[{"command":"add_css","data":[{"rel":"stylesheet","media":"all","href":"\/sites\/default\/files\/css\/css_veuEhhb1658wti0_ZAig66JOyixENU-N9zhjLQSLfOQ.css?delta=0\u0026language=en\u0026theme=heritage_theme\u0026include=eJwrTi1LzdNPzkksLq7Uy8tPSQUAPMsGtA"}]},{"command":"invoke","selector":null,"method":"openEssay","args":["10000063","\n\n\u003Carticle about=\u0022\/constitution\/articles\/1\/essays\/64\/direct-taxes\u0022 class=\u0022node node--type-constitution-essay node--promoted node--view-mode-embedded clearfix\u0022\u003E\n  \u003Ch1 class=\u0022title\u0022\u003E\u003Cspan\u003EDirect Taxes\u003C\/span\u003E\n\u003C\/h1\u003E\n\n      \u003Cdiv class=\u0022con-location\u0022\u003E\n      Article I, Section 9, Clause 4\n    \u003C\/div\u003E\n    \u003Cdiv class=\u0022con-essay-context\u0022\u003E\n      \n            \u003Cdiv\u003E\u003Cp\u003ENo Capitation, or other direct, Tax shall be laid, unless in Proportion to the Census or enumeration herein before directed to be taken.\u003C\/p\u003E\n\u003C\/div\u003E\n      \n    \u003C\/div\u003E\n      \n  \u003Cdiv class=\u0022con-essay-body\u0022\u003E\n    \n            \u003Cdiv\u003E\u003Cp\u003EThe Constitution was intended to give the\u003Ci\u003E \u003C\/i\u003Enational government greater power to raise revenue\u2014the Articles of Confederation had been a fiscal disaster\u2014but many Framers remained fearful of taxation. Indirect taxes (generally understood as falling on articles of consumption) did not lend themselves to congressional abuse (for reasons that will be described presently), but the Framers believed that \u201cdirect taxes\u201d needed to be cabined. The cumbersome apportionment rule, requiring that a direct tax be apportioned among the states on the basis of population (so that, for example, a state with twice the population of another state would have to pay twice the tax, even if the more populous state\u2019s share of the national tax base were smaller), made the more dangerous taxes politically difficult for Congress to impose.\u003C\/p\u003E\n\n\u003Cp\u003EThe effectiveness of apportionment as a limitation on congressional power obviously depends on the levies to which it applies, and students of the Founding disagree on this point. At one extreme, some scholars, citing Rufus King\u2019s unanswered question at the Constitutional Convention (\u201cMr King asked what was the precise meaning of direct taxation? No one answd.\u201d), have argued that \u201cdirect taxes\u201d had no agreed upon meaning, or, much the same thing, that the Framers did not think through what they were doing. They created an apportionment scheme so unworkable that a cramped definition of \u201cdirect taxes\u201d became necessary to prevent the collapse of the system.\u003C\/p\u003E\n\n\u003Cp\u003EThose views overstate the extent of the confusion in 1787. No interpretation of \u201cdirect taxes\u201d can be consistent with all statements made at the time, but the Founding debates are full of references to two forms of taxation for which apportionment was clearly intended: capitation taxes (specifically denominated as direct in the Constitution) and taxes on land (generally including slaves as well). Although intended to be difficult, apportionment was not impossible. Between 1798 and 1861, Congress enacted several real estate taxes, all with complex schemes for apportionment.