Commentary The Constitution granted Congress power to impose personal income taxes before ratification of the 16th Amendment, but the 16th Amendment facilitated the power. This essay explains the amendment’s background and effect. This essay also corrects several longstanding myths about the Constitution and taxation. These myths have real world effects: For example, they led to the Supreme Court’s erroneous 2012 decision upholding the Affordable Care Act (Obamacare) (pdf). Direct and Indirect Taxes The Constitution divided taxes into two categories: indirect and direct. Indirect taxes were those imposed on consumption (sales taxes and other excises), on crossing political boundaries (tariffs and tonnage), and on certain specific activities, such as the execution of legal documents (e.g., stamp taxes). Direct taxes were levies on the following: Individuals, both slave and free. Impositions on persons were called capitations, head taxes, or poll taxes. Sometimes they imposed a fixed amount on every person, but often …
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