Skip to content

16th Amendment (1913)

February 3, 2017
1040_tax

Under Art. I § 9 of the Constitution, direct taxation of individuals was prohibited except in proportion to the census.  On February 3, 1916, the Sixteenth Amendment was ratified to impose an income tax, without regard to the population of any state.  The Constitution granted Congress the power to levy indirect taxes.  Prior to 1913, the federal budget relied on excise taxes, tariffs, customs duties and public land sales for most of its revenue.

During the Civil War,  Congress had enacted a flat rate tax on income to finance the war effort.  It was repealed in 1872.   In 1894, Congress again approved a flat rate income tax.  The Supreme Court declared that tax unconstitutional in Pollock v. Farmers’ Loan & Trust Co., 151 U.S. 601 (1895), ruling that it was levied without regard to population.

The Revenue Act of 1913 was passed on October 3 and provided that a tax would be levied against income, including income derived from wages, salaries, and compensation as well as interest, dividends, rents and securities.  The tax rate was 1% on couples earning over $4,000 and on individuals earning over $3,000, with higher earners to pay more.

No comments yet

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: