The Sixteenth Amendment

Ratified in 1913, the Sixteenth Amendment gave Congress the power to tax incomes directly, without apportioning the tax among the states by population. It is the constitutional foundation of the modern federal income tax.

For more than a century after ratification of the Constitution, the federal government could not easily levy a direct tax on individual income. Article I required that direct taxes be apportioned among the states according to population, an arrangement that made an income tax practically impossible. Congress passed an income tax during the Civil War, but it expired. A second attempt in 1894 was struck down by the Supreme Court in Pollock v. Farmers' Loan and Trust as an unapportioned direct tax. Progressives spent the next two decades arguing that the federal government needed a broader, fairer revenue base than tariffs and excise taxes could provide. The Sixteenth Amendment, proposed by Congress in 1909 and ratified in 1913, settled the constitutional question. It reads simply: "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." The first modern income tax followed within months, with a top rate of seven percent on incomes over half a million dollars. Rates climbed during the World Wars and stayed high into the postwar period. The income tax became the workhorse of federal finance, funding everything from the military to Social Security administration. The amendment did not require progressive taxation, but it made it possible.