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The 16th amendment, which was adopted on July 2, 1909, and ratified on February 3, 1913, granted Congress the authority to enact a Federal income tax.
The income tax amendment, which had a significant social and economic impact, was added to the Constitution through a bizarre series of circumstances that culminated in some questionable political scheming.
The first income tax in America was instituted in 1861 as a result of the war's financial demands. All incomes over $800 were initially subject to a flat 3-percent tax by Congress, which was later changed to a progressive tax. Although the income tax was abolished by Congress in 1872, the idea persisted.
A 2-percent tax on income over $4,000 was established by Congress in 1894 as a component of a high tariff measure. Despite the Supreme Court having confirmed the constitutionality of the Civil War tax as recently as 1881, the levy was nearly soon overturned by a 5–4 decision of the Court. A general return to prosperity around the turn of the century tempered the call for reform, despite the fact that farm organizations criticized the Court's ruling as a shining illustration of the government and business coalition against the farmer.
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