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The Sixteenth Amendment of the United States Constitution was ratified on February 3rd, 1913. This Amendment allows the Congress to levy an income tax without regard to the States or the Census.
The power to impose taxes is granted by Article 1, section 8, clause 1. Indirect taxes, “excises”, are required to be geographically uniform, according to Article 1, section 2, clause 3 and Article 1, section 9, clause 4 states that all direct taxes are required to be apportioned among the states according to population.
This means that the dollar amount of direct taxes imposed on the taxpayers in any given state is required to bear a relationship to the total dollar amount of direct taxes imposed in the entire nation that is equal to the ratio of that state’s population to the total population of the nation. (Sixteenth Amendment to the United States Constitution)
In the case of Pollock v. Farmers' Loan & Trust Co. the Supreme Court declared certain income taxes — taxes on income from property under the 1894 Act — to be unconstitutionally unapportioned direct taxes. The Court reasoned that a tax on income from property should be treated as a tax on "property by reason of its ownership," and should therefore be required to be apportioned. The reasoning was that taxes on the rents from land, the dividends from stocks and so on burdened the property generating the income in the same way that a tax on "property by reason of its ownership" burdened that property.
This meant that, after Pollock, while income taxes on wages (as indirect taxes) were still not required to be apportioned by population, taxes on interest, dividends and rent income were required to be apportioned by population. The Pollock ruling made the source of the income (e.g., property versus labor, etc.) relevant in determining whether the tax imposed on that income was deemed to be "direct" (and thus required to be apportioned among the states according to population) or,...