This Day in American History

February 3, 1913 – With 36 states voting in favor of the measure, the Sixteenth Amendment to the Constitution, authorizing a federal income tax, was ratified.

In researching this post, I couldn't believe my eyes when I saw some supposedly rational citizens of this republic murmuring on the Web that there was no foundation in the Constitution, its amendments or any Supreme Court decisions for the income tax. This claim possessed all the credibility of an Elvis sighting down at the local Piggly-Wiggly.

(Don't go sending me any images of the latter phenomenon – that guy in the rhinestone suit is probably one of those "skydiving Elvis impersonators" still unemployed a dozen years after the highlight of his career—an appearance in the hilarious Andrew Bergman film, Honeymoon in Vegas).

The amendment came about as a reaction to the deeply divided U.S. Supreme Court decision in Pollack v. Farmers, Loan and Trust Co. (1895), which declared unconstitutional an act passed by Congress the prior year to tax incomes uniformly throughout the United States. The amendment was so unusual partly because it was only one of four passed specifically to redress decisions of the high court (the others were the Eleventh, Thirteenth, Fourteenth, and Twenty-Sixth Amendments).

The income tax was first used as an extraordinary measure to produce badly needed funds during the Civil War. (Paying their full share of taxes was the least that the wealthy could do for their country during those years, given that so many well-to-do citizens such as Andrew Carnegie, Pierpont Morgan, Grover Cleveland, and the father of a future President, Theodore Roosevelt Sr., bought their way by purchasing substitutes—often immigrants, such as the Germans and Irish—to take their places in killing fields ranging from Gettysburg to the Red River Valley.)

Compensating for the loss of one government revenue source, the Sixteenth Amendment enabled the soon-to-be-inaugurated President Woodrow Wilson to fulfill a campaign pledge to promote free trade. Later that year, in a special session called at his behest—the busiest in American history up to that point -- Congress passed the Underwood-Simmons Tariff, which represented the first successful reduction in the tariff since the Civil War. The act spurred competition—a hallmark of Wilson’s “New Freedom” program—and reduced prices for consumers.

By year’s end, Wilson had taken off the table an issue that had caused contention for a generation among different sections of the country: the South and West, whose farmers worried that Federal taxes on property would replace excise taxes, and the Northeast, where industrial leaders had built up major fortunes without the government knowing many of the details of how they ran their businesses.

Even in the final year of World War I, when the need for revenue again required boosts in taxes, only 5 percent of the population paid any income taxes. Over the years, as the role of government expanded, that state of affairs would change dramatically.