The IRS building in the early days of the income tax.

Hopefully, we can answer these and other questions, even though the importance of April 15 has faded somewhat with the popularity of electronic tax filings and automatic deadline extensions.

Question 1: How did the Internal Revenue Service come about?

The IRS has its roots in the Civil War, when a revenue bureau was set up to collect taxes levied to support the war effort in the North. That tax expired in 1872, but the Commissioner of Internal Revenue and its successor have remained in business since.

Question 2: Was there really a national income tax before the one we have now?

Aside from the Civil War tax on the Union states, Congress passed a national income tax in 1894, which was ruled unconstitutional the following year by the U.S. Supreme Court in Pollock v. Farmers’ Loan & Trust Company. The court said it was a direct tax not apportioned according to the population of each state, in violation of Article I, Section 9, of the Constitution.

Question 3: If the Supreme Court said the income tax was unconstitutional, why do we have it now?

Quite simply, enough states changed the Constitution to allow it. After the Pollock decision, two forces joined together to get Congress and at least 36 states to make the income tax legal via the 16th Amendment. Populists thought more people, especially those with higher incomes, should pay taxes. People who supported Prohibition realized the income tax was needed to replace lost taxes on alcohol sales.

Question 4: Which state can we “blame” for passing the 16th Amendment?

Delaware was the 36th state to ratify the 16th Amendment in 1913. But it would be harsh to blame Delaware, since six other states ratified the amendment after it did. And some people believe the income tax is a good thing, and maybe they would honor Delaware!

Question 5: So why is April 15 the big Tax Day?

Tax Day hasn’t always been on April 15. The first Tax Day was on March 1, which was a little over a year after the 16th Amendment was ratified. Just before Prohibition started, Tax Day was moved to the Ides of March, aka March 15. In 1955, the deadline was pushed back to April 15, so the IRS could spread out the work involved with processing all the forms. The date of Tax Day changes if it is on a weekend or conflicts with a holiday in the District of Columbia.

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Question 6: How long was the first tax form?

It was four pages long, including instructions. Check out what the first 1040 form ever looked like here (PDF). At the time, the average annual income was $800.

Question 7: Is it really that hard to do your own taxes?

It depends on your skill level, but the income tax seems to have befuddled Albert Einstein. According to a website called The Quote Investigator, there may be some truth to a quote allegedly uttered by Einstein: “The hardest thing in the world to understand is income taxes.” The site tracked down the saying to Einstein’s personal accountant.

Question 8: Who has the biggest income tax bill?

ExxonMobil pays the highest, at about $30 billion a year in corporate income tax, followed by Chevron and Apple.

Question 9: What was the highest tax rate ever?

During World War II, the highest tax bracket was taxed at 91 percent and the lowest tax bracket was 23 percent.

Question 10: Who exactly is the “taxman”?

The current “taxman” is Steven T. Miller, the Acting Commissioner of Internal Revenue and Deputy Commissioner for Services and Enforcement. He replaced Douglas H. Shulman, who resigned late last year. As for the man that inspired the Beatles song written by George Harrison, that would be then-Prime Minister Harold Wilson and his governments 95-percent tax bracket that affected the Beatles.

The first 1040 form.

February 3 was the 100th anniversary of the ratification of the 16th Amendment in 1913. Its champion was President William Howard Taft, and its ratification was an effort to make sure more higher-income people paid taxes, and that the government wasn’t wholly dependent on tariffs and taxes on goods.

It wasn’t the first national income tax that was enacted. In fact, it was the third. But this third attempt had the power of a constitutional amendment behind it, and it’s still in force today.

The Founding Fathers and the generation of leaders that followed them weren’t big on the idea of an income tax. Tariffs and sales taxes helped fund the federal government in the early days.

But the financial needs of the Civil War led to the first national income tax.

The Civil War income tax instituted by the Union was one of several financing tools it used against the Confederacy. The government also issued bonds and used excise taxes.

The Confederacy also had its own version of an income tax, too, which wasn’t as effective.

The Union’s income tax went away during the period of Reconstruction, with the idea of an income tax returning two decades later.

Author John Steele Gordon wrote a nice, short history of the income tax in 2011 for The Wall Street Journal, beginning with the Civil War and concluding with the 14th Amendment and its immediate aftermath.

Steele says the combination of a huge government surplus and a heavy tax burden on consumers led President Grover Cleveland’s administration to pass a second income tax law in 1894.

“The new tax, however, was very different from the Civil War income tax, which had exempted only the poor. The new one hit only the rich, imposing a 2 percent tax on incomes above $4,000. Less than 1 percent of American households in 1894 met that income threshold,” said Steele.

