"Federalism Amendment"

Professor Randy Barnett of Georgetown University writes in the Wall Street Journal to propose a "federalism amendment" to the U.S. Constitution that would limit the powers of Congress, allegedly to what was originally intended. Part of his proposed amendment would repeal the 16th Amendment, which, Barnett says, "authorized a federal income tax." Repealing the amendment would, according to Barnett, "eliminate[] the federal income tax," and Congress would then have to impose something else, such as a national sales tax.

Professor Barnett's proposal is a bad idea on policy grounds, because the income tax is one of the few progressive taxes we have (i.e., richer people pay a higher percentage of their income than poorer people), and even it doesn't do the greatest job on this score, as Warren Buffett has pointed out (because dividends and capital gains receive preferential treatment, he pays a lower tax rate than his secretary). But a sales tax is regressive, so Barnett's proposal amounts to saying that the less wealthy should bear a higher proportion of the national tax burden relative to their incomes.

But putting policy issues aside, the even bigger problem with Barnett's proposal is that it would be ineffective. It wouldn't "eliminate[] the federal income tax," because Barnett is wrong when he claims that the 16th Amendment "authorized a federal income tax." As every tax protestor knows, the 16th Amendment in fact "conferred no new power of taxation."

The power to impose an income tax was granted by Article I, section 8 of the Constitution, which gives Congress the power to "lay and collect Taxes, Duties, Imposts and Excises." As is explained in detail here, the Supreme Court approved an income tax as early as 1880, prior to adoption of the 16th Amendment.

It's true that the 16th Amendment became necessary because the Supreme Court ruled that certain aspects of income tax were unconstitutional because they were "direct taxes" that, in accordance with the Constitution, had to be apportioned among the states according to the census. In a case called Pollock v. Farmers’ Loan & Trust Co., 157 U.S. 429, on reh'g, 158 U.S. 601 (1895), the Supreme Court, roughly speaking, disapproved an income tax on income from property (e.g., rents). That's the problem the 16th Amendment fixed.

So if the 16th Amendment were repealed, it might make income taxes on some income (income from property) unconstitutional, but it wouldn't eliminate taxes on wage and salary income. That would probably be OK with Professor Barnett, because if you like the idea of replacing a progressive income tax with a regressive sales tax, you probably like the idea of limiting income tax to wages and salary too, because it has the same effect of shifting the tax burden from the wealthy to the less wealthy. But apart from being a bad idea, it would not "eliminate the federal income tax."

It's also possible that the Supreme Court would conclude that Pollock was wrongly decided and that the constitutional prohibition on unapportioned "direct" taxes shouldn't apply to taxes on income from property, but only to taxes on the value of the property itself -- wealth taxes. In that case, repealing the 16th Amendment would have almost no effect on income taxes at all.

So if we're going to amend our precious Constitution based on bad policy ideas, we should at least do so effectively. Declaring that "the 16th article of amendment to the Constitution of the United States is hereby repealed," as Barnett proposes, would not eliminate the income tax. You'd need to say something more like, "Congress shall not impose a tax on incomes." If that's what you want, it's not so hard to state.