Posted by KatNip on September 21, 1998 at 03:42:34:
Mr. ROBERTSON: As I say, we must forget that the major thing is handing out bounties. [***] Mr. ROBERTSON: This compilation of information concerning our income-tax law is so well written that I am making it a part of my statement and the record:
I. THE INCOME TAX IS AN EXCISE TAX, AND INCOME IS MERELY THE BASIS FOR DETERMINING ITS AMOUNT. [***]
In sustaining the Civil War income tax laws, the Supreme Court held that the tax based on income was not a direct tax but was an excise or duty and as such did not require apportionment among the States. Springer v. United States (1880) 102 U.S. 586. This decision, rendered after the income tax had been thoroughly tested for a period of 10 years, represents a deliberate determination as to the fundamental nature of the tax. [***]
The amendment was duly ratified and became effective as the sixteenth amendment on February 25, 1913. (Secretary of State’s Certificate of Adoption, 37 Stat. 1785).
The sixteenth amendment authorizes the taxation of income “from whatever source derived”——thus taking in investment income——“without apportionment among the several States.” The Supreme Court has held that the sixteenth amendment did not extend the taxing power of the United States to new or excepted subjects but merely removed the necessity which might otherwise exist for an apportionment among the States of taxes laid on income whether it be derived from one source or another. So the amendment made it possible to bring investment income within the scope of a general income-tax law, but did not change the character of the tax. It is still fundamentally an excise or duty with regard to the privilege of carrying on any activity or owning any property which produces income.
The income tax is, therefore, not a tax on income as such. It is an excise tax with respect to certain activities and privileges which is measured by reference to the income which they produce. The income is not the subject of the tax: it is the basis for determining the amount of tax.
The purpose of the income tax is to raise revenue in the year of its levy. It is a method by which some of us make annual payments on account of the governmental expenses and the public debt of all of us——contributions to a common fund to preserve the blessings of liberty. The great French political philosopher and jurist Montesquieu [1689-1755], stated the fundamental principles of taxation as follows:
“The revenues of the State are a portion that each subject gives of his property in order to secure, or to have the agreeable enjoyment of, the remainder.” (Spirit of Laws, book XIII, chap. 1.) CONGRESSIONAL RECORD - HOUSE, 78th Congress, 1st Session, March 27, 1943, Individual Income Tax Collection Bill of 1943, pp. 2578, 2579, 2580.
(Montesquieu [1689-1755], Spirit of Laws, book XIII, chap. 1). [Cf. Spirit of Laws, book XIII, chap. 1, Cambridge University Press (1989) translation of same at page 213: “The revenues of the state are a portion each citizen gives of his goods in order to have the security or the comfortable enjoyment of the rest.”
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