British Parliament later stated in the Declaratory Act that they had "full power and authority to make laws and statutes of sufficient force and validity to bind the colonies and people of America in all cases whatsoever." According to the story, the American Revolution wasn't about the size of the tax, it was about the right of Britain to impose taxes on the colonists without their consent.

From 1868 to 1913, 90 percent of federal tax revenue came from alcohol and tobacco taxes. In 1909, President Taft recommended that Congress propose a constitutional amendment to give the government power to tax incomes without apportioning the burden.

In 1913, the Federal Reserve Bank was established. Along with it came the ratification of the Sixteenth Amendment, which gave what many court cases show to be undue power to the Internal Revenue Service. This includes case law that was withheld from IRS employee training, such as Stanton v. Baltic Mining Co. Bill Benson's findings, published in "The Law That Never Was," make a case that the 16th Amendment was not legally ratified and that the Secretary of State committed fraud when he declared it so in 1913.

The 1913 Form 1040 shows that only those with annual incomes of at least $3,000 were instructed to file an income tax return — the equivalent to approximately $98,000 in 2025. And only about three percent of the population was subject to the income tax. In the years following the Great Depression taxes were raised from about a tenth of a person's income to a third. And during WWII the taxpayer base was expanded from 4 million people to 42 million. The Current Tax Payment Act of 1943 required employers to withhold federal income tax from an employee's paycheck each pay period and send the payment directly to the IRS.

There is no statute in the Internal Revenue Code that clearly makes the average American wage earner liable to file a 1040 or pay income tax on their labor. And the Code of Federal Regulations, 26 CFR § 601.602, states explicitly: "The tax system is based on voluntary compliance." The IRS counters that Congress gave the Secretary of the Treasury power to enforce these laws through involuntary collection if voluntary compliance fails.

In 2026, while many Americans struggle to make ends meet, and argue that the IRS is unconstitutional, the White House is targeting a July 4 deadline for the CLARITY Act to become law, which will be the legal framework for the agentic crypto economy, and comprehensive oversight by the IRS. Changes to Internal Revenue Code §6045 require brokers — "any person who is responsible for regularly providing any service effectuating transfers of digital assets on behalf of another person." — to report digital asset transactions to the IRS.

This is happening on the international level as well, by the time the agentic AI commerce is fully running, every wallet, every broker, and every cross-border data-sharing agreement will already be wired directly into the IRS and its international counterparts.