In 1909, U.S. Senator Norris Brown of Nebraska proposed the Sixteenth Amendment to the U.S. Constitution, which would authorize Congress to institute a graduated income tax on earnings of American workers.
Between 1909 and 1913, state legislatures across the country began to ratify the amendment. On February 3, 1913, this day in history, Wyoming became the last state needed for ratification.
The fight wasn’t over yet, however. The amendment was challenged in courts, and on January 24, 1916, the Supreme Court declared, in Brushaber v. Union Pacific Railroad Co (240 U.S. 1, 1916) that the income tax was in fact constitutional. Specifically, the Court upheld the validity of a tax statute called the Revenue Act of 1913, also known as the Tariff Act, Ch. 16, 38 Stat. 166 (October 3, 1913).
This was not the first income tax passed in the U.S. As the Library of Congress reports,
The origin of the income tax on individuals is generally cited as the passage of the 16th Amendment, passed by Congress on July 2, 1909, and ratified February 3, 1913; however, its history actually goes back even further. During the Civil War Congress passed the Revenue Act of 1861 which included a tax on personal incomes to help pay war expenses. The tax was repealed ten years later. However, in 1894 Congress enacted a flat rate Federal income tax, which was ruled unconstitutional the following year by the U.S. Supreme Court because it was a direct tax not apportioned according to the population of each state. The 16th amendment, ratified in 1913, removed this objection by allowing the Federal government to tax the income of individuals without regard to the population of each State.”
You can read the text of the 16th Amendment here and you can read an analysis of the amendment and its origins here and in “The Constitutionality of the Federal Income Tax of 1913,” University of Pennsylvania Law Review and American Law Register, Vol. 64, No. 5 (Mar., 1916), pp. 498-502, online here.
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