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What Is the Sixteenth Amendment?

Erik J.J. Goserud

Last Modified Date: January 27, 2024

The Sixteenth Amendment is a modification to the constitution of the United States of America, stating verbatim, "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 to enumeration." Many people interpret this particular amendment as initiating what is known as income tax; however, a close examination offers a more accurate interpretation.

An amendment to the constitution is a change or addition to the document. This particular amendment was brought about due to the resolution proposition of 12 July 1909. This proposal by the Taft administration, which was passed in Congress, served as the precursor to the Sixteenth Amendment.

The controversy regarding the Sixteenth Amendment is based on the numerous available interpretations as well as the constitutionality of its meaning. Some believe that it states the right of the government to issue an income tax, whereas other interpretations say the Sixteenth Amendment does not actually give the government any new taxing privileges. Those who believe the second interpretation state that what this amendment really does is limit the definition of income taxes to indirect taxes.

Income taxes are significant in that they provide the government with the monetary means necessary to support many programs and public functions that may otherwise not be possible. The taxing of citizens is controversial in that a flat rate is not utilized across all demographics. Rather, an increase in income equates to a higher percentage of interest paid.

Oftentimes those on the lower end of the income spectrum agree with the current policy and may even support an increase in taxes for the wealthy, generally based on the principle that those with more have more to give and should therefore be responsible for sacrificing more income toward public initiatives. The counterpoint to this argument, often referenced by those on the wealthier end of the spectrum, is that they are being penalized for success, and their efforts to increase personal income should not be subject to an increase in the government's share of their profits.

The Sixteenth Amendment also draws controversy regarding whether it is constitutional. The argument here lies in that the minimum amount of states needed to ratify it was never met. This debatable issue is somewhat irrelevant in that most people concerned with the validity of the Sixteenth Amendment feel that it dictates the existence of income tax, and that is not necessarily the case.

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Discussion Comments

jholcomb

December 14, 2011

It's really a misperception that the richest people pay the highest percentage of their income in taxes. They don't.

For one thing, consider taxes as a whole, not just federal income tax. State sales tax is also an important chunk of people's spending. People who make less money spend a higher percentage of their income buying stuff, and therefore spend a larger percentage on sales tax. (The wealthy do spend more money, but their spending doesn't rise as fast as their income. Even the poorest have to buy food, shoes, etc.)

But most importantly, the tax brackets, with the highest being I think 35 percent, only apply to earned income, like wages. So a doctor who makes a couple hundred thousand a year is, indeed, getting pretty well soaked.

But the wealthiest Americans are not usually making big salaries - their income comes from their investments. And investment income is taxed at flat rates (15 percent for capitals gains, for instance), no matter how many millions you make. So a person worth hundreds of millions of dollars might take in eight figures a year in dividends, capital gains, etc., and have his actual taxes work out to like eleven percent.

Basically, the highest taxes are paid by the upper middle class, not the uber-rich.