There was a time in this country when we didn’t have an income tax. Americans were allowed to keep all the money they had worked so hard to get. But when the 16th Amendment was ratified, all that changed.
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Here’s a transcript of our conversation:
Connor: Hey, Brittany.
Brittany: Hi, Connor.
Connor: You know, we’ve been talking about the first 10 amendments to the United States Constitution called the Bill of Rights, but there’s other amendments as well that, was like a package of amendments that were done by the founding fathers. But there’s been a number of other constitutional amendments that have happened, since then. The founding Fathers, when they created the Constitution, created a way for it to be amended because they anticipated that there would need to be changes, that other people would kind of discover, issues or come up with things that needed to change. And, you know, most of the time, some of the time we’re excited about some of these amendments because they protect our rights. They limit the government. I mean, you think of the Bill of Rights, right? It’s like Congress can make no law about free speech and, you know, your second Amendment right to keep and bear arms your Fourth Amendment right to property and, and being private, you know, in your home and being protected. There’s a lot of these rights, these constitutional amendments that are protecting our rights. Well, today I wanted to talk with you about one that does not meet that criteria. This is the 16th Amendment. It’s certainly not protecting our rights. In fact, I would argue it’s, it’s one of the more devastating, problematic things to happen in our country. And in a previous episode, we talked about income taxes, and the 16th Amendment is the reason this happened. So I wanted to get in with that, into this with you, Brittany, and, turn it over to you. What, are your thoughts here on the 16th Amendment?
Brittany: well, first of all, taxation is theft. I would like to point that out. a very important rule to learn. But, so income tax, it’s funny for us to remember a time when that didn’t exist. And a lot of the kids, well, I think most of the kids don’t work unless they have small businesses like we’ve talked about a lot. But, you know, for your parents who work once a year or every time they get a paycheck, depending on what kind of work they do, they have to pay a pretty big percentage of their income to the government. And if you are on the payroll, like if you’re not an entrepreneur like me, and I get like a salary, I get a paycheck every two weeks. It’s automatically taken out of my check. I don’t even see it. But what’s really bad is if you make more than a certain amount, not only do you does it get taken out of each check, they take more from you at the end of the year. So it’s one of the most, in my opinion, annoying things ever because I work really hard for my money. And then they take a very, very big portion. And there’s the joke, I mean, kids probably don’t watch Parks, and recreation, but there’s always this funny episode where one of the characters teaches a kid about taxes. And what he basically does is start eating half her lunch. And that to me is always funny cause I’m like, that’s pretty much exactly what the income tax is.
Connor: Yeah. Yep. Well, there’s some important history here that we should talk about before talking a little bit more about income taxes in general and what has changed, frankly, in the past century. of course, when you, when you make proposals like this, they Congress, never said, and the people never say, oh, we need an income tax. We’re gonna take a third of your money. Right? Or a quarter of your money or half your money, depending on what you earn. Well, of course, the people would revolt. So they always start, oh, that’ll just be 1%, that’ll just be the rich. And of course.
Brittany: And what’s 1%, you know, it’s something so tiny.
Connor: Yeah, right. And we need roads, and we need a military. And look, you know, uncle Sam is destitute. He needs more money to fund, you know, his programs. And so that’s, you know, how the income tax was argued. And of course, like any government program, they get, it’s like the camel’s nose in a tent. Some of the kids out there may have heard this, where it’s the old proverb where the, you know, you’re out in the desert and there’s a storm and the camel wants to, you know, be shielded from the sand. And so it asks the guy in the tent, it’s master or owner, you know, Hey, can I come in and No, no, no, and well just, just my, just my nose, you know, so I can breathe. Oh, okay. Right. And then he puts his head in, and then he gets his neck in, and then he pushes his shoulder in, and then he gets him, and pretty soon the guy in the tent is kicked out because he, he first let the camel come in and of course, this is just a simple little analogy, but the principle is here’s this massive income tax that people are paying today. And it starts very small. Now. It started, Britney, you know, this, it started before the 16th Amendment because, Congress actually passed a tax, an income tax. This was back in the late 18 hundreds, I believe it was 1893. And this income tax was passed. But, President Cleveland at the time, he wasn’t a fan of this. He allowed it to become law without his signature, so he could have vetoed it. But, another option is that you either sign it as a president or you veto it, or you can just let the law, let the bill become law without your signature as a way of kind of objecting to it without having to, you know, without actually vetoing it. Cuz maybe like Congress supports it so strongly that you know that even if you veto it, they’re just gonna kind of override your veto. So, President Cleveland, he thought this income tax was unconstitutional. And it was only two years later that the Supreme Court ruled this was a five to four ruling in the Supreme Court, and they agreed. They said the income tax is not supported by the Constitution. Right? Nothing in the Constitution allowed for that type of income tax. And so, you know, it was unconstitutional. There were parts of the Constitution that said, if you want to do taxes, here’s how they have to be done. And this, the way they set up this income tax, it was different. And therefore it was not constitutional. And so it was, I think in 1909 if I’m remembering my history right, Britney, that Congress decided to pass an income tax constitutional amendment. So the way this happens is Congress says, Hey, we want to amend the Constitution. We’re gonna pass this bill. And then it sends it out to the states, and each state has to what’s called ratify it. They basically vote on it. I believe it’s the state legislatures. Am I remembering that right, Brittany? Do you know?
