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Nation's first income tax. The U.S. Supreme Court would later rule in Eisner v. Macomber, 252 U.S. 189 (1920) that the word “income” may not be defined by Congress, and that it can only be defined by the Constitution. It also ruled in the case of Bowers v. Kerbaugh-Empire Co., 271 U.S. 170, 174, (1926) that:
“Income has been taken to mean the same thing as used in the Corporation Excise Tax Act of 1909 (36 Stat. 112) in the 16th Amendment, and in the various revenue acts subsequently passed.” [Bowers v. Kerbaugh-Empire Co., 271 U.S. 170, 174, (1926)]
All income tax acts under Subtitle A of the Internal Revenue Code are based on the above, and are classified by the Supreme Court in Stanton v. Baltic Mining Co., 240 U.S. 103 (1916) as indirect taxes, which means they can only be excise taxes on privileges and may only fall on businesses and not directly on citizens:
"... [the 16th Amendment] conferred no new power of taxation... [and]... prohibited the ... power of income taxation possessed by Congress from the be ginning from being taken out of the category of indirect taxation to which it inherently belonged..." [Stanton v. Baltic Mining Co., 240 U.S. 103 (1916)]