Comments on: Origins of the Income Tax http://www.fairtaxmn.org/2010/02/origins-of-the-income-tax/ Minnesotans for Fair Taxation: The Fair Tax Plan Wed, 19 May 2010 05:08:04 +0000 http://wordpress.org/?v=2.9.2 hourly 1 By: Dave Boone http://www.fairtaxmn.org/2010/02/origins-of-the-income-tax/comment-page-1/#comment-11 Dave Boone Fri, 30 Apr 2010 01:04:49 +0000 http://www.fairtaxmn.org/nfwiu54wre/?p=25#comment-11 Back in 1913 the 16th Amendment was made part of the Constitution. The language is very short: “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.” In other words, a direct tax. It just goes to show it doesn’t take 2700 pages to destroy the dream. It can be done in a single sentence. The story of the 16th amendment is amusing, if you like dark humor. Washington needed a Constitutional Amendment because up until 1913, the Supreme Court had ruled that an income tax would be unconstitutional. Now here’s where it gets political: The idea of a tax to “soak the rich” began to take root among liberals of both parties. (sound familiar so far?) Then, as now, the Republican Party had the reputation for being the party of the rich, but Republican Wm Howard Taft was forced to declare that an income tax might be alright “in principle” even though he was privately opposed. In 1909 a conservative Democrat from Texas, Joseph Bailey, introduced a bill to embarrass the Republicans by voting against an income tax. Bailey himself was against an income tax. However to Bailey’s amazement, Teddy Roosevelt and a growing number of Republican liberals came out in favor of the bill, and it looked as though it was going to pass. Old line Republicans Sen. Nelson Aldrich and Sen. Henry Cabot Lodge held an emergency meeting with President Taft, and they decided to do a political end-around by coming out for an income tax, but it had to be a Constitutional Amendment. Their bet was that ¾ of the states would never go along. Long story short, they bet wrong! The slogan of “soak the rich” got politicians in Washington and in the several states, salivating like Pavlov’s dogs. The Senate approved the 16th Amendment 77-0. State after state ratified the amendment and it went into effect on February 12, 1913. SO HERE’S MY QUESTION: HOW’S THAT “SOAK THE RICH” WORKING OUT FOR YOU? OK, so much for the history lesson. The scene shifts to the mid nineteen-nineties where 3 Houston business men are talking taxes at lunch one day. One of them threw out a simple question. If the income tax were gone tomorrow, what would the best replacement look like? These guys had some pretty serious pocket change, so they pooled several million dollars to do the research to answer that hypothetical question. (did I mention this was Texas?) Out of that research was born the FairTax, a national sales tax. It stops penalizing productivity, encourages savings and investment, repatriates trillions of dollars hiding from taxes overseas, and levels the playing field for our exports. When you earn a dollar, you get to keep a dollar. It would jump start our flagging economy like no other stimulus, real or imagined. The IRS has more than 67,000 pages of rules and regulations. By contrast, the FairTax bill, currently before the House Ways and Means Committee, consists of only 132 pages. –A beautiful example of the KISS principle. Simple, transparent, fair and doable. hat's the FairTax. Back in 1913 the 16th Amendment was made part of the Constitution. The language is very short: “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.” In other words, a direct tax.

It just goes to show it doesn’t take 2700 pages to destroy the dream. It can be done in a single sentence.

The story of the 16th amendment is amusing, if you like dark humor.

Washington needed a Constitutional Amendment because up until 1913, the Supreme Court had ruled that an income tax would be unconstitutional. Now here’s where it gets political:

The idea of a tax to “soak the rich” began to take root among liberals of both parties. (sound familiar so far?) Then, as now, the Republican Party had the reputation for being the party of the rich, but Republican Wm Howard Taft was forced to declare that an income tax might be alright “in principle” even though he was privately opposed.

In 1909 a conservative Democrat from Texas, Joseph Bailey, introduced a bill to embarrass the Republicans by voting against an income tax. Bailey himself was against an income tax. However to Bailey’s amazement, Teddy Roosevelt and a growing number of Republican liberals came out in favor of the bill, and it looked as though it was going to pass. Old line Republicans Sen. Nelson Aldrich and Sen. Henry Cabot Lodge held an emergency meeting with President Taft, and they decided to do a political end-around by coming out for an income tax, but it had to be a Constitutional Amendment. Their bet was that ¾ of the states would never go along.

Long story short, they bet wrong! The slogan of “soak the rich” got politicians in Washington and in the several states, salivating like Pavlov’s dogs. The Senate approved the 16th Amendment 77-0. State after state ratified the amendment and it went into effect on February 12, 1913.

SO HERE’S MY QUESTION: HOW’S THAT “SOAK THE RICH” WORKING OUT FOR YOU?

OK, so much for the history lesson. The scene shifts to the mid nineteen-nineties where
3 Houston business men are talking taxes at lunch one day. One of them threw out a simple question. If the income tax were gone tomorrow, what would the best replacement look like? These guys had some pretty serious pocket change, so they pooled several million dollars to do the research to answer that hypothetical question. (did I mention this was Texas?)

Out of that research was born the FairTax, a national sales tax. It stops penalizing productivity, encourages savings and investment, repatriates trillions of dollars hiding from taxes overseas, and levels the playing field for our exports. When you earn a dollar, you get to keep a dollar. It would jump start our flagging economy like no other stimulus, real or imagined. The IRS has more than 67,000 pages of rules and regulations. By contrast, the FairTax bill, currently before the House Ways and Means Committee, consists of only 132 pages. –A beautiful example of the KISS principle. Simple, transparent, fair and doable. hat’s the FairTax.

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