\u003C\/p\u003E\n\n\u003Cp\u003EDoes \u201cdirect taxes\u201d include anything beyond capitation and taxes on property? The conventional wisdom is that it does not, based on dicta in \u003Ci\u003EHylton v. United States\u003C\/i\u003E (1796), which held that a tax on carriages was an excise rather than a direct tax. Justice William Paterson, for example, thought the provision was designed to allay Southern fears of a federal tax on their lands and slaves\u2014nothing more. Because the Federalist justices were themselves among the Framers, these dicta are often accepted as evidence of original understanding. Not all significant Framers thought the concept of \u201cdirect taxes\u201d was so limited\u2014James Madison voted against the carriage tax in Congress because he thought it needed to be apportioned\u2014but, based on the \u003Ci\u003EHylton\u003C\/i\u003E dicta, the Supreme Court in the nineteenth century upheld unapportioned federal taxes on insurance company receipts, \u003Ci\u003EPacific Insurance Co. v.\u003C\/i\u003E \u003Ci\u003ESoule \u003C\/i\u003E(1869); on notes of state-chartered banks,\u003Ci\u003E Veazie Bank v. Fenno \u003C\/i\u003E(1869); on inheritances of\u003Ci\u003E \u003C\/i\u003Ereal estate, \u003Ci\u003EScholey v. Rew\u003C\/i\u003E (1875); and on the Civil War income tax, \u003Ci\u003ESpringer v. United States\u003C\/i\u003E (1881).\u003C\/p\u003E\n\n\u003Cp\u003EWhat looked to be a revolutionary change occurred in 1895, when, in \u003Ci\u003EPollock v. Farmers\u2019\u003C\/i\u003E \u003Ci\u003ELoan \u0026amp; Trust Co. \u003C\/i\u003E(1895), a divided Court accepted\u003Ci\u003E \u003C\/i\u003Ea broader conception of \u201cdirect taxes\u201d and concluded that an unapportioned 1894 income tax\u2014which largely reached income from property\u2014was invalid. In rejecting the notion that nothing but a capitation or land tax could be direct, the Court stressed that a limitation on congressional power ought not to be interpreted in a way that destroys the limitation. Although the Court after \u003Ci\u003EPollock\u003C\/i\u003E continued to approve a large number of unapportioned federal taxes, calling them \u201cexcises,\u201d \u003Ci\u003EPollock\u003C\/i\u003E unquestionably hampered the government\u2019s ability to raise revenue. In 1913, the Sixteenth Amendment was ratified, exempting \u201ctaxes on incomes\u201d from apportionment.\u003C\/p\u003E\n\n\u003Cp\u003EOver the years, until 2012 (see below), Supreme Court authority had provided little further guidance on the meaning of \u201cdirect taxes.\u201d That was understandable because the Sixteenth Amendment made worrying about new sources of revenue less pressing for the federal government. Nonetheless, it seems that any direct tax other than an income tax should still be subject to the apportionment rule today. At a minimum, that would include capitation and land taxes. (In 1934, the Supreme Court emphasized, in dictum, that a tax on the value of real estate would be direct. \u003Ci\u003EHelvering v. Independent Life Insurance\u003C\/i\u003E \u003Ci\u003ECo. \u003C\/i\u003E(1934).)