Article I Section 2:
Representatives and direct
Taxes shall be apportioned among the several States which may be included
within this Union, according to their respective Numbers, which shall be
determined by adding to the whole Number of free Persons, including those bound
to Service for a Term of Years, and excluding Indians not taxed, three fifths
of all other Persons.
In other words the
National government is authorized to collect taxes from the states based on
their populations, but is not authorized to tax the people directly.
On May 21, 1895, the U.S.
Supreme Court ruled that a direct tax on
personal income was unconstitutional as a result of the case of Pollock
v. Farmers‘ Loan and Trust Company.
The lawsuit had been precipitated by the 1894 Income Tax Act. The Supreme
Court’s 5-4 decision stated that a “direct tax” on the “income of real and of
personal property” was “unconstitutional and void.”
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