Table of Contents
- 1 Overview of 16th Amendment – Simplified and Explained
- 2 Famous 16th Amendment Related Cases
- 2.1 1. Brushaber v. Union Pacific Railroad Co. (1916)
- 2.2 2. United States v. Doremus (1919)
- 2.3 3. Eisner v. Macomber (1920)
- 2.4 4. Helvering v. Gregory (1935)
- 2.5 5. United States v. Sullivan (1944)
- 2.6 6. Commissioner v. Glenshaw Glass Co. (1955)
- 2.7 7. Commissioner v. Tufts (1983)
- 2.8 8. Commissioner v. Schleier (1995)
- 2.9 9. South Dakota v. Wayfair, Inc. (2018)
- 2.10 10. Trump v. Mazars USA (2020)
- 2.11 11. Commissioner v. Duberstein (1960)
- 2.12 12. Commissioner v. Clark (1983)
- 2.13 13. United States v. Welch (1980)
- 2.14 14. United States v. James (1983)
- 2.15 15. Edelman v. Jordan (1974)
- 2.16 16. United States v. Calamaro (2005)
- 2.17 17. Commissioner v. Banks (2003)
- 2.18 18. Leocal v. Ashcroft (2004)
- 2.19 19. Commissioner v. Glenshaw Glass Co. (1960)
- 2.20 20. National Federation of Independent Business v. Sebelius (2012)
- 2.21 21. Murphy v. IRS (2020)
- 2.22 22. Agency Holding Corp. v. Malley-Duff & Associates (1985)
- 2.23 23. United States v. Hall (1998)
- 2.24 25. United States v. Carlton (1994)
- 2.25 26. United States v. Skelly Oil Co. (1968)
- 2.26 27. Mayo v. United States (1981)
- 2.27 28. Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc. (1984)
- 2.28 29. Hutchinson v. Commissioner (2006)
- 2.29 30. Maryland v. Wynne (2015)
- 2.30 Conclusion
- 2.31 The 16th Amendment: Federal Income Tax and State Legal Implications
- 2.31.1 Introduction
- 2.31.2 The Birth of Federal Income Tax
- 2.31.3 State Laws and Taxation
- 2.31.4 Tax Coordination and Impact
- 2.31.5 State Income Taxes and Conformity
- 2.31.6 Constitutional Questions
- 2.31.7 Revenue Generation and Services
- 2.31.8 Taxpayer Compliance and State Laws
- 2.31.9 Contemporary Implications
- 2.31.10 Shaping the Taxation Landscape
- 2.32 How did income tax start?
Overview of 16th Amendment – Simplified and Explained
The 16th Amendment to the United States Constitution is a pivotal piece of legislation that forever changed the way the federal government collects revenue. Ratified in 1913, this amendment granted Congress the power to levy and collect income taxes from American citizens. In this comprehensive overview, we will delve into the origins, significance, and implications of the 16th Amendment, while simplifying its complex legal language and exploring how it has shaped the nation’s fiscal landscape.
Understanding the 16th Amendment: A Historical Context
Before the 16th Amendment, the federal government primarily relied on tariffs and excise taxes to fund its operations. These forms of taxation proved insufficient during times of war or economic hardship, leading to financial instability and budgetary constraints. The need for a more stable and flexible source of revenue became apparent.
Origins of the Income Tax Idea
The concept of taxing income wasn’t new when the 16th Amendment was proposed. In fact, the United States had experimented with income taxes during the Civil War and again in the late 19th century. However, these early attempts faced legal challenges and were often seen as unconstitutional.
The Pollock v. Farmers’ Loan & Trust Co. Case
The turning point came with the Supreme Court case of Pollock v. Farmers’ Loan & Trust Co. in 1895. The Court ruled that certain income taxes imposed by the Wilson-Gorman Tariff Act were unconstitutional because they were not apportioned among the states based on population, as required by the Constitution.
The Birth of the 16th Amendment
The Pollock decision left a significant void in the federal government’s ability to collect income taxes. This void prompted Congress to take action, leading to the proposal and ratification of the 16th Amendment.
In 1909, President William Howard Taft called for a constitutional amendment to grant Congress the power to tax income without the need for apportionment among the states. The proposed amendment stated:
“Congress shall have the power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the states, and without regard to any census or enumeration.”
This simple yet profound change sought to remove the constitutional obstacles that had hindered previous attempts to establish a federal income tax.
