The Democrat Party's Century of Tax Hikes

By Michael Schaus

Monday, April 14, 2014

The worst amendment to the Constitution is also one of the vaguest. The right to keep and bear arms might be simplistic, but at least it is direct. Our first amendment is mildly long winded and grotesquely misunderstood. However, the 16th amendment, ratified in 1913, stands as one of the most viscous deteriorations of the American Experiment. Stating simply “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 amendment grants to the Federal government powers typically reserved for serfdom or British ruled colonies.

It’s not that tax collection is inherently evil, or that a personal income tax of some nature is abhorrent to Constitutional values, but the 16th Amendment marked the beginnings of progressive dominance in political discourse. Direct taxation (which was expressly prohibited in the Constitution) endangers personal property, privacy and anonymity.

In 1894 Democrat President Grover Cleveland – with support from Democrat majorities in both houses of Congress – declared a 2 percent tax on those evil “one percenters.” (It turns out Grover might be a good mascot for the Occupy Wall street crowd. Just a thought.) However pathetic a 2 percent tax on Mitt Romney might seem by today’s debate standards, the tax was contentious and immediately challenged in court. As any good historian would note, the US Constitution only allows for certain types of taxation. . . And any “direct” tax, such as income taxes, are explicitly prohibited. Of course, even in 1894, few progressives allowed that pesky founding document to get in their way.

Republican President William Howard Taft – influenced heavily by the “progressive” wing of the Republican Party and Theodore Roosevelt – pushed for a change to our constitution. By the end of his term, with help from Progressive Republicans (who supported things like gun control, Keynesian economics, and even fascism) and Democrats in congress, the 16th Amendment was ratified. Horrifically, the Democrat controlled houses of Congress, and the new Progressive President Woodrow Wilson, immediately passed a progressive income tax.

The tax rates ballooned from a top marginal rate of 7 percent under Wilson, to over 70 percent in WWI. Amazed, and no doubt bewildered, Democrats and progressives screamed for even higher tax rates as revenue to the federal government failed to match the exponential rate increases. By WWII, tax rates had been hiked up to a top marginal rate of 94 percent. Even middle class families faced rates as high as 23 percent. The number of tax brackets had swollen from less than a dozen to nearly two dozen. As more of the nation’s wealthy moved their wealth into various tax havens and tax advantaged vehicles (yes. . . They had a complex web of deductions and exemptions back then as well) revenue plummeted. Mixed with a staggering economy that was burdened by soaring national debt and an ever-increasing entitlement state, rates were unlikely to lower anytime soon.

As the decades trudged on, rates went up and down with “loopholes” being closed and opened repeatedly. Our tax code seemed to be a cancer on our American experiment as the number of words used to print the code began to outpace the total works of William Shakespeare. We can thank reluctant Democrats such as JFK, and conservative Republicans such as Ronald Reagan, for lowering the rates near the level they are today. Of course, we can also thank the Democrat majorities for Social Security, Welfare, Medicaid and the ever increasing web of social entitlement programs that overwhelm our federal budget. During Clinton’s tenure, the “negative tax” was a major point of contention. . . A process where people paying no federal income tax are eligible for “refunds” of money they never paid. Our tax code today serves as a massive redistributive Rube-Goldberg machine without sufficiently funding our treasury for repayment of the trillions we borrow.

The US tax code, as it stands today, is a perfect example of runaway government. A one sentence Amendment led to nearly 74,000 pages of rules and regulations in an attempt to separate Americans from a portion of their hard earned money.

Moreover, the tax system no longer achieves its main purpose. Internal revenue is designed to supply the government with the funds needed to keep government operations functioning. Our tax system, since its modern inception in 1913, has been designed to spread “equality” by treating wealthy people differently than the poor; and “spreading the wealth around”. Of course this attempt at wealth redistribution is ineffective and burdensome. The wealthy, and the influential, continue to avoid proportionately higher taxation by the simple virtue that they have more money to dispose at avoidance. (Just ask Warren Buffet. . . His secretary saw a tax increase when Obama and the Democrats allowed the payroll tax cut to expire. But he sure didn’t.) The system, however, does continue to feed into emotions of envy, jealousy and victimhood.

The reason our current system is such a danger to Americanism, is because it is arbitrary and cumbersome. It is so unwieldy and complex, any citizen can (and probably will) find themselves in violation at one point or another. The system necessary to enforce such a massive and overreaching set of regulations, rules and data is intrusive and brutal. While the recent IRS targeting of conservative groups is legally questionable and morally reprehensible, it is only conceivable because of the system we have in place for tax collection. While Americans rant to their neighbor about the intrusive nature of the NSA, they should consider for a minute how much their local IRS agent knows about their life. Our IRS was not selected to enforce Obamacare because of any demonstrable competency, but because they already have information pertaining to every facet of every American’s life.

The 16th Amendment gave birth to the idea that what someone earns is first property of the government. It gave birth to the “progressive” notion that some of us owe our government more than a pound of flesh because of our success, or wealth. It opened up the door to envy politics, and class warfare. It gave rise to the “progressive” notion of “fairness” and redistribution of wealth. It deteriorated our traditional sense of private property, private information, and private affairs.

Perhaps the worst part about the 16th Amendment is not within its actual text. (After all, we can all agree government is in need of revenue for legitimate functions.) Its problem relies on a tax system put in place 100 years ago by redistributive Democrats and progressive Republicans. So, when you hear the “Progressives” talk about increasing taxes on the rich, increasing the number of tax brackets, or increasing credits to certain groups of Americans, just remember: We’ve been doing this since 1913. There is nothing “forward” looking, or “progressive” about continuing a century of failed ideas.