A century of the 16th Amendment
Taxes have always been a controversial issue in our American history. After all, colonists dumping tea into the Boston Harbor to protest British duties is one of the defining events of America's birth. Colonists were not necessarily protesting all taxes, but they resented and opposed a far-off king and Parliament imposing taxes on them.
No taxation without representation.
Many of these same protesting colonists, our Founding Fathers, maintained their same concern about an all-too-powerful federal government, and wrote a Constitution that permitted only the House -- the direct representatives of the American people -- to raise taxes or revenues. In a nation that valued freedom over the power of the state, it was supposed to be a big deal to raise taxes.
It still is, and it still should be. But for some in Washington, raising taxes is seen as no big deal.
With the passage of the "fiscal cliff deal" last month (which I opposed), 77 percent of all American households saw taxes on their incomes increase. Paychecks shrank for all workers as the Social Security tax holiday was not renewed. And, for many family farms and other small businesses, the president's tax increase agenda will hamper their abilities to hire new employees, invest in equipment, and pay for employees' health care. For the so-called tax on the rich pushed by Obama will trap many a Main Street business here in Kansas -- taxing more of their incomes now and more of their estates later.
This February marks the 100th anniversary of the ratification of the 16th Amendment, which allowed Congress to tax individual income directly. Except during the Civil War -- when an income tax was levied to pay for Union efforts -- taxes were not imposed on wages and earnings. In fact, prior to the 1913 Amendment, a flat income tax had not passed constitutional muster.
While it is unlikely that the 16th Amendment will be abandoned, there is no reason why we have to continue suffering under the current complicated and convoluted system. When it takes Americans more than six billion hours to prepare their taxes and at a cost to them of $168 billion, we have a problem. A tax code with four million words is destructive and full of danger: The complexity has negative economic impacts, is ripe for political favoritism and cronyism, and even an unintentional mistake may invite penalties and fines.
We can and must simplify the tax code to make it fairer, flatter, and smarter. Doing so not only lessens the burden on individuals, families and businesses, but might also address the challenges we have with revenue shortfalls. Make no mistake, the problem in Washington is still that we spend too much. But cleaning up a messy web of deductions, credits, exemptions -- and reducing the rates -- would certainly create a pro-growth economic environment that benefits everyone, not just large businesses like GE or billionaires such as Warren Buffett who can afford legions of lawyers and accountants to avoid taxes other Americans must pay.
Rep. Tim Huelskamp, R-Fowler and Hutchinson, represents the First District of Kansas. He serves on the House Small Business and Veterans' Affairs committees.