Direct Tax (United States)

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In US constitutional law , a direct tax is a levy that is levied on property or income from property or as a poll tax . However, direct taxes were only allowed if the levy was spread across states in proportion to their population . For example, the Revenue Act of 1861 contained a passage that provided for a direct tax of US $ 20 million and stipulated for each of the states what proportion of it was to be levied there. Since this is a pure substance control concerned, the tax burden showed every inhabitant as a percentage of the value of its goods in the total value of all goods in private ownership in the state.

The notion of direct tax gained widespread attention in the late 19th century in several court cases examining the unconstitutionality of an income tax introduced by Congress in 1894 as part of the Wilson-Gorman Act . The law stipulated that any annual income, regardless of the type of income , should be taxed at a rate of two percent above $ 4,000. In the landmark judgment of Pollock v. Farmers' Loan & Trust Co. on April 8, 1895 , the Supreme Court ruled unconstitutional those portions of the law that provided taxation of income from rent, dividends, interest, or other uses of property. Such a tax is necessarily a direct tax and must therefore be levied according to the population of the states.

Indirect tax

An indirect tax is a levy that is levied on an event, including economic transactions such as gifts and inheritances, but also income from one's own labor in the form of an income tax .

The distinction between direct and indirect taxes lost its practical importance in 1913 with the adoption of the 16th Amendment . With this constitutional amendment, Congress was given the authority to levy taxes on income of any kind without any allocation requirement and without taking into account censuses.

Individual evidence

  1. A Century of Lawmaking for a New Nation: US Congressional Documents and Debates, 1774 - 1875, Statutes at Large, 37th Congress, 1st Session, page 295. Accessed 21 August 2011 .