The Taxes and Takings Clauses

Here are pulled together some facts and thoughts on several clauses in the U.S. constitution that have been ignored, misunderstood or misapplied. Some people merely want the correct meaning to be restored by educating the judiciary, others wish to amend the constitution so as to correct the way the constitution is applied (to repeal or correct the problem clauses), and yet others would like an entirely new constitution. The focus here will be on one of the 10 troubling constitutional clauses:

1. The commerce clause
2. The contracts clause
3. The due process clause (amend 5 and 14)
4. The privileges or immunities clause
5. The equal protection of the laws clause
6. The general welfare clause
7. The necessary and proper clause
8. The supremacy clause
9. The takings and tax clauses
10. The enumeration of rights clause (amend 9)

We have now come to the ninth of these topics, The Takings and Tax Clauses.

The Takings and Tax Clauses

"The Takings Clause," also referred to as "eminent domain," is the common name given to the last part of Amendment V of the United States Constitution, which reads:

"No person shall be . . . deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use, without just compensation."

"The Income Tax Clause" is the common name given to Amendment XVI of the United States Constitution, which reads:

“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."

Instead of focusing on just a single clause this time, a pair of clauses are included, which I find to be closely related. "Takings," it is true, affect single households in a sporadic manner rather than continually like taxes. However, whether your house is being expropriated once or you are required to pay a percentage of your income or the value of your property year after year, it is still a matter of government expropriation. What you have belongs to you. You deserve it. No other claim on your house, land, income or investments should be able to trump the fact that you worked for them and earned them.

The power of governments to expropriate what we have has been with us for centuries. It comes with what we know as government, kings, empires, republics and democracies. Only in pre-state societies such as the Papuans of New Guinea, Anglo-Saxon England and Iceland (there are many) do we find the legitimate functions of government performed without taxes -- without government. Our founding fathers did not shake off the assumption that a government was needed, and that this government needed to take properties and impose taxes.

Why does someone who owns property and earns a regular income have to provide the means for government to operate? Does such a person enjoy a greater proportion of what the government provides than someone who grows potatos and hunts grouse and rabbit in the wild and enjoys a sunset more than a movie (totally without any money coming in or going out)? Penalizing the true contributors to our society is immoral.

Takings Before Amendments

Prior to the passage of the Bill of Rights, the constitution of 1787 had only one provision that touched on government acquisition of real estate: clause 17 of Article I, section 8, which granted power to congress to acquire a district up to 10 square miles as the seat of the federal government. This area, named the District of Columbia, was ceded to the United States by Maryland (1798) and Virginia (1789).

However, the wording of that clause does have the ring of a tacit recognition of a preexisting power to take private property for public use, rather than a grant of new power. We would like to believe that the natural rights of the individual includes sovereignty. However, government implicitly accretes absolute sovereignty to itself, which in turn implies that it has the power to take property. Insofar as property is a major means for the pursuit of happiness, there must be a limit. It would be unreasonable for the power of eminent domain to include the power to take all of a person's property. (The right to life, liberty and the pursuit of happiness has the same meaning as the right to life, liberty and property).

For some time there was probably no further need for any unit of government to acquire land. However, it was already established in common law, that a government may take land from people. The Takings Clause found its genesis in Section 39 of the Magna Carta, which declared that land would not be taken without some form of due process: "No freemen shall be taken or imprisoned or disseised or exiled or in any way destroyed, nor will we go upon him nor send upon him, except by the lawful judgment of his peers or by the law of the land."

Taxation Before Amendments

The original constitution of 1787 enabled only capitations, head taxes or poll taxes (direct taxation based on the populations of the states), other federal revenues were derived from duties and imposts. These were generally restricted to imports.

From Usinfo.State.Gov we learn that

Duties are taxes on goods coming into the United States. Excises are taxes on sales, use, or production, and sometimes on business procedures or privileges. For example, corporation taxes, cigarette taxes, and amusement taxes are excises. Imposts is a general tax term that includes both duties and excises.

While the revenues from these rather benign taxes were adequate for covering federal government expenses in peace, with the outbreak of the Civil War, other means were required. Although the fiat currency and the income tax imposed by the Lincoln government were temporary, they set a precedent.

With the Fifth Amendment Enacted

The Takings Clause hardly needed to be included in the fifth amendment. "By the law of the land" was understood to mean the same as by "due process" What was new may have only been limitations, the requirement of "just compensation" and the requirement of "for public use." If it had also added some truly fair way of setting the amount of compensation and if all takings were purely for public use, much less trouble would have been caused.