The Ratification Process
Ratifying a constitutional amendment is no small feat. It requires a proposal by Congress, followed by approval from three-fourths (38 out of 50) of the state legislatures. The 16th Amendment faced significant opposition, particularly from states that relied heavily on revenues from other forms of taxation.
However, over the course of several years, the amendment gained momentum. On February 3, 1913, Delaware became the 36th state to ratify it, and just a few days later, both Wyoming and New Mexico followed suit. This pushed the amendment over the required three-fourths threshold, and it was officially ratified on February 25, 1913.
Understanding the 16th Amendment’s Impact
With the ratification of the 16th Amendment, the United States entered a new era of taxation. Here are some key aspects of its impact:
Federal Revenue Growth
The most immediate effect of the 16th Amendment was the significant increase in federal revenue. By tapping into the income of individuals and corporations, the federal government gained a stable and substantial source of income that could be used to fund various programs and initiatives.
The 16th Amendment paved the way for a progressive income tax system. This means that individuals with higher incomes pay a higher percentage of their earnings in taxes. Progressive taxation is seen as a way to redistribute wealth and fund government services while placing a relatively lighter burden on lower-income earners.
Complex Tax Code
Over the years, the tax code has become increasingly complex, with numerous deductions, credits, and loopholes. This complexity has led to the need for tax professionals and software to navigate the system effectively. While the amendment itself is straightforward, the implementation has evolved into a labyrinth of regulations.
Revenue for Government Programs
The revenue generated through income taxes has funded various government programs, including defense, healthcare, education, and social welfare. Without this revenue source, many of these programs would be unsustainable at their current levels.
The 16th Amendment Today
The 16th Amendment remains a fundamental pillar of the United States’ fiscal policy. Its continued existence reflects the government’s reliance on income taxes to maintain its operations and finance essential programs. However, it has also been a subject of debate and controversy.
The question of tax rates, deductions, and the overall fairness of the tax system has been a central issue in American politics. Different political parties and interest groups have varying opinions on how the income tax system should be structured and who should bear the greatest tax burden.
Tax Reform Efforts
Efforts to reform the tax code have been ongoing for decades. Presidents and Congresses have enacted numerous changes to the tax system in an attempt to simplify it, close loopholes, and ensure that it serves the best interests of the nation.
Challenges and Criticisms
The 16th Amendment has faced criticism for its complexity, as well as concerns about the potential for abuse by the government. Some argue that it allows for overreach, while others believe that certain income groups are disproportionately burdened by the tax system.
The 16th Amendment to the United States Constitution fundamentally altered the nation’s fiscal landscape by granting Congress the power to levy and collect income taxes. It emerged from a historical context of financial instability and the need for a more stable source of revenue. While its ratification was not without challenges, it ushered in an era of federal income taxation that has persisted for over a century.
The impact of the 16th Amendment is far-reaching, from the growth of federal revenue to the establishment of a progressive tax system. It has allowed the government to fund critical programs and services while sparking ongoing debates about tax reform and fairness.
As the United States continues to evolve, so too will its tax policies, and the 16th Amendment will remain a central point of discussion and contention in the nation’s ongoing fiscal dialogue. Understanding its origins, significance, and implications is essential for any citizen seeking to engage in these important debates and make informed decisions about the country’s financial future.
Famous 16th Amendment Related Cases
The 16th Amendment to the United States Constitution was ratified in 1913, allowing Congress to levy a federal income tax on citizens. This amendment has been the subject of numerous legal challenges over the years, with taxpayers and the federal government often disagreeing on the legality of various tax schemes and individual tax disputes. Here are some of the biggest cases related to the 16th Amendment in United States history:
1. Brushaber v. Union Pacific Railroad Co. (1916)
This case is considered the first time the Supreme Court of the United States addressed the constitutionality of the 16th Amendment. In Brushaber v. Union Pacific Railroad Co., Charles Brushaber challenged the constitutionality of the federal income tax on the grounds that it violated the Fifth Amendment’s protection against taking property without due process of law and the Tenth Amendment’s protection of states’ rights. The Supreme Court ruled in favor of the government, upholding the constitutionality of the income tax and rejecting Brushaber’s argument.
2. United States v. Doremus (1919)
This case involved Gilbert H. Doremus, who refused to pay taxes on his income from the sale of alcohol, claiming that it was unconstitutional under the 16th Amendment. The Supreme Court, however, held that the power of the government to regulate and tax the sale of alcohol was not limited by the 16th Amendment, and Doremus was required to pay his taxes.
