The Online Library of Liberty

A project of Liberty Fund, Inc.

• About the Author
• Preface
• Part 1: The Constitution’s Deep Roots
• Points to Remember
• The Meaning of Constitutional Government
• The Lamp of Experience
• The Constitutions of Antiquity
• English Origins of America’s Constitution
• The Growth of Parliament
• The Challenge of Parliamentary Supremacy
• The Common Law Tradition
• The Republican Tradition and the Struggle For Constitutional Liberty
• The Influence of Continental Thinkers
• The Education of the Founders
• The French and American Revolutions Compared
• Appendix A: Relevant Chapters of Magna Charta (1215)
• Appendix B: Petition of Right (1628)
• Appendix C: The English Bill of Rights (1689) an Act For Declaring the Rights and Liberties of the Subject, and Settling the Succession of the Crown.
• Part 2: America’s First Constitutions and Declarations of Rights
• Points to Remember
• Colonial Governments
• Relations With Great Britain
• Local Government In the Colonies
• Civil Liberties In the Colonies
• The Movement Toward Independence
• The Declaration of Independence
• The Rights Proclaimed
• The First State Constitutions, 1776–1783
• The Articles of Confederation
• Appendix A: the Mayflower Compact
• Appendix B: Fundamental Orders of Connecticut
• Appendix C: Declaration and Resolves of the First Continental Congress
• Appendix D: Declaration of the Causes and Necessity of Taking Up Arms
• Appendix E: the Declaration of Independence (1776)
• Appendix F: Virginia Bill of Rights
• Appendix G: Thoughts On Government
• Appendix H: Massachusetts Constitution of 1780
• Appendix I: Articles of Confederation (1778)
• Part 3: The Achievement of the Philadelphia Convention
• Points to Remember
• The Problems of the Convention
• The Delegates to the Convention
• A Wide Range of Talents
• Plans and Progress At Philadelphia
• The Meaning of “federal”
• The Virginia Plan: a Supreme National Government
• Hamilton’s Concept of a Unified America
• The New Jersey Plan:checks Upon Central Power
• The Benefits of Compromise
• Compromise and Consensus
• Appendix A: Virginia Plan
• Appendix B: New Jersey Plan
• Appendix C: Constitution of the United States of America (1787)
• Part 4: Basic Constitutional Concepts: Federalism, Separation of Powers, and Rule of Law
• Points to Remember
• A.: Federalism
• Powers Delegated to Congress
• Powers Denied to Congress
• Powers Denied to the States
• The Division of Powers
• The Supremacy Clause
• National and State Obligations
• Obligations of the National Government to the States
• Obligations of the States to the National Government
• Obligations of the States to Each Other
• The Role of the States In the Amendment Process
• The Federalism Factor
• The Advantages of Federalism
• The Future of Federalism
• B.: the Separation of Powers
• Checks and Balances
• Checks Upon the Congress
• Checks Upon the President
• Checks Upon the Judiciary
• The Independence of Congress
• The Independence of the President
• The Independence of the Judiciary
• Summary and Review
• Separation of Powers: a Critical Evaluation
• Separation of Powers At the Crossroads
• C.: The Rule of Law
• The Basic Principles of the American Constitution
• Appendix A: the Federalist No. 10
• Appendix B: the Federalist No. 45
• Appendix C: The Federalist No. 47
• Part 5: Defending the Constitution: the Struggle Over Ratification and the Bill of Rights
• Points to Remember
• A.: the Anti-federalist Persuasion
• The Constitution Establishes a Consolidated Empire
• The Constitution Establishes an Aristocracy
• The Constitution Confers Too Much Power
• An Imperial Congress
• An Elected Monarch
• An Omnipotent Judiciary
• B.: the Federalist Response
• The Constitution Limits and Distributes Power
• Congress Is Not an Oligarchy
• The President Is Not a King
• The Judiciary Is the Least Dangerous Branch
• Whether a Bill of Rights Was Necessary
• The Clash of Values
• C.: The Bill of Rights
• The First Amendment: Religious Freedom, and Freedom to Speak, Print, Assemble, and Petition
• The Second Amendment: the Right to Bear Arms
• The Third Amendment: Quartering Troops
• The Fourth Amendment: Search and Seizure
• The Fifth Amendment: Rights of Persons
• The Sixth Amendment: Rights of the Accused
• The Seventh Amendment: Trial By Jury In Civil Cases
• The Eighth Amendment: Bail and Cruel and Unusual Punishments
• The Ninth Amendment: Rights Retained By the People
• The Tenth Amendment: Rights Retained By the States
• Rights Versus Duties
• Appendix A: the Address and Reasons of Dissent of the Minority of the Convention of the State of Pennsylvania to Their Constituents
• Appendix B: Northwest Ordinance (1787)
• Part 6: Interpreting and Preserving the Constitution
• Points to Remember
• Principles of Statutory Construction
• The Doctrine of Judicial Review
• The Supreme Court As Final Interpreter
• The States As Final Interpreters
• Strict Versus Loose Construction
• The Independence of the Judiciary
• A.: Origins of Judicial Independence
• B.: the Judicial Power
• C.: Jurisdiction
• Appendix A: Marbury V. Madison
• Appendix B: Martin V. Hunter’s Lessee
• Appendix C: Washington’s Farewell Address (1796)
• Part 7: Changing the Constitution—together With an Explanation of the Amendments Added Since 1791
• Points to Remember
• Our Living Constitution
• Our Changing Constitution
• Amending the Constitution
• The Limits of the Amending Power
• The Amended Constitution
• A.: Amendment Xi (1798)
• B.: Amendment Xii (1804)
• C.: Amendment Xiii (1865)
• D.: Amendment Xiv (1868)
• E.: Amendment Xv (1870)
• F.: Amendment Xvi (1913)
• G.: Amendment Xvii (1913)
• H.: Amendment Xviii (1919)
• I.: Amendment Xix (1920)
• J.: Amendment Xx (1933)
• K.: Amendment Xxi (1933)
• L.: Amendment Xxii (1951)
• M.: Amendment Xxiii (1961)
• N.: Amendment Xxiv (1964)
• O.: Amendment Xxv (1967)
• P.: Amendment Xxvi (1971)
• Q.: Amendment Xxvii (1992)
• Conclusion

