The rate was 3 per cent on the excess of incomes over $600, and
5 per cent on the excess over $10,000. This law was repeatedly
upheld by the United States Supreme Court as not in conflict with
the Constitution. Its fiscal results were not large, as it was never
effectively administered.

The next income tax law was that of 1894, enacted in connection with
the tariff revision of that year. It was declared unconstitutional
before it had gone into effect. The main ground for the decision was
that a tax on incomes from rent of land as well as on incomes from
personal property is direct, and must therefore be apportioned among
the states according to population.

In the active discussion of social legislation in the years following
this decision public sentiment developed favoring a renewed attempt to
get such legislation by amending the Constitution. This was shown by
the remarkable fact that a bill for the sixteenth amendment to
the Constitution was passed unanimously by the Senate, and almost
unanimously by the House. It was ratified by three-fourths of the
states and became a law in 1913.[8]

Sec. 6. #Events leading up to the law of 1913.# Meantime, in 1909 and
excise tax law had been passed, applying to corporations in a manner
not open to the objections found by the Supreme Court to the law of
1894. The Democratic party, which had passed the law of 1894, was
pledged to the passage of an income tax law when it came into power
again in 1913. The reduction of the tariff, as well as growing
expenditures, moreover, made necessary the development of new sources
of revenue for the national government. In other countries the income
tax had been found to be a part of a system of taxation especially
valuable as "a balance wheel" to equalize the revenues and
expenditures. It was deemed by some to be an additional advantage of
an income tax that it would make the richer citizens better realize
the nature and burden of public expenditure. Most other federal
revenues, being derived from the tariff and from taxes on merchandise,
are borne mainly by the purchasers and consumers.

An income tax was opposed as sectional taxation by many in the Eastern
states where the owners of most of the larger fortunes reside. But to
this Senator Elihu Root replied that the states where there was
the greatest ownership of wealth pay the largest taxation under any
scheme, and ought to.

Sec. 7. #Main features of the law.# The law as enacted[9]