The Sixteenth Amendment to the U.S. Constitution 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.
Congress passed the Sixteenth Amendment to the U.S. Constitution in 1909, and the states ratified it in 1913. The ratification of the amendment overturned an 1895 U.S. Supreme Court decision that had ruled a 2 percent federal flat tax on incomes over $4,000 unconstitutional (pollock v. farmer's loan & trust co., 157 U.S. 429, 15 S. Ct. 673, 39 L. Ed. 759). Article I of the Constitution states that "direct taxes shall be apportioned among the several states … according to their respective numbers." By a 5–4 vote, the Court in Pollock held that the new income tax was a direct tax insofar as it was based on incomes derived from land and, as such, had to be apportioned among the states. Because the law did not provide for apportionment, it was unconstitutional.
The decision was unpopular and took the public by surprise because a federal income tax levied during the u.s. civil war had not been struck down. Critics contended that the conservative majority on the Pollock Court was seeking to protect the economic elite. Industrialization had led to the creation of enormous corporate profits and personal fortunes, which could not be taxed to help pay for escalating federal government services. The democratic party made the enactment of a constitutional amendment a plank in its platform beginning in 1896.
The language of the Sixteenth Amendment addressed the issue in Pollock concerning apportionment, repealing the limitation imposed by article I. Soon after the amendment was ratified, Congress established a new personal income tax with rates ranging from 1 to 7 percent on income in excess of $3,000 for a single individual.
Jensen, Erik M. 2001. "The Taxing Power, the Sixteenth Amendment, and the Meaning of 'Incomes'." Arizona State Law Journal 33 (winter).
Oring, Mark, and Steve Hampton. 1994. "Cheek v. United States and the Tax Protest Movement: An Historical Reassessment of the Sixteenth Amendment." University of West Los Angeles Law Review 25 (annual).
"Sixteenth Amendment." West's Encyclopedia of American Law. . Encyclopedia.com. (August 21, 2017). http://www.encyclopedia.com/law/encyclopedias-almanacs-transcripts-and-maps/sixteenth-amendment
"Sixteenth Amendment." West's Encyclopedia of American Law. . Retrieved August 21, 2017 from Encyclopedia.com: http://www.encyclopedia.com/law/encyclopedias-almanacs-transcripts-and-maps/sixteenth-amendment
Proposed in Congress on July 12, 1909, and ratified February 3, 1913, the Sixteenth Amendment to the U.S. Constitution gives the federal government (specifically, the U.S. Congress) authority to levy and collect income taxes. The amendment states that incomes may be taxed "from whatever sources derived" and without regard to population. In other words, it is up to Congress to determine the level at which citizens of the country are taxed, and this may be done without apportionment among the individual states.
One hundred years before the Sixteenth Amendment was approved, Congress had begun eyeing income tax as a way to collect funds for government use. Lawmakers first considered levying an income tax to help pay for the War of 1812 (1812–1814), which the new republic fought against Great Britain over shipping disputes. During the American Civil War (1861–1865) Congress imposed an income tax for the first time, charging workers and businessmen between three and five percent of their earnings and establishing (in 1862) a Bureau of Internal Revenue to administer the tax program. The war over, income taxes were phased out. In 1894, responding to increasing economic and political pressures, the legislature again passed an income tax law (two percent on all incomes over $4,000), as part of the Wilson-Gorman Tariff Ac, but the law was struck down by the U.S. Supreme Court, which declared it unconstitutional in the case of Pollock v. Farmers' Loan and Trust Company (1898). In the early 1900s the idea of an income tax received widespread political support for the first time. Progressive politicians could see that the nation's wealth was poorly distributed, as the gap between rich and poor was growing wider. Conservative politicians worried that the government would not be able to respond to a national emergency if it lacked resources. These political factions found a single voice in favor of a graduated income tax (a tax based on level of income—those who earn more, pay higher taxes). To circumvent the U.S. Supreme Court it was necessary for Congress to propose an amendment to the Constitution. In ratifying the amendment the states gave Congress the authority to set rates and collect income tax.
Tax rates have fluctuated ever since the passage of the Sixteenth Amendment, reaching their highest mark during World War II (1939–1945), when the rate soared to 91 percent. The war effort also brought the innovation of automatic withholdings: Taxes were deducted directly from paychecks. In 1953 the Bureau of Internal Revenue was dramatically reorganized to create the Internal Revenue Service (IRS). Over the decades tax laws (collectively called the Tax Code) have become increasingly complex, prompting a recent movement in favor of a flat (versus the graduated) tax, where all taxpayers are charged at the same rate.
See also: Flat Tax Provision, Pollock v. Farmers' Loan and Trust Company, Progressive Tax, Regressive Tax
the congress shall have the 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.
sixteenth amendment, u.s. constitution
"Sixteenth Amendment." Gale Encyclopedia of U.S. Economic History. . Encyclopedia.com. (August 21, 2017). http://www.encyclopedia.com/history/encyclopedias-almanacs-transcripts-and-maps/sixteenth-amendment
"Sixteenth Amendment." Gale Encyclopedia of U.S. Economic History. . Retrieved August 21, 2017 from Encyclopedia.com: http://www.encyclopedia.com/history/encyclopedias-almanacs-transcripts-and-maps/sixteenth-amendment