Policy Documents

What the Constitution Says About Taxation

Steve Stanek –
September 17, 2010

The Constitution of the United States tells us “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.”

Uniformity is hardly a hallmark of the modern U.S. tax regime. It is in fact the opposite of what the Constitution originally called for. The “originally” qualifier will become clear in a moment.

The tax code—formally known as Title 26 of the U.S. Code—covers an astonishing 3.4 million words and grows each year. With 60 lines per printed page, it fills more than 7,500 letter-size pages and includes numerous cross-references to other sections of the U.S. code that have a bearing on federal taxes.

This Everest of Agony is the result of countless attempts by nearly every conceivable interest group over the years to twist the tax code to its advantage or to use it as a tool to put others at a disadvantage. Lawmakers and Presidents use the tax code to reward and punish, to manipulate businesses and individuals, and to buy votes to stay in office.

Earlier this year, for instance, the ObamaCare healthcare overhaul legislation became law only after many weeks of backroom dealing by the White House to buy votes from reluctant lawmakers. One notorious example: the “Cornhusker Kickback.” States expect more people to enroll in their Medicaid programs as a result of Obamacare, but only Nebraska was promised that federal taxpayers would pick up 100 percent of the state’s added Medicaid costs in perpetuity. This was the price Democratic Senator Ben Nelson of Nebraska demanded for his vote for ObamaCare.

The promise leaked out, and public outrage caused it to be rescinded, but dozens of other deals to buy votes were made. Where is the uniformity in that?

Because of the 16th Amendment to the Constitution, uniformity no longer matters. The Amendment states, ”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.”

James Madison, the chief architect of the Constitution, wrote in Federalist Paper #45: "The powers delegated by the proposed Constitution to the federal government are few and defined.” The 16th Amendment has gutted the limits on government and enabled lawmakers and bureaucrats to turn the simple act of collecting taxes into a vast and complex tool of social engineering.

Congress routinely makes some states “donors” and others “beneficiaries.” Donor states pay more in federal taxes than they recoup in federal spending. Beneficiary states pay less in federal taxes than they receive in federal spending.

The same thing is happening with individuals. Today nearly 45 percent of all adults who earn income pay no federal income tax, and nearly 50 percent of all persons receive financial assistance from the federal government in the form of Social Security checks, Medicare payments, food stamps, or other handouts. These handouts, of course, are funded by the increasingly small number of persons who pay federal taxes—taxes that fall disproportionately harder on some than others, depending on what tax bracket they are in.

The Constitution also states, “No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law; and a regular Statement and Account of the Receipts and Expenditures of all public Money shall be published from time to time.”

Congresses and Presidents have made a joke of this provision. Presidents regularly issue “executive orders” to do things that cost taxpayers money even though they’ve not been approved by Congress. Congress exercises no oversight of swaths of spending done by the Central Intelligence Agency and other organizations in the array of national security agencies.

Spending is also being done in other non-security areas without Congress passing appropriations. Earlier this year, by a 215-210 vote, Congress used a procedural vote on an emergency war supplemental bill to attach a rider that “deemed as passed” $1.12 trillion of spending. No budget was proposed, no vote on a budget was recorded, yet Congress deemed itself the power to spend more than $1 trillion.

And the accounting of the federal government is beyond laughable. The government would never allow a business or charity to handle its books as the government handles its books.

Then there’s this pesky provision: “All bills for raising Revenue shall originate in the House of Representatives. . . .” Why, then, do we see so many headlines about budgets proposed by Presidents? Formally, the budgets are presented by Congress. But as we have seen depressingly often through the years, the President starts the ball rolling with his budget proposal. Lawmakers usually make the President’s proposal the floor from which to spring to even higher spending heights.

As described by Gene Healy in his book The Cult of the Presidency: America’s Dangerous Devotion to Executive Power, the American people and the lawmakers who swear an oath to uphold and defend the Constitution have ceded far more power to the President than the nation’s founders ever intended. The President was never meant to have such sway over the federal budget.

The nation’s first executive to swear an oath to the Constitution—George Washington—wrote, “Government is not reason; it is not eloquence; it is force. Like fire, it is a dangerous servant and a fearful master.”

The Constitution, as its author James Madison told us, was designed to give the federal government “few and defined” powers. Instead, the government has become a fearful master with nearly limitless powers, including the power to raise and spend as much money as it likes in whatever ways it chooses.

If we are to take more control of our lives and enjoy more of the fruits of our livelihoods, we need to recognize the truth in Washington’s warning and embrace Madison’s aim in writing a Constitution that would make the federal government more reasonable and far less forceful than it has become.