\u003C\/p\u003E\n\n\u003Cp\u003EFurthermore, after \u003Ci\u003EPollock\u003C\/i\u003E, a broader interpretation of \u201cdirect taxes\u201d was certainly possible. In fact, a broad interpretation of \u201cdirect taxes\u201d can reconcile the clear original understanding that capitation and land taxes were direct with the equally clear intention that apportionment should have bite. The Constitution divided governmental levies into two mutually exclusive categories: indirect taxes subject to the uniformity requirement, and direct taxes subject to apportionment. Indirect taxes, which the Framers assumed would fund the national government in ordinary circumstances, were \u201cDuties, Imposts, and Excises\u201d\u2014generally taxes on articles of consumption. These taxes were considered safe because, regardless of who collected them, the burden was thought to be shifted to consumers. If Congress became greedy and raised rates too high, fewer taxed goods would be purchased and revenue would decrease. It was because taxes on articles of consumption \u201ccontain in their own nature a security against excess,\u201d wrote Alexander Hamilton in \u003Ci\u003EThe Federalist\u003C\/i\u003E No. 21, that further constitutional protection against congressional overreaching was unnecessary.\u003C\/p\u003E\n\n\u003Cp\u003EDirect taxes, which were expected to be used only in emergencies, did not have the built-in protections characteristic of indirect taxes. Direct taxes were imposed directly on individuals, who, it was assumed, could not shift the tax burden away from themselves. If a tax was not indirect, the Framers thought it should be apportioned. Capitation and land taxes (the eighteenth century form of a wealth tax) were direct under this understanding, but so might other taxes be, whether known in 1787 or not.\u003C\/p\u003E\n\n\u003Cp\u003ERecent scholarship has provided another reason to think that the phrase \u201cdirect taxes\u201d has a much broader meaning than is generally understood today. James Campbell has demonstrated that the term \u201ccapitation\u201d was understood in the late eighteenth century to encompass much more than a lump-sum head tax; it would, for example, have included an income tax.\u003C\/p\u003E\n\n\u003Cp\u003EWith the exception of \u003Ci\u003EPollock\u003C\/i\u003E, however, the Supreme Court has not blessed an expansive conception of what constitutes a direct tax. For one brief moment in 2006, a panel of the U.S. Court of Appeals for the District of Columbia Circuit did just that. In \u003Ci\u003EMurphy v.\u003C\/i\u003E \u003Ci\u003EInternal Revenue Service\u003C\/i\u003E, the panel initially held\u003Ci\u003E \u003C\/i\u003Ethat an unapportioned tax on a whistleblower\u2019s recovery, received because she was wrongly discharged from her governmental position and suffered emotional distress, was direct and was not exempted from apportionment by the Sixteenth Amendment. Facing criticism, however, the panel vacated that decision, reheard the case, and in 2007 made a 180-degree turn. As a matter of first principle, the panel seemed sympathetic to the notion of direct taxes outlined above, but it could find no support for that understanding in Supreme Court cases.\u003C\/p\u003E\n\n\u003Cp\u003EThere continues to be no Supreme Court support for a broader conception of direct taxes. In 2012, in ruling on the constitutionality of the individual mandate in the Affordable Care Act (the requirement that individuals must purchase health insurance or pay a \u201cpenalty\u201d), the Court held that the penalty provision was actually a tax. The opinion of Chief Justice John Roberts went further. It effectively held that the only \u201crecognized\u201d categories of direct taxes are capitations and taxes on the ownership of property, and that, as a result, the penalty for failure to acquire suitable health insurance, scheduled to come into effect in 2014, will not be a direct