Following the horror stories told by average Americans about the sometimes outrageous behavior of the Internal Revenue Service, the worst mistake Congress could make is to reform the agency.
A re-examination of the origin of the 16th Amendment makes a powerful case for finding other ways to raise money to run the government than an income tax.
The Founding Fathers rejected income taxes and all other direct taxes unless they were apportioned to each state according to population (Article 1, section 2, clause 3). As late as 1893, the Supreme Court found income taxes unconstitutional, though it upheld a direct tax on incomes during the Civil War.
As the court changed, cries were heard among liberals in both parties to "soak the rich," starting a class warfare that continues. When Democrats introduced bills to tax higher incomes, conservatives in the Republican Party derailed it in the Senate, leading Democrats to brand Republicans the "party of the rich."
In 1909, Sen. Joseph Bailey, a conservative Southern Democrat opposed to income taxes, introduced an income tax bill hoping to further embarrass Republicans. He was astonished when Teddy Roosevelt and liberal Republicans supported it.
Senate Republican leaders met to devise a strategy to have it both ways. They would demonstrate they were not the party of the rich by favoring an income tax, but they would introduce it as a constitutional amendment, believing it would fail to win approval by three-fourths of the states. Democrats were caught by surprise when President Taft sent a message to Congress on June 16, 1909, recommending passage of a constitutional amendment to legalize federal income taxes.
Democrats like Rep. Cordell Hull denounced Republican leaders and questioned their motives. But the "soak the rich" campaign propelled the amendment to unanimous Senate approval. It passed the House 318-14.
When Rep. S.E. Payne of New York saw the amendment strategy he supported failing, he said, "As to the general policy of an income tax, I am utterly opposed to it. I believed with Gladstone that it tends to make a nation of liars . . . I hope that if the Constitution is amended in this way the time will not come when the American people will ever want to enact an income tax except in time of war."
The "soak the rich" amendment was added on Feb. 12, 1913. The rich simply created charitable foundations in which to hide their money, exposing the middle class to the ultimate burden of paying income taxes. Not at first, of course. The first tax was only 1 percent on the first $20,000 of taxable income to only 7 percent on income above $500,000. Most people didn't have to file.
The collection process was greatly accelerated in 1943, when President Roosevelt devised withholding taxes to help fund World War II. The tax would be collected at the payroll window before the taxpayer got his paycheck. The income tax had moved from "soaking the rich" to a bath for nearly every worker.
Former IRS Commissioner T. Coleman Andrews said, "Congress (in implementing the 16th Amendment) went beyond merely enacting an income tax law and repealed Article IV of the Bill of Rights, by empowering the tax collector to do the very things from which that Article says we were to be secure. It opened up our homes, our papers and our effects to the prying eyes of government agents and set the stage for searches of our books and vaults and for inquiries into our private affairs whenever the tax men might decide, even though there might not be any justification beyond mere cynical suspicion."
The Senate Finance Committee heard just such stories last week.
The solution? Pass a balanced budget amendment, outlawing deficit spending in peacetime. Pass a "sunset law" eliminating every government agency and federal expenditure that exists outside the Constitution and cannot survive an amendment to justify their existence. Pass a fiscal reform amendment that would raise needed revenue through a federal consumer sales tax and simultaneously repeal the 16th Amendment.
Now is the time to act while public outrage is white hot. The debate ought not focus on the behavior of the IRS. It should focus on the income tax, something the Founders didn't want and that was pushed through as dishonestly as a congressional pay raise.
Los Angeles Times Syndicate