In most modern economies, personal income tax is simply considered an inevitable fact. But throughout the vast majority of history, personal income tax didn't exist €" and in fact, history shows many revolutions, rebellions, and riots when civilizations have tried to implement such a charge. How did it come to be so commonplace today? The answer has its roots in ancient China.

Early Beginnings

The first incident of a charge on personal gains occurred in 10 CE. A Chinese emperor decided to institute a new charge, which instead of asking for payments based on property or population would instead take fees from certain working individuals. This is the first recorded incident of personal income tax. It wasn't well accepted at all: it was a major factor in the emperor's eventual overthrow. His successor almost immediately removed the fee he had imposed.

These tariffs made their first appearance in Europe at the turn of the 19th century. Britain's leadership charged a graduated fee that was larger for higher incomes. From the beginning, this was designed to be a temporary initiative. The goal was to raise funds for the upcoming Napoleonic wars, and all indications were that the government intended to repeal afterward. It was repealed in 1816, and the opposition to it was so vehement that they demanded all record of it be burned so as to avoid risking a politician rediscovering it in the future and reinstituting the charges.

Charges first appeared in the United States during the Civil War. As in Britain before, the goal was to finance the war, with the thought that it could be repealed afterward. However, the revenue proved to be an enduring benefit: in 1894, a 2% charge was assessed on households with exceptionally high earnings.

Legal Challenges And The 16th Amendment

Although the right to levy some form of tax on the people had been established inherently within the Constitution of the United States, there was a major handicap which made doing so impractical. In order to charge any specific or direct receipts, the government was required to apportion it. Apportionment required that it be divided by the number of sitting members in the House of Representatives, and then multiplied by the number of representatives belonging to a given state. For example, tax in North Carolina would be proportionally smaller than tax in Maryland if Maryland had a larger population, and thus more representatives in the House.

In the first year of peacetime personal income tax, an individual brought a case before the Supreme Court which revealed this issue. The case, Pollock v. Farmers' Loan & Trust Co. was decided in 1895 and effectively nullified the opportunity to levy any kind of charge because of the immense work that would be involved.

To overcome the issue, Congress decided to offer an amendment to the Constitution. Ratified in 1913, the 16th Amendment very simply stated that a personal income tax did not need to be apportioned in any way, which made it once again logistically possible to administer such a charge.

From that time, paying a part of one's income to the government has been commonplace in the United States. The details of the charge have changed over time, and new charges have been added, but the fundamental fees applied to earnings are now a constant fixture in American life.