[Congressional Record Volume 144, Number 5 (Tuesday, February 3, 1998)]
[Senate]
[Pages S297-S298]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




               THE 16TH AMENDMENT: AN IGNOBLE ANNIVERSARY

  Mr. GRAMS. Mr. President, 85 years ago today, the 16th Amendment to 
the United States Constitution was ratified, giving Congress the power 
to levy an income tax on the people. As we mark this occasion, I rise 
to call upon Congress to take immediate action to end the federal tax 
code as we know it, and end 85 years of ever-increasing hardship for 
America's taxpayers.
  Let me focus on how we got here and why we need real tax reform.
  Mr. President, this great Nation was born out of a revolt against the 
abusive taxing powers of its motherland. This tax revolt created a 
nation of individual liberty. In this land, a person owns himself, his 
labor, and the fruit of his labor. To protect individual liberty, our 
founders crafted Clause 4 of Article I, Section 9 of the U.S. 
Constitution, rejecting all direct income taxes that were not 
apportioned to each State by its population.
  This clause, as originally adopted in the Constitution, clearly 
reflected the genius, wisdom, and experience of our founders--
protecting individual liberty by limiting the Government's power to 
tax. For more than 100 years following the founding of this nation, the 
American people enjoyed tax freedom and did not pay any income taxes. 
Although an income tax was imposed as a temporary measure to finance 
the Civil War in 1862, it was repealed shortly after the war ended.
  In the same period--during the last decade of the 18th, the entire 
19th, and first decade of the 20th century--the Supreme Court also 
defended this freedom and held the income tax to be unconstitutional. 
However, under the direct influence of the rise of socialism in Europe 
at that time, on February 3rd, 1913, the 16th Amendment to the 
Constitution was ratified. The 16th Amendment says:

       ``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.''

  Mr. President, in my view, nothing has been more damaging to 
America's families than the 16th Amendment. It opened a Pandora's box 
we have never since been able to contain. A few months after the 
Amendment was ratified, the Revenue Act of 1913 was enacted, imposing 
an individual income tax. The ratification of the 16th Amendment and 
enactment of the first tax code fundamentally eroded individual liberty 
and created the shadow of servitude that has darkened our Nation since.
  Former IRS Commissioner T. Coleman Andrews said the 16th Amendment, 
in effect, repealed Article Four of the Bill of Rights. The 16th 
Amendment has empowered tax collectors to invade our citizen's homes, 
papers, and private affairs. Worse still, it is used for social 
engineering, redistributing private income, and promoting class 
warfare.
  Initially, the income tax did not apply to individuals with taxable 
incomes less than $3,000, which in today's dollars means that people 
with incomes of $44,000 or lower would be exempted from paying tax. It 
only imposed a one-percent tax on the first $20,000, which equals over 
$300,000 in today's dollars. The highest tax rate was up to 7 percent 
for income above $500,000, which equals over $8 million today.
  Less than one percent of all Americans paid any income tax in 1913. 
Only 5 percent of Americans paid any income tax as late as 1939, before 
World War II. Then came the New Deal, which tripled Government 
spending, producing a large Federal budget deficit.
  It was the Second World War that gave the Government an excuse to 
enact the first mass income tax increase in U.S. history. The lowest 
tax rate rose from 4 percent on income over $4,000 to 23 percent on 
income over $2,000. Higher taxes were accompanied

[[Page S298]]

by a withholding system that took money out of each worker's paycheck, 
rather than requiring them to pay their taxes in one lump-sum payment 
at the end of the year. After the war, tax rates and Federal revenue 
receded somewhat, but never returned to prewar levels.
  Today, the Federal tax burden is at an historic high. For the average 
worker, more than three hours of every eight-hour working day are 
dedicated just to paying taxes. The average American family spends more 
on taxes than it does on food, clothing, transportation, and housing 
combined. A typical median-income family can expect to pay nearly 40 
percent of its income in Federal, State, and local taxes. This. In 
1996, an average household with an annual income between $22,500 and 
$30,000 paid an average of $9,000 for food, clothing, and housing and 
paid $11,000 in total taxes.
  Households with incomes ranging from $45,000 to $60,000 averaged 
$16,000 for basic necessities, and paid the tax collector $25,000. If 
the ``hidden taxes'' that result from the high cost of Government 
regulations are factored in, a family today gives up more than 50 
percent of its annual income to the Government. The budget submitted 
yesterday by the President continues this pattern of growing Federal 
intrusion into the taxpayers' daily lives.
  While I have always called for a smaller, more efficient Government, 
the President's budget endorses just the opposite. While I want to 
close down Government agencies that do not perform their duties, the 
President wants to give them more money. That includes the Department 
of Energy, a taxpayer-financed black hole for which the President wants 
to boost spending by another 8 percent next year.
  Overall, it appears the President would increase Federal spending by 
$135 billion and raise taxes and fees by $115 billion to pay for all 
that new spending. And the President's scheme to help fund his laundry 
list of new initiatives by using $65.5 billion in tobacco settlement 
proceeds is risky--if a settlement does not occur, then where do the 
dollars come from? Even higher taxes? I know some of my colleagues take 
offense when I use the phrase ``Washington's big spenders.'' But I 
cannot think of any euphemism in which to couch what is happening here.
  This is a budget cooked up by big spenders and served to a taxpaying 
public that did not order it and does not want it. But that has long 
been the pattern in Washington.
  To make matters worse, as the tax burden has grown higher and more 
unfair, the government tax collector, the IRS, has turned into an 
arrogant, inefficient, cold-hearted, heavy-handed, intrusive, and 
abusive bureaucracy. We have heard many horror stories about how IRS 
agents routinely use their enormous coercive power to squeeze more 
money out of the taxpayer's pockets to meet the demands of ever-
increasing Government spending. Not only do people pay more taxes, but 
they spend more time and money calculating their tax burden. Our tax 
system has become extremely complicated and difficult to understand, 
even for IRS experts. Do you know the tax code was only 14 pages long 
when it was first enacted, but today it has grown to 10,000 pages, and 
on top of that, there are another 20 volumes of tax regulations, and 
thousands and thousands of pages of instructions and other guidance. 
The current tax code is anti-family and anti-economic growth. It 
destroys economic opportunity, hinders job creation, impedes 
productivity, and retards competitiveness. It has deepened despair and 
disaffection among the poor and disadvantaged. It encourages abuse, 
waste, and corruption.
  Our Nation faces many great challenges in the 21st century. But 
without real change, the present tax system will fail to lead us there. 
We must fix the system. To correct the problem once and for all, 
Congress must pass new legislation to fundamentally reform our tax 
system and replace the ever-more-complicated tax code with one that is 
simpler, fairer, and more friendly to the taxpayers.
  The American people deserve a new tax code that promotes harmony 
among people instead of promoting class warfare; a new tax code that 
encourages work and savings; a new code that rewards families and 
success rather than penalizing them; a new code that stimulates real 
economic growth and produces more jobs and higher tax revenue for the 
Government; a new tax code that allows people to keep more of their own 
money.
  Congress should explore all possible solutions to achieve these 
objectives. The 85th anniversary of the 16th Amendment's ratification 
is an ignoble occasion. I urge my colleagues to reflect on this day and 
what it has come to mean to America's struggling taxpayers. And I urge 
them to join me in a pledge to the people that we will not let another 
anniversary come and go before we dedicate ourselves to ending the tax 
code as we know it.
  I yield the floor.
  The PRESIDING OFFICER. The Chair recognizes the distinguished Senator 
from Iowa.

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