item. The government gets its money, the rich guy is not penalized for making a heck of a lot more money, but he can voluntarily pay more in taxes by buying big ticket items, as the wealthy are often wont to do.

The only big objection I’ve seen to these tax systems that are so fair even a quarrelsome 2nd grader would likely approve, is that they aren’t progressive enough. That is, they don’t soak the rich. I believe that voluntary egalitarianism on the part of the wealthy goes a long way to preserving a stable democracy and eliminating human suffering, but the key is that it should be voluntary. America was founded on different ideas than most countries, and one of them was that the government is supposed to govern as little as possible. Income redistribution was never supposed to end up in the hands of our politicians, and we’re arguably worse off now that a large percentage of the federal budget goes to direct hand outs. A person is also supposed to be able to make it in America and become wealthy without being punished for it. The rich under the current system have the power to and do get laws passed that allow them to end up paying a smaller percentage of their income than the average middle-class family while simultaneously feeling justified in doing so because the tax code is blatantly unfair. Replace the graduated tax system with something as egalitarian as America’s founding ideals, and not only would we save a lot of money, we might get a real “fair share” out of the wealthy without them feeling gouged.

[1] Article 1, Section 9 of the U.S. Constitution (relevant section):
"No Capitation, or other direct, Tax shall be laid, unless in Proportion to the Census or enumeration herein before directed to be taken."

[2] Amendment IV:
"The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated, and no Warrants shall issue, but upon probable cause, supported by Oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized."

[3] Amendment VI:
"In all criminal prosecutions, the accused shall enjoy the right to a speedy and public trial, by an impartial jury of the State and district wherein the crime shall have been committed, which district shall have been previously ascertained by law, and to be informed of the nature and cause of the accusation; to be confronted with the witnesses against him; to have compulsory process for obtaining witnesses in his favor, and to have the Assistance of Counsel for his defence."

[4] Specifically, see the section on pork for Hawaii.


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