Sixteenth Amendment

Sixteenth Amendment This amendment was a response to the Supreme Court's decision in Pollock v. Farmers' Loan (1895), which had declared the federal income tax law of 1894 unconstitutional. The burgeoning size of the federal government rendered traditional revenue sources increasingly inadequate, while there was great public criticism of the growing disparities of wealth produced by industrialization. Some conservatives in Congress supported the amendment as part of a scheme to defeat a pending income tax law in 1909. They mistakenly believed that the states would fail to approve it.

Ratified in 1913, the Sixteenth Amendment specifically empowered Congress to levy an income tax “upon any source whatever without apportionment among the several states,” a power that Congress immediately exercised. The graduated income tax soon became the major source of revenue and has remained such ever since.

The Supreme Court has largely confined itself to interpretation of the increasingly complex income tax laws and the regulations of the Internal Revenue Service. The amendment itself has infrequently been a subject of constitutional litigation. Nevertheless, the Court has held that incomes from illegal sources may be taxed and that corporations may be taxed at a different rate than individuals. The Supreme Court has also ruled in South Carolina v. Baker (1988) that income from state and municipal bonds may be taxed, although Congress has not seen fit to do so.

While the fact of income tax is now beyond constitutional challenge, Congress has great discretion over how to use its power. Political battles are frequently waged over tax questions and the related issue of reform.

See also Income Tax; Reversals of Court Decisions by Amendment.

Loren P. Beth