Benjamin Franklin is known for his wonderful adages. One of my favorites is the following: “Nothing in this world is certain except death and taxes”.
It is not a surprise to the scientifically minded, that modern medicine and technology are working furiously towards successfully slowing down and reversing the aging process. Visionaries such as technologist Ray Kurzweil predict that death itself may be rolled back indefinitely in the wake of the genetic and cyber innovations to come in this century. Although the vanquishment of death itself is beyond the purview of this article, it does seem to most of us that the dire specter of taxes will never be eradicated much less conquered. After all, how can Ben Franklin be wrong on both counts?
Well – think again – or should I say – “think back”. With the exception of a few legal historians and constitutional lawyers, most of us fail to question the legitimacy of our tax system. Baby Boomers who are now drawing on social security and even their parents, cannot conceive of a period in American History when the IRS simply did not exist. From our perspective circa 2015, even the most conservative budget debate concerns not the legitimacy of the IRS itself, but the ongoing battle to reign in government spending and reduce the deficit. But the larger question which is almost never considered is whether our federal constitution mandates that the IRS exist as a government entity with enormous power over our daily lives. The answer will surprise you. Here are a few things to consider.
- The Constitution as Drafted by our Founding Fathers Prohibited the Assessment of Direct Taxes on the People.
The very fuel which powers the IRS – is its ability under the law to levy “direct taxes”. Without this authority under our “present” constitution as amended, the IRS would lack the legal legitimacy to exist at all. To the surprise of many, the IRS would have been deemed “unconstitutional” by our Founding Fathers.
To this day, we recall the importance of the Boston Tea Party and the phrase which launched the Revolutionary War – “No Taxation Without Representation”. This issue was clearly on the minds of the drafters of the U.S. Constitution – adopted in 1787 – which provided that “No capitation or other direct tax be laid unless in proportion to the census or enumeration herein before directed to be taken”. See Article 1, Section 8. In layman’s terms, the above made clear that the federal government did not have the right to levy direct taxes on its citizens – period. The reason for this prohibition was the fear of our Founders that the ability to levy direct taxes could lead to circumstances of oppression by the new government akin to the tyranny of King George himself. The very proponent of central government and nemesis of Thomas Jefferson, Alexander Hamilton, was adamant that the new constitution deny Congress the ability to levy such direct taxes and viewed the importance of the above language as a “circumstance which effectively shut the door to partiality and oppression.” Federalist Paper No. XXXVI.
The constitutional law takeaway is quite simple – the Constitution which all of us revere, prohibited direct taxation.
- Did the IRS Exist since the Founding of the United States?
Nope. No surprise that the Founding Father’s repulsion toward direct taxation required that government operations be funded by means other than direct taxation of the people. In fact, for most of our history, until the passage of the 16th Amendment, the U.S. paid for its operations based upon the levying of excise taxes on products such as tobacco and alcohol. It was – more or less – a “pay as you go” formula based on taxation of commodities, not citizens. Of course, there were exceptions to this rule including the imposition of the first income taxes during the civil war by both President Lincoln and Confederate President Jefferson Davis. However, with the conclusion of hostilities, the income tax provisions were repealed and government surplus returned.
- So What is the Legal Basis for the IRS?
Most people are totally unaware that the IRS could not have existed until the 16th Amendment, ratified by the States and Congress in 1913, repealed the critical language in the original Constitution which prohibited the assessment of direct taxes by the federal government on the people. The repeal of the former language and replacement of the following phrase formally legitimized direct taxation as the means to finance the federal government: “The Congress shall have the power to lay and collect taxes on incomes, for whatever derived, without apportionment among the several states, and without regard to any census or enumeration.” The 16th Amendment led to the birth of the IRS.
- Can the IRS be Abolished?
The absolute answer is “yes”. The constitution allows for the passage of new amendments including the total repeal of prior provisions. A perfect example is the repeal of Prohibition. Most of us are aware that a prior amendment to the Constitution that prohibited the consumption and transport of alcoholic beverages was ultimately repealed by the States and Congress. This ability to modify the Constitution by amendment has been employed no less than 17 times since 1791 and could be used again to repeal the very basis for the legitimacy of the IRS itself, the 16th Amendment.
- Could the Repeal of the 16th Amendment really be Done?
Absolutely. The process would be no more complex than the repeal of prohibition. The question is whether the American people Will reach a level of frustration with government spending and consensus to ever do so.
- Wouldn’t Repeal of the 16th Amendment Cripple the Government?
It would. Without a “Plan B,” it would be devastating and likely destroy the fabric of our society and the ability of the federal government to fund itself. Think about the consequences, not only would payment of social security be terminated, but all payments for any services including national defense.
- So Why Even Consider Repeal at All?
The reason is to allow citizens to think outside the “constitutional box”. It is critical that all of us be aware that the IRS as an institution and the ability to reach into our pockets is not immutable. It is not a law of nature like gravity. It is subject to change. The danger is for any or all of us to believe that this institution is certain as – well – death. It is not. (apologies to old Ben)
- What Would be an Alternative to the IRS?
Anything we can think of. Use your imagination. Taxes could be based on the population of each state so that individuals do not have to bear the brunt. Additionally, there could be limits placed on what the IRS could constitutionally do in terms of taxing wages or even its power to conduct audits. Taxes could also be imposed on commodities again, as was the case during the first two centuries of our republic. Finally, the states could be utilized as the prime source of taxation, not the FEDS – or some more equal combination.
- Can I Stop Paying My Taxes Now?
Not unless you want to go to the slammer. We are a nation of laws, and the IRS has authority over all of us absent constitutional change. (Disclaimer – the Moster Law Firm does not practice in the area of Criminal Law)
- Wouldn’t Abolishment of the IRS Cause Injury by Eliminating Critical Programs for Children, Elderly, etc.
It would, to the extent that state programs could not pick up the slack. The reality of limited state resources would lead to a horrific widening of the gap between the “haves” and “have nots”. People could literally starve absent a source of funding coming from somewhere.
That said, the flip side is that if our deficit continues to increase, we will reach the same result as the debt will absorb all of the resources for critical programming. Think about folks who can’t support their families because of mounting credit card payments. Inaction will likely lead to the same result. Therefore, the dialogue surrounding the elimination of the IRS should also consider critical questions such as our civic and moral responsibility to assist and care for the needy, the sick, our veterans… the elderly. It may be that by curtailing wasted resources, more funding could be dedicated for civic ends.
Bottom Line – Benjamin Franklin was brilliant, but is – well “dead wrong” about taxes. They are not immutable and we have the ability to change our laws if we so desire. However, there needs to be a public debate about the role of government in our lives and other less fortunate people. Advocating for a discussion on curtailing the power of the IRS – or I dare say – abolishing it – does not relegate the proponent to the status of “Scrooge”. We need to re-ask the very questions which led to the creation of the constitution to begin with – and that is – “how to form a more perfect union”.
Think about it. What is your proposal?