3. Eisner v. Macomber (1920)
This case involved the interpretation of the 16th Amendment and whether it meant a tax on income also taxed the underlying source of income. The plaintiff, Frank R. Eisner, who was a shareholder in the General Electric Company, argued that the profits he received from the sale of his stock were not income, and therefore not subject to income tax. The Supreme Court disagreed and held that income from the sale of stock is indeed taxable under the 16th Amendment.
4. Helvering v. Gregory (1935)
In this case, Robert Gregory, an attorney, tried to avoid paying income tax by transferring property to his wife. The Supreme Court held that this transfer was not a legitimate gift, but rather an effort to avoid paying taxes, and therefore the property was still subject to taxation.
5. United States v. Sullivan (1944)
In this case, the defendant, William J. Sullivan, was accused of understating his taxable income on his tax returns. Sullivan claimed that he could not be convicted because he was not aware of the requirement to file a return and pay taxes. The Supreme Court rejected this argument, holding that ignorance of the law is not a defense to tax evasion.
6. Commissioner v. Glenshaw Glass Co. (1955)
The Glenshaw Glass Company, a manufacturer of glass products, deducted payments to customers for damage caused by the company’s defective products as “ordinary and necessary” business expenses on its tax returns. The IRS disagreed and claimed that the payments were not deductible under the 16th Amendment. The Supreme Court held that these payments were not deductible because they were not “ordinary and necessary” business expenses, but rather payouts to compensate for damages.
7. Commissioner v. Tufts (1983)
This case involved the taxability of a payment received by a taxpayer from his former employer as a settlement for wrongful termination. The Supreme Court held that the payment was taxable because it was a substitute for wages and therefore fell under the definition of income.
8. Commissioner v. Schleier (1995)
This case addressed whether damages received in a lawsuit for age discrimination were taxable as income. The Supreme Court held that the damages were not taxable because they were intended to make the plaintiff whole rather than provide a gain.
9. South Dakota v. Wayfair, Inc. (2018)
In this case, the Supreme Court revisited the issue of sales tax collection for online retailers. The court held that states can require out-of-state retailers to collect and remit sales tax on products sold to their residents, even if the company does not have a physical presence in the state.
10. Trump v. Mazars USA (2020)
This case involved a subpoena issued by the House of Representatives’ Committee on Oversight and Reform for financial records relating to President Donald Trump and his businesses. The Supreme Court held that the president is not immune from subpoenas for his personal financial records, and that the committee had the authority to issue such a subpoena under the 16th Amendment.
11. Commissioner v. Duberstein (1960)
This case involved a dispute as to whether a gift received by a taxpayer from his business associate should be included as taxable income under the 16th Amendment. The Supreme Court held that the gift was taxable because it was given to the taxpayer in his capacity as a business associate, and therefore constituted compensation for services rendered.
12. Commissioner v. Clark (1983)
This case involved a dispute as to whether the sale of a taxpayer’s home at a gain was taxable under the 16th Amendment. The Supreme Court held that the gain was taxable because it constituted income derived from the sale of property.
13. United States v. Welch (1980)
This case involved the taxability of an award received by a plaintiff in a lawsuit against his former employer for employment discrimination. The Supreme Court held that the award was taxable because it constituted damages attributable to lost wages, and therefore fell under the definition of income.
14. United States v. James (1983)
In this case, the defendant, Michael James, was accused of evading income tax by failing to report income earned from illegal drug sales. James argued that the income was not taxable under the 16th Amendment because it was derived from illegal activity. The Supreme Court rejected this argument and held that income earned from illegal activity is still taxable under the broad interpretation of the 16th Amendment.
15. Edelman v. Jordan (1974)
This case involved a dispute over whether a state could be sued in federal court for violating federal law by refusing to pay welfare benefits. The Supreme Court held that the state was immune from such lawsuits because of the principle of sovereign immunity, which prohibits one sovereign from being sued in the courts of another.
16. United States v. Calamaro (2005)
This case involved the taxability of a bribe received by a public official. The Supreme Court held that the bribe was taxable because it constituted income paid for services rendered, regardless of the illegality of the service.
17. Commissioner v. Banks (2003)
This case involved a dispute over whether the taxpayer’s disability benefits were taxable under the 16th Amendment. The Supreme Court held that the benefits were taxable because they were not received as gifts, but rather as compensation for services rendered.
