The U.S. Constitution’s Sixteenth Amendment: The Legalization of Income Tax

By Michael Arnheim

Can Uncle Sam legally tax you on your income? You may resent this government power, but it is kosher. However, that hasn’t always been the case. Income tax is a direct tax because it’s paid directly to the government. But it was unknown in the early days of the Republic. The earliest form of direct tax was a capitation tax — or poll tax — a flat tax of the same amount payable by everybody regardless of wealth or earnings.

Article I, Section 9 contains this little tidbit about direct taxes:

No Capitation, or other direct, Tax shall be laid, unless in Proportion to the Census or Enumeration herein before directed to be taken.

A capitation tax is of course automatically in proportion to population — but income tax normally varies according to income, which prevents it from being proportional to population.

Income tax was first introduced in 1861 to pay for the Civil War. It was abolished in 1872, and when the government tried to reintroduce it in 1894 it was immediately challenged. In 1895 the U.S. Supreme Court declared income tax unconstitutional.

However, most politicians recognized the need for income tax. In the presidential election of 1912, all three main candidates — incumbent President William H. Taft, former President Theodore Roosevelt, and the winner, Woodrow Wilson — supported the legalization of income tax. The Sixteenth Amendment was introduced precisely to achieve that objective. Here’s what it says:

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.