Amendment XVI
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 Taxing Clause in Article I, Section 8, grants Congress the broad “Power To lay and collect Taxes, Duties, Imposts and Excises,” but Article I also provides (twice) that a “direct” tax must be apportioned among the states on the basis of population. This means that if a tax is a “direct” tax, a state with one-tenth of the national population must bear one-tenth of the total liability.
This Amendment was part of a wave of federal and state constitutional amendments championed by Progressives in the early twentieth century. The Amendment reversed an 1895 Supreme Court decision that had made a nationwide income tax effectively impossible by invoking the distinction between “direct” and “indirect” taxes.
February 3rd was the anniversary of the ratification of the 16th Amendment in 1913. Its champion was President William Howard Taft, and its ratification was an effort to make sure more higher-income people paid taxes, and that the government wasn’t wholly dependent on tariffs and taxes on goods.
It wasn’t the first national income tax that was enacted. In fact, it was the third. But this third attempt had the power of a constitutional amendment behind it, and it’s still in force today.
The Founding Fathers and the generation of leaders that followed them weren’t big on the idea of an income tax. Tariffs and sales taxes helped fund the federal government in the early days. But the financial needs of the Civil War led to the first national income tax.
The Civil War income tax instituted by the federal government was one of several financing tools it used against the Confederacy. The government also issued bonds and used excise taxes. The Confederacy also had its own version of an income tax, too, which wasn’t as effective. The Union’s income tax went away during the period of Reconstruction, with the idea of an income tax returning two decades later.
The combination of a huge government surplus and a heavy tax burden on consumers led President Grover Cleveland’s administration to pass a second income tax law in 1894.
The new tax, however, was very different from the Civil War income tax, which had exempted only the poor. The new one hit only the rich, imposing a 2 percent tax on incomes above $4,000. Less than 1 percent of American households in 1894 met that income threshold.
The second income tax law was soon overturned by the Supreme Court in the 1895 decision of Pollack v. Farmers’ Loan & Trust. In a 5-4 decision, the court said the Cleveland income tax was a direct tax that violated a constitutional provision because it taxed interest, dividends, and rent. That act violated Article 1, Section 2 of the Constitution, which required such taxes to be imposed in proportion to states’ population.
By the time President Taft took office in 1909, the public outcry grew over a tax system that undertaxed the rich and overtaxed the poor. In June 1909, Taft sent a letter to Congress to lobby for the 16th Amendment. He explained that part of the Pollack decision allowed the federal government to levy a corporate income tax as an excise tax. “The decision in the Pollock case left power in the National Government to levy an excise tax, which accomplishes the same purpose as a corporation income tax and is free from certain objections urged to the proposed income tax measure,” he said.
The President then defined a basic two-tax system where income taxes were collected from citizens and businesses. He also understood that the amendment wouldn’t allow the Supreme Court to overturn a personal income tax based on the Pollack decision.
“I recommend, then, first, the adoption of a joint resolution by two-thirds of both Houses, proposing to the States an amendment to the Constitution granting to the Federal Government the right to levy and collect an income tax without apportionment among the several States according to population; and, second, the enactment, as part of the pending revenue measure, either as a substitute for, or in addition to, the inheritance tax, of an excise tax upon all corporations, measured by 2 percent of their net income,” Taft said.
Congress passed its resolution about the 16th Amendment a month later, but the amendment wasn’t ratified until early 1913, when Delaware became the 36th state to approve it. Incoming President Woodrow Wilson pushed for the Revenue Act of 1913, which included the income tax along with changes in tariffs.
The first 1040 form appeared in 1914. It was three pages long. The first income tax act after the 16th Amendment was 14 pages long, and the federal tax code was about 400 pages long. Today, one estimate puts the federal tax code at more than 70,000 pages. An IRS report from 2008 said that no one really knew how big the current tax code is, and it estimated the code at 3.7 million words, (it has surely grown larger and more complicated in ten years).
A convincing case can be made that the 16th amendment was not legally ratified and that Secretary of State Philander Knox was not merely in error, but committed fraud when he declared it ratified in February 1913. What follows is a summary of some of the major findings for many of the states, showing that their ratifications were not legal and should not have been counted.
The 16th amendment had been sent out in 1909 to the state governors for ratification by the state legislatures after having been passed by Congress. There were 48 states at that time, and three-fourths, or 36, of them were required to give their approval in order for it to be ratified. The process took almost the whole term of the Taft administration, from 1909 to 1913.
Knox had received responses from 42 states when he declared the 16th amendment ratified on February 25, 1913, just a few days before leaving office to make way for the administration of Woodrow Wilson. Knox acknowledged that four of those states (Utah, Conn, R.I. and N.H.) had rejected it, and he counted 38 states as having approved it.
