TaxProf Blog

Editor: Paul L. Caron, Dean
Pepperdine University School of Law

Friday, November 23, 2012

The New Yorker: Why We Pay Taxes

New YorkerJill Lepore, Tax Time: Why We Pay, The New Yorker, Nov. 26, 2012:

Both the Sixteenth Amendment, which granted Congress the right to levy an income tax, and the Federal Reserve will be a hundred years old in 2013. Hoopla is not anticipated. Not especially controversial a century ago, the tax and the bank lie at the core of a now popular account of American history in which 1913 was a disaster, the original “fiscal cliff.” ... In 1913, the income tax was introduced, not only to undergird the Treasury with a stable source of revenue, but also to answer populist rage at the growing divide between the rich and the poor. In 1913, the Bureau of Internal Revenue printed its first 1040: the form was three pages, the instructions just one. Taxes have got a lot hairier since then. Writer explains the attempts of business interests to fight back against the income tax. Helped by Andrew W. Mellon, the industrialist and philanthropist, among others, the business lobby succeeded in redefining American citizens as “taxpayers,” and began arguing that high tax rates were stifling the economy. Chronicles attempts by the conservative lobby to pass the Dresser Amendment, which would have capped the income tax rate at 25%; describes the failure of liberals to articulately defend their own tax policy.

(Hat Tip: Dorothy Brown.)

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The New Yorker has perfected the style of appealing to liberal snobbery while almost never saying anything new. It's a good read but has practically no influence.

Posted by: michael livingston | Nov 24, 2012 3:10:29 AM

Actually it's a boring read, because it's history written by a Harvard professor. However, the connection between the San Francisco earthquake and the 16th Amendment is something I had not known.

Posted by: Bob | Nov 24, 2012 11:37:00 AM

The 16th Amendment did NOT grant Congress the right to levy an income tax as she means it in this article..

"The legislative history merely shows... ...that the sole purpose of the Sixteenth Amendment was to remove the apportionment requirement for whichever incomes were otherwise taxable. 45 Cong. Rec. 2245-2246 (1910); id., at 2539; see also Brushaber v. Union Pacific R. Co., 240 U.S. 1, 17 -18 (1916)."

United States Supreme Court, South Carolina v. Baker, 485 U.S. 505 (1988)

“We are of opinion, however, that the confusion is not inherent, but rather arises from the conclusion that the 16th Amendment provides for a hitherto unknown power of taxation; that is, a power to levy an income tax which, although direct, should not be subject to the regulation of apportionment applicable to all other direct taxes. And the far-reaching effect of this erroneous assumption will be made clear by generalizing the many contentions advanced in argument to support it...”

“[Taxation of "income" is] in its nature an excise entitled to be enforced as such unless and until it was concluded that to enforce it would amount to accomplishing the result which the requirement as to apportionment of direct taxation was adopted to prevent, in which case the duty would arise to disregard form and consider substance alone, and hence subject the tax to the regulation as to apportionment which otherwise as an excise would not apply to it” (That is, if the "income" tax ever comes to be administered as something other than an excise, or on something unsuited to an excise, the rule of apportionment must be applied.)

United States Supreme Court, Brushaber v. Union Pacific R. Co., 240 U.S. 1 (1916)

"The provisions of the Sixteenth Amendment conferred no new power of taxation . . ."

United States Supreme Court, Stanton v. Baltic Mining Co., 240 U.S. 103 (1916)

“The Sixteenth Amendment, although referred to in argument, has no real bearing and may be put out of view. As pointed out in recent decisions, it does not extend the taxing power to new or excepted subjects...”

United States Supreme Court, Peck v. Lowe, 247 U.S. 165 (1918)

Posted by: Otto | Nov 25, 2012 5:30:11 AM