Sixteenth Amendment

On February 25, 1913, the Sixteenth Amendment to the U.S. Constitution was ratified, which required Americans to pay income tax. It took nearly four years of debate to get this amendment passed.

The idea of paying income tax was not new in 1913. As far back as the War of 1812 the concept of using taxation to fund a federal issue was considered. The war ended before the tax levy could be legalized, and the question of taxation did not come up again until the American Civil War (1861–65).

The Internal Revenue Act of 1862 taxed incomes in a progressive manner. This meant that the higher the income, the higher the tax. Those with incomes up to ten thousand dollars paid a 3 percent tax; those who earned more than that annually paid a 5 percent tax. Although rates fluctuated the law was in effect until 1872, when Congress let it expire. Business owners were unhappy with the tax and pressured lawmakers for change, since they viewed it as being penalized for being successful.

In 1894 Congress passed the Wilson-Gorman Tariff Act, which imposed a 2 percent tax on all annual incomes over four thousand dollars. The law was declared unconstitutional the following year, however, in violation of the Constitution's prohibition of direct taxation.

Many citizens fought for the adoption of income taxation. It was an easy way to raise money that could be used for any number of things. The main concern was that the bulk of the country's wealth lay in the hands of just a few people. This was seen as a threat to democracy, and the income tax could reverse that trend. Conservatives opposed the use of taxation as a means for the redistribution of wealth.

As it became apparent that the income tax measure might become reality, a Constitutional amendment was submitted to the states in 1909. The back-and-forth fighting over the issue continued into the second decade of the twentieth century. In the end only five states rejected passage of the amendment.