The 16th Amendment
Despite the Court’s ruling, the progressive income tax remained a popular policy, thanks to rising concerns about the unequal distribution of both wealth and political power at the turn of the 20th century. Party politics followed public support. At its 1896 convention, the Democratic Party endorsed a progressive income tax for the first time. According to the party’s platform, such a tax would ensure that “wealth may bear its due proportion of the expenses of the government.” By 1908, both major parties supported some kind of income tax.
In 1909, the House and Senate approved Constitutional amendment giving Congress the power to “lay and collect taxes on incomes . . . without regard to any census or enumeration.” Approved by 42 of 48 states, the 16th Amendment took effect on February 25 1913.
The first tax enacted under the 16th Amendment was relatively modest, imposing only a 1 percent rate on personal and corporate income. Thanks to a high exemption rate, only about 2 percent of Americans had to pay any income tax to the federal government in the tax’s early years.