The furtherance of the personal income tax in the United States has a lengthy – and some would say shaky – history. The Founding Fathers included explicit speech in the Constitution regarding the authority of the Federal Government to tax its citizens. Specifically, Article 1; Section 2, Clause 3 states:
“Representations and direct taxes shall be apportioned among the several states which may be included within this union, according to their respective numbers…”
The word apportioned becomes crucial in discerning the original intent of the instruction. The definition of apportionment means to distribute or allocate proportionally. Consequently, the Founding Fathers directed a distribution corresponding to their respective numbers or in other words it was based on the number of people in each state. Then Article 1; Section 9, Clause 4 it states:
“No Capitation, or other direct tax, shall be laid, unless in proportion to the census or enumeration herein before directed to be taken.”
Again, we have to understand a Capitation Tax. This type of tax is imposed upon a person at a fixed rate, regardless of the taxpayers ability to pay, occupation, assets, or income.”
Much of the opposition to a graduated income tax contends that it is unconstitutional because an indirect tax cannot be required upon property and that compensation for labor is property therefore no indirect tax may be legally imposed. What is more, they claim that the Right of Labor is an inalienable fundamental right upon which a privilege tax cannot be imposed. This was set forth in Murdoc v. Pennsylvania, 319 U.S. 105, at 113 which stated, “A State, or The Federal Government, may not impose a charge for the enjoyment of a Right granted by the Federal Constitution.”
But, as a matter of course, the confirmation of the 16th Amendment was a direct result of the Supreme Courts decision in Pollock v. Farmers Loan & Trust Co. in 1895. The Courts decision thwarted Congresses effort to tax income uniformly throughout the US. This decision was based on Article 1; Sections 2 & 9 as stated above. Their rationale was that under these Articles, Congress could not impose a direct tax unless apportioned according to population and supported by the census. Why the Court voted this way this time is unclear since just fifteen years beforehand, the Justices had unanimously affirmed the collection of similar taxes in order to help fund the Civil War.
Consequently, in order to facilitate the power of the Congress to lay and collect taxes on incomes, the Constitution was amended to get the better of the language used in Article 1; Sections 2 & 9. The 16th Amendment to the Constitution states:
“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.”