equal tax question

Article 1, Section 8, Clause 1 says - The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States;

Doesn’t tax, duty, and impost mean the same thing?

If so, doesn’t that mean income taxes must be uniform for everyone?

One might say that if they wrote all three words down, they don’t mean the same thing.

One might also say that the tax code is uniform throughout the United States.

I’m not a tax resistor, but do believe that a flat tax or sales tax is fair, unlike our current tax code.

What do you think about this argument against our current tax system?

Technically, no.

From “The Constitutional Law Of The United States”, by Westel Woodbury Willoughby:

It means that federal taxes of any sort must be uniformly applied throughout all the states, that is, that Congress cannot levy one set of taxes on New York and another on North Carolina. Obviously, individual taxes vary by value and always have throughout our history. A duty on furniture did not have to be the same as a duty of whiskey, and the duty on one kind of furniture did not have to be the same as the duty on a different kind of furniture, nor did the duty for multiple sets of furniture have to be identical to one. This notion is easily extended to income: different types of income can be taxed differently and so can differing amounts.

As an argument against the current tax system, it’s completely faulty. You’re much better off ignoring it entirely if you want to argue for a flat tax system or sales tax system.

Besides, the 16th Amendment removes that line of reasoning.

Uniform doesn’t mean identical. It doesn’t mean that everyone will pay the same income tax. It means everyone with the same income will pay the same income tax.

It doesn’t even mean that. I make $100K in long term capital gains. You make $100K in W2. Big difference in tax due.

It simply means the rules must be uniform across the country. No Federal rule may say “For this particular situation, NY residents pay X%, but everybody else pays 1/2 of X%”

I agree that there’s a big disparity on what is legally defined as income for tax purposes. And not surprisingly, the disparity favors the wealthy. When people talk about how taxes should be “fair” and “equal” my answer is that I agree but rich people would complain if their tax rate was raised to the same level I pay.

Article 1, Section 9, Clause 4 used to say - (No capitation, or other direct, Tax shall be laid, unless in Proportion to the Census or Enumeration herein before directed to be taken.) Section in parentheses clarified by the 16th Amendment.

Anyone know this history behind what brought about the 16th Amendment? It’s almost like Congress wrote it while they were upset for not being able to raise the federal budget without their constituents getting upset.

Just look at the language -
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.

It’s like an upset teenager doing exactly the oppsite of what it’s smarter parents said it could do. “I will do what I want, how I want!”

It seems to me that the original Clause was meant to make the federal budget transparent and directly impact the common citizen. In this way, the fed wouldn’t grow too large because any budget increases would directly be felt by the majority of people in the country. It was a check and balance kind of thing.

The new way opens it up to maximizing revenue by taking as much as they can from each income bracket.

I’m not rich or anything, something just doesn’t seem right to me. I’m no lawyer either. The closest to law I got was my friend taking his LSAT and then not going to law school.

Any thoughts?

Start with Wikipedia.

Short version: as the government grew, an income tax became more and more necessary. It required a constitutional amendment, so one was passed. Nothing mysterious about it.

Collecting a tax on income is the sticking point. If you are providing your services and education and get money for it, isn’t that a wash.
Income is like selling a horse. Do that and your income goes up. The difference between what you paid and what you got for it is income. That would be taxable.

I’m not certain I understand what you are saying, but you appear to be mistaken on the meaning of the passages quoted.

The original language specified that taxes had to be apportioned to the States by population. Thus a census or enumeration was required to find out the population of each state, by which to pro-rate the tax.

The new language allowed taxes to be taken from individuals for their income without prorating by state population.

I don’t see how adding an income tax prevents the majority of people from directly being affected by it. Nor do I see how income tax brackets somehow open a loophole for Congress to bypass the populace at large.

I understand “Article 1, Section 9, Clause 4 (No capitation, or other direct, Tax shall be laid, unless in Proportion to the Census or Enumeration herein before directed to be taken.) Section in parentheses clarified by the 16th Amendment” to mean that before the 16th amendment a tax levied on people has to be equally divided amongst the population. As an example, $100k government budget divided amongst ten people means each person pays $10k. Could you also take it to mean everyone must pay 10% of their income, for example. Am I understanding the original language before the 16th Amendment correctly?

Let’s rewrite that to clarify what it is saying.

No capitation = no “per head” tax, i.e. tax per citizen

or other direct tax = tax per person or tax on property for ownership of the property

Enmeration herein before directed to be taken = a counting of people or property done prior to the tax being levied

Oh, one other key, these federal taxes were not levied on individual citizens - they are levied on the States. In other words, Congress will tax the States based upon headcount or property ownership. Ergo, they must have a census or other headcount or property summation in order to determine how much to charge each State.
So what that clause is saying is

No per person tax or tax on property ownership shall be levied on the States unless in prior to the tax being levied a headcount or property assessment is conducted and that accounting is used to apportion the tax levied on each State.

According to my totally unofficial interpretation of what Wiki says.

If you’re going to start this again, let’s go back to your earlier post.

This makes no historical sense. The U.S. began existence as a colony. Colonies have special relationships with their controlling governments. Britain could and did prohibit the U.S. from setting up competing industries and from trading with competitors to British goods. It also took raw materials from the colonies and prevented others from doing so. These weren’t absolute and lots of people made their fortunes from smuggling, but they set the parameters for our economy.

