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Historical Perspectives on the Federal Income Tax

1909: The Sixteenth Amendment

SJR-25, SJR-39, SJR-40


Senate Joint Resolution 25, April 28, 1909, Congressional Record Volume 44, Part 2, page 1568:

"Resolved by the Senate and House of Representatives of the United States of America in Congress Assembled (two-thirds of each House concurring therein). That the following section be submitted to the legislatures of the several States, which, when ratified by the legislatures of three-fourths of the States, shall be valid and binding as a part of the Constitution of the United States:

‘The Congress shall have power to lay and collect taxes on incomes and inheritances.’

The proposed amendment was rejected, but in rejecting it Senator Rayner of Maryland made this observation:

"In looking at the joint resolution I see that it reads ‘The Congress shall have power to lay and collect taxes on incomes and inheritances.’ It has that power now. Congress has the power now to lay and collect taxes on incomes and on inheritances.

I will just call the Senator’s attention to the fact that unless you change the clause of the Constitution which provides for apportionment the joint resolution would not repeal that clause. The two clauses would stand in pari materia together and you would still have an apportionment."


Senate Joint Resolution 39, June 17, 1909, Congressional Record Volume 44, Part 3, page 3377:

"The Congress shall have power to lay and collect direct taxes on incomes without apportionment among the several States according to population"

This proposal seems to cover our present interpretation of the Federal Income Tax, however, it too was rejected. In reality this proposal was seriously debated, even to the point that Senator McLaurin offered a secondary amendment, which would have repealed the clause of the Constitution requiring apportionment of "direct taxes". The interesting thing is that in proposing the secondary amendment it was limited specifically to "direct taxes" and not "capitation" taxes, indicating that there is a distinct difference between the two "Taxes" and that Congress contemplated (but did not) abandoning the former and not the latter. The Federal Income Tax is an indirect tax levied under Article 1, Section 8; it is in its nature an excise tax.

"I think the word "direct" there must be construed with reference to the word "Capitation". A Capitation Tax is a tax that is levied directly upon the individual without reference to property. It is what is called in the States generally a "Poll Tax". When you speak of a "Capitation" tax as a direct tax then speak of "other direct taxes" the word "direct" in this connection must be construed ejusdem generis with reference to the word "Capitation" ---a Capitation" Tax; that is, a direct tax which operates upon the individual himself, without reference to any property at all---and the words "or other direct" of course, always, by the rules of construction, must be construed to mean a tax of the same kind. Other direct taxes, that operate upon the individual without reference to any property at all. Out of that confusion has grown all the trouble that has arisen in reference to the question of an income tax." (Senator McLauren, Congressional Record - Senate July 5, 1909, Page 4109)


Senate Joint Resolution 40, June 28, 1909, Congressional Record Volume 44, Part 4, page 3900.

"Article XVI. 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."

This is the Sixteenth Amendment; but notice that it makes no provision for the repeal of the clauses requiring apportionment. Why? Because it was not the "intent" of Congress to levy a direct tax (or a "capitation" tax for that matter), the "intent" was to clarify that a tax laid upon the "income", derived from real and personal property, was in its nature an excise tax. In other words, Congress specifically intended that the "gains and profits" derived from the "income" of real and personal property be treated in the same manner as the "gains and profits" derived from business and professional pursuits. In other words, the Sixteenth Amendment is a "net-income" tax, not a gross income tax.

This information is found in Senate Document-61-2 Volume 58, book 5657.   On page 2, under the Title “Different Kinds of Taxation”.   The author gives us this perspective on the Taxing powers granted to Congress by the Constitution:

    “The difference between a tax upon property of any and every kind- which is and must be, inherently direct- and taxes imposed in the form of duties and excises is obvious in principle as well as in fact.   The first kind of tax is and always must be upon thing and rights, while the second is and always must be upon the doing of something which each person may do or refrain from doing at his own will and pleasure.
    The land, the goods, or the money of a member of the community can not escape taxation by change of ownership, for the tax adheres to the thing or right, and whether one person or another has it is of no consequence whatever.  But with the tax in the form of a duty or excise it is very different.  In the case of a duty it is the voluntary act of the importer in bringing into this country the goods that fixes the tax upon him, and it is the same with excise taxes.
    No one is compelled by law to engage in the business of buying and selling merchandise, stocks, operating railways, or in any particular business whatever.  If he chooses to do so, he submits himself of his own choice to any excise tax that may be uniformly laid upon that particular kind of business.
    The framers of the Constitution clearly understood these distinctions and provided for the security of the internal rights of the people of the several States accordingly by requiring that in the imposition of poll and other direct taxes they should be apportioned among the several States according to population, thus securing to the minorities of the people equality with the majorities of the people electing the House of Representatives, and thus controlling the kind and amount of levies made.”

In the debate over the Corporation Excise Tax of 1909, President Taft, in a letter to both the Senate and the House of Representatives, made this statement regarding the proposed legislation (page 3344, June 16, 1909):

"Second, the decision in the Pollock case left power in the National Government to levy an excise tax, which accomplishes the same purpose as a corporation income tax and is free from certain objections urged to the proposed income-tax measure. …

The decision of the Supreme Court in the case of Spreckles Sugar Refining Company against McCain (192 U.S. 397) seems clearly to establish the principle that such a tax as this is an excise tax upon privilege and not a direct tax on property, and is within the federal power without apportionment according to population. The tax on net income is preferable to one proportionate to a percentage of the gross receipts, because it is a tax upon success and not failure."


Congressional Record, Volume 44:

Part 1-5, INDEX: House Bills, 1417-1449, H.R. 1438

Part 1-5, INDEX pg. 248 and 254 "Topical History--1909"

Part 1, pgs. 194-198, 266-268, 486-7, 533-536, 669, 964

Part 2, pgs. 1085, 1351-54, 1420-24, 1558-66,

Part 2, Apr. 28, 1909, pgs. 1568-70, S.J.R. 25

Part 3, pgs. 2334-35, 2443-57, 3135-38, 3344

Part 4, June 17, 1909, pg. 3377, S.J.R. 39

Part 4, June 28, 1909, pg. 3900, S.J.R. 40

Part 4, pgs. 3928-92, 4067-68, 4105-21, 4389-4441*

Part 5, pgs. 4605-09, 4663-68, 4958-62

House Document No. 92, Serial Set 5576, H.R. 1438

Senate Document No. 91, Serial Set 5576, Tariff Act of 1909

Senate Document 367 (61-2), Serial Set 5657, "Income Tax"

Senate Document 398 (61-2), Serial Set 5658 "Proposed Income Tax Amendment"



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