The story of income tax in the U.S. is ripe with stops, starts and court battles.
British taxes were one of the triggers that set off the American colonies' fight for independence ("no taxation without representation!"). So the new nation's Constitution stated in the first draft that citizens should not be subject to direct taxation.
Despite this, about 60 years later, the first income tax in the U.S. was levied to pay for the Civil War. When the conflict ended, this tax was repealed – but it gave the federal government a taste for the revenue that income taxes could raise. A new income tax was introduced in 1894, ostensibly to make up for lost revenues from reductions in U.S. tariffs. The public was not impressed. This tax was taken before the Supreme Court and was declared unconstitutional, in the case Pollock v. Farmers' Loan and Trust Co.
To counteract this defeat, the government drafted the 16th Amendment stating, "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." The amendment was ratified in 1913, clearing the legal hurdles to an income tax. Unsurprisingly, an income tax was levied that very year. The legislation was again taken up in front of the Supreme Court. On January 24, 1916, the court ruled that income taxes were now legal – due to the constitutional changes.
From that time forward, income tax has become a regular fixture of American life. Long before the permanent imposition of income tax or, worse yet, pay-as-you-go income tax, Benjamin Franklin lamented, "nothing is certain but death and taxes." Since then, medical advances have made headway on at least delaying death, but we've consistently lost ground on the taxes. (To learn more, check out our Investopedia Special Feature: Income Tax Guide.)
This question was answered by Andrew Beattie.