[15] Due to the political difficulties of taxing individual wages without taxing income from property, a federal income tax was impractical from the time of the Pollock decision until the time of ratification of the Sixteenth Amendment (below). As a starting point, the Court defined income succinctly by reference to the dictionary and to two earlier cases [23] as follows: "Income may be defined as the gain derived from capital, from labor, or from both combined, provided it be understood to include profit gained through a sale or conversion of capital assets."
After the war when the need for federal revenues decreased, Congress (in the Revenue Act of 1870) let the tax law expire in 1873. On May 20, 1895, the Court expanded its holding to rule that the unapportioned income tax on income from personal property (such as interest income and dividend income) was also unconstitutional. The rate was 2% on income over $4000, which meant fewer than 10% of households would pay any. a tax on professional earnings and on interest from bonds) was within the category of an excise or duty, and was neither a capitation tax (based on population) nor a property tax. The provisions were Article I, Section 8, Clause 1, which provides that "all Duties, Imposts and Excises shall be uniform throughout the United States"[13] and Article I, Section 9, Clause 4, which provides: "No Capitation, or other direct, Tax shall be laid, unless in Proportion to the Census or Enumeration herein before directed to be taken.[14]. 252 U.S. at 200. The portion of the Springer decision that was not overruled by the Court in Pollock was the portion of the holding that applied to taxes on professional earnings. The "direct tax" argument had also been used by Springer in 1880, but now the Court focused more closely on the wording in the Constitution. In the end, the Court decided that the stock dividend was not taxable, because it was merely a book adjustment and was not "severable" from the underlying stock.
But it was not meant to provide a touchstone to all future gross income questions.
"Gross income" includes gains, profits, and income derived from salaries, wages or compensation for personal service (including personal service as an officer or employee of a State, or any political subdivision thereof, or any agency or instrumentality of any one or more of the foregoing), of whatever kind and in whatever form paid, or from professions, vocations, trades, businesses, commerce, or sales, or dealings in property, whether real or personal, growing out of the ownership or use of or interest in such property; also from interest, rent, dividends, securities, or the transaction of any business carried on for gain or profit, or gains or profits and income derived from any source whatsoever.[18].