The Corner

More On The Fair Tax

I should have added a clarification along these lines as well. From a reader:

Jonah, I read your latest Corner post titled “Re: the Fair Tax, A Partial Correction,” and I’d like to offer a clarification. The Fair Taxers (and others) typically argue that the repeal of the 16th Amendment would make an income tax unconstitutional. However, that is not the case. The income tax is permitted under Article I, Section 9, Clause 4 of the Constitution, with the “census or enumeration” part referring to Article I, Section 2. The debate before the 16th Amendment was ratified was whether the income tax was a direct tax and therefore subject to apportionment. An 1894 case, Pollock v. Farmers’ Loan and Trust Co, ruled that a tax on income derived from property is indistiguishable from a tax on the property itself and was therefore a direct tax…but only a direct tax on that segment of income. An income tax on wages isn’t a direct tax, per Pollock, and therefore allowed without apportionment. It was a decision that went against all other previous decisions and treatments on the subject, but we were stuck with it anyway. Rather than come up with an income tax scheme that apportioned taxes on income from property but left other income alone, the 16th Amendment was introduced to remove the apportionment requirement from any and all income taxes. So the 16th Amendment doesn’t create the income tax. Instead it explicitly says that an income tax is not subject to be apportioned, whatever the source of the income. It’s actually a rather refreshing case of the Supreme Court’s interpretation being overruled by Congress in a Constitutionally prescribed manner. Thanks, John


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