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Pollock v. Farmers' Loan & Trust Co

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Pollock v. Farmers' Loan & Trust Co.
Argued March 7–8, 11–13, 1895
Decided April 8, 1895
Full case nameCharles Pollock v. Farmers' Loan and Trust Company
Citations157 U.S. 429 (more)
15 S. Ct. 673; 39 L. Ed. 759; 1895 U.S. LEXIS 2215; 3 A.F.T.R. (P-H) 2557
Prior historyAppeal from the Circuit Court of the United States for the Southern District of New York
The unapportioned income taxes on interest, dividends and rents imposed by the Income Tax Act of 1894 were, in effect, direct taxes, and were unconstitutional because they violated the rule that direct taxes be apportioned.
Court membership
Chief Justice
Melville Fuller
Associate Justices
Stephen J. Field · John M. Harlan
Horace Gray · David J. Brewer
Henry B. Brown · George Shiras, Jr.
Howell E. Jackson · Edward D. White
Case opinions
MajorityFuller, joined by Field, Gray, Brewer, Shiras
DissentWhite, joined by Harlan, Jackson, Brown
Superseded by
U.S. Const. amend. XVI
Overruled by
South Carolina v. Baker, 485 U.S. 505 (1988)

Pollock v. Farmers' Loan & Trust Company, 157 U.S. 429 (1895), was a Landmark decision by the Supreme Court of the United States. In a 5–4 decision the Court ruled that the federal Income Tax Act of 1894 was unconstitutional.[1] The Pollock decision was overturned by the passing of the Sixteenth Amendment to the United States Constitution.[1]


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Article I, Section 2 of the United States Constitution required that direct taxes be apportioned among the states by population.[2] Apportionment by population proved to be a nearly impossible, uneven and unfair requirement for collecting taxes since the states had different populations.[2] An income tax is a direct tax. So the federal government relied on tariffs and other sources of revenue.

During the Civil War, in order to fund the war, the federal government passed an income tax law. In 1862, Abraham Lincoln signed a bill that called for a 3% tax on incomes between $600 and $5,000, 7.5% on incomes between $5,000 and $10,000 and 10% on incomes over $10,000.[3] The bill was declared unconstitutional in 1872 when it was repealed.[3]

In 1894 Congress created a personal income tax as a part of theWilson–Gorman Tariff Act. President Grover Cleveland was unhappy with the bill but let it pass without his signature.[4] All income over $4,000[a] was subject to a 2% tax. It was the first peacetime federal income tax in the United States.[b][4] It was challenged right away on the grounds that the Constitution required direct taxes to be levied in proportion to each state's population (called apportionment).[4] The US government has levied taxes before but these were indirect taxes (such as on whiskey, carriages and other goods).[4]

The Gorman Tariff Act of 1894 called for a 2% tax on any "gains, profits and incomes" over $4,000 for a period of five years.[8] Shareholders of the Farmers' Loan & Trust Co., based out of New York, would pay the required tax. In addition they would provide a list of the names of shareholders to the Bureau of Internal Revenue.[8]

A Shareholder, Charles Pollock, who lived in Massachusetts and owned ten shares of stock, sued the company.[8] He did not want them to pay the tax. He lost his case in the lower courts and appealed to the Supreme Court, which agreed to hear the case.[8] The high court ruled in Pollick's favor declaring the tariff act (sections 27 to 37) unconstitutional.[8]

  1. $4,000 in 1894 would be roughly equivalent to $107,287 in 2016.[5] In 1894 the average family income was under $400 and fewer than 10% had incomes of over $12,000.[6]
  2. The first direct income tax was enacted during the Civil War to help pay for the war.[7]


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  1. 1.0 1.1 "Pollock v. Farmers' Loan & Trust Co". The Free Dictionary. Farlex. Retrieved 19 May 2016.
  2. 2.0 2.1 Calvin H. Johnson. "Apportionment of Direct Taxes: The Foul-Up In The Core of The Constitution" (PDF). Texas Law, The University of Texas at Austin. Retrieved 18 May 2016.
  3. 3.0 3.1 "The First Income Tax". Civil War Trust. Archived from the original on 10 August 2015. Retrieved 19 May 2016.
  4. 4.0 4.1 4.2 4.3 Joseph Henchman (8 April 2013). "Today in History: Income Tax Ruled Unconstitutional in Pollock v. Farmers Loan Trust Co". Tax Foundation. Retrieved 19 May 2016.
  5. "Inflation Calculator". in2013dollars.com. Retrieved 19 May 2016.
  6. Norman Stein (2004). "1894 Income Tax and the Wilson-Gorman Tariff Act". Encyclopedia.com. The Gale Group Inc. Retrieved 19 May 2016.
  7. Ellen Terrell (February 2004). "History of the US Income Tax". The Library of Congress. Retrieved 19 May 2016.
  8. 8.0 8.1 8.2 8.3 8.4 "Pollock v. Farmers' Loan & Trust Co". Digital Scholarship Lab, The University of Richmond. Retrieved 19 May 2016.

Other websites

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