Talk on the 16th Amendment

Main Points

Victorian Era

• In the mid 1800s, there was a general return to morality in both England and America
• Sparked the creation of a fable 
• A cautionary tale showing the dangers of allowing evil event the smallest place
• An Arab was crossing the desert
• Pitched his tent one evening
• As the night grew cold, camel asked if he might put his nose in tent to help stay warm
• The weary traveler relented
• We know the story, repeatedly the camel ask for just a bit more
• At last, the traveler finds himself outside withe camel, the master of the tent
• At this time, Congress introduces America's first income tax
• To fund the civil war
• when the war debt was paid off, congress repealed the tax
• 1894 congress reintroduced income tax as a way to fund the federal gov't
• 1895 Supreme court rules the tax unconstitutional
• To tax income, Congress would need to change the constitution
• drafted what would become the 16th amendment
• Asking for the right to tax income
• no appropriation among the several states
• no regard to census or enumeration
• Before it could become law it would have to be approved by most voters in 3/4 of states
• Why would Americans give congress right to reach directly into their pockets?
• Like the fabled camel, congress initially asked for very little
• Most Americans would pay only 1% and even the highest earners would pay only 7%
• Like the weary traveler, America relented
• Three years later, the tax would double for most Americans
• Three years after that, the tax would be six times the original amount
• By this time, The highest earners are paying 70% tax
• By 1945, the top marginal tax rate would be 94%
• think about that
• for some Americans, when they earned an additional dollar, 94 cents went to gov't
• the earner kept just 6 cents
• The 16th amendment is a cautionary tale showing the dangers of giving governments new powers, for they will surely abuse them to excess
• Founders sought to make a small central central government 
• one of controls to keep it small was limited power of taxation
• Before the 16th, federal government was funded largely by taxing imports and exports
• The thing about Tariffs:
• Their power to produce revenue is limited
• Raise the tax too high and revenue will decline as people turn to local markets to by and sell
• For more than a century, this control helped keep the federal government small
• In 1913 the federal gov't spent just 3% of Gross Domestic Product
• For every $100 earned in America, the federal government spent just $3
• Today, the federal government has grown to 12 times that size
• spending more than 36% of the GDP
• This growth was funded primarily by the tax on income
• Conclusion
• Our founders sought to create a limited central government 
• Bound down by the chains of the constitution
• With ratification of the 16th amendment, one of those very important chains has been cut