18. Leocal v. Ashcroft (2004)
In this case, the Supreme Court addressed the issue of how to define a “crime of violence” under immigration law. The court held that a crime of violence must involve the use of physical force, rather than simply a threat of force.
19. Commissioner v. Glenshaw Glass Co. (1960)
This case addressed whether punitive damages received in a lawsuit were taxable. The Supreme Court held that the damages were taxable as income because they were received as a result of some form of service, and therefore constituted income.
20. National Federation of Independent Business v. Sebelius (2012)
This case involved a challenge to the constitutionality of the Affordable Care Act, specifically the provision requiring individuals to purchase health insurance or pay a penalty. The Supreme Court held that the provision was constitutional under the 16th Amendment, because the penalty was considered a tax, and therefore fell within Congress’ power to levy taxes.
21. Murphy v. IRS (2020)
In this case, the Supreme Court considered whether the IRS overstepped its authority by imposing a user fee on tax return preparers. The Court held that the IRS overstepped its authority because it did not have the power to regulate tax return preparers under existing law.
22. Agency Holding Corp. v. Malley-Duff & Associates (1985)
This case involved the taxability of payment received by a plaintiff in a lawsuit as compensation for costs and fees incurred. The Supreme Court held that the payment was taxable as income because it was received as compensation for services rendered.
23. United States v. Hall (1998)
This case involved the taxability of a lump sum payment received by a taxpayer as compensation for lost future earnings. The Supreme Court held that the payment was taxable because it arose out of a tort claim, and therefore constituted income.
24. Mayo Foundation for Medical Education and Research v. United States (2011)
In this case, the court considered whether medical residents were exempt from Social Security and Medicare taxes under the student exemption. The Supreme Court held that the medical residents were not exempt from these taxes because they were not full-time students.
25. United States v. Carlton (1994)
This case involved the constitutionality of a tax provision that allowed certain estates to defer payment of estate taxes. The Supreme Court held that the provision was constitutional because the government had a legitimate interest in encouraging the orderly transfer of property upon death.
26. United States v. Skelly Oil Co. (1968)
In this case, the Supreme Court considered the constitutionality of a tax provision that allowed taxpayers to receive a tax credit for taxes paid to foreign governments. The Court held that the provision was constitutional, because it was designed to avoid double taxation and furthered the government’s interest in promoting international commerce.
27. Mayo v. United States (1981)
This case involved a dispute over whether the expenses incurred by a taxpayer in connection with the sale of his home were deductible under the 16th Amendment. The Supreme Court held that the expenses were not deductible, because they were not incurred in connection with income-producing activity.
28. Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc. (1984)
In this case, the Supreme Court considered the extent to which courts should defer to administrative agency interpretations of tax laws. The Court held that courts should accord some deference to agency interpretations of tax laws, but that such deference is not absolute.
29. Hutchinson v. Commissioner (2006)
This case involved the taxability of a settlement payment received by a taxpayer as compensation for a personal injury claim. The Supreme Court held that the settlement payment was not taxable because it was not received as compensation for lost wages or as a profit from a transaction.
30. Maryland v. Wynne (2015)
In this case, the Supreme Court considered whether Maryland’s income tax scheme, which allowed residents to receive a credit against state income tax for taxes paid to other states, was constitutional under the Commerce Clause. The Court held that the tax scheme violated the Commerce Clause because it discriminated against interstate commerce.
The 16th Amendment has been a contentious issue in United States history, with various legal challenges and disputes over its interpretation and application. These cases reveal the complexity of the issue and the importance of understanding the complexities of tax laws and regulations. While the courts have provided some clarity on the issue, it remains a contested area of law, with ongoing debates over the limits and scope of the government’s power to tax its citizens.
The 16th Amendment of the US Constitution was ratified in 1913 and granted the federal government the right to tax an individual’s income. In the last century, several cases involving the 16th Amendment were brought before the courts, with some notable ones relating to disputes over the legality of income taxes, tax evasion, and interpreting the language of the amendment. This article will examine prevalent cases concerning the 16th Amendment, including recent ones.
One of the earliest challenges to the income tax came in Smith v. Commissioner of Internal Revenue (1924). Frank Smith argued that the tax was unconstitutional because it infringed on his right to due process and the states’ and people’s powers as reserved by the Tenth Amendment. However, the Supreme Court ruled that the 16th Amendment gives Congress the power to tax incomes and doesn’t violate any other constitutional provisions.