Brittany: Yes. There’s some controversy on that too, we can get into later. But yes, it was the state legislators, if I recall correctly.
Connor: Yeah. And so, you know, enough states have to vote on it to say, yes, we agreed to this new constitutional amendment, and it took four years. And so it was in 1913 when the last state ratified, the constitutional amendment that created the income tax. So it’s been over a century that we’ve now, so they, right after the Supreme Court said, you can’t do that. The Constitution doesn’t allow you. Then Congress came back and said, okay, well then we’ll amend the Constitution. And that’s what they did. And so now it’s constitutional because it was amended in the 16th Amendment.
Brittany: There’s one quote I really like, and I’m gonna butcher this guy’s last name, but it’s, Frank Chodorov. I’m gonna say that wrong. Yeah.
Connor: Very Russian.
Brittany: But he had this quote that I really loved. And he said, the freedoms won by Americans in 1776 were lost in the revolution of 1913. And 1913 is when, when they ratified it when it went into effect. So I mean, no taxation or without representation. We’ve all heard that somewhere. And that’s how this revolution was fought. And then here you have this new taxation that’s against the Constitution. And to back up a teeny bit, they had tried to institute some sort of income tax, before this, but it was always after war. So like the war of 1812, which no one even remembers, that’s about, they only know the year, right? It’s like another one with Britain. And it was soon after the Revolution. But right after that, they tried to do an income tax and people were like, no, we’re not gonna do this. And then during the Civil War, and it’s funny to me because it’s like, oh, the government wants to get you into a war that the people usually are not the ones starting the war, but they wanna make you pay for it. And then they get desperate and they implement all these things. So, you know, 1913, there wasn’t a war going on, but here you had presidents that realized they could redistribute the wealth, meaning they could, you know, collect taxes from everyone, and then they could decide where your money goes. And that’s just outrageous to me.
Connor: I’m gonna read the actual text of the 16th Amendment and we can maybe break it down a little bit. and so it’s short, you know, typically the constitutional amendments are not long. They’re just some texts that’s kind of generalized. And then Congress can pass laws that are more detailed and have a lot of substance to them. But in the Constitution, it’s just this kind of high-level idea that you then say, Hey, this is allowed, or this isn’t allowed. And so here’s what the 16th Amendment says. The Congress shall have the 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. So why, this is important? And what this really means is that previously in the Constitution, you could only tax people in a very, specific way. So this is article one of the Constitution, which is where Congress’s power is laid out. And it says there that direct taxes have to be apportioned or kind of spread out, divided up amongst the states, according to the census. Different states have different numbers of people. And, so they created this method where it would be proportional, it would be, it would be different because the states are different. And Congress didn’t like that, right? Because they wanted to be able to put taxes directly on every person, even flat taxes if you will. so that more money could be collected so that it wasn’t more from some districts and less than others. Of course, if you were a congressman from a state that had a, you know, heavier tax burden, for example, you wouldn’t like that. and so everyone needs to pay their fair share. We should just tax everyone directly. And yet the founding fathers had said no. So now the 16th Amendment said Congress can now tax income, which is the money you earn from your job, whether it’s your own company, like if you’re an entrepreneur or a small business owner, or if you just work for someone else, then this is saying that Congress can tax your income, your earnings from whatever source that you obtain it again, your company, someone else’s company without any regard, right? To a census or with any, without any apportionment among the states. They’re basically overturning. Or rather, they did overturn what the founding fathers put in the Constitution by saying, eh, we wanna do it differently now. And of course, at the time, the tax rates were very low because again, they’re not gonna be able to have enough political support to pass this tax if they say this