Podcast #49: 16^th and 17^th Amendments

16^th Amendment

Alright before we get into the meat and potatoes of the first of the 4 Progressive Era Amendments, I think it’s important to discuss taxes and what they are and why the Government collects them. We have all heard the phrase “The two certainties in life are death and taxes.” I can’t shed much light for you on death, but I can talk a bit about taxes. I will never forget the first paycheck I received as a full time teacher. I was working in a pretty tough school and I was leaving work feeling defeated and exhausted every day. Just like the song “I was working hard for the money”. So pay day arrives, my first real big girl job paycheck. I look at the amount and my take home pay for two weeks was 1014. and change. At first I remember thinking “Wow, I’m rich. Prior to that job, I had worked part time making minimum wage throughout College. Taxes of course came out but never to the extent I saw now. I looked at my net pay and almost $600 had been taken out in taxes and my gut response was one of anger. I remember thinking “What in the bleep did Uncle Sam do to earn this money?”

Taxes are mandatory monetary contributions that must be paid to the Government. There are a variety of taxes. Sales Tax, Property taxes, Capital gains all sorts of taxes, but for today’s discussion, we are going to be focusing on income taxes. The 16^th Amendment established a graduated income tax that still exists today. It was not the first tax on income in the United States. During the Civil War a tax was levied on income more than $600 to help pay for the war effort. The Revenue Acts of 1861 and 1862 were later repealed. There is a history in this country of protesting taxes, disliking taxes even rebellion over taxes, political wars over tariffs and the rising burdens of protective tariffs and stories of tax collectors being tarred and feathered.

What does the Government do with tax money? The government provides a wide array of social services. A quick inquiry on a search engine of your choice will instantly provide you with pie charts and explanations of what the Federal Government spends tax money on and what percentage of a certain type of tax funds the yearly budget. Income taxes are the leading contributor to the Federal Government’s tax revenue. Payroll taxes are second if you were curious.

We are talking things like Social Security, Medicare, Medicaid, CHIP (Children’s Health Insurance Plan) ACA (Affordable Care Act) National Security and Defense, Safety net programs like unemployment, food stamps, low income housing the list goes on and on. Interestingly, the Federal Government doesn’t make enough on tax revenues to pay for its yearly budget, so they borrow. When you borrow money you have to pay interest. Part of the budget is paying back debt.

Now that we know what a tax is and generally what the Federal Government does with tax revenue we need to talk about why the 16th Amendment was passed during the Progressive Era.

After Civil War Era, income tax laws were repealed, new attempts at passing a new income tax were found Unconstitutional by the Supreme Court. Now, this is not absolute, but an income tax was supported by most Democrats in the Congress. Each time a new bill was introduced for an income tax, the Republican Party tended to squash it. Not to say there weren’t any republicans who supported it. The Democrats at the time used this to paint the Republican Party as the party of the wealthy. After all, with a progressive or graduated income tax, the more money you make the more money you will pay. With the start of the Progressive Era and the growing support for an income tax, many leading public officials in both parties lent their support. Including, Teddy Roosevelt, William Howard Taft and Woodrow Wilson. Most members of Congress didn’t want to put themselves in a position of having to publicly denounce an income tax so that gave way to the great idea to have a Constitutional Amendment create an income tax instead of a law passed by Congress. Nothing like passing the buck! The thinking was the states will never go for this and the Amendment will never get the necessary number of states to ratify it which is ¾. Well to the surprise of many, more than the ¾ needed of states approved the amendment. This didn’t happen quickly. It took almost 4 years from the time both houses of Congress passed the resolution until the necessary number of states ratified the Amendment in 1913. All but Connecticut, Rhode Island, Pennsylvania, Virginia, Florida, and Utah approved the amendment. The 16th amendment stated “The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.”

