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'''The Sixteenth Amendment''' to the United States Constitution allows the Congress to "lay and collect taxes on incomes, from whatever source derived".

'''The Sixteenth Amendment''' to the United States Constitution allows the Congress to "lay and collect taxes on incomes, from whatever source derived".

Far-reaching in its social as well as its economic impact, the income tax amendment became part of the Constitution by a curious series of events culminating in a bit of political maneuvering that went awry.  

Far-reaching in its social as well as its economic impact, the income tax amendment became part of the Constitution by a curious series of events culminating in a bit of political maneuvering that went awry.

==Background==

==Background==

After ''Pollock'', the Court did uphold creative taxation by Congress based on a theory that they were levied on mere "incidents of ownership" and thus were constitutional excise taxes:  (1) an inheritance tax, (2) a tax affixing revenue stamps to memoranda for the sale of merchandise on commodity exchanges, (3) a war revenue tax upon tobacco being resold, and (4) a corporate income tax as an excise "measured by income" justified by the privilege of doing business in corporate form.

After ''Pollock'', the Court did uphold creative taxation by Congress based on a theory that they were levied on mere "incidents of ownership" and thus were constitutional excise taxes:  (1) an inheritance tax, (2) a tax affixing revenue stamps to memoranda for the sale of merchandise on commodity exchanges, (3) a war revenue tax upon tobacco being resold, and (4) a corporate income tax as an excise "measured by income" justified by the privilege of doing business in corporate form.

==Comeback==

===Comeback===

The income tax, long a dream of progressives, was put on the back burner until a later date and more opportune time to try again.  As a few years went by, the popularity of taxing income gradually increased once more, and even was included as a topic in the 1907 State of the Union address of then president Theodore Roosevelt.<ref>[http://www.let.rug.nl/usa/presidents/theodore-roosevelt/state-of-the-union-1907.php State of the Union 1907 - 3 December 1907], Quote: "When our tax laws are revised the question of an income tax and an inheritance tax should receive the careful attention of our legislators. In my judgment both of these taxes should be part of our system of Federal taxation."</ref>

The income tax, long a dream of progressives, was put on the back burner until a later date and more opportune time to try again.  As a few years went by, the popularity of taxing income gradually increased once more, and even was included as a topic in the 1907 State of the Union address of then president Theodore Roosevelt.<ref>[http://www.let.rug.nl/usa/presidents/theodore-roosevelt/state-of-the-union-1907.php State of the Union 1907 - 3 December 1907], Quote: "When our tax laws are revised the question of an income tax and an inheritance tax should receive the careful attention of our legislators. In my judgment both of these taxes should be part of our system of Federal taxation."</ref>

In 1909 progressives in Congress, led by Republican Senator Nelson Aldrich, Republican of Rhode Island, proposed a constitutional amendment allowing an income tax.  President [[William Howard Taft]] gave an important speech in support of the effort on June 16, 1909.<ref>[http://www.presidency.ucsb.edu/ws/print.php?pid=68517 William Howard Taft, Special Message To the Senate and House of Representatives]</ref>  Shortly thereafter, a resolution proposing the 16th amendment was submitted on July 12, 1909.<ref>[https://books.google.com/books?id=9883AQAAIAAJ&pg=PA252 United States Congressional serial set, Issue 6773]</ref> The amendment was ratified by one state legislature after another, and on February 25, 1913, with the certification by Secretary of State Philander C. Knox, the 16th amendment took effect. The first income tax was passed in 1913 as part of the Underwood Tariff. Since the new tariff was lower, the government needed a way to replace the lost revenue. Due to generous exemptions and deductions, less than 1 percent of the population paid income taxes at the rate of only 1 percent of net income. However, during [[World War I]] the heavy cost of the war led to much higher rates; the rates were lowered in the 1920s.

In 1909 progressives in Congress, led by Republican Senator Nelson Aldrich, Republican of Rhode Island, proposed a constitutional amendment allowing an income tax.  President [[William Howard Taft]] gave an important speech in support of the effort on June 16, 1909.<ref>[http://www.presidency.ucsb.edu/ws/print.php?pid=68517 William Howard Taft, Special Message To the Senate and House of Representatives]</ref>  Shortly thereafter, a resolution proposing the 16th amendment was submitted on July 12, 1909.<ref>[https://books.google.com/books?id=9883AQAAIAAJ&pg=PA252 United States Congressional serial set, Issue 6773]</ref> The amendment was ratified by one state legislature after another, and on February 25, 1913, with the certification by Secretary of State Philander C. Knox, the 16th amendment took effect. The first income tax was passed in 1913 as part of the Underwood Tariff. Since the new tariff was lower, the government needed a way to replace the lost revenue. Due to generous exemptions and deductions, less than 1 percent of the population paid income taxes at the rate of only 1 percent of net income. However, during [[World War I]] the heavy cost of the war led to much higher rates; the rates were lowered in the 1920s.

The Sixteenth Amendment settled the constitutional question of permission to tax income and, by so doing, effected dramatic changes in the American way of life.  

The Sixteenth Amendment settled the constitutional question of permission to tax income and, by so doing, effected dramatic changes in the American way of life.  The states which ratified the amendment are as follows:<ref>[https://books.google.com/books?id=9883AQAAIAAJ&pg=PA253 United States Congressional serial set, Issue 6773]</ref>

 

 

 

 

The remaining states ratified this amendment, after the necessary number was reached:  [[Vermont]], [[Massachusetts]], [[New Hampshire]], and [[West Virginia]].

==Repeal efforts==

==Repeal efforts==