In Kentucky, the legislature acted on the amendment without even having received it from the governor (the governor of each state was to transmit the proposed amendment to the state legislature). The version of the amendment that the Kentucky legislature made up and acted upon omitted the words “on income” from the text, so they weren’t even voting on an income tax! When they straightened that out (with the help of the governor), the Kentucky senate rejected the amendment. Yet Philander Knox counted Kentucky as approving it!
In Oklahoma, the legislature changed the wording of the amendment so that its meaning was virtually the opposite of what was intended by Congress, and this was the version they sent back to Knox. Yet Knox counted Oklahoma as approving it, despite a memo from his chief legal counsel, Reuben Clark, that states were not allowed to change it in any way.
Attorneys who have studied the subject have agreed that Kentucky and Oklahoma should not have been counted as approvals by Philander Knox, and, moreover, if any state could be shown to have violated its own state constitution or laws in its approval process, then that state’s approval would have to be thrown out. That gets us past the “presumptive conclusion” argument, which says that the actions of an executive official cannot be judged by a court, and admits that Knox could be wrong.
If we subtract Kentucky and Oklahoma from the 38 approvals above, the count of valid approvals falls to 36, the exact number needed for ratification.
The state constitution of Tennessee prohibited the state legislature from acting on any proposed amendment to the U.S. Constitution sent by Congress until after the next election of state legislators. The intent, of course, is to give the proposed amendment a chance to become an issue in the state legislative elections so that the people can have a voice in determining the outcome. It also provides a cooling off period to reduce the tendency to approve an idea just because it happens to be the moment’s trend. You’ve probably already guessed that the Tennessee legislature did not hold off on voting for the amendment until after the next election, and you’d be right – they didn’t; hence, they acted upon it illegally before they were authorized to do so. They also violated their own state constitution by failing to read the resolution on three different days as prescribed by Article II, Section 18. These state constitutional violations should make their approval of the amendment null and void. Their approval is and was invalid, and it brings the number of approving states down to 35, one less than required for ratification.
Texas and Louisiana violated provisions in their state constitutions prohibiting the legislatures from empowering the federal government with any additional taxing authority. Now the number is down to 33.
Twelve other states, besides Tennessee, violated provisions in their constitutions requiring that a bill be read on three different days before voting on it. This is not a trivial requirement. It allows for a cooling off period; it enables members who may be absent one day to be present on another; it allows for a better familiarity with, and understanding of, the measure under consideration, since some members may not always read a bill or resolution before voting on it (believe it or not!). States violating this procedure were: Mississippi, Ohio, Arkansas, Minnesota, New Mexico, West Virginia, Indiana, Nevada, North Carolina, North Dakota, Colorado, and Illinois. Now the number is reduced to 21 states legally ratifying the amendment.
When Secretary Knox transmitted the proposed amendment to the states, official certified and sealed copies were sent. Likewise, when state results were returned to Knox, it was required that the documents, including the resolution that was actually approved, be properly certified, signed, and sealed by the appropriate official(s). This is no more than any ordinary citizen has to do in filing any legal document, so that it’s authenticity is assured; otherwise it is not acceptable and is meaningless. How much more important it is to authenticate a constitutional amendment! Yet a number of states did not do this, returning uncertified, unsigned, and/or unsealed copies, and did not rectify their negligence even after being reminded and warned by Knox. The most egregious offenders were Ohio, California, Arkansas, Mississippi, and Minnesota – which did not send any copy at all, so Knox could not have known what they even voted on! Since four of these states were already disqualified above, California is now subtracted from the list of valid approvals, reducing it to 20.
These last five states, along with Kentucky and Oklahoma, have particularly strong implications with regard to the fraud charge against Knox, in that he cannot be excused for not knowing they shouldn’t have been counted. Why was he in such a hurry? Why did he not demand that they send proper documentation? They never did.
Further review would make the list dwindle down much more, but with the number down to 20, sixteen fewer than required, this is a suitable place to rest, without getting into the matter of several states whose constitutions limited the taxing authority of their legislatures, which could not give to the federal government authority they did not have.
The results from the six states Knox had not heard from at the time he made his proclamation do not affect the conclusion that the amendment was not legally ratified. Of those six: two (Virginia and Pennsylvania) he never did hear from, because they ignored the proposed amendment; Florida rejected it; two others (Vermont and Massachusetts) had rejected it much earlier by recorded votes, but, strangely, submitted to the Secretary within a few days of his ratification proclamation that they had passed it (without recorded votes); West Virginia had purportedly approved it at the end of January 1913, but its notification had not yet been received (remember that West Virginia had violated its own constitution, as noted above).
Much of the information in this post is attributable to a book; The Law That Never Was: The Fraud of the 16th Amendment and Personal Income Tax is a 1985 book by William J. Benson and Martin J. “Red” Beckman which claims that the Sixteenth Amendment to the United States Constitution, commonly known as the income tax amendment, was never properly ratified.
