Why was the 16th amendment necessary?

Why was the 16th amendment necessary?

The Sixteenth Amendment, ratified in 1913, played a central role in building up the powerful American federal government of the twentieth century by making it possible to enact a modern, nationwide income tax. Before long, the income tax would become by far the federal government’s largest source of revenue.

What led to the 16th Amendment?

The ratification of the Sixteenth Amendment was the direct consequence of the Court’s 1895 decision in Pollock v. Farmers’ Loan & Trust Co. holding unconstitutional Congress’s attempt of the previous year to tax incomes uniformly throughout the United States.

When did the income tax become part of the Constitution?

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. The financial requirements of the Civil War prompted the first American income tax in 1861.

What kind of income is taxable under the Sixteenth Amendment?

Macomber, the Court has ruled that a dividend in common stock paid to holders of preferred stock, 26 and a dividend in preferred stock paid to holders of common stock, 27 because they gave the stockholders an interest different from that represented by their prior holdings, constituted income taxable under the Sixteenth Amendment .

When was the 16th Amendment to the Constitution ratified?

16th Amendment to the U.S. Constitution: Federal Income Tax (1913) Citation: The 16th Amendment, March 15, 1913; Ratified Amendments, 1795-1992; General Records of the United States Government; Record Group 11; National Archives. Income Tax Form, 1913.

Why was the exaction of income tax permissible?

Because the exaction was permissible as a tax, its validity was held not to be impaired by its penal objective, which was “to force corporations to distribute earnings in order to create a basis for taxation against the stockholders.”