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In Pollock v. Farmers' Loan & Trust Co., 157 US 429 (1895), the US Supreme Court held the government had levied a direct tax against the people, in violation of Article I, Sections 2 and 9 of the Constitution, which reads:

Article I, Section 2

"Representatives and direct taxes shall be apportioned among the several states which may be included within this union, according to their respective numbers, which shall be determined by adding to the whole number of free persons, including those bound to service for a term of years, and excluding Indians not taxed, three fifths of all other Persons."

Article I, Section 9

"No capitation, or other direct, tax shall be laid, unless in proportion to the census or enumeration herein before directed to be taken."

According to the Court, federal personal income tax legislation imposing a tax on profits derived from real estate investments, stocks and bonds in "An act to reduce taxation, to provide revenue for the government, and for other purposes," (aka Wilson-Gorman Tariff, 1894) was unconstitutional.

According to the Court, this direct tax was invalid for several reasons: It violated Article I, Sections 2 and 9 of the Constitution because the tax on real estate income wasn't apportioned among the states in accordance with congressional representation, as required; the tax on profit from stocks and bonds improperly created a burden on state and municipal governments' ability to borrow money; and the tax on municipal bonds constituted a tax on the states, which was considered a violation of Articles IV and V.

The Court overturned the federal income tax law, but Amendment XVI, ratified in 1913, gave Congress power to reinstate personal income tax in the areas the Court disallowed.

Amendment XVI

"The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several states, and without regard to any census or enumeration."

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Q: Why did the US Supreme Court once hold the income tax unconstitutional?
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