The Benson book was published in 1985. The earliest reported court cases where the book was mentioned appear to be United States v. House and United States v. Wojtas. Benson testified unsuccessfully in the House case. In the latter case, defendant Wayne Wojtas was unsuccessful in his attempt to use Benson’s theory to have his indictment for failure to file federal tax returns dismissed. In the case the judge ruled that Benson’s evidence was inadmissible, stating that:
[T]he few cases that have been asked to deal with issues comparable to the one now tendered to this Court have uniformly held questions as to compliance with Article V’s requirements are within the sole province of Congress and not the courts—in the language that has come to characterize such issues, they are “political” (that is, nonjusticiable).
Wojtas was convicted, sentenced to prison, and released in August 1986.
Benson’s claim was also rejected in Miller v. United States. The court stated, “We find it hard to understand why the long and unbroken line of cases upholding the constitutionality of the Sixteenth Amendment generally, Brushaber v. Union Pacific Railroad Company … and those specifically rejecting the argument advanced in The Law That Never Was, have not persuaded Miller and his compatriots to seek a more effective forum for airing their attack on the federal income tax structure.” The court then sanctioned the litigants for advancing a “patently frivolous” position.
Similar “Sixteenth Amendment arguments” have been uniformly rejected by the courts in other cases including United States v. Thomas. In Thomas the court, in affirming the tax convictions of Kenneth L. Thomas, referred to Benson’s book and noted that the errors found by Benson had already been investigated by Secretary of State Knox at the time of ratification of the Sixteenth Amendment, and had been determined to be insignificant.
Arguments that the Sixteenth Amendment was not properly ratified were also rejected in Sisk v. Commissioner; United States v. Sitka; and United States v. Stahl. The non-ratification argument has also been deemed legally frivolous in Brown v. Commissioner and Lysiak v. Commissioner.
The argument that the Sixteenth Amendment was not ratified, and variations of this argument, have been officially identified by the courts as legally frivolous federal income tax return positions for purposes of the $5,000 frivolous tax return penalty imposed under Internal Revenue Code section 6702(a).
In one of Benson’s cases, the United States Court of Appeals for the Seventh Circuit stated:
Benson argues that he did not need to file tax returns or pay income taxes because the Sixteenth Amendment was not properly ratified. [….] The district court denied Benson’s request for an evidentiary hearing on this issue and refused to hear any Sixteenth Amendment argument.
As the district court noted, we have repeatedly rejected the claim that the Sixteenth Amendment was improperly ratified. […] One would think this repeated rejection of Benson’s Sixteenth Amendment argument would put the matter to rest […] Benson is the co-author of The Law That Never Was, a book that purports to “review the documents concerning the states’ ratification of the Sixteenth Amendment” and to show “that only four states ratified the Sixteenth Amendment [and that] the official promulgation of the amendment by Secretary of State Knox in 1913 is therefore void.” […] Benson insists that as the co-author of The Law That Never Was, and the man who actually reviewed the state documents “proving” improper ratification, he is uniquely qualified to make the “exceptionally strong showing” we spoke of in Foster. Because of this, Benson insists, the district court should have at least granted him an evidentiary hearing on the Sixteenth Amendment issue.
Benson is wrong. In Thomas, we specifically examined the arguments made in The Law That Never Was, and concluded that “Benson … did not discover anything.” We concluded that Secretary Knox’s declaration that sufficient states had ratified the Sixteenth Amendment was conclusive, and that “Secretary Knox’s decision is now beyond review.” [….] It necessarily follows that the district court correctly refused to hold an evidentiary hearing; no hearing is necessary to consider an issue that is “beyond review.”
The Court of Appeals stated:
Benson knew or had reason to know that his statements were false or fraudulent. 26 U.S.C. [section] 6700(a)(2)(A). Benson’s claim to have discovered that the Sixteenth Amendment was not ratified has been rejected by this Court in Benson’s own criminal appeal. [ . . . . ] Benson knows that his claim that he can rely on his book to prevent federal prosecution is equally false because his attempt to rely on his book in his own criminal case was ineffective.
The Court of Appeals also ruled that the government could obtain a ruling ordering Benson to turn his customer list over to the government. Benson petitioned the United States Supreme Court, (on first amendment free speech grounds), and the Supreme Court denied his petition in November 2009.
Obviously, the courts disagree with this, but I think the Founders, many of them anyway, thought the apportionment rule for direct taxes wasn’t a glitch. It was intended to be a real limitation on the congressional taxing power. It worked by making direct taxation cumbersome, and often impossible. Many Founders thought direct taxation was dangerous—it lacked built-in protections against governmental overreaching.
When considering the actions of the Executive, (DOJ prosecutors) and the Judiciary, (local, appellate and SCOTUS) regarding actions and decisions over the 16th amendment and it’s legality, you can, perhaps, see the wisdom of the Founding Fathers in the resultant ubiquitous overreach of the government in opposition to the Constitution.
I direct you to a quote from Mel Brooks in the 1981 film “History of the World-Part I”: “It’s Good To Be King,”
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