prev | next
Amdt5.7.4.1 Restrictions on Federal Government Taxation

Fifth Amendment:

No person shall be held to answer for a capital, or otherwise infamous crime, unless on a presentment or indictment of a Grand Jury, except in cases arising in the land or naval forces, or in the Militia, when in actual service in time of War or public danger; nor shall any person be subject for the same offence to be twice put in jeopardy of life or limb; nor shall be compelled in any criminal case to be a witness against himself, nor be deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use, without just compensation.

In laying taxes, the federal government is less narrowly restricted by the Fifth Amendment than are the states by the Fourteenth.1 The federal government may tax property belonging to its citizens, even if such property is never situated within the jurisdiction of the United States,2 and it may tax the income of a citizen resident abroad that is derived from property located at his residence.3 The difference is explained by the fact that protection of the federal government follows the citizen wherever he goes, whereas the benefits of state government accrue only to persons and property within the state’s borders. The Supreme Court has said that, in the absence of an equal protection clause, “a claim of unreasonable classification or inequality in the incidence or application of a tax raises no question under the Fifth Amendment . . . .” 4

Consistent with this holding, the Supreme Court has sustained, over charges of unfair differentiation between persons: a graduated income tax;5 a higher tax on oleomargarine than on butter;6 an excise tax on “puts” but not on “calls” ;7 a tax on the income of businesses operated by corporations but not on similar enterprises operated by individuals;8 an income tax on foreign corporations, based on their income from sources within the United States, even though domestic corporations were taxed on income from all sources;9 a tax on foreign-built yachts but not upon domestic yachts;10 a tax on employers of eight or more persons, with exemptions for agricultural labor and domestic service;11 a gift tax law embodying a plan of graduations and exemptions under which donors of the same amount might be liable for different sums;12 an Alaska statute imposing license taxes only on nonresident fishermen;13 an act that taxed the manufacture of oil and fertilizer from herring at a higher rate than similar processing of other fish or fish offal;14 an excess profits tax that defined “invested capital” with reference to the original cost of the property rather than to its present value;15 an undistributed profits tax in the computation of which special credits were allowed to certain taxpayers;16 an estate tax upon the estate of a deceased spouse in respect of the moiety of the surviving spouse where the effect of the dissolution of the community is to enhance the value of the survivor’s moiety;17 and a tax on nonprofit mutual insurers, even though such insurers organized before a certain date were exempt, as there was a rational basis for the discrimination.18

For more information on due process and state taxation, see Amdt14.S1.5.7.1 State Taxes and Due Process Generally to Amdt14.S1.5.7.4 Collection of State Taxes and Due Process. back
United States v. Bennett, 232 U.S. 299, 307 (1914). back
Cook v. Tait, 265 U.S. 47 (1924). back
Helvering v. Lerner Stores Co., 314 U.S. 463, 468 (1941). back
Brushaber v. Union Pac. R.R, 240 U.S. 1, 24 (1916). back
McCray v. United States, 195 U.S. 27, 61 (1904). back
Treat v. White, 181 U.S. 264 (1901). back
Flint v. Stone Tracy Co., 220 U.S. 107 (1911). back
Nat’l Paper Co. v. Bowers, 266 U.S. 373 (1924). back
Billings v. United States, 232 U.S. 261, 282 (1914). back
Steward Mach. Co. v. Davis, 301 U.S. 548 (1937); Helvering v. Davis, 301 U.S. 619 (1937). back
Bromley v. McCaughn, 280 U.S. 124 (1929). back
Haavik v. Alaska Packers Ass’n, 263 U.S. 510 (1924). back
Alaska Fish Co. v. Smith, 255 U.S. 44 (1921). back
LaBelle Iron Works v. United States, 256 U.S. 377 (1921). back
Helvering v. Nw. Steel Mills, 311 U.S. 46 (1940). back
Fernandez v. Wiener, 326 U.S. 340 (1945); cf. Coolidge v. Long, 282 U.S. 582 (1931). back
United States v. Maryland Savings-Share Ins. Corp., 400 U.S. 4 (1970) (per curiam). back