Supreme Court Rules Against Unapportioned Taxation
April 8th, 1895
April 8th, 1895
How Long Ago?
129 years, 11 months, 7 days ago
Location
Washington, D.C., United States
Category
Politics & Government
People
- Charles Pollock
- Justice Melville Fuller
Links & References
- Supreme Court of the United States
- Pollock v. Farmers' Loan & Trust Co.
- Income tax in the United States
- Constitutionality
Tags
Supreme Court Rules Against Unapportioned Taxation
In a landmark case, the Supreme Court ruled that an unapportioned income tax violates the Constitution. The case arose from a challenge by Farmers' Loan & Trust Co. against the income tax imposed by Congress in 1894. The court determined that the tax was effectively a direct tax and must be apportioned among the states based on population, leading to significant implications for federal taxation authority.
Declared income tax unconstitutional.
Focused on direct tax apportionment requirements.
Led to the 16th Amendment adoption.
Significant case in U.S. tax law history.
What Happened?
The case of Pollock v. Farmers' Loan & Trust Co. centered around the Income Tax Act of 1894, which aimed to impose a 2% tax on incomes over $4,000. Charles Pollock, a shareholder in the Farmers' Loan & Trust Company, challenged the constitutionality of this tax. The Supreme Court's deliberation involved intricate considerations of the Constitution's stipulation regarding direct taxes, which must be apportioned according to state populations. The court ruled in favor of Pollock on the grounds that income derived from property was categorized as property itself, and therefore subject to apportionment. This ruling, delivered by Justice Melville Fuller, was significant, as it effectively nullified the federal income tax for several years and necessitated the adoption of the 16th Amendment to the Constitution in 1913 to enable an income tax without apportionment.
Why Does it Matter?
The significance of the ruling in Pollock v. Farmers' Loan & Trust Co. lies in its long-lasting effects on the structure of federal taxation in the United States. The decision underscored the limitations placed on Congress in collecting direct taxes, essentially invalidating the income tax as an effective revenue source. This prompted debates and discussions around tax reform, ultimately leading to the ratification of the 16th Amendment, allowing for a federal income tax that was not subject to apportionment among the states, which profoundly shaped the fiscal framework of the U.S. government.
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