The second income tax law was soon overturned by the Supreme Court in the 1895 decision of Pollack v. Farmers’ Loan & Trust.

In a 5-4 decision, the court said the Cleveland income tax was a direct tax that violated a constitutional provision because it taxed interest, dividends, and rent. That act violated Article 1, Section 2 of the Constitution, which required such taxes to be imposed in proportion to states’ population.

By the time President Taft took office in 1909, the public outcry grew over a tax system that undertaxed the rich and overtaxed the poor.

In June 1909, Taft sent a letter to Congress to lobby for the 16th Amendment. He explained that part of the Pollack decision allowed the federal government to levy a corporate income tax as an excise tax.

“The decision in the Pollock case left power in the National Government to levy an excise tax, which accomplishes the same purpose as a corporation income tax and is free from certain objections urged to the proposed income tax measure,” he said.

The president then defined a basic two-tax system where income taxes were collected from citizens and businesses. He also understood that the amendment wouldn’t allow the Supreme Court to overturn a personal income tax based on the Pollack decision.

“I recommend, then, first, the adoption of a joint resolution by two-thirds of both Houses, proposing to the States an amendment to the Constitution granting to the Federal Government the right to levy and collect an income tax without apportionment among the several States according to population; and, second, the enactment, as part of the pending revenue measure, either as a substitute for, or in addition to, the inheritance tax, of an excise tax upon all corporations, measured by 2 percent of their net income,” Taft said.

Congress passed its resolution about the 16th Amendment a month later, but the amendment wasn’t ratified until early 1913, when Delaware became the 36th state to approve it.

Incoming president Woodrow Wilson pushed for the Revenue Act of 1913, which included the income tax along with changes in tariffs.

The first 1040 form appeared in 1914. It was three pages long. The first income tax act after the 16th Amendment was 14 pages long, and the federal tax code was about 400 pages long.

Today, one estimate puts the federal tax code at more than 70,000 pages. An IRS report from 2008 said that no one really knew how big the current tax code is, and it estimated the code at 3.7 million words.

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Today we celebrate a constitutional ratification twofer: the 15th Amendment (ratified February 3, 1870) and the 16th Amendment (ratified February 3, 1913). Here’s what you need to know.

The 15th Amendment

What it does:

It prohibits the state or federal government from using race as a voting qualification.

Why it was added:

The 15th Amendment was one of the “Reconstruction amendments,” and was an important step in ensuring African Americans’ right to vote. Unfortunately, change didn’t happen overnight, and it would take further measures, such as the 24th Amendment, which nixed the use of poll taxes, to foster true equality.

Word-For-Word:

Section 1. The right of citizens of the United States to vote shall not be denied or abridged by the United States or by any State on account of race, color, or previous condition of servitude.

Section 2. The Congress shall have power to enforce this article by appropriate legislation.

The 16th Amendment

What it does:

It allows Congress to levy an income tax.

Why it was added:

An 1895 Supreme Court decision had ruled that an income tax law was unconstitutional because it violated the provisions in Article 1 of the Constitution requiring that direct taxes be apportioned according to state population. A constitutional amendment was the only way to make an income tax happen.

Interestingly, one of the arguments made for an income tax was quite similar to the today’s rhetoric of income inequality. For example, in promoting a new national tax system consisting of an income tax and inheritance tax, Theodore Roosevelt stated this:

As a matter of personal conviction, and without pretending to discuss the details or formulate the system, I feel that we shall ultimately have to consider the adoption of some such scheme as that of a progressive tax on all fortunes, beyond a certain amount either given in life or devised or bequeathed upon death to any individual — a tax so framed as to put it out of the power of the owner of one of these enormous fortunes to hand on more than a certain amount to any one individual; the tax, of course, to be imposed by the National and not the State Government. Such taxation should, of course, be aimed merely at the inheritance or transmission in their entirety of those fortunes swollen beyond all healthy limits.

You can check out more of Roosevelt’s statements here.

Word-For-Word:

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.

For the full text of the Constitution, visit the Interactive Constitution here.

Civic holidays are occasions to commemorate America’s history, celebrate our rights and responsibilities as citizens, and learn about our constitutional ideals. Download a PDF of the 2013 Civic Calendar here.

Holly Munson is Assistant Editor of Constitution Daily, the blog of the National Constitution Center.

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American constitutional history has not moved in a straight line, from the Founding to the 21st Century. Its development is a wavering line, with twists and turns that were far from predictable. The amendment process under Article V has followed a meandering path — in fact, the latest amendment, the 27th, dealing with congressional salaries and ratified in 1992, was actually one of the first proposed, in 1789. Meandering, too, have been the Supreme Court’s interpretations of what the Constitution ultimately means — for any given day and time.