After the revolution, the U.S. was in desperate need of building up its industries. Tariffs are one means of doing this. They raise the costs of goods imported and so provide incentives for building factories. But they also raise the cost of the goods manufactured by those factories and released into the now captive market. That’s a hidden tax, the exact opposite of a transparent budget.

Then there’s internal revenue. Why do you think the IRS is called the Internal Revenue Service? That’s essentially a levy on certain goods made inside the country. The most famous one is the whiskey tax, the one that led to the Whiskey Rebellion, when Washington used federal troops to put down a revolt against tax collectors in Pennsylvania. People didn’t care about transparency. They just didn’t like being taxed.

The whiskey tax was repealed, but, the government has to get money some way. It came back. By the end of the 19th century it (and the beer taxes) were the largest fraction of government income.

There’s an argument to be made that Prohibition, which was already in effect in many states, was a powerful influence on the passage of a Federal income tax, since tax revenue from alcohol was dropping sharply. Daniel Okrent alludes to this in Last Call, his excellent history of Prohibition. But he never really makes the connection, and for good reason.

The U.S. was not the tiny nation of farmers that it had been in 1776. It was the largest industrial power in the world. Other countries were furious at our protectionism of industries that were now larger than theirs. We also had become an exporter of almost everything and exporters hate tariffs on their goods, which the other countries were putting on in retaliation. Free trade requires the elimination of tariffs and almost every economist agrees that the global economy works better this way.

Again, nothing of this supports any claim of transparency in taxing. Just the opposite. The U.S. ran on a system of hidden taxes that no citizen could hope to understand.

The U.S. had passed an income tax out of necessity during the Civil War, which had been declared unconstitutional. As government grew in an imperial age, it needed more revenue. The need for a legal income tax had been obvious for decades. It finally happened.

Obviously the government is going to try to get the money it needs from taxes. It did so before the 16th Amendment, too. And you know what the tax rate was for the rich in 1913? 7%. (Go to this page to click on a link for a complete year by year pdf of tax rates.)

The upper end of the tax rate skyrocketed because of WWI. Which it would have anyway. The U.S. was going find a way to fund it and worry about the legalities later, just like during the Civil War. Most of the country still had incomes too low to worry about federal taxes, then and for years to come.

The argument for a progressive tax rate is simple. Every dollar of a poor person’s income is necessary for survival. The vast proportion of a rich person’s income is not. You can talk about a Fair Tax all day long, but you still have to deal with the poor and explain how they can contribute the same percentage as the rich. Every Fair Tax scheme that I see simply sets their taxes to zero, which is not equal. That’s progressive in disguise.

There’s no way to twist any aspect of the constitution to your meaning, and history is entirely against you.

After reading your posts, I realized that I don’t know what the heck I’m talking about. Thanks for the wealth of information.

Thank you for a polite response. I find history endlessly fascinating, so I hope you will be inspired to do more reading on this bottomless subject.

Now I am curious. How does a person with more knowledge about the subject propose we change the tax system?

No, but you the capacity to be one.

That’s funny. What can I say, I’m an electrical engineer.

Then you have the reluctance.

How best to change the tax system depends on what you want to accomplish. The problem is that there is no agreement on what’s wrong with the system today.

You called the system unfair because it’s progressive. Others think that a progressive tax is the most fair.

Some people say that taxes are too high, but the top rates are about as low as they have been at any time since the Depression.

The amount of taxes collected needs to correlate or, ideally, match, the amount of federal expenses. Collection is well below expenses now. Yet some people say we should cut taxes even so, while others say that the government has to meet urgent needs that would require even more spending.

The costs of compiling tax information are high for those who file long forms and the tax code is extremely complicated. But that’s because of “special interests,” which is to say, everyone. Every business and profession and individual and type and sort has influenced Congress to write provisions into the tax code for many decades. There is no political way to back all those out.

That’s why supposedly fair and even tax systems are proposed. But the fairness of them is revealed by the fact that about half of households don’t pay any federal income tax already. They do pay sales tax and FICA and local taxes and use taxes and fees and lots of the other devices that are used to gain revenue. None of those would go away. So how would a consumption tax be fair? Even if you made the tax zero on critical items like food, what else? Rent? Clothing? Health? Where do you draw the line? The same issue applies for a flat tax. If you paid a flat percentage of income then you have to exempt the poor, which means that’s there is a sharp cut off. Suddenly someone earning $24,000 pays no taxes and someone making $25,000 pays $5,000. That’s hugely unfair and a huge incentive to cheat. It’s exactly why there has always been a progressive tax.

And what is income? Look at all the people who want to reduce capital gains taxes, which are already much lower than income taxes. What happens to businesses who can’t apply any deductions that are now built into every decision they make about building factories and hiring workers and buying supplies?

This is all scratching the surface of the argument. Don’t look to me for answers. I just know enough to know that easy, sweeping changes are impossible. It is true that other countries have added consumption taxes and made it through the disruption. However, they all, to my knowledge, already had far larger protections and welfare systems for the poor than the U.S. so the cases aren’t strictly comparable. Adding a 25% federal sales tax onto everything is slavery.

There won’t be any change to tax policy until some general consensus emerges about a direction to take. It is impossible that everybody would come out better after a total system change. Someone has to lose. Right now the proposal is that the people with the largest disposable incomes pay 39.1% instead of 35% of that marginal income. And that is being met with near-hysteria even though IMO the return of these rates would have net positive affects on the economy and government.

First the world has to change. Then we can talk about how the tax system can change. That’s how it always has happened, and so that’s the only way I can see the future occurring.