President and Government Employees Were Once Exempt from Income Tax
The 16th Amendment to the U.S. Constitution – the one explicitly authorizing the income tax – was ratified 100 years ago this month. A new federal income tax was imposed later that year.
But did you know that state employees, judges and even the U.S. Presidents were initially exempt from it?
An accountant writing a fun history of the 16th Amendment for the Wall Street Journal includes this factoid:
After the tax law was passed, judges embraced it—for everyone else, just not themselves. Judges across the land proclaimed that the Constitution prohibited diminishing their salaries (and those of the president and state employees) through taxation. They emphasized the point by issuing court rulings in their own favor, excusing themselves from the tax. This lasted until the Depression, when the force of public opinion essentially shamed them into relenting. Under a law passed in 1932, Franklin Roosevelt became the first president subject to the income tax, but he refused to pay an increased rate that he helped enact in 1934. FDR insisted on paying the lower 1932 rates.
Today, some tax protesters try to argue that the income tax is still unconstitutional and doesn’t apply to them. This is not advisable. The WSJ article notes the following about the same courts that once exempted themselves from the law:
A frustrated Tax Court, in addition to reliably ruling in favor of the IRS when such cases come before it, adds a penalty of up to $25,000 against anyone raising the frivolous constitutional argument in court.
And just where in the language of the 16th does it give the government any authority for progressive rates, i.e., a higher rate on those who make more as against those with less income. I don't see it.