Prohibition on Direct Taxation: Overview

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ArtI.S9.C4.1.1 Prohibition on Direct Taxation: Overview

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 crucial problem under Clause 4 is to distinguish “direct” from other taxes. In its opinion in Pollock v. Farmers' Loan & Trust Co., the Court declared: “It is apparent . . . that the distinction between direct and indirect taxation was well understood by the framers of the Constitution and those who adopted it.” 1 Against this confident dictum may be set the following brief excerpt from Madison's Notes on the Convention: “Mr. King asked what was the precise meaning of direct taxation? No one answered.” 2 The first case to come before the Court on this issue was Hylton v. United States,3 which was decided early in 1796. Congress has levied, according to the rule of uniformity, a specific tax upon all carriages, for the conveyance of persons, which were to be kept by, or for any person, for his own use, or to be let out for hire, or for the conveying of passengers. In a fictitious statement of facts, it was stipulated that the carriages involved in the case were kept exclusively for the personal use of the owner and not for hire. The principal argument for the constitutionality of the measure was made by Hamilton, who treated it as an “excise tax,” 4 whereas Madison, both on the floor of Congress and in correspondence, attacked it as “direct” and therefore void, because it was levied without apportionment.5 The Court, taking the position that the direct tax clause constituted in practical operation an exception to the general taxing powers of Congress, held that no tax ought to be classified as “direct” that could not be conveniently apportioned, and on this basis sustained the tax on carriages as one on their “use” and therefore an “excise.” Moreover, each of the judges advanced the opinion that the direct tax clause should be restricted to capitation taxes and taxes on land, or that, at most, it might cover a general tax on the aggregate or mass of things that generally pervade all the states, especially if an assessment should intervene, while Justice Paterson, who had been a member of the Federal Convention, testified to his recollection that the principal purpose of the provision had been to allay the fear of the Southern states that their slaves and land should be subjected to a specific tax.6

157 U.S. 429, 573 (1895). back
J. Madison, The Debates in the Federal Convention of 1787 435 (G. Hunt & J. Scott eds., Greenwood Press ed. 1970). back
3 U.S. (3 Dall.) 171 (1796). back
The Works of Alexander Hamilton 845 (J. Hamilton ed., 1851). “If the meaning of the word excise is to be sought in the British statutes, it will be found to include the duty on carriages, which is there considered as an excise, and then must necessarily be uniform and liable to apportionment; consequently, not a direct tax.” back
4 Annals of Cong. 730 (1794); 2 Letters and Other Writings of James Madison 14 (1865). back
Hylton v. United States, 3 U.S. (3 Dall.) 171, 177 (1796) (Paterson, J., concurring). back

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