Tax Reform Act of 1986, the most-extensive review and overhaul of the Internal Revenue Code by the U.S. Congress since the inception of the income tax in 1913 (the Sixteenth Amendment). Its purpose was to simplify the tax code, broaden the tax base, and eliminate many tax shelters and preferences.

What are the benefits of the 16th amendment?

The Sixteenth Amendment, ratified in 1913, played a central role in building up the powerful American federal government of the twentieth century by making it possible to enact a modern, nationwide income tax. Before long, the income tax would become by far the federal government’s largest source of revenue.

When was the income tax added to the Constitution?

Shortly after the amendment was ratified, Congress imposed a federal income tax with the Revenue Act of 1913. The Supreme Court upheld that income tax in the 1916 case of Brushaber v. Union Pacific Railroad Co., and the federal government has continued to levy an income tax since 1913.

Why was there a need for an income tax amendment?

A constitutional amendment was necessary because the Supreme Court had struck down the earlier income tax as unconstitutional. But the process of amending the Constitution made this difficult. First, the income tax amendment would have to pass both houses of Congress by two-thirds majorities.

What kind of income is taxed under the 16th Amendment?

Taxable income includes salary, interest, dividends, capital gains, rents, royalties, gambling and lottery winnings, unemployment compensation, and business profits. The 16th Amendment did not “create” income tax in the United States.

What was the purpose of the Sixteenth Amendment?

e. 1913 amendment regulating the collection of federal income tax. The Sixteenth Amendment in the National Archives. The Sixteenth Amendment ( Amendment XVI) to the United States Constitution allows Congress to levy an income tax without apportioning it among the states on the basis of population.