Question

1. Discuss the all inclusive view of revenue as described in the 16th amendment.

2. What is the purpose of regulations?

Answer 1

• Inclusive view of revenue for 16th ammendment are:
  • It allows Congress to levy a tax on income from any source without apportioning it among the states and without regard to the census.
  • For individuals in the United States, income from almost all sources is subject to income tax. Taxable income includes salary, interest, dividends, capital gains, rents, royalties, gambling and lottery winnings, unemployment compensation, and business profits
• The 16th amendment was passed because many people believed that an income tax would provide a more stable source of income than tariffs (the chief way by which the US government had been financed throughout history to that point), but such a tax could not be imposed because the Supreme Court had ruled in Pollock v. Farmers' Loan and Trust Company (1895) that a direct tax on income was unconstitutional. There was also some sense in the heavy populist/progressive atmosphere of the time that existing government policy had allowed "the rich" to acquire "too much wealth" and that a direct income tax was needed so that "the rich" would pay their "fair share" (Political Rhetoric: When politicians say that the rich should pay their fair share of taxes, is "fair share" the most vague term ever?)
  
  The 16th amendment was actually proposed by Rhode Island Senator Nelson W. Aldrich (father-in-law of John D. Rockefeller, Jr.) as a way to kill the idea once and for all. Aldrich proposed the amendment expecting that the manufacturing base in the Northeast would refuse en masse to ratify the amendment, but as the Progressive movement reached its apex in 1910 and 1912, it tore apart the unified front and opened the door to ratification, which came in February 1913.