Article I, Section 9, Clause 4:
No Capitation, or other direct, Tax shall be laid, unless in Proportion to the Census or enumeration herein before directed to be taken.
The Framers’ principal motivation for granting Congress the power to tax in the Constitution was to provide the National Government with a mechanism to raise a “regular and adequate supply” 1 of revenue and pay its debts.2 Under the predecessor Articles of Confederation, the National Government had no power to tax and could not compel states to raise revenue for national expenditures.3 The National Government could requisition funds from states to place in the common treasury, but, under the Articles of Confederation, state requisitions were “mandatory in theory” only.4 State governments resisted these calls for funds.5 As a result, the National Government raised “very little” revenue through state requisitions,6 inhibiting its ability to resolve immediate fiscal problems, such as repaying its Revolutionary War debts.7
By contrast, the Constitution provides Congress with broad authority to lay and collect taxes. Article I, Section 8, Clause 1 of the Constitution—commonly known as the Taxing and Spending Clause8 —empowers Congress “To lay and collect Taxes, Duties, Impost and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States.” 9 The U.S. Supreme Court has described Congress’s power to tax as “very extensive.” 10 Supreme Court Chief Justice Salmon P. Chase famously described the taxing power in the License Tax Cases:
It is given in the Constitution, with only one exception and only two qualifications. Congress cannot tax exports, and it must impose direct taxes by the rule of apportionment, and indirect taxes by the rule of uniformity. Thus limited, and thus only, it reaches every subject, and may be exercised at discretion.11
By proscribing direct taxes “unless in Proportion to the Census or enumeration herein” under Article I, Section 9, Clause 4, the Framers apportioned direct taxes consistent with how they apportioned representation in the House.12 As James Madison noted in the Federalist Papers, linking tax liability to representation ensured that any advantage a state may have in enhancing its reported population size to increase its representation would be offset by its increased tax liability. Madison stated:
As the accuracy of the census to be obtained by the Congress will necessarily depend, in a considerable degree on the disposition, if not the co-operation of the States, it is of great importance that the States should feel as little bias as possible, to swell or to reduce the amount of their numbers. Were their share of representation alone to be governed by this rule, they would have an interest in exaggerating their inhabitants. Were the rule to decide their share of taxation alone, a contrary temptation would prevail. By extending the rule to both objects, the States will have opposite interests, which will control and balance each other, and produce the requisite impartiality.13
- The Federalist No. 30 (Alexander Hamilton).
- Gillian E. Metzger, To Tax, To Spend, To Regulate, 126 Harv. L. Rev. 83, 89 (2012); see Veazie Bank v. Fenno, 75 U.S. 533, 540 (1869) ( “The [National Government] had been reduced to the verge of impotency by the necessity of relying for revenue upon requisitions on the States, and it was a leading object in the adoption of the Constitution to relieve the government, to be organized under it, from this necessity, and confer upon it ample power to provide revenue by the taxation of persons and property.” ); Bruce Ackerman, Taxation and the Constitution, 99 Colum. L. Rev. 1, 6 (1999) ( “The [Federalists] would never have launched their campaign against America’s first Constitution, the Articles of Confederation, had it not been for its failure to provide adequate fiscal powers for the national government.” ); see generally The Federalist No. 30 (Alexander Hamilton) (advocating for a “General Power of Taxation” ).
- See Articles of Confederation of 1777, arts. II, VIII; Ackerman, supra 2, at 6 ( “The Articles of Confederation stated that the ‘common treasury . . . shall be supplied by the several States, in proportion to the value of all land within each State,’ Articles of Confederation art. VIII (1781), but did not explicitly authorize the Continental Congress to impose any sanctions when a state failed to comply. This silence was especially eloquent in light of the second Article’s pronouncement: ‘Each State retains its sovereignty, freedom and independence, and every power, jurisdiction and right, which is not by the confederation expressly delegated to the United States, in Congress assembled.’” ).
- Calvin H. Johnson, Righteous Anger at the Wicked States: The Meaning of the Founders’ Constitution, 15 (2005); see Articles of Confederation of 1777, art. VIII.
- Johnson, supra note 4, at 16 ( “Some states simply ignored the requisitions. Some sent them back to Congress for amendment, more to the states’ liking. New Jersey said it had paid enough tax by paying the tariffs or ‘imposts’ on goods imported through New York or Philadelphia and it repudiated the requisition in full.” ).
- Robert D. Cooter & Neil S. Siegel, Not the Power to Destroy: An Effects Theory of the Tax Power, 98 VA. L. REV. 1195, 1202 (2012); see, e.g., Johnson, supra note 4, at 15 ( “In the requisition of 1786—the last before the Constitution—Congress mandated that states pay $3,800,000, but it collected only $663.” ); see Metzger, supra note 2, at 89 ( “Under the Articles of Confederation, states had failed to meet congressional requisitions on a massive scale and Congress was bankrupt.” ).
- Johnson, supra note 4, at 16–17 ( “Congress’s Board of Treasury had concluded in June 1786 that there was ‘no reasonable hope’ that the requisitions would yield enough to allow Congress to make payments on the foreign debts, even assuming that nothing would be paid on the domestic war debt. . . . Almost all of the money called for by the 1786 requisition would have gone to payments on the Revolutionary War debt. French and Dutch creditors were due payments of $1.7 million, including interest and some payment on the principal. Domestic creditors were due to be paid $1.6 million for interest only. Express advocacy of repudiation of the federal debt was rare, but with the failure of requisitions, payment was not possible. . . . Beyond the repayment of war debts, the federal goals were quite modest. The operating budget was only about $450,000 . . . . Without money, however, the handful of troops on the frontier would have to be disbanded and the Congress’s offices shut.” ); see Cooter & Siegel, supra note 6, at 1204.
- See, e.g., United States v. Richardson, 418 U.S. 166, 169–70 (1974).
- U.S. Const. art. I, § 8, cl. 1; see also id. art. I, § 8, cl. 18 ( “To make all Laws which shall be necessary and proper for carrying into Execution the foregoing Powers, and all other Powers vested by this Constitution in the Government of the United States, or in any Department or Officer thereof.” ).
- License Tax Cases, 72 U.S. 462, 471 (1866); see also United States v. Kahriger, 345 U.S. 22, 28 (1953) ( “It is axiomatic that the power of Congress to tax is extensive and sometimes falls with crushing effect . . . . As is well known, the constitutional restraints on taxing are few.” ); Brushaber v. Union Pac. R. Co., 240 U.S. 1, 12 (1916) ( “That the authority conferred upon Congress by § 8 of article 1 ‘to lay and collect taxes, duties, imposts and excises’ is exhaustive and embraces every conceivable power of taxation has never been questioned or, if it has, has been so often authoritatively declared as to render it necessary only to state the doctrine.” ); Austin v. Aldermen, 74 U.S. (7 Wall.) 694, 699 (1869) ( “The right of taxation, where it exists, is necessarily unlimited in its nature. It carries with it inherently the power to embarrass and destroy.” ); see generally Veazie Bank v. Fenno, 75 U.S. 533, 540 (1869) (explaining “[N]othing is clearer, from the discussions in the [Constitutional] Convention and the discussions which preceded final ratification [of the Constitution] by the necessary number of States, than the purpose to give this power to Congress, as to the taxation of everything except exports, in its fullest extent.” ).
- License Tax Cases, 72 U.S. at 471.
- U.S. Const. art. I, § 2, Cl. 3 ( “Representatives and direct Taxes shall be apportioned among the several States which may be included within this Union, according to their respective Numbers . . . .” ).
- The Federalist No. 54 (James Madison).