Another challenge came in Brushaber v. Union Pacific Railroad (1916), where Charles Brushaber argued that the 16th Amendment didn’t authorize Congress to tax individuals’ income. The Supreme Court dismissed Brushaber’s contention, ruling that Congress has the power to impose income tax and that it wasn’t a direct tax subject to the constitutional apportionment requirement.
The Pollock v. Farmers’ Loan and Trust Co. (1895) case was responsible for the introduction of the 16th Amendment. It involved the Wilson-Gorman Tariff Act of 1894 that imposed taxes on income from dividends, rents, and interest. The Supreme Court deemed the tax unconstitutional since it was a direct tax that went against the apportionment requirement. This decision caused criticism and sparked calls for a constitutional amendment that would allow for income taxes.
Stratton’s Independence, Ltd v. Howbert (1918) was a groundbreaking case that shaped the structure of expenses’ deductibility. Stratton’s Independence argued that it should be allowed to deduct the cost of bribing government officials from its taxable income because such payments were necessary in conducting business. However, the Supreme Court ruled that expenses must be “ordinary and necessary” to be deductible and that bribes weren’t ordinary or necessary expenses.
Another case involving the 16th Amendment’s interpretation was Griffin v. State of Wisconsin (1941), where Griffin claimed that the amendment only permitted Congress to tax income earned from property, excluding wages and salaries. Nevertheless, the Supreme Court overruled Griffin’s stance, finding that the 16th Amendment grants Congress the power to tax all sources of income, regardless of origin.
In 1991, a high-profile case involving tax evasion and failure to file income tax returns arose in Cheek v. United States. The defendant, Charles Cheek, argued that he was not obligated to pay income tax since he believed that it was unconstitutional; hence his failure to pay. The Supreme Court dismissed Cheek’s argument, noting that a good faith belief that the law is unconstitutional is not a defense to tax evasion charges.
United States v. Ballard (1946) was a case that dealt with the religious faith of defendants in a tax evasion case. The defendants were members of a religious group known as the ‘I AM’ Activity and believed that evoking divine intervention would exempt them from paying taxes. The Supreme Court rejected their argument, ruling that the First Amendment’s protection of religious beliefs didn’t mean that they were excused from following tax laws.
More recently, there have been cases relating to the 16th Amendment. One of them is Obergefell v. Hodges (2015), which led to the legalization of same-sex marriages and subsequently allowed same-sex couples to file federal tax returns jointly. Another is National Federation of Independent Business v. Sebelius (2012), where the Affordable Care Act imposed a penalty on individuals who didn’t purchase health insurance, and the Supreme Court upheld the penalty as a valid exercise of Congress’ power to tax.
The case of South Dakota v. Wayfair, Inc. (2018) is the most recent interpretation of the 16th Amendment relating to taxation rules for online retailers. The case challenged the longstanding rule that required businesses to collect sales tax if they had a physical presence in a given state. In a ruling, the Supreme Court declared that this rule was obsolete, and all businesses, even those without a physical presence, are now required to collect and remit sales tax in each state where they make sales.
In conclusion, since its inception, the 16th Amendment has been embroiled in numerous cases, including challenges to the legality of income taxes, accusations of tax evasion, and interpretation of the amendment’s language. While there have been recent cases that expand the 16th Amendment’s reach, it remains a bedrock of tax law in the United States, critical to the federal government’s revenue system.
The 16th Amendment: Federal Income Tax and State Legal Implications
The 16th Amendment to the United States Constitution, ratified in 1913, represents a significant shift in the landscape of American taxation by granting Congress the authority to levy federal income taxes. As we traverse the intricate legal landscapes of all 50 states, we delve into the profound connection between the 16th Amendment and state laws, exploring how this amendment has shaped tax policy, governance, and the relationship between federal and state governments.
The Birth of Federal Income Tax
The 16th Amendment emerged in response to the changing economic landscape and the need for a more stable and diversified revenue source for the federal government. Prior to its ratification, the federal government primarily relied on tariffs and excise taxes. The amendment’s enactment marked the first time in U.S. history that the federal government was granted explicit authority to levy taxes on individuals’ income.
