Throughout the history of taxes in America there have always been two different types of taxes: indirect and direct. Indirect taxes are collected by a middle person and paid to the government.

Tobacco tax, tea tax, or sales taxes are examples of indirect taxes. Direct taxes are taken directly out of someone's paycheck to pay things such as social security, Medicare, or federal income tax.

When America's constitution was first written, Article 1, section 9 said, "No capitation, or other direct, Tax shall be laid, unless in Proportion to the Census or Enumeration herein before directed to be taken." This means that direct taxes on labor of private sector workers are not allowed unless it is split evenly among the people.

However, the constitution also states that if you work for the government as a federal employee, you are considered privileged. This means that your income is taxable by the government.

The Supreme Court says, "An income tax is neither a property tax nor a tax on occupations of common right, but is an excise tax...The legislature may declare as 'privilege' and tax as such for state revenue, those pursuits not matters of common right, but it has no power to declare as a 'privilege' and tax for revenue purposes, occupations that are of common right".

However, Congress does have the right to tax gains and profits. These taxes may be things like dividends, royalties, alimony, and pensions.

Since, then policies have changed and come a long way. In the beginning income tax was unconstitutional, but today it not only constitutional but common practice.
In 1862 Abraham Lincoln was fighting the Civil War. What they had thought would be a fast and relatively easy war turned into a drawn-out and intensely bloody war.

The United States had left the gold standards for printing money. Therefore, Lincoln had to print more money to fund the North's army.

As a result this created inflation. To counteract this inflation and still finance the war, the Internal Revenue Act was passed on July 1st, 1862. This was the first time that a progress rate income tax had been instituted in the history of the United States.

Only government workers had to pay it and the money was withheld from their paycheck. At this time, other indirect taxes on luxuries such as alcohol, tobacco, jewelry, yachts, and playing cards were also instituted.

He also began to tax the purchase of licenses of most professions. Income was also defined as gains and profits were also established as income at this time.
Income was not defined as the earnings from a job, because everyone would have had to pay the tax and that would have been unconstitutional under the law at the time. A citizen's labor or products from his own personal property were also un-taxable.

Then in 1894 Congress enacted another federal income tax and the 16th Amendment. The 16th amendment says that Says "The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States...."

Later, during World War II the government needed to raise money to pay for the war so they established the Victory Tax of 1942. This tax was only supposed to last two years to conform to another part of the constitution that said direct taxes could be collected "To raise and support armies, but no appropriation of money to that use shall be for a longer Term than two years."

Technically, following then the tax should have been voluntary but the government did not publicize this fact. To encourage people to pay taxes, the government even hired Walt Disney to create a move about it.
The movie was named New Spirit. New Spirit featured Donald Duck and supported patriotism, paying taxes, and the war.

Today, the Supreme Court dictates that when you fill out the W-4 form, you are voluntarily entering into an agreement with the federal government that the money you receive is taxable income. The IRS also believes that the 16th amendment authorized income taxes.
After a long and evolving history, income taxes are now legal and punishable.