April 11, 2018 | Hall v Hall: Consolidated Cases Remain Independent for Appeal
|The Constitutionality of the Income Tax||Important Cases|
|Congress has always had the ability to levy taxes on the American people. However, according to the original Constitution, if Congress wanted to tax people directly, it could only do so in proportion to each state’s population. This meant that the larger states had to pay a greater share of the federal taxes no matter what. For example, if the State of Richia had only 1,000 millionaire residents and the State of Poorland had only 1,000,000 homeless residents, if Congress wanted to issue a direct tax, Poorland would have to pay more than Richia because Poorland had a greater population.|
To help finance the Civil War, however, Congress issued what is known as an “Income Tax.” Income taxes directly tax people based on their own individual incomes irrespective of how populated their home state happens to be. Congress issued another income tax after the Civil War as well. But obviously, such a scheme was unconstitutional. In Pollock v. Farmer’s Loan & Trust Company (1895) the Supreme Court held that an income tax of this type was not within Congress’ power. It was a direct tax. As such, it had to be apportioned based on state populations.
Hence, in 1913, the 16th Amendment was ratified. The amendment states that “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.” This amendment directly overruled the decision in Pollock and completely eliminated the requirement that taxes be levied on individuals in proportion with the populations of their states.
|Pollock v. Farmer’s Loan & Trust Company (1895)|