Who to Tax, What to Tax, and How Much To Tax

In every election cycle, the issue of taxes raises its head. This has been true since what became the United States of America was 13 colonies along the Atlantic coast.

It is worth remembering that taxes imposed by the British Parliament on the colonies without the consent of the colonists were one of the causes of the American Revolution. The Continental Congress went in the other direction, as it did not have the power to levy AND collect taxes from the member states.

During the war for independence, the Continental Congress had to borrow money from its own citizens and foreign governments with no real means to repay them. In the years afterward, those loans were coming due and the Continental Congress had no means to repay them.

One of the debates during the Constitutional Convention was finding a way to fund the central or federal government, which became a key topic. Our Founding Fathers realized that taxes were the only viable answer, and they set about answering the three key questions.

Who do we tax?

What do we tax?

How much do we tax?

The issue of taxes appears in three places in the Constitution, as it was ratified in 1787. Imposing an income tax came  in 1913 when  the Sixteenth Amendment, 126 years after the Constitution was ratified.

In Article I (Legislative), Section 7, Clause 1 – gives the sole power to raise revenue to the House of Representatives by stating All Bills for raising Revenue shall originate in the House of Representatives; but the Senate may propose or concur with Amendments as on other Bills.

In one clause later, Section 8, Clause 1 of Article I (Legislative), our Founding Fathers wrote 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;

Clause 2 of Section 8 of Article I (Legislative) goes one step further in that by giving the House of Representatives the power To borrow Money on the credit of the United States.

Then, in Article I (Legislative), Section 9, Clause 4 reads No Capitation, or other direct, Tax shall be laid, unless in Proportion to the Census or Enumeration herein before directed to be taken. This portion of the Constitution was clearly modified by the Sixteenth Amendment.

The word “census” directs us to back to Section 2 of Article I (Legislative) where our Founding Fathers were laying out how many legislators each state could have. To do this, one needed to know how many people were in each state. The second sentence in Article I (Legislative), Section 2, Clause 3 reads The actual Enumeration shall be made within three Years after the first Meeting of the Congress of the United States, and within every subsequent Term of ten Years, in such Manner as they shall by Law direct. The Number of Representatives shall not exceed one for every thirty Thousand, but each State shall have at Least one Representative.

In Section 2, our Founding Fathers achieved three goals. One, they established the methodology by which the number of members each state would have in the House of Representatives. Two, they provided the legal or Constitutional basis for conducting a nationwide census every 10 years. And three, they answered key question 1 – whom do we tax. Answer, we the people. 

In their wisdom, they left the answer to Questions 2 and 3 – what do we tax and how much up to the House of Representatives. This made it a matter of public debate, and the citizens of this country could see who voted for what tax.

To ensure transparency, the votes are all in the Congressional Record which is required by Article I, Section 5, Clause 3 which reads Each House shall keep a Journal of its Proceedings, and from time to time publish the same, excepting such Parts as may in their Judgment require Secrecy; and the Yeas and Nays of the Members of either House on any question shall, at the Desire of one fifth of those Present, be entered on the Journal.

The logo of the IRS which was founded in 1862 under President Lincoln as part of the Second Revenue Act.