The Law That Says We Have to Pay Federal Income Tax

Last month, the Internal Revenue Service (IRS) released a 2010 update of its discussion/rebuttal of various “taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities. protestor” arguments (PDF). The IRS advises that “[a]nyone who contemplates arguing on legal grounds against [paying taxes] should first read the 80-page document.” Wikipedia also has a reference page, as does Professor Jonathan Siegel at George Washington University Law School.

There’s hardly a constitutional amendment, law, or supposition that hasn’t been used in an attempt to prove that income tax collection is invalid. As a constitutional lawyer who works for a tax policy organization, I’m often asked whether the Sixteenth Amendment was properly ratified or (often more rudely) to show where the law is that requires people to pay income taxes.

I find these arguments, like most constitutional law discussions, interesting. But ultimately the truth is that the Secretary of State proclaimed the ratification of the Sixteenth Amendment on February 25, 1913, 26 U.S.C. § 1 imposes tax on taxable incomeTaxable income is the amount of income subject to tax, after deductions and exemptions. For both individuals and corporations, taxable income differs from—and is less than—gross income. , 26 U.S.C. § 63 defines taxable income as gross incomeFor individuals, gross income is the total pre-tax earnings from wages, tips, investments, interest, and other forms of income and is also referred to as “gross pay.” For businesses, gross income is total revenue minus cost of goods sold and is also known as “gross profit” or “gross margin.” minus allowed deductions, 26 U.S.C. § 61 defines gross income as all income from whatever source derived, and 26 U.S.C. § 6012 requires the filing of returns by every individual with gross income for the year (with some exceptions). Dozens of cases have upheld the federal government’s power to collect income taxes against just about every argument.

Judges have little tolerance for tax protestors, particularly ones who convince other people not to pay taxes while being deceptive about the enormous legal consequences. Adherents who practiced what they preached are in jail for tax evasion, many for dramatically hefty sentences. And while the IRS may be less sinister than it was a few years ago, there’s no doubting their willingness to use enormous power against individuals to collect tax revenue.

As I tell people, the current federal income tax has a lot of problems. We at the Tax Foundation are no stranger to its complexity, favoritism, non-transparency, and the burden it imposes on the economy. But claiming that the tax doesn’t actually legally exist hasn’t been a productive avenue. Since our founding in 1937, we’ve had hundreds of brilliant economists, lawyers, accountants, and policy analysts here, and they all paid their income taxes. If there was a way out, one of them would have found it.

Share this article