16th Amendment

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Amendment 16 of the Constitution gives Congress the power to lay and collect income taxes. It is stated as follows:
“The Congress shall have power to lay and collect taxes on incomes, from whatever sources derived, without apportionment among the several States, and without regard to any census or enumeration.”
Basically this means that Congress can make up and collect taxes on people’s income. They can set and regulate the amount that they take from each state as well.
Congress passed the Amendment on July 12, 1909, and it was ratified on February 3, 1913.
In 1895, in the Supreme Court case of Pollock v Farmer's Loan and Trust, the Court disallowed a federal income tax. The tax was designed to be an indirect tax, which would mean that states need not contribute portions of a whole relative to its census figures. The Court, however, ruled that the income tax was a direct tax and subject to apportionment. This was the last in a series of conflicting court decisions dating back to the Civil War. Between 1895 and 1909, when the amendment was passed by Congress, the Court began to back down on its position, as it became clear not only to accountants but to everyone that the solvency of the nation was in jeopardy. In a series of cases, the definition of "direct tax" was modified, bent, twisted, and coaxed to allow more taxation efforts that approached an income tax.
The financial requirements of the Civil War prompted the first American income tax in 1861. At first, Congress placed a flat 3-percent tax on all incomes over $800 and later modified this principle to include a graduated tax. Congress repealed the income tax in 1872, but the concept did not disappear.
In 1894, as part of a high tariff bill, Congress enacted a 2-percent tax on income over $4,000. The tax was almost immediately struck down by a five-to-four decision of the Supreme Court, even though the Court had upheld the constitutionality of the Civil War tax a...