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How does the 16th Amendment affect us today?

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Quick Answer

The 16th Amendment gives the federal government the right to collect income tax. Prior to the ratification of this amendment, the U.S. Supreme Court found a federal income tax unconstitutional in Pollock v. Farmer’s Loan & Trust Co. Before the 16th Amendment, the Constitution only allowed Congress to levy taxes against states and not individuals.

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Full Answer

Even though the Constitution did not allow Congress to levy income taxes, a bill passed during the Civil War charging citizens a 3 percent tax on income over $800. Revisions to the law eventually resulted in a tax on income over $600, but such taxes ended in 1866. In 1894, Congress imposed a 2 percent tax on income over $4,000, which led to the Supreme Court case and a five-to-four decision striking down the law.

At the beginning of the 20th century, there was a move to tax corporations by President Taft. Congress responded by drafting the 16th Amendment, believing it would not pass. However, the tax was popular in the western states and a sufficient number of states ratified the amendment so that it became law in 1913. The tax laws were generous, and less than 1 percent of the population paid income tax at a rate of 1 percent of their income.

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