The Constitution and the income tax


Author: Timothy Sandefur

The graduated income tax was the brainchild of the Progressive movement, which hoped that it would help to equalize wealth rather than merely to fund government programs. (In California, the tax collection agency is even called the “Board of Equalization.”) Although the Lincoln Administration imposed a temporary income tax to help pay for the Civil War, it was only in 1894 that Congress adopted a peacetime income tax. The constitutionality of the tax was challenged, and a year later, in Pollock v. Farmer’s Loan & Trust Company, the Supreme Court held it to be unconstitutional.

The case is a bit confusing because there were many different opinions—the Court actually ended up deciding the case twice. But in one of his most famous, or infamous, opinions, Justice Stephen Field railed against the fact that the tax only applied to people making above a certain amount of money:

If the provisions of the Constitution can be set aside by an act of Congress, where is the course of usurpation to end? The present assault upon capital is but the beginning. It will be but the stepping-stone to others, larger and more sweeping, till our political contests will become a war of the poor against the rich; a war constantly growing in intensity and bitterness.

Ever since that day, Field’s opinion has been treated with contempt and ridicule by liberal law professors, but Field had a point. The history of ancient Greece and Rome showed that when government imposed burdens on some to benefit others, that power quickly become a tool wielded not for the public good, but for the private good of politically influential groups and individuals. Those not subject to the tax would have nothing to lose from voting to raise that tax, thereby enriching themselves at the expense of others. This ran the risk of transforming America into an unlimited democracy, where the majority was unconstrained by law or justice. That is just what happened in other countries. The ancient Greek historian Polybius described the fate of democracies, more than a century before Christ:

…as long as any survive who have had experience of oligarchical supremacy and domination, [the people in a democracy] regard their present constitution as a blessing, and hold equality and freedom as of the utmost value. But as soon as a new generation has arisen, and the democracy has descended to their children's children, long association weakens their value for equality and freedom, and some seek to become more powerful than the ordinary citizens; and the most liable to this temptation are the rich. So when they begin to be fond of office, and find themselves unable to obtain it by their own unassisted efforts and their own merits, they ruin their estates, while enticing and corrupting the common people in every possible way. By which means when, in their senseless mania for reputation, they have made the populace ready and greedy to receive bribes, the virtue of democracy is destroyed, and it is transformed into a government of violence and the strong hand. For the mob, habituated to feed at the expense of others, and to have its hopes of a livelihood in the property of its neighbors, as soon as it has got a leader sufficiently ambitious and daring, being excluded by poverty from the sweets of civil honors, produces a reign of mere violence. Then come tumultuous assemblies, massacres, banishments, redivisions of land; until, after losing all trace of civilization, it has once more found a master and a despot.

In his Pollock opinion, Field went on to warn that if the government could impose a tax on just certain people and not others, “future Congresses” might impose a tax only on people making “five or ten or twenty thousand dollars,” so that “the burdens of government” would be borne only by that politically unpopular minority—for no other reason than that they are unpopular. “Unless the rule of the Constitution governs, a majority may fix the limitation at such rate as will not include any of their own number.”

Of course, Pollock was overruled by a constitutional amendment. But it turns out that Field was right. Today, almost half of all Americans pay no income tax…and, surprise!—around the same number of Americans think the country is not over-taxed. Obviously this isn’t a side-by-side comparison, but it is obvious that a huge number of people who benefit from public services and government programs, and vote to support or expand these programs, do not bear the cost of paying for them. Instead, politicians trot out the old rhetoric about the evil, greedy, rich people not paying “their fair share.” Meanwhile, constitutional principles of equal freedom are forgotten in the mad rush for more and more government benefits.