Prohibition on Direct Taxation: Early Doctrine
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 result of the Hylton case was not challenged until after the Civil War. A number of the taxes imposed to meet the demands of that war were assailed during the postwar period as direct taxes, but without result. The Court sustained successively, as “excises” or “duties,” a tax on an insurance company's receipts for premiums and assessments,1 a tax on the circulating notes of state banks,2 an inheritance tax on real estate,3 and finally a general tax on incomes.4 In the last case, the Court took pains to state that it regarded the term “direct taxes” as having acquired a definite and fixed meaning, to wit, capitation taxes, and taxes on land.5 Then, almost one hundred years after the Hylton case, the famous case of Pollock v. Farmers' Loan & Trust Co.6 arose under the Income Tax Act of 1894.7 Undertaking to correct “a century of error,” the Court held, by a vote of five-to-four, that a tax on income from property was a direct tax within the meaning of the Constitution and hence void because not apportioned according to the census.
- Pacific Ins. Co. v. Soule, 74 U.S. (7 Wall.) 433 (1869).
- Veazie Bank v. Fenno, 75 U.S. (8 Wall.) 533 (1869).
- Scholey v. Rew, 90 U.S. (23 Wall.) 331 (1875).
- Springer v. United States, 102 U.S. 586 (1881).
- 102 U.S. at 602.
- 157 U.S. 429 (1895); 158 U.S. 601 (1895).
- 28 Stat. 509, 553 (1894).
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