To further complicate matters, the power of eminent domain was recognized as a power of the states also, by the Fourteenth Amendment. See the Cornell University Annotations for more.

Originally the application of the clause was fairly restrictive, but the understanding became more expansive in the twentieth century, see Berman v. Parker (1954), where a property was found blighted, and the District of Columbia decided to have condos and a shopping center built. Later in Hawaii Housing Authority v. Midkiff (1984) a large property held by a small group, which concentrated power and disturbed the real estate market, the supreme court approved granting ownership to previous tenants and saw the wider ownership as sufficient public benefit. The most recent notable case, The Supreme Court's decision in Kelo v. City of New London (2005), took private property to build commercial buildings to increase the tax base, was found justified as "for a public purpose."

Since then many states have started work on new laws to restrict the use of the power. As of January 2007, 34 states have reformed their eminent domain laws. Seventeeen of them beefed up their definition of blight and public use. We would hope that all of the states, and the congress as well, would at least do the same, if not outright repeal the clause.

With the Sixteenth Amendment Enacted

Duties, excises, imposts and tariffs proved inadequate sources of federal revenue in the early twentieth century. While congress already had power to impose other taxes, including an income tax, it had to be requested from the states in proportion to their populations (apportioned).

All taxes are forms of "takings." No taking is to be made by government "without just compensation." With what is the government compensating us when it takes the sales taxes or corporate and individual income taxes? Is our compensation the welfare it doles out to other people, irrespective of from where it got the moneys? A very curious way to compensate us!

These might have been concerns of people in 1913, but the machine of politics in search of money rolled right over them. An amendment was voted on to permit the income tax and it allegedly was accepted by two thirds of the states and the members of congress.

Or was it? Over at GiveMeLiberty dot com they remind us that research was published in a book by William Benson and that:

Bill Benson's findings, published in "The Law That Never Was," make a convincing case that the 16th amendment was not legally ratified and that Secretary of State Philander Knox was not merely in error, but committed fraud when he declared it ratified in February 1913. What follows is a summary of some of the major findings for many of the states, showing that their ratifications were not legal and should not have been counted.

Unfortunately, you would never get your tax liability forgiven based on that. The amendment is accepted by every important authority. It would take another amendment to undo it. You would first have to get the special IRS tax courts abolished. Only then could the (unamended) constitutionality of the income tax be challenged.

Takings and Taxes Together

Books from years ago, perhaps written by people with an interest in legal matters, spoke of "having property in" various things, including abstract things, recognizing that you have exclusive use and control of a thing. I have property in this thing, was how it was used. At the same time, people wrote about "having property" when speaking about owning land or other personal things. A person has property in himself. He owns his mind, body, knowledge and skills. He has property in what he makes. He has property in his income and his wealth.

His income and wealth are his property. They are the means to his happiness. Remember how the phrases "the right to life, liberty and the pursuit of happiness" and "the right to life, liberty and property" are equivalent? For someone else to take any of your property requires compensation. This applies equally to your land, house and your earnings. "Takings" and "taxes" are the same thing, except when the taking is compensated.

But it ought to be voluntary. The freedom of contrac means the right "not to contract" and means "freedom to enter into a contract." A trade is voluntary in the sense that a trade cannot be forced and cannot be prevented. There must be a beneficial result. There must be a reward for both parties.

Wealth, including the savings and checking account from which we draw money for purchasing the necessities of life is something in which we have property. It is private property. So also is the addition to it that we make each week or month with our pay-checks. Depriving us of any property obliges compensation. Compensating you with a payout to a welfare recipient across town or with expenditures on a criminal war is immoral.

Why Not Repeal Takings and Taxes?

Whatever you think of the justice of paying some kind of "rent" for living in this country, taxes should not be necessary. They are supposed to be a necessary evil, but I can only agree on the "evil" part. The most benevolent reading I can imagine for "takings" is that if a person (including agencies and corporations) needs something, he must obtain it from the free market, and not target a specific item or property and then condemn it or seize it with a token compensation. But government does not deserve the least benevolent reading.

Property needed for "public use" is a floating abstraction not worthy of serious thought. It is an immoral conception. Anything you can think of using could be provided privately. Nothing can be proven to be needed to be public.

The legitimate functions performed by government can arguably be financed without taxes and takings. In fact, what we know as government is arguably not needed. Voluntary fees paid to multiple agencies could provide everything we want in the way of adjudicating disputes and defending our lives and property.

The takings clause and the taxes clauses should be repealed.