It is not an over-exaggeration that the debate over an American Income Tax was not resolved for over half a century. Several Federalist administrations had argued for an income tax to help subsidize infrastructure projects since the mid 1800s. Democrats had, by-and-large, opposed these on the grounds of it being another government intrusion into the individual citizen's life. Therefore, it is not that surprising that a corporate tax on companies and other non-human legal persons passed first, in the first flush of the debate. Corporate taxes were not seen as an intrusion into the individual's life by the Democrats, and thus were a reasonable compromise. Of course, the problem with this is that companies almost from the first blush of the new tax started to pass on all income in the form of employee income and shareholder dividends so that there was very little profit, on paper at least, to be taxed. Therefore the debate raged from Congress to Congress.
One of the main problems, other than those who were opposed to any income tax at all on principle (generally Democrats) were the many diverging and sometimes contradictory views on what would be fair and practical to implement. The rare congressman who favored a per head tax were not the problem, as most everyone agreed that such a program would be essentially regressive in nature and impractical as it be unpayable by poorer citizens of the United States. However, there were not many in favor of a highly progressive tax, even in the Federalist camp, as many of the wealthiest industrialists were supporters of the Federalist party, as well as striking many as wrong to tax a man more on a dollar just because he had made more before that, not to mention some of the more radical Federalists suggested even giving negative taxes or stipends to the poor instead of taxes to bring up their level of income. However, by the Poe administration, a front-runner emerged in the form of a single per head deduction prior to taxation of the remainder at a flat rate. This would fulfil fairness in the sense that every citizen would get the same deduction, and every dollar made after that deduction would be taxed at the same rate, or so it was said. It still was in essence a heavily simplified progressive tax. The debate in the waning days of the Poe era was whether to place the deduction equal to the poverty line, equal to the median income for the middle class, or somewhere in between. It was recognized that the tax might act as a break on wealth generation at the point it was placed, and thus the concern with placing it at or anywhere near the poverty line as keeping people from rising by their own toil to the middle class. The counter proposal was that placing it as high as median middle class income would mean that a large percentage of the population of the USA would pay no taxes, and possibly create a dual class system of taxpayers and non-taxpayers. By the end of the Poe Administration, the US had clearly clawed its way out of the worst of the long depression, and it seemed likely that Poe would get the income tax passed through Congress (he had been the only president in history to have a gain in his party's represenation in Congress in his second midterm election), and so a deal was struck with the most centralist of the Democrats for accepting the median income level deduction to minimize the number of citizens who would have to pay (and to soak some of the richer members of the Federalist Party as this then would require a higher percentage tax to offset the losses). The corporate taxes were amended to allow for the deduction of payroll from their rate to avoid double taxation. Additionally, it was decided that the income tax would be applied to all US citizens and resident aliens, given concerns over the possibility of US citizens moving across the border to the DSA, which made enough off of taxes on cotton and sugar (and later, oil) to avoid the need for an income tax. The Income Tax Law was one of the last pieces of legislation signed into law by President Poe.