tax. \u003Ci\u003ENational Federation of Independent Business v. Sebelius \u003C\/i\u003E(2012). (To no avail, four dissenters complained that \u003Ci\u003ENFIB\u003C\/i\u003E presented a case of first impression about the scope of direct taxes, and that that issue had been inadequately briefed and argued.) Moreover, writing for the majority, Chief Justice Roberts quoted Justice Samuel Chase\u2019s opinion in \u003Ci\u003EHylton\u003C\/i\u003E that \u201c[c]apitations are taxes paid by every person \u2018without regard to property, profession, or \u003Ci\u003Eany other\u003C\/i\u003E \u003Ci\u003Ecircumstance\u003C\/i\u003E\u2019\u201d\u2014in effect, limiting capitations\u003Ci\u003E \u003C\/i\u003Eto lump-sum head taxes. With the Supreme Court\u2019s decision in \u003Ci\u003ENFIB\u003C\/i\u003E, we are left with a narrow understanding of direct taxes, encompassing at most capitation taxes (itself narrowly construed) and taxes on property, even though the original understanding of direct taxes may have been far broader.\u003C\/p\u003E\n\u003C\/div\u003E\n      \n  \u003C\/div\u003E\n\n      \u003Cdiv class=\u0022con-essay-author\u0022\u003E\n      \u003Cdiv class=\u0022con-essay-author--media\u0022\u003E\n            \u003C\/div\u003E\n      \u003Cdiv class=\u0022con-essay-author--info\u0022\u003E\n              \u003Ch4 class=\u0022con-essay-author--name\u0022\u003E\n                      \u003Ca href=\u0022http:\/\/law.case.edu\/OurSchool\/FacultyStaff\/MeetOurFaculty\/FacultyDetail.aspx?id=118\u0022\u003EErik M. Jensen\u003C\/a\u003E\n                  \u003C\/h4\u003E\n                  \u003Cdiv class=\u0022con-essay-author--job\u0022\u003E\n         Schott-van den Eynden Professor, Case Western Reserve Law School\n      \u003C\/div\u003E\n            \u003C\/div\u003E\n    \u003C\/div\u003E\n\n    \u003Cdiv class=\u0022con-essay-tabs\u0022\u003E\n      \u003Cul data-tabs class=\u0022tabs\u0022\u003E\n        \u003Cli class=\u0022button-more thirds\u0022\u003E\u003Ca data-tab href=\u0022#node-10000063-taba\u0022\u003EFurther Reading\u003C\/a\u003E\u003C\/li\u003E\n        \u003Cli class=\u0022button-more thirds\u0022\u003E\u003Ca data-tab href=\u0022#node-10000063-tabb\u0022\u003ECase Law\u003C\/a\u003E\u003C\/li\u003E\n        \u003Cli class=\u0022button-more thirds\u0022\u003E\u003Ca data-tab href=\u0022#node-10000063-tabc\u0022\u003ERelated Essays\u003C\/a\u003E\u003C\/li\u003E\n      \u003C\/ul\u003E\n\n      \u003Cdiv data-tabs-content\u003E\n        \u003Cdiv data-tabs-pane class=\u0022tabs-pane\u0022 id=\u0022node-10000063-taba\u0022\u003E\n          \n      \u003Cdiv\u003E\n              \u003Cdiv\u003E\u003Cp\u003EBruce Ackerman, \u003Ci\u003ETaxation and the Constitution\u003C\/i\u003E, 99 Colum. L. Rev. 1 (1999)\u003C\/p\u003E\n\u003C\/div\u003E\n              \u003Cdiv\u003E\u003Cp style=\u0022margin-left:16px; text-align:justify; text-indent:-11.95pt\u0022\u003EJames Campbell, \u003Ci\u003EDispelling the Fog About Direct Taxation\u003C\/i\u003E, 1\u003Ci\u003E \u003C\/i\u003EBRIT. J. AM. LEGAL STUD.\u003Ci\u003E \u003C\/i\u003E109 (2012)\u003C\/p\u003E\n\u003C\/div\u003E\n              \u003Cdiv\u003E\u003Cp style=\u0022margin-left:16px; text-align:justify; text-indent:-11.95pt\u0022\u003EErik M. Jensen, \u003Ci\u003EThe Apportionment of \u201cDirect Taxes\u201d:\u003C\/i\u003E \u003Ci\u003EAre Consumption Taxes Constitutional?, \u003C\/i\u003E97\u003Ci\u003E \u003C\/i\u003ECOLUM.