SW VandeCarr said:
Since when is taxation a "seizure of property"? That sounds pretty exteme. The original constitution gave Congress the power to levy to taxes and the 16th amendment gave Congress the right to levy an income tax. US local governments have been taxing real property, often at gross asset value, for I don't know how long. The 16th amendment is specific to income, so any wealth tax would require an another amendment. Show me where even the original constitution or any law implies everyone should be taxed at a graduated rate?
http://www.nytimes.com/2012/11/19/opinion/to-reduce-inequality-tax-wealth-not-income.html?_r=0
It's simple: if you don't pay your taxes, the state or the federal government can put a lien on your real property and seize and sell your personal property if the tax bill isn't paid. This applies to unpaid income tax as well as unpaid property tax.
You are correct about the Constitution giving Congress the power to tax. However, the Constitution originally treated
direct taxation differently from
indirect taxation.
http://en.wikipedia.org/wiki/Direct_tax#U.S._constitutional_law_sense
http://en.wikipedia.org/wiki/Sixteenth_Amendment_to_the_United_States_Constitution
A direct tax is a tax levied on someone or something merely because it exists. A
property tax is an example of a direct tax: the owner of record for a certain piece of property on a certain date during the year accrues a liability for paying the tax (it doesn't matter how the tax is calculated). Another example of a direct tax is a capitation tax, sometimes called a
poll tax. It is levied on a person merely for being alive and drawing breath.
Direct taxes were controversial when the Constitution was drafted, because some of the delegates feared that direct taxation led the way to tyranny from the government levying the tax. As one group said at the time when the document had been sent to the states for ratification,
"The power of direct taxation applies to every individual ... it cannot be evaded like the objects of imposts or excise, and will be paid, because all that a man hath will he give for his head. This tax is so congenial to the nature of despotism, that it has ever been a favorite under such governments. ... The power of direct taxation will further apply to every individual ... however oppressive, the people will have but this alternative, either to pay the tax, or let their property be taken for all resistance will be vain."
To stop the possibility of abuse, the original Constitution mandated that direct taxes had to be apportioned among the states, that is, by population.
OTOH, an indirect tax is a tax on a transaction of some sort, like the sale of goods. Sales taxes and VATs are examples of indirect taxes. If no sale takes place, no taxes are due.
Income taxes had been levied during the Civil War by the federal government, before the 16th Amendment was ratified. These proved to be a lucrative source of revenue for the government, which had been funded primarily by excise taxes and customs duties. The Civil War income taxes expired in 1872, but politicians have long memories when it comes to devising ways to increase government revenue.
At various times after 1872, various proposals and party platforms called for reviving the income tax, but all went nowhere until an amendment was made to a tariff bill which passed in 1894. The income tax provision was not popular in all parts of the country and suit was filed to get it struck down. As the country grew, various court cases had added to the list of direct taxes: income taxes on rents, dividends, and interest were ruled to be direct taxes based on the tariff case decided by the Supreme Court in 1895, which meant these taxes had to be apportioned among the states based on population. Taxes on wages, which are indirect under the law, were not initially affected, but the ruling of the Court established the principle that the
source of the income had an immediate effect on determining whether a tax on such income was to be considered direct or indirect.
After the dust settled from this ruling, things bubbled along until W.H. Taft was elected president and took office in 1909. Taft proposed that the congress levy an excise tax on corporations for the privilege of doing business. This excise tax was in reality an income tax, but Taft also recommended that congress draft a constitutional amendment which would overturn one of the key aspects of tax law which arose out of the 1895 Supreme Court decision in the tariff case: abolishing the distinction between direct and indirect taxes when levied by the federal government.
A number of factors made the reception to the idea of a federal income tax more palatable across a wide spectrum of private and political groups. The amendment which Taft had proposed was drafted and passed by congress and sent to the states for ratification, ultimately being adopted in 1913, allowing the federal government to levy an income tax without apportionment.
The passage and ratification of the 16th Amendment did not stop all litigation involving federal income taxes. A court case decided in 1916 ruled that the federal income tax statutes do not violate the Fifth Amendment guarantees against the government taking property (i.e. income) without due process of law.
As far as the mechanics of the collection of the federal income tax, that is not properly a function of
constitutional law, but of the various congressional statutes which created the Internal Revenue Code and established the Internal Revenue Service to administer and enforce that Code. The Revenue Act of 1913 was passed in the wake of the ratification of the 16th Amendment and established a graduated income tax from the get-go:
http://en.wikipedia.org/wiki/Revenue_Act_of_1913
The top rate was 7% in 1913, and the amount of income which could be excluded essentially meant that most wage earners were not liable for paying any federal income taxes.
With the approach of World War I, the tax code rapidly became more complex and the number of income brackets multiplied significantly, until the top rate in 1918 was 77% and there were almost as many different income brackets.
http://taxfoundation.org/sites/taxfoundation.org/files/docs/fed_individual_rate_history_nominal.pdf