State Of New York et al v. Mnuchin et al

Filing 47

DECLARATION of Owen T. Conroy in Support re: 44 CROSS MOTION for Summary Judgment .. Document filed by State Of Connecticut, State Of New York, State of Maryland, State of New Jersey. (Attachments: # 1 Exhibit 1, # 2 Exhibit 2, # 3 Exhibit 3, # 4 Exhibit 4, # 5 Exhibit 5, # 6 Exhibit 6, # 7 Exhibit 7, # 8 Exhibit 8, # 9 Exhibit 9, # 10 Exhibit 10, # 11 Exhibit 11, # 12 Exhibit 12, # 13 Exhibit 13, # 14 Exhibit 14, # 15 Exhibit 15, # 16 Exhibit 16, # 17 Exhibit 17, # 18 Exhibit 18, # 19 Exhibit 19, # 20 Exhibit 20, # 21 Exhibit 21, # 22 Exhibit 22, # 23 Exhibit 23, # 24 Exhibit 24, # 25 Exhibit 25, # 26 Exhibit 26, # 27 Exhibit 27, # 28 Exhibit 28, # 29 Exhibit 29, # 30 Exhibit 30, # 31 Exhibit 31, # 32 Exhibit 32, # 33 Exhibit 33, # 34 Exhibit 34, # 35 Exhibit 35, # 36 Exhibit 36, # 37 Exhibit 37, # 38 Exhibit 38, # 39 Exhibit 39, # 40 Exhibit 40, # 41 Exhibit 41, # 42 Exhibit 42, # 43 Exhibit 43, # 44 Exhibit 44, # 45 Exhibit 45, # 46 Exhibit 46, # 47 Exhibit 47, # 48 Exhibit 48, # 49 Exhibit 49, # 50 Exhibit 50, # 51 Exhibit 51, # 52 Exhibit 52, # 53 Exhibit 53, # 54 Exhibit 54, # 55 Exhibit 55, # 56 Exhibit 56, # 57 Exhibit 57, # 58 Exhibit 58, # 59 Exhibit 59, # 60 Exhibit 60, # 61 Exhibit 61, # 62 Exhibit 62, # 63 Exhibit 63, # 64 Exhibit 64, # 65 Exhibit 65, # 66 Exhibit 66, # 67 Exhibit 67, # 68 Exhibit 68, # 69 Exhibit 69, # 70 Exhibit 70, # 71 Exhibit 71, # 72 Exhibit 72, # 73 Exhibit 73, # 74 Exhibit 74, # 75 Exhibit 75, # 76 Exhibit 76, # 77 Exhibit 77, # 78 Exhibit 78, # 79 Exhibit 79, # 80 Exhibit 80, # 81 Exhibit 81, # 82 Exhibit 82, # 83 Exhibit 83, # 84 Exhibit 84, # 85 Exhibit 85, # 86 Exhibit 86, # 87 Exhibit 87, # 88 Exhibit 88, # 89 Exhibit 89, # 90 Exhibit 90, # 91 Exhibit 91, # 92 Exhibit 92, # 93 Exhibit 93, # 94 Exhibit 94, # 95 Exhibit 95, # 96 Exhibit 96, # 97 Exhibit 97, # 98 Exhibit 98, # 99 Exhibit 99, # 100 Exhibit 100, # 101 Exhibit 101, # 102 Exhibit 102, # 103 Exhibit 103, # 104 Exhibit 104, # 105 Exhibit 105, # 106 Exhibit 106)(Conroy, Owen)

Exhibit 14

THE RATIFICATION OF THE FEDERAL
INCOME TAX AMENDMENT
John D. Buenker
The ratification of the federal income tax amendment was the
product of two contemporaneous and interrelated movements that
swept the United States during the first two decades of the twentieth century. The first was what Clifton K. Yearley has styled the
"revolution in taxation"-the drive at all levels of government to
create a tax system that was more predictable, productive, and
equitable than was the existing complex of property levies, excise
taxes, and tariffs.' The primary goal of this revolution was to reach
the wealth engendered by the rapid and large-scale industrialization of the late nineteenth century. It aimed to create a system of
taxation based on two guiding principles: (1) "the ability to pay" and
(2) "from whatever source derived." The former meant that taxes
should fall heaviest on those best able to bear them; the latter, that
income from stocks, bonds, and dividends ought to be taxed at least
as heavily as that from salaries and wages. Generally this was
translated into progressive income and inheritance taxes, which fell
almost exclusively upon those in the upper income brackets. There
can be little doubt that the task of ratifying the amendment was
greatly eased because of the understanding that any tax levied
under its authority would fall only upon the wealthiest 3 percent to
5 percent of the population; the claim that "only the rich will pay"
was heard in state legislatures across the land.
Cato journal, Vol. 1, No. 1 (Spring 1981). Copyright c Cato Institute. All rights
reserved.
The author is Professor of History at the University of Wisconsin- Parkside,
53140.
This paper was prepared for the Cato Institute's symposium "Taxation and
Society," held at the University of Chicago in April 1980.

'Clifton K. Yearley, The Money Machines (Albany: State University of New York
Press, 1970).
183

CATO JOURNAL

In addition to the disabilities posed by disfranchisement and factionalism, the amendment was also vulnerable to appeals based
upon cherished southern beliefs. Most frequently, it faced the objection that an income tax would violate states' rights, by augmenting federal power and by allowing federal tax collectors to ravage
the South. An Arkansas senator typically objected to having his
business pried into by a "snippy little deputy U.S. marshal." Several
southern lawmakers coupled this theme with Hughes's contention
concerning state and municipal bonds. The speaker of the Florida
house, even though he favored ratification, moved to have the
resultant revenues returned to their states of origin. The states'
rights argument was raised in almost every southern legislature; it
was the most frequently voiced reason for opposing the amendment. Proponents of the measure often charged that such appeals
were blinds for special interests, as did the Birmingham Age-Herald
when it insisted that opponents of ratification, though using the
states' rights argument "for all it is worth," were in reality mere "lobbyists." Most, however, acknowledged the sincerity of the concern,
seeking to prove that a federal income tax would not seriously impair state sovereignty.5 9
Closely tied to the states' rights issue were appeals to the "Lost
Cause." Some legislators were Confederate veterans who objected
to the amendment as a plot by the Grand Army of the Republic to
gain additional benefits for Union veterans. Most opponents of the
amendment, though, simply styled it a northern plot to complete
the destruction begun by the Civil War and Reconstruction, linking
it with the infamous Thirteenth, Fourteenth, and Fifteenth Amendments. The classic statement was made by Richard Byrd in the Virginia House of Delegates:
A hand from Washington will be stretched out and placed upon
every man's business; the eye of the federal inspector will be in
every man's counting house. -The law will of necessity have inquisitorial features, it will provide penalties, it will create complicated machinery. Under it men will be hailed into courts distant
from their homes. Heavy fines imposed by distant and unfamiliar
tribunals will constantly menace the taxpayer. An army of federal
inspectors, spies and detectives will descend upon the state.
- Who of us who have had knowledge of the doing of the federal

officials in the Internal Revenue Service can be blind to what will
59

Birmingham Age-Herald, August 8, 1909; Arkansas Gazette, March 8, April 6, 12,
23, 1911; Louisiana, Senate Journal, 1910, pp. 167-69; Jackson Daily News, January
27, February 8, 1910; Atlanta Constitution, July 7, 8, 11, 12, 13, 24, 1910; Florida,
House Journal, 1911, pp. 15-16.

204