\u003Ci\u003E \u003C\/i\u003EL. REV. 2334 (1997)\u003C\/p\u003E\n\u003C\/div\u003E\n              \u003Cdiv\u003E\u003Cp style=\u0022margin-left:16px; text-align:justify; text-indent:-11.95pt\u0022\u003EErik M. Jensen, Murphy v. Internal Revenue Service, \u003Ci\u003Ethe Meaning of \u201cIncome,\u201d and Sky-Is-Falling Tax Commentary\u003C\/i\u003E, 60\u003Ci\u003E \u003C\/i\u003ECASE W. RES. L. REV.\u003Ci\u003E \u003C\/i\u003E751 (2010)\u003C\/p\u003E\n\u003C\/div\u003E\n              \u003Cdiv\u003E\u003Cp style=\u0022margin-left:16px; text-align:justify; text-indent:-11.95pt\u0022\u003ECalvin H. Johnson, \u003Ci\u003EApportionment of Direct Taxes:\u003C\/i\u003E \u003Ci\u003EThe Foul-Up in the Core of the Constitution\u003C\/i\u003E, 7\u003Ci\u003E \u003C\/i\u003EWM.\u003Ci\u003E \u003C\/i\u003E\u0026amp; MARY BILL RTS. J. 1 (1998)\u003C\/p\u003E\n\u003C\/div\u003E\n          \u003C\/div\u003E\n  \n        \u003C\/div\u003E\n        \u003Cdiv data-tabs-pane class=\u0022tabs-pane\u0022 id=\u0022node-10000063-tabb\u0022\u003E\n          \n      \u003Cdiv\u003E\n              \u003Cdiv\u003E\u003Cp\u003EHylton v. United States, 3 U.S. (3 Dall.) 171 (1796)\u003C\/p\u003E\n\u003C\/div\u003E\n              \u003Cdiv\u003E\u003Cp\u003EPacific Insurance Co. v. Soule, 74 U.S. (7 Wall.) 433 (1869)\u003C\/p\u003E\n\u003C\/div\u003E\n              \u003Cdiv\u003E\u003Cp\u003EVeazie Bank v. Fenno, 75 U.S. (8 Wall.) 533 (1869)\u003C\/p\u003E\n\u003C\/div\u003E\n              \u003Cdiv\u003E\u003Cp\u003EScholey v. Rew, 90 U.S. (23 Wall.) 331 (1875)\u003C\/p\u003E\n\u003C\/div\u003E\n              \u003Cdiv\u003E\u003Cp\u003ESpringer v. United States, 102 U.S. 586 (1881)\u003C\/p\u003E\n\u003C\/div\u003E\n              \u003Cdiv\u003E\u003Cp\u003EPollock v. Farmers\u0027 Loan \u0026amp; Trust Co., 157 U.S. 429, 158 U.S. 601 (1895)\u003C\/p\u003E\n\u003C\/div\u003E\n              \u003Cdiv\u003E\u003Cp\u003EHelvering v. Independent Life Insurance Co., 292 U.S. 371 (1934)\u003C\/p\u003E\n\u003C\/div\u003E\n              \u003Cdiv\u003E\u003Cp style=\u0022margin-left:16px; text-align:justify; text-indent:-11.95pt\u0022\u003EMurphy v. Internal Revenue Service, 460 F.3d 79 (D.C. Cir. 2006), \u003Ci\u003Evacated\u003C\/i\u003E (2006); \u003Ci\u003Eopinion on reh\u2019g\u003C\/i\u003E, 493 F.3d 170 (D.C. Cir. 2007), \u003Ci\u003Ecert. denied\u003C\/i\u003E, 553 U.S. 1004 (2008)\u003C\/p\u003E\n\u003C\/div\u003E\n              \u003Cdiv\u003E\u003Cp style=\u0022margin-left:16px; text-align:justify; text-indent:-11.95pt\u0022\u003ENational Federation of Independent Business v. Sebelius, 132 S. Ct. 2566 (2012)\u003C\/p\u003E\n\u003C\/div\u003E\n          \u003C\/div\u003E\n  \n        \u003C\/div\u003E\n        \u003Cdiv data-tabs-pane class=\u0022tabs-pane\u0022 id=\u0022node-10000063-tabc\u0022\u003E\n                      \u003Ca href=\u0022\/essay_controller\/10000007\u0022 class=\u0022use-ajax\u0022\u003EAllocation of Representatives\u003C\/a\u003E\n                      \u003Ca href=\u0022\/essay_controller\/10000033\u0022 class=\u0022use-ajax\u0022\u003ESpending Clause\u003C\/a\u003E\n                      \u003Ca href=\u0022\/essay_controller\/10000034\u0022 class=\u0022use-ajax\u0022\u003EUniformity Clause\u003C\/a\u003E\n                      \u003Ca href=\u0022\/essay_controller\/10000176\u0022 class=\u0022use-ajax\u0022\u003EIncome Tax\u003C\/a\u003E\n                  \u003C\/div\u003E\n      \u003C\/div\u003E\n    \u003C\/div\u003E\n  \n\u003C\/article\u003E\n"]}]