Friday, June 4, 2010

And Then...BLAM! Income Tax!

So, things were moving right along in this great country, with the Industrial Revolution changing industry the world over. Railways, factories, interchangeable parts, and trade across the Atlantic with the British Empire, France, Germany, and others kept our nation profitable and our citizens productive. The framework designed in our Constitution ensured that free trade continued unobstructed in the United States.

(Don't think that I'm forgetting the Civil War. That's a whole other can of worms that we'll get to really soon. It encompasses so many issues that I figured I'd skip it for now and come back to it when our discussions have matured a bit more.)

Then, BLAM! It happened. Over on the other side of the world, the Great War (or as we know it today, World War I) broke out. So, what did that have to do with us? Why did we get involved? Well, as I pointed out here, our Federal Government was tasked with making sure it provided for our common defense, infrastructure for trade, and matters that spanned several states or the nation as a whole. So, was a war happening on the other side of the world a matter of national security? Well, no, it wasn't an immediate threat to the USA, as in we weren't being attacked. But, Germany was over there kicking Britain's butt! Remember that Britian was one of our primary trading partners, probably the biggest, so American commerce was being threatened. Germany was also conquering the other European countries and threatening to upset the balance of power and status quo in Europe, especially if they succeeded in taking over France. Those darn Germans just couldn't keep to themselves, and they had the potential to exert great power, as we saw again in WWII.

Woodrow Wilson, then President, couldn't justify direct entry into the war based on those reasons. In fact, the American people were pretty divided in their sympathies; much of the population supported Germany. Anyway, Wilson started to secretly ship arms to Britain on passenger ships from the USA. Germany caught wind of this and publicly warned the United States, in our own newspapers, that they would sink the next ship carrying arms to Britain. They even knew the name of the next ship slated to carry arms, the Lusitania, and warned passengers that if they got on this ship, they would die. Apparently Wilson thought they were joking, because he ignored the warnings, and out sailed the Lusitania on May 7, 1915, full to the brim with passengers and arms for Great Britain. Oops. The Germans sank it! And, off the USA went to war on the side of Britain, with the blessing of Congress.

Our entry into World War I had several consequences.

The Good: We emerged a World Power, maintained the status quo in Europe, preserved our trade and commerce overseas, and trained a previously green military.

The Bad: We ignored George Washington's philosophy that we should not become involved in foreign wars, and also ignored the Monroe Doctrine, that stated that our sphere of influence was North America, Latin America, and the Caribbean, and that we should not get involved in anything beyond. These are good points of debate. When do foreign events become a direct threat to us?

The Ugly: The blight on our Constitution known as the 16th Amendment, or, the Federal Income Tax, which was ratified in 1913, shortly before we entered the war, because Congress claimed that taxing goods like tobacco, alcohol, chewing gum, etc., like it had for the Spanish American War, was not sustainable. Now, why did we need a Constitutional Amendment for this? Well, as I've stated before, the Constitution kept the Federal Government on very tight reins. Only the States could tax their voting citizens (the property owners) and they would pay the Federal Government out of those taxes. The Federal Government could not touch the people, except on direct taxes on goods as stated above. Every time Congress had tried sneaking one past, the Supreme Court struck it down as unconstitutional. Why the States would get together and ratify an Amendment that would give Congress the right to tax the people's income directly is beyond me. This changed the whole spirit of how our Constitution was written, and now the Federal Government had direct access to our pockets, information on how we made our income, our daily lives, etc. Form 1040 and the IRS were born. Didn't they have any better ideas? Granted, the tax was in the works before the war (sticky government fingers) but now that the war was on, they were ready to go, and they had the means to do it. Boy, did they do it.

Did you know that the Federal Income Tax was supposed to be temporary, and it was never supposed to exceed 2% unless you made more than $1.5 million? Take one look at your paycheck today, almost 100 years later, and laugh (or weep...)

While this certainly wasn't the first violation of our Constitution, it was one of the biggest. I'll sign off now and let all of you process that and its implications...

3 comments:

  1. The passage of the 16th Amendment had repercussions very similar to those created when Caesar crossed the Rubicon...

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  2. I'm not sure whether the 16th or the 17th was the worse of the amendments. Both granted logarithmic leaps in the power of the federal government.

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  3. I'm not sure either, but between the two they neutered the power of the States. I'll have more to say on the 17th, and MUCH more on the subject in general.

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