Simple Liberty  



The American Income Tax

Chapter 5

The 16th Amendment — Saddling the Camel

Written by Darrell Anderson.

Pay no attention to that man behind the curtain.

The Wizard of Oz movie, Metro-Goldwyn-Mayer, 1939

As controversial as the Pollock ruling might have been, both legislators and the Supreme Court justices slowly eroded the effects of Pollock. Legislators learned to label a tax a duty or excise tax imposed on various activities and the Supreme Court justices liberally interpreted the meaning of the term excise. Only four years after Pollock the Court justices decided that a trade tax on the Chicago Board of Trade was a duty or excise tax on usage rather than ownership or property.[1] The justices opened the door for progressive graduated tax rates in 1900,[2] deciding that a graduated estate tax was an excise and initiated the move toward interpreting the uniformity clause in a loose manner. In 1904 the justices decided that a tax on the gross receipts of companies involved in sugar refining was an excise tax.[3] In 1911, the justices upheld the 1909 Corporate Excise Tax.[4] In a case that consolidated several cases, the justices agreed that the tax on the privilege of doing business as a corporation was an excise tax.[5] Although originally established in Hylton, the argument of taxing usage as an excise was, in the early 20th century, all but killed any argument that such taxation was actually a property tax subject to apportionment.

Although running dormant since the Pollock decision, the Panic of 1907 renewed serious awareness in the income tax. Many people thought the protective tariff played a role in the Panic. Democrats included a constitutional amendment proposal in their 1908 presidential platform. Beginning in 1906, as president Theodore Roosevelt publicly endorsed a graduated income tax. With each passing year, more people were inclined to believe that Pollock was wrongly decided.[6]

Contrary to popular belief, the 16th Amendment did not specifically overturn the Pollock rule. Instead the 16th Amendment merely closed the door on that rule of law, rendering the rule impotent and meaningless. Nor did the amendment modify the meaning of direct tax or apportionment. What does the 16th Amendment state?

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.

The 16th Amendment was first proposed in 1909 by Senator Norris Brown of Nebraska. He submitted two attempts, Senate Resolutions Nos. 25 and 39. The amendment proposal finally accepted was Senate Joint Resolution No. 40,[7] introduced by Senator Nelson Aldrich of Rhode Island, the Senate majority leader and Finance Committee Chairman. Aldrich was well known as a defender of “big business” and his sudden support of the cause was suspect. Largely in part due to the 1909 Corporate Excise Tax, he and his supporters never expected the proposed amendment to be ratified.[8]

Reading the history of the 16th Amendment reveals that legislators expected the amendment to allow taxing incomes without being subject to the rule of apportionment.[9] They wanted to break the linkage between derived incomes and the source of property as established in the Pollock rule.[10] An amendment would prevent court judges from viewing a tax on incomes or measured by income or being subject to apportionment. The goal was to avoid another Pollock issue and to ignore the source from which income is derived.

Unfortunately, because income is considered a form of property, this goal of escaping the rule of apportionment could be interpreted in two polarizing ways.

First, people might see an income tax as a direct tax not subject to the rule of apportionment. That is, creating a new method for collecting taxes on income. The tax would remain a direct tax but no longer subject to the rule of apportionment. Apportionment would remain in effect for taxing other forms of property.

Second, people might see the amendment as preventing judges from viewing income taxes as anything but an indirect tax in the nature of a duty or excise.

Either way, the 16th Amendment exempted income taxes from being subject to the rule of apportionment, but this bifurcated interpretation could and would lead to much confusion. For the next 8 decades people would argue about the nature or character of the income being taxed. Was the income being taxed in the nature of profits and gains or in the nature of gross receipts? Which type or character of income satisfied the intent of the 16th Amendment?

Ratified Or Not?

On February 25, 1913 Secretary of State Philander Knox certified the Amendment as being ratified.[11] However, today there is a credible debate about whether the 16th Amendment was properly ratified. In 1985, Bill Benson and M. J. “Red” Beckman published The Law That Never Was, an exhaustive study investigating the ratification process of the 16th Amendment.

Benson and Beckman investigated the records of all 48 state legislatures that existed in that period. The authors discovered many anomalies that raised serious questions about whether the 16th Amendment was properly ratified. For example, California legislators allegedly were among those who ratified the amendment, but no record exists in the California legislative history.[12] Kentucky legislators voted against the amendment 22 to 9, but the ratification record shows legislators voting for the amendment. The reason for this confusion was that originally Kentucky legislators had approved the amendment and then, after urging from Governor Augustus E. Willson, had re-voted disapproval.[13] Despite these anomalies, Secretary of State Philander Knox certified the ratification. Without discussion or debate, Knox personally decided that state legislators could not rescind their ratification vote.[14] Several state governors had failed to send Knox certified copies of the record.

Many people today are aware of this study, but neither legislators nor judges will tackle the issue. Court judges claim the issue is political and must be decided by the legislators. Legislators argue that the issue is judicial and must be decided within the courts.


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Next: Chapter 6: Defining Income — The Camel’s Nose

Table of Contents



[1] Nicol v. Ames, 173 U.S. 509 (1899).

[2] Knowlton v. Moore, 178 U.S. 41 (1900). See also the Head Money Cases, 112 U.S. 580 (1885).

[3] Spreckels Sugar Refining Co. v. McClain, 192 U.S. 397 (1904).

[4] Volume 36 Statutes at Large, 61st Congress Session I, Chapter 6, section 38, p. 112, enacted August 5, 1909.

[5] Flint v. Stone Tracy Co., 220 U.S. 107 (1911).

[6] Johnson, “Fixing the Constitutional Absurdity,” pp. 344–347.

[7] Volume 36 Statutes at Large, 61st Congress Session I, Senate Joint Resolution No. 40, p. 184, approved July 31, 1909.

[8] Hart, Constitutional Income, pp. 81–85.

[9] Brown, Senator Norris, Shall the Income-Tax Amendment Be Ratified?, Senate Document No. 705, 61st Congress Session III, presented December 14, 1910, p. 5.

[10] Hart, Constitutional Income, p. 77.

[11] Volume 37 Statutes at Large, 62nd Congress Session III, p. 1785, certified February 25, 1913.

[12] Benson and Beckman, The Law That Never Was, Vol. I, pp. 119–123.

[13] Benson and Beckman, The Law That Never Was, Vol. I, pp. 37–44.

[14] Buenker, “The Ratification of the Income Tax Amendment,” pp. 191–192.