Prior to the 16th Amendment, the government only had the power to tax themselves. The Federal Income Tax is not a tax on earnings - it is a tax upon federal income. To be completely exact, it is a tax upon federal privilege, measured by the dollars you gain by exercising that privilege.
"The income tax is, therefore, not a tax on income as such. It is an excise tax with respect to certain activities and privileges which is measured by reference to the income they produce. The income is not the subject of the tax: it is the basis for determining the amount of the tax." F. Morse Hubbard, Treasury Department legislative draftsman. House Congressional Record March 27th, 1943, page 2580
The worst part? (yes, I can provide info to back this up) direct income tax in the US is actually unconstitutional.
The income tax is not a direct tax - it is an excise tax, (also known as a privilege tax.) This is why the income tax is not in conflict with the Constitutional requirement that direct taxes are apportioned among the states.
When a court refers to an income tax as being in the nature of an excise, it is merely stating that the tax is not on the property itself, but rather it is a fee for the privilege of receiving gain from the property. The tax is based upon the amount of gain, not the value of the property." John R. Luckey, Legislative Attorney with the Library of Congress, "Frequently Asked Questions Concerning The Federal Income Tax" (C.R.S. Report for Congress 92-303A (1992))
Most folks never take the time to study the actual code, and so they never learn what it actually means. In law, if a term is given a custom defined legal definition, you are to ignore the common meaning of the word, and only use the legal definition. The Internal Revenue Code takes many common words, and gives them a legal definition, which is quite different from the common meaning. For example, terms like employee, employer, wages, business, United States, etc do not have the income tax code meaning that they do in common language. If you think they hold the same legal meaning as their common meaning, it can cost you quite dearly.