Paying Taxes

Citizens have been paying taxes since the time of the ancient republics. The Magna Carta, the Petition of Right, and the English Bill of Rights all refer to taxation.

The government has no independent source of income other than the money it receives in tax revenue. Article I, Section 8 of the Constitution grants Congress the power “to lay and collect taxes.” This power did not extend to taxes on personal incomes—rather, the government could only raise money through excise taxes and tariffs. The Sixteenth Amendment, ratified in 1913, granted the power to the national government to collect income taxes. The Social Security Act, passed in 1935, created a tax on payrolls, paid by both employers and employees, designed to fund pension-style payments to retiring workers.

The Founders believed that government should encourage initiative and entrepreneurship, and that enjoying the fruits of one’s hard work was a natural inducement for promoting personal responsibility. They believed that the power of taxation was prone to abuse. Thomas Jefferson said, “To take from one, because it is thought that his own industry and that of his fathers has acquired too much, in order to spare to others, who, or whose fathers have not exercised equal industry and skill, is to violate arbitrarily the first principle of association, ‘the guarantee to every one of a free exercise of his industry, and the fruits acquired by it.’” Chief Justice John Marshall said, “The power to tax involves the power to destroy,” in McCullough v. Maryland (1819).

The taxes citizens pay on a regular basis to their local, state and national governments include sales taxes, property taxes, taxes on certain goods and services, social security taxes, local state income taxes (in some states) and federal income taxes.