16th Amendment Ratified: Federal Income Tax Established to Shift Burden from Middle Class to Wealthy

Delaware became the 36th state to ratify the 16th Amendment, meeting the three-fourths requirement to establish Congress’s right to impose a federal income tax. Secretary of State Philander C. Knox certified the amendment on February 25, 1913. The amendment was part of a wave of Progressive Era federal and state constitutional amendments championing political and social reform. Congress had passed the amendment on July 2, 1909. The key progressive argument was “that it was fairer for wealthy individuals to pay for the taxes and tariffs that had been largely obliged from the middle class and the poor in society.” In 1909, conservatives in Congress, hoping to kill the idea, proposed a constitutional amendment believing it would never receive ratification by three-fourths of states. Much to their surprise, state legislatures ratified it rapidly. The rise of the Progressive Party and Democratic Party victory in the 1912 Presidential Election accelerated ratification. From 1909 to 1913, thirty-six of the then forty-eight states ratified the amendment. The text grants Congress authority “to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.” In 1913, due to generous exemptions and deductions, less than 1% of the population paid income taxes at the rate of only 1% of net income. Shortly after ratification, Congress imposed a federal income tax with the Revenue Act of 1913. This amendment was a significant milestone for the Progressive Era, aimed at addressing economic inequality and providing government revenue to fund social reforms.