<Tr> <Td_colspan="2"> Overruled by </Td> </Tr> <Tr> <Td_colspan="2"> South Carolina v. Baker, 485 U.S. 505 (1988) (in part) </Td> </Tr> <P> Pollock v. Farmers' Loan & Trust Company, 157 U.S. 429 (1895), affirmed on rehearing, 158 U.S. 601 (1895), with a ruling of 5--4, was a landmark case in which the Supreme Court of the United States ruled that 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 provision that direct taxes be apportioned . The decision was superseded in 1913 by the Sixteenth Amendment to the United States Constitution . A separate holding regarding the taxation of interest income on certain bonds was overruled by the Supreme Court in 1988 in the case of South Carolina v. Baker . </P> <P> To raise revenue to fund the American Civil War, the income tax was introduced in the United States with the Revenue Act of 1861, as a flat tax of 3% on annual income above $800 . The following year, it was replaced with a graduated tax of 3 to 5% on income above $600 by the Revenue Act of 1862, which specified a termination of income taxation in 1866 . The Socialist Labor Party advocated a graduated income tax in 1887 . The Populist Party "demanded a graduated income tax" in its 1892 platform . William Jennings Bryan, a Democrat who supported cooperation with the Populists, was among those Congressional Democrats who advocated the income tax law passed in 1894 . As a three - time Democratic candidate for president, Bryan advocated an income tax and wrote that advocacy into the Democrats' platform in 1908 . </P>

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