How did income tax become permanent in the USA: the 16th Amendment of 1913 and the 20th century

In England, income tax appeared in 1799 to pay for a war. Across the ocean things went differently: in the USA, the fate of this tax was decided in the courtroom and in the Constitution.

Key points

1. The first attempt: wartime. According to the training materials of the U.S. tax service (IRS), during the Civil War, in 1862, income tax was set at 3% on annual income from 600 dollars to 10 000 dollars and 5% on income above 10 000 dollars. In the same year the office of Commissioner of Internal Revenue was created. After the war, in 1872, income tax was abolished.
2. The second attempt: struck down in court. In 1894 income tax was introduced again, but in 1895 the Supreme Court held it unconstitutional in the case "Pollock v. Farmers' Loan and Trust Co.". The reason: under the Constitution, a "direct tax" had to be apportioned among the states according to population, and income tax was not apportioned in this way.
3. The solution: an amendment to the Constitution. According to the U.S. National Archives, Congress passed the 16th Amendment in 1909, and it was ratified on 3 February 1913. The amendment gave Congress the right to collect income tax without apportioning it among the states according to population.
4. An interesting detail. The National Archives writes that the conservatives who put forward the idea of the amendment hoped that three-quarters of the states would never approve it. The calculation turned out to be wrong.
5. The first rates of 1913. The law passed that year set a 1% tax on income above 3 000 dollars and a surtax on high incomes; its top rate was 6% on income above 500 000 dollars (National Archives, Encyclopedia.com). In other words, at first the tax fell only on people with high incomes.
6. Withholding from wages. According to documents of the U.S. Senate Committee on Finance, the "Current Tax Payment Act" was signed on 9 June 1943, and from 1 July 1943 employers began withholding tax from employees' wages and transferring it to the budget. This is the practical embodiment of today's concept of a "tax agent".
7. Around the world. Britannica writes that income tax was tried in the German states from the 1840s, but it became an effective fiscal instrument only after Prussia's 1891 reform; Sweden introduced a permanent modern income tax in 1910. In France, progressive income tax was adopted in July 1914 (history page of the French National Assembly).
8. From a "tax on the rich" to a mass tax. Britannica notes that the Second World War turned income tax in many countries from a tax on the upper classes into a tax paid by the whole population.

Example: how "light" was the 1913 rate?

Taking only the 1% basic rate, let us do a simplified calculation (the surtax brackets are not taken into account; compiled by the author):

The benefit of the withholding idea can be seen in a present-day example (hypothetical figures). Suppose the annual tax for Kamola, a designer from Tashkent, is 6 000 000 soum. Paying this amount in one go at the end of the year would be a heavy blow to the family budget. The employer, however, withholds about 500 000 soum every month and transfers it to the budget: the employee does not "see" the money and no debt builds up, while the state receives revenue evenly throughout the year. This is exactly the problem the 1943 law solved.