The rate began at 1 percent for incomes $20,000 and higher. The rate rose to 7 percent for taxpayers with income in excess of $500,000. At its passage, it didn’t impact many people. Over time rates would change and a greater percentage of the population files tax returns than those that had to in 1914. Insert Jimmy

The history of loopholes and tax avoidance stories could fill a number of podcasts. Nothing like a good charitable organization… When we get into the Presidency of Woodrow Wilson we will talk about the creation of the Federal Reserve and the IRS.

The 17^th Amendment

When discussing the 17^th amendment, it is often said that the amendment led to a greater sense of democracy. It changed the way US Senators were chosen. The Amendment states:

“The Senate of the United States shall be composed of two Senators from each State, elected by the people thereof, for six years; and each Senator shall have one vote. The electors in each State shall have the qualifications requisite for electors of the most numerous branch of the State legislatures.

When vacancies happen in the representation of any State in the Senate, the executive authority of such State shall issue writs of election to fill such vacancies: Provided, That the legislature of any State may empower the executive thereof to make temporary appointments until the people fill the vacancies by election as the legislature may direct.

This amendment shall not be so construed as to affect the election or term of any Senator chosen before it becomes valid as part of the Constitution.”

The power to choose a US Senator was taken away from individual state legislatures and was given to the people. Now the Senate, just like the House of Representatives would be directly elected by the people.

The Senate was known as “The Millionaires Club” it was thought that the wealthy could buy their way into a Senate seat. After all, many individuals who wanted a senate seat would often campaign for members of the state legislature or donate money to campaigns. There were issues with Senate vacancies lasting for months because political parties within the state controlled different houses in the legislature. During the Progressive Era there was a call to end political corruption and make US Senators elected by popular vote. In Feb. of 1906, Cosmopolitan Magazine published a 9-part series titled “The Treason of the Senate”. The first line of the first article really shows the distrust some people had of the Senate. “Treason is a strong word, but not too strong to characterize the situation in which the Senate is the eager, resourceful, and indefatigable agent of interests as hostile to the American people as any invading army could be.” These articles were written by popular novelist David Graham Phillips at the behest of William Randolph Hearst the famous publisher, owner of Cosmopolitan Magazine and member of The House of Representatives! The articles followed the conviction of two US Senators on corruption charges.

Prior to the amendment getting passed, many states had started to change the way they appointed senators. Some states used what was known as the Oregon System. By 1908, the state of Oregon began holding primaries where the names of potential candidates for a senate seat was voted on by the people. The state legislature then would select the winner of the primary vote. This became known as the Oregon System and many other states followed suit.

A second major change is that when a Senate seat becomes vacant due to death, resignation, the individual gets elected or appointed to another type of public office, the Gov. of a state has the power to fill the vacancy until the end of the current term of that particular seat. For example, current Vice President Kamala Harris was a Senator from California when she and Joe Biden won the Presidential election. California Gov. Garry Newsom had the power to appoint a replacement. Now, can a Governor appoint him or herself…. That answer is YES but when that has happened either by doing it themselves or resigning and having their Lt. Gov. appoint them, it hasn’t worked out for them as they lost re-election. Senator Alex Padilla who was California’s Sec. of State now holds Harris’ Senate seat and will be up for election in 2022.

The impact of the 17^th Amendment is important. It structurally changed the Federal Government. The Senate was now going to be directly elected by the people. As for the charge that direct elections of US Senators would stop the Senate from being a millionaire’s club…. That’s debatable. Always follow the money. Do you know how many members of the Senate or the US House of Representatives are Millionaires?? The answer would surprise you. More than half of all members of Congress (which is the Senate and the House of Representatives are millionaires. Not just 1 or 2 million either… there are some members who have hundreds of millions of dollars. Many members of Congress have seen their personal wealth grow since being elected. After all, few things will help grow your portfolio faster than good connections and access to power. Follow the money, do your research, be informed. If you haven’t listened to our podcast on Campaign Financing, please do so! It takes a lot of money to run a campaign and get elected to public office. Money talks and in government, it talks real loud.