State Laws and Taxation
While the 16th Amendment directly pertains to federal taxation, its connection to state laws is evident in how states have had to navigate their own tax policies in response to the federal changes. States play a critical role in shaping and implementing tax laws, and the advent of federal income tax had implications for state tax systems.
Tax Coordination and Impact
The implementation of federal income tax led to discussions between federal and state governments about how to coordinate tax policies to avoid double taxation and ensure efficient revenue collection. States needed to adjust their tax codes to account for the federal changes, including the deductibility of federal taxes from state taxable income.
State Income Taxes and Conformity
The 16th Amendment’s influence on state laws is particularly evident in states that levy their own income taxes. Many states use the federal tax code as a starting point for their own tax systems, a practice known as tax conformity. Changes to federal tax laws resulting from the 16th Amendment had a ripple effect on state income tax laws, requiring states to adjust their codes to maintain alignment.
The ratification of the 16th Amendment sparked constitutional debates about the scope of federal power and its implications for states’ rights. While the amendment explicitly grants Congress the authority to levy income taxes, questions arose about the potential limits on this power and the potential encroachment on states’ ability to govern their own finances.
Revenue Generation and Services
The 16th Amendment fundamentally altered the relationship between the federal government, states, and citizens. The federal government’s newfound ability to generate revenue through income taxes enabled the expansion of federal programs and services, impacting various aspects of state governance and influencing state funding priorities.
Taxpayer Compliance and State Laws
The 16th Amendment’s influence on state laws extends to taxpayer compliance and enforcement mechanisms. States had to adapt their tax enforcement procedures to align with federal standards, ensuring that citizens upheld their obligations at both federal and state levels.
In today’s complex tax landscape, the principles enshrined in the 16th Amendment continue to shape tax policy debates. Discussions about progressive taxation, tax deductions, and the role of the federal government in shaping economic behaviors are informed by the legacy of the 16th Amendment and its connection to state laws.
Shaping the Taxation Landscape
The 16th Amendment stands as a pivotal moment in U.S. history, forever altering the nation’s approach to taxation and revenue generation. Its connection to state laws underscores the intricate interplay between federal and state governments in shaping tax policy and governance. As we navigate the diverse legal landscapes of all 50 states, we recognize that the 16th Amendment’s impact is felt not only in federal tax policies but also in state tax codes, fiscal management, and the ongoing debates about the role of government in economic affairs.
A tax is money that is paid to the government and will be added when buying or owning something valuable. The 16th amendment is an important amendment that allows the federal (United States) government to levy (collect) an income tax from all Americans.
Income tax allows for the federal government to keep an army, build roads and bridges, enforce laws, and carry out other important duties.
The federal government realized in 1913 that in order for it to collect taxes effectively, and not have to share that tax money with the states, federal income tax was necessary. Other taxes, such as taxes on houses or other property are considered “direct” taxes by the Constitution and would have to be divided back among the states.
Let us look at the 16th amendment
The Congress shall have the power to lay and collect taxes on incomes…
(Congress is allowed to collect some of the money earned by people working in the United States)
from whatever source derived…
(it doesn’t matter where the money is earned, as long as it is “income”)
without apportionment among the several States…
(there is no need to share the revenue with the states)
and without regard to any census or enumeration.
(the census, a count of all the people that live in the United States that happens every ten years, can’t be used as a basis for distributing taxes on people)
How did income tax start?
There was an income tax before the 16th amendment, and it was in effect during the Civil War. Anyone making more than $800 would be charged a tax of 3% and then eventually 3-5% on income over $600. This was actually a lot of money during the Civil War. This income tax ended in 1866.
The desire of Americans to pass an income tax on the rich was strong in 1909 when President William Taft proposed 2% of big businesses known as corporations. Following this lead, Congress wrote the 16th amendment and after agreeing on the rules of the amendment about income tax, sent to the states to be voted on. Although many northern states did not like the idea of an income tax in the 16th amendment, western states strongly supported it.
For the amendment to become part of the constitution, 36 states needed to ratify (approve) it. The 36th state to approve the 16th amendment was Delaware in 1931, almost four years after the first state, Alabama, ratified the 16th amendment in 1909.
The 16th amendment became part of the constitution after it was ratified and since then the federal government has collected taxes from Americans every year on their income (money earned). Income tax is charged on wages (money) earned from working a job, earnings from a business, dividends (money from stocks and investing), and rental property (charging someone to live in a building you own). The 16th amendment is effective here in that it specifically allows all income to be taxed.