F.

AMENDMENT XVI (1913)

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.

In Pollack v. Farmer’s Loan & Trust (1895), the Supreme Court held unconstitutional an Act of Congress establishing an income tax derived from property. An income tax, said the Court, is a “direct” tax, and Article I, Section 2, Clause 3 and Article I, Section 9, Clause 4 of the Constitution specify that direct taxes must be apportioned according to population. Such apportionment might be possible under a uniform capitation tax, but not under an income tax based on property.

The Sixteenth Amendment overturned the Pollock case, authorizing Congress to levy a tax on income, whatever its source, without apportionment. This Amendment strengthens the tax power of Congress, but necessarily reduces the power of States by reducing their tax base. In other words, there is less tax revenue available to the States as a result of this Amendment because there is less to collect after the Federal government has levied its tax. In this respect, the Sixteenth Amendment vitally affects the institution of federalism.

The Sixteenth Amendment, then, altered the relationships between the Federal government and the State governments. For Washington now enjoyed means for raising money more efficient than the means most States possessed. Beginning in the era of Franklin Roosevelt, the Congress found it expedient to secure cooperation from State legislatures by offering the States grants of money for purposes approved by the Federal government. Often the State could obtain the “grant-in-aid” by matching the Federal contribution; sometimes Washington required that the States contribute only a small percentage of the total costs, or perhaps nothing at all.

Thus increasingly, since the Second World War, the Federal government has paid the bills for large public projects and induced or compelled State governments to adopt and administer Federal programs. Federal funds are awarded for compliance or withheld for lack of cooperation from a State. States that do not comply “lose” Federal money given to other States. The result of this policy has been to diminish greatly the power of the State governments to make their own decisions, so shifting the political structure of the United States toward centralization, and toward policy-making by an elite of central administrators, rather than through the established processes of a democratic republic.

A recent example of how Federal grants may be used to “bribe” or compel State governments to obey Congress’s will—or perhaps the will of lobbyists in Washington who bring pressure to bear upon members of Congress—is the requirement that State governments must make the use of seat-belts in all automobiles compulsory, on pain of losing Federal funds for highway-building if a State fails to comply. In the past, States have also run the risk of losing Federal highway funds if they refused—as did California—to require motorcyclists to wear helmets. Such concerns formerly were regarded as falling wholly within the established police powers of the States. When many such decisions no longer can be made statewide or locally, but are determined in Washington by Congress, executive administrators, or interest groups—then it would seem the original federal plan of government has given way, for the most part, to a centralized political scheme not contemplated by the Constitution. But for the Income Tax Amendment, Congress would not have the financial resources that make these intrusions into the domain of State power possible.