How, then, is it possible to assign a place in history for a new constitutional development? Does it rank among the most important, and with what can it be compared, closely or loosely? Where, one may ask, will a Supreme Court ruling on the Patient Protection and Affordable Care Act stand in history?

This coming week, the nine Supreme Court Justices will set out on another constitutional journey, and it probably will be a quick one: it might well be concluded in almost exactly three months. The three days of hearings on the new federal health care law — the most time set aside for a case in more than four decades — will be saturated with history. Monday’s argument will focus on an 1867 law, Tuesday’s will talk about precedents going back at least to 1942 and maybe all the way back to 1819, and Wednesday’s will have echoes of states’ rights doctrine all the way from the Philadelphia Convention and its Grand Compromise in 1787.

And, when the Court does rule, probably by late June, few doubt that it will have done something historic.

Without exaggeration, the final ruling has the potential to be the most important declaration on how the Constitution divides up power between national and state governments since the New Deal days some three quarters of a century ago. Without exaggeration, it could be the most important pronouncement on the federal “safety net” since the Social Security Act was upheld by the Court in 1937. Without exaggeration, a decision to strike down all or part of the new health law could be the most severe rebuff of Congress’s power over the national economy since the Sick Chicken Case in 1935. And, without exaggeration, a nullification of the Act in whole or in part could be the most devastating blow to presidential power and prestige since the Steel Seizure Case in 1952.

The law at issue is not directly about civil rights, but for the nation’s working poor, the coming ruling on the law’s validity could be as important to them as a 1938 decision was for racial minorities, essentially starting the modern civil rights revolution. And for individuals who want to be left alone by their government, the final decision may be a reminder of a 1905 decision that first spelled out a theory of individual liberty that, in time, would contribute importantly decades afterward to that same civil rights revolution.

Yes, it is that important — at least in potential. Whether or not it lives up to that potential may depend, to a significant degree, on how the Justices react to the 90-minute argument that opens the week on Monday. Many observers, and certainly most of the media, have been waiting most eagerly for Tuesday’s two-hour argument, when the biggest cog in the entire machinery of the Affordable Care Act, the individual mandate, is up for review.

But, in the end, the Court just might not rule at all on the individual mandate if it were to decide that no challenger had a right to go to court to contest the mandate’s constitutionality. That is Monday’s issue, and the first lawyer to step up to the Court’s lectern this week will be urging the Justices to do just that — to take a pass. Although neither the challengers nor the federal government currently believes that the federal Anti-Injunction Act was a bar to the lawsuits, the lower courts took differing positions on that, and the Justices have agreed to sort it out, naming a Washington lawyer with no other part in the case to make the point.

The Court itself had taken differing positions on that, in rulings decades ago, but then switched and steadily reinforced the Act’s ban on lawsuits that threatened to stop the U.S. Treasury from collecting tax revenues. If it should turn out that the Justices do apply the Act to the lawsuits against the mandate, the mandate would survive this test, and maybe $4 billion of tax revenue would still come in over coming years.

That would take away from this case much of its historic potential, because the constitutional issues surrounding the mandate are so momentous and yet would remain unsettled for now. But such a ruling would be one of the most significant gestures the Court has made to protect the national Treasury in 50 years — an action that could rank constitutionally with the ratification of the Sixteenth Amendment in 1913. It would be a strong message to lower courts to keep the courthouse doors closed to attempts to block federal legislation that is designed, at least in part, to produce revenue for the government’s coffers. But the practical effect, for the mandate, would be that it could not be challenged until after it had actually gone into effect — in 2014 — and was then enforced by the government.

There would be a political effect, too: the mandate’s future would remain an issue in this year’s congressional and presidential campaigns, and the outcome of the national election on November 6 could either doom the mandate to a repeal effort, or save it, at least until it went into effect. The issue of its constitutionality might not return to the Court until 2015 at the earliest.

However, when Monday’s argument winds up, close to noon, the nation — and even the Court — will not yet know whether the mandate’s fate is going to be decided. The Court will move on to Tuesday, to explore the mandate itself as if its validity were going to be settled. And that is the argument in which the biggest parade of history will march across the courtroom.

The federal government gets to open the argument that day, and its top Supreme Court advocate will seek to persuade the Court that history is on the government’s side, that health care is in a crisis of national proportions, that Congress must have the authority to rise to such occasions, and that this controversy calls for judicial modesty. For almost as long as there has been constitutional history, that attorney seems sure to argue, economic crises too big for the states to handle have been left to Congress. If Congress was constitutionally disabled from enacting this law, it will have had to surrender core constitutional power, the Court may be told.

