About Me

My photo
This blog is the work of an educated civilian, not of an expert in the fields discussed.

Thursday, April 15, 2010

Income Tax and other Constitution Stuff



[some edits made]

Justice Breyer at one point alluded to the new health care law as something that would result in many cases. The implication here seems to be that constitutional matters would arise. But, earlier he cited a complicated law that resulted in various statutory interpretation litigation. Some people over at Vololkh Conspiracy having wet dreams aside, I think he mainly meant that. Even if some sort of constitutional issue arose, this would not mean something like the so-called individual mandate.

Twenty years ago, Randy Barnett (talking about VC) edited a book entitled The Rights Retained By The People: The History and Meaning of the Ninth Amendment. It is basically a collection of law articles from the late 1920s on discussing the amendment along with Madison's speech introducing the Bill of Rights to the House of Representatives, proposals of the same from various states and Justice Goldberg's Griswold concurrence. Interesting overall, though the conservative takes simply are not convincing.
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.

There is some argument made that the Seventeenth Amendment (involving direct election of senators) greatly changed federalism somehow. How so? Why should indirect selection by legislatures voted by the people being changed to direct selection (when some moves were made already to balance the two) matter? Senators in the past were not under the wing of state legislatures. Proposed amendments (to go back to the last issue) aside, there was no power of removal. And, moves toward democracy was already in the air overall, including one with less of a local focus in some ways. Expansion of government never truly ended after the Civil War, especially as the 20th Century continued on.

Something related might be said about the income tax. Some argue the income tax amendment was an important matter in changing how the federal government had the means to pay for a modern welfare state. If you look at the background and opening cases related to it, however, this too is very unclear. First, even beforehand, the controversial (and bound to be overturned at some point) 5-4 ruling in the 1890s striking down a federal income tax law was applied narrowly. For instance, corporate income taxes were upheld as an excise. Ditto inheritance taxes. Many taxes on professions would be okay too.

The property related "direct tax" (so the five said) in that ruling was a relatively narrow matter by the time of the passage of the amendment. The idea was not that this class of taxes could not be applied. The concern was that it was a "direct tax" that had to be tied to state population. As noted in the discussion, an early case held:
[T]he Sixteenth Amendment conferred no new power of taxation but simply prohibited the previous complete and plenary power of income taxation possessed by Congress from the beginning from being taken out of the category of indirect taxation to which it inherently belonged.

In effect, the motivation behind the amendment was to (like the Eleventh, see Hans v. Louisiana) correct a sort of misstatement of law -- income taxes really aren't direct at all. A somewhat later case confused things somewhat on that but still did not claim that the scope of taxation was not expanded as such. Income taxes possibly might be "direct" but the amendment just allowed collection to be made easier by removing the apportionment requirement. Again, the ruling is a bit confused on the point, and as with other Lochner Era rulings, it is probably the case that income taxes would have been allowed the same as now soon enough even without the amendment.

So, the amendment did in some fashion ease the application of income taxes across the board, but as with a ban on federal poll taxes basically being moot given the Supreme Court struck down state poll taxes without such an amendment (yes, a ruling could be overturned, but that's rather unlikely; the amendment if anything supports a state poll tax by being of limited scope; in this respect, it was arguably counterproductive in a fashion), it is unclear just how important it truly was. Clearly, it has a symbolic value, those no big fans of income taxes clearly having an amendment that firmly legitimizes them. Some tax rebels, notwithstanding.

Anyway, happy tax day, and here is part of where your tax dollars are going.