Because personal income taxes were held to be a direct tax, it was held to be unconstitutional because it was not apportioned among the states in proportion to their population. Corporate income tax was also challenged, but was held to be constitutional because it was deemed to be an excise tax. Each year changes take place. TAX BASE Federal income tax based on taxable income.
All income is taxable unless excluded by statute.
Only states and local subdivision impose. Assessment values subject to debate. Purpose was to prevent large concentrations of wealth from being kept within a family for generations. Tax on the right to transfer. This law combined federal estate and federal gift taxes and made them a unified transfer tax.