Sixteenth Amendment

Don’t remember the U.S.’s Sweet Sixteen? That’s okay...here it is: “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.”

Translation: the federal government (specifically Congress) is allowed to tax people...and no, they don’t have to give it to the states. Basically, the 16th amendment means the U.S. federal government is free to tax its people.

The Sixteenth Amendment was a long time coming. First, Congress was taxing people via tariffs and excise taxes on certain goods. They decided that wasn’t working out very well, so they passed the Revenue Act of 1861, which gave the green light to federal income taxing, but that was repealed in 1872.

For the next two decades, the fight was on to make federal income tax a Thing. The demand for federal income tax to replace tariffs and excise taxes was a call for more progressive taxation. When goods are taxed, taxes are regressive, meaning they disproportionately tax poorer individuals at a higher rate than wealthier individuals. The result was the 1894 Wilson-Gorman Tariff Act, which had an income tax provision in it.

But...the Supreme Court struck it down, and said no-can-do...direct taxes must be doled out to the states. Finally, enough support was gathered among states to pass the Sixteenth Amendment...and amendments are no easy thing to pass in the U.S.

Later, in 1916, the Supreme Court upheld an income tax case, setting a new precedent for income taxes. And ol’ Uncle Sam has been collecting taxes from you ever since.

See: Progressive Income Tax. See: Tax Brackets.