The return of income for the child”s education

Letter dated January 3, 1862, from Treasury Secretary Salmon P. Boutwell the return of income for the child’s education the newly-created post of Commissioner of Internal Revenue.

The Abraham Lincoln Papers at the Library of Congress, American Memory Collections. Far reaching in its social as well as its economic impact, the income tax amendment became part of the Constitution by a curious series of events culminating in a bit of political maneuvering that went awry. The Revenue Act of 1861, formally cited as Act of August 5, 1861. Fifteen years later, another Republican U. The President also proposed, on June 16th, 1909, a constitutional amendment to legalize income tax. The decision of the Supreme Court in the income-tax cases deprived the National Government of a power which, by reason of previous decisions of the court, it was generally supposed that Government had.

It is undoubtedly a power the National Government ought to have. It might be indispensable to the nation’s life in great crises. This course is much to be preferred to the one proposed of reenacting a law once judicially declared to be unconstitutional. For the Congress to assume that the court will reverse itself, and to enact legislation on such an assumption, will not strengthen popular confidence in the stability of judicial construction of the Constitution. It is much wiser policy to accept the decision and remedy the defect by amendment in due and regular course. Again, it is clear that by the enactment of the proposed law, the Congress will not be bringing money into the Treasury to meet the present deficiency, but by putting on the statute book a law already there and never repealed, will simply be suggesting to the executive officers of the Government their possible duty to invoke litigation. If the court should maintain its former view, no tax would be collected at all.

It is said the difficulty and delay in securing the approval of three-fourths of the States will destroy all chance of adopting the amendment. Of course, no one can speak with certainty upon this point, but I have become convinced that a great majority of the people of this country are in favor of vesting the National Government with power to levy an income tax, and that they will secure the adoption of the amendment in the States, if proposed to them. 2 per cent on the net income of such corporations. This is an excise tax upon the privilege of doing business as an artificial entity and of freedom from a general partnership liability enjoyed by those who own the stock.

The tax on net income is preferable to one proportionate to a percentage of the gross receipts, because it is a tax upon success and not failure. Another merit of this tax is the federal supervision which must be exercised in order to make the law effective over the annual accounts and business transactions of all corporations. While the faculty of assuming a corporate form has been of the utmost utility in the business world, it is also true that substantially all of the abuses and all of the evils which have aroused the public to the necessity of reform were made possible by the use of this very faculty. Sixteenth Amendment, was passed by the Republican controlled 61st U. Today the States often find themselves in a position where the choice is either to adopt U. S Congressional legislation as a state law or to lose federal funding. The 16th Amendment also enabled the U.