is gonna be a massive tax that’s, you know, a quarter of your money or a third of your money. And so it’s always small. It’s always this tiny little incremental thing, right? Oh, it’s just this amount. It’s not that big of a deal, but that camel’s nose gets in the 10th. Yep. And then the next problem that happens, or the next government project or the next war, it’s, oh, we need more money, so we’re gonna raise income tax rates. And then it goes up and up and up and up to the point today where, you know, it is, had you gone back to nine if you could time travel, Britney, and if you could go back to 1909 when Congress passed this and the four years that followed where states were kind of thinking about, should we do this, should we not? And if you were a warning voice from the future, first, they’d think you were dressing pretty crazy. Like, but if you run around these states, state legislatures, and you say, I’m from the future, listen to me in my time because you guys passed this amendment, income tax rates are one-quarter of all of your earnings, or one third or what, depending on, you know, how much money you’re making. And they would be hysterical. No one would’ve passed this company.
Brittany: No. Yeah.
Connor: Right? And that speaks to this exact problem of why the government is always using that little camel’s nose effect. Oh, it’s just the small thing. Oh, just a 10-cent tax. It’s just a minor tax increase. Well, of course, when all these tax increases add up, it’s a ton of money.
Brittany: And this is just income tax. Like when we talk about a fourth of our, you know, income, that’s just income tax that doesn’t account for all the other things were taxed for as well. So it adds up very quickly. One thing though that struck me is 1913 is an important year for another pretty terrible thing. Am I correct? I might be wrong on this.
Connor: You are? What are you remembering?
Brittany:
The creature from Jekyll Island, as we call it, the Federal Reserve, was also started in 1913.
Connor: That’s right. And also, this is when the 17th Amendment hit, which, took the voice of the state’s away. So maybe, we’ll do a separate episode about the 17th Amendment. But again, this, all this stuff is coming to, ahead in 1913. You know, I’ll maybe mention this here. I don’t think I’ll ever do this. maybe I will. But for years I’ve had an idea for a book, and the book would be all about 1913. And there’s a type of fiction called, excuse me, while I Young, I think it’s called like, it’s not historical fiction. It might be called speculative fiction. But, the idea for this book would be. Imagine, if we could go back in time or imagine if we’re in this book, we’re looking at the year 1913, but something different happened.
Brittany: I know what you’re talking about. There’s a genre for this and I can’t remember.
Connor: Yeah. You go back and you just tweak something in history, but then you fast forward and you see how different the world is as a result of changing that, right? If that person had died or hadn’t died, right.? Or that decision was made differently, the ripple effect that would happen. And so I thought like, what if there was a Ron Paul back in 1913 who had like a campaign for Liberty or some grassroots organization, and they were able to mobilize the people and, and stop Congress from doing all this stuff. Okay, what would, that would mean? No Federal Reserve. It would mean the 17th Amendment wouldn’t have passed. We’ll talk about that in a future episode. it would mean no income taxes. So then fast forward to today, and how different would the world be if we did not have an income tax? We didn’t have a central bank, you know, creating money outta thin air. And it would be so fun to just try and think through what that world would even be like because it’s so foreign to what our experience is today.
Brittany: No, I think you’re absolutely right. It would be, I mean, people could be wealthier. And we already, you know, we’ve talked about Steven Pinker before, I think where we talked about how great the world actually is. Imagine how much greater it would be if we got to keep more of our money and, you know, maybe we’d give more to charity and we’d give more to this or that because we could. So yeah, who knows?
Connor: We can daydream though. Well, until next time, Brittany, this has been a good conversation, guys. Head to the show notes page, Tuttletwins.com/podcast. We’ll link to an article or two about the income tax if you’d like to do some additional reading. And, until next time, Brittany, we’ll talk to you later.
Brittany: Talk to you later.
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