“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 16th Amendment
Feb. 25 marked the 100th anniversary of the day that U.S. Secretary of State Philander C. Knox took pen in hand and affirmed that the 16th Amendment, having been passed by Congress and ratified by the legislatures of three-fourths of the states, was part of the U.S. Constitution.
The income tax is 100 years old. Got any big plans to celebrate? Probably not.
The First Amendment has a lot of fans. The Second Amendment is huge. The 13th Amendment was a star on Oscar night. Chicks dig the 19th. We'll drink to the 22nd, which overturned the 18th. But few people love No. 16, which is strange, considering how much we all benefit from it.
From the air we breathe and the water we drink to the security we feel at night, from the teachers in the classroom to the meat on the table to the airplanes that do not crash, from FEMA and CIA, FBI and BATF and dozens of other acronym agencies and programs, taxes — as Justice Holmes observed — are what we pay for civilized society.
Most Americans will admit that, albeit grudgingly. We'd just rather that somebody else pay a bigger share. The late Senate Finance Committee Chairman Russell Long, D-La., put it best: “Don't tax you. Don't tax me. Tax that fellow behind the tree.”
It's amazing to realize, but the passage of the 16th Amendment wasn't even close. Lincoln had briefly imposed an income tax to pay for the Civil War. Congress passed a 2 percent tax in 1894, but the Supreme Court threw it out two years later.
So the only way to get one on the books was to amend the Constitution. It passed the Congress in July 1909 and whizzed through legislatures in Southern and Western states. People were ticked off.
Harvard historian Jill Lepore, in a short history of the income tax published in The New Yorker last November, wrote, “The tax was intended to answer populist rage at the growing divide between the rich and the poor.”
A panic that followed the San Francisco earthquake of 1906 had created a deep recession. Congress created the Federal Reserve to shore up failing banks. People thrown out of work were outraged that the richest 1 percent of households held more than a third of the nation's wealth. Imagine that: 1 percent of taxpayers holding a third of wealth— land, stocks, bonds, art, savings accounts, jewels, cars, boats, the whole kaboodle.
Today it's 43 percent. The next-richest 4 percent hold another 29 percent of the wealth. That's 5 percent of households controlling 72 percent of the nation's wealth.
And what have we got for public outrage? Anti-tax crusaders. Tea-party Republicans. We've got people chained to the oars in one of those “Ben-Hur” Roman galleys, rooting for Caesar.
How is it that the Americans of 1913 were so much smarter than Americans of 2013? My theory: We've got a better quality of not-rich now than we did back then. We've got television and the Internet to distract us and delude us, consumer fripperies to appease us and social safety net programs to preserve us from the worst effects of income inequality.
Also: We are easily bamboozled. Lepore's piece in The New Yorker recounts the long effort that began with Andrew Mellon, Treasury secretary under three Republican presidents, to convince Americans that the income tax was the spawn of Satan. She recounts the long effort by Robert B. Dresser, the Grover Norquist of his day, to repeal the “Marxist” 16th Amendment.
So on the 100th birthday of the income tax, we are a nation that reviles the income tax instead of acknowledging what we owe to it and insisting that it become as fair and simple as it was, say, in 1913.
You know who should celebrate the tax's birthday? Republicans. Lepore quotes the late liberal economist John Kenneth Galbraith, who suggested that by defusing populist rage and giving wealthy Americans the right to say, “See, we're paying our share,” even if they aren't, the income tax might have saved capitalism.
“Conservatives ought to build a statue to it,” he wrote.