Much like with the British during the Napoleonic wars, America’s income tax was introduced to fund the military during the Civil War, and meant to be only temporary, expiring in five years. And much like in Britain, it did not take long after the end of the war that the government saw a need to impose it during peacetime, permanently. But the peacetime tax faced a much larger hurdle in the tax-averse United States, to the point of being declared unconstitutional by the Supreme Court in 1895. This spurred the addition of the sixteenth amendment to the Constitution of the United States.

On this day, February 3rd, in 1913, the 16th Amendment, providing the U.S. government the power to levy income taxes on its citizens, was ratified by Congress. The tax rate was generously set at 1% for incomes above $3,000 (equivalent to $68,000 today) with a 6% surtax on any income above $500,000.

The beauty of the sixteenth amendment was its end-run around the Supreme Court’s decision in the Pollock v. Farmers’ Loan & Trust Co. case, which stated that the federal government had no power to collect for itself income taxes. Income tax was considered a “direct tax” in Pollock, which the constitution initially mandated to be distributed back to the states.