And then two lawyers for the challengers will take turns arguing that this case does not involve just another episode of familiar history, but rather that this is constitutional history starting over. Congress, they will say, has never dared to so manage Americans’ private lives as it now has attempted, without precedent and without even a hint of authority from the Constitution. If Congress can do this, there is no invasion of private choice that will not be constitutionally tolerable, the Justices almost certainly will be told.

Wednesday will be a double-header on constitutional history. In the morning, the Court will return — as so often in the past — to the fundamental division of government authority between Congress and the courts — horizontal separation of powers that James Madison thought essential to individual liberty. That will be at the center of the argument on what happens to the remainder of the new health care law if the individual mandate were to be struck down. And, in the afternoon, the Court will trace many of history’s earlier steps along the line that divides national and state power — the vertical separation that Thomas Jefferson thought essential to the sovereignty and dignity of governments closest to the people. That will be the focus of the argument over the expansion of the Medicaid program for the poor, for the first time providing those benefits to millions of the working poor and to childless adults.

By week’s end, America will have witnessed — for most people, from afar, because only a couple of hundred seats are available for those who will see it actually happen — a deeply serious and probably quite revealing conversation about the Constitution and what it might mean 225 years after it was written.

Lyle Denniston is the National Constitution Center’s Adviser on Constitutional Literacy. He has reported on the Supreme Court for 54 years, currently covering it for SCOTUSblog, an online clearing house of information about the Supreme Court’s work.

Image via Mint.com

Last week the Obama administration offered a proposal to cut the corporate tax rate from 35 percent to 28 percent. The plan also includes eliminating loopholes and cutting the tax rate for manufacturing corporations to 25 percent. Republican leaders have similarly pitched plans to slash corporate tax rates.

You may be a bit preoccupied with your own taxes, but if you want to learn more about corporate taxes and why they matter, here’s a quick question-and-answer overview. We’ll start with the basics:

What is a corporation?

According to Investopedia, a corporation is:

A legal entity that is separate and distinct from its owners. Corporations enjoy most of the rights and responsibilities that an individual possesses; that is, a corporation has the right to enter into contracts, loan and borrow money, sue and be sued, hire employees, own assets, and pay taxes. The most important aspect of a corporation is limited liability. That is, shareholders have the right to participate in the profits, through dividends and/or the appreciation of stock, but are not held personally liable for the company’s debts.

How long have corporations been around?

It depends on how you define corporation. In The Company: A Short History of a Revolutionary Idea, John Micklethwait and Adrian Wooldridge explain that “from the beginning of economic life, businesspeople have looked for ways to share the risks and rewards of their activities” (p. xvi). Certainly, corporations are at least as old as America itself. America owes its very existence to corporations: The colonies—and the democratic experiment that its residents eventually pursued—evolved out of charters from the Virginia Company, the Massachusetts Bay Company, and the like. However, it wasn’t until the mid-19th century that the “big businesses” began to emerge.

Does the Constitution mention corporations?

No. The Constitution does not explicitly mention anything about corporations. However, a combination of legislation and court decisions have established legal doctrine recognizing some constitutional rights for corporations. There are some rights corporations definitely don’t have: they can’t bear arms, vote, or run for office. There are some rights corporations definitely do have: they can own property, sue and be sued, and be taxed. And there are some rights we’re still debating. The biggest debate is whether corporations have a right to free speech (see our posts on the 2010 Citizens United decision).

What about corporate taxes? How did they come to be?

In 1861 a federal income tax was enacted, and in 1894 a federal corporate income tax was instituted. Both taxes were ruled unconstitutional shortly after being enacted. But in 1913, the 16th Amendment overruled the previous court decisions, granting Congress the power to levy a federal income tax (including corporate taxes) without apportioning it among the states. The U.S. has had some form of corporate taxes ever since.

How much do corporations pay in taxes now?

The tax rate ranges from 15 to 35 percent. According to a 2008 survey by PricewaterhouseCoopers, corporations in the U.S. pay an average total tax rate of 36 percent. Of course, the actual tax rate varies widely, as this infographic by Mint shows.

The U.S. corporate tax rate is the second highest in the world, behind Japan’s 39.5 percent. In 2010, corporate taxes yielded a total of $191 billion in revenues, which amounts to 1.3 percent of gross domestic product and 9 percent of the year’s federal revenue.

Why are President Obama, Mitt Romney, and others proposing a change to corporate taxes?

Many people, particularly Republicans, have argued for a lower tax rate to make the U.S. globally competitive. Today, members of both parties generally agree that they’d like to cut corporate taxes, but as usual, they have differing views on how to make it happen. Obama’s proposed plan may not take effect this year, but it’s likely that the issue of corporate taxes will continue to be discussed during this presidential campaign.

Holly Munson is the Programs Coordinator at the National Constitution Center.