The Constitution's financial terms, part II: Duties, imposts, excises and tonnage

|The Volokh Conspiracy |

In this series of four posts, I discuss the original legal force of the terms the Constitution employs to denote financial exactions. This series is based, for the most part, on my forthcoming article in Case Western Reserve Law Review: "What the Constitution Means by 'Duties, Imposts, and Excises'—and 'Taxes' (Direct or Otherwise)." The previous post considered the difference between "Taxes" and other financial impositions.

Several provisions in the Constitution contain terms referring to financial exactions. For example, Article I, § 8, cl. 1 authorizes Congress to "lay and collect Taxes, Duties, Imposts and Excises." Article I, § 9, cl. 5 states that "No Tax or Duty shall be laid on Articles exported from any State." Section 10, cl. 3 of the same Article refers to "any Duty of Tonnage."

All of these terms appear widely in written materials published before or contemporaneously with the Constitution. They show that the American meaning of each had crystallized well before the document was ratified, although American usage was not always reflected in British dictionaries. Those materials also show that none of these terms was purely repetitive of any other, although all of them overlapped others.

Tonnage (originally "tunnage") had begun as a medieval import fee on "tuns" (casks) of wine. By the time of the Founding, the term had broadened into a charge levied on the carrying capacity of ships. Tonnage could be imposed on ships either importing or exporting. In 1787, for example, Virginia imposed a tonnage fee of six shillings per ton on all vessels entering and clearing the harbors of that state. Tonnage could be imposed to raise revenue, in which case it was considered an indirect tax. Tonnage also could be imposed to regulate or facilitate commerce or to fund harbor maintenance or an inspection program, in which case it was not considered a tax.

An impost was an exaction on imports. Thus, a tonnage fee levied on ships entering harbor was a kind of impost, but a tonnage fee levied on ships leaving harbor was not. An impost designed to raise money was a form of indirect tax. For example, a 10-cent impost on each French dress imported was a tax, because such an impost would raise revenue. A 1,000-dollar impost on each French dress, however, would act as a prohibitory tariff and raise no revenue. It was, therefore, a regulation of commerce rather than a tax.

From an originalist point of view, Justice Cardozo's opinion in Charles C. Steward Machine Co. v. Davis holding that the Social Security tax on employers was an "excise" is constitutional nonsense. To the founding generation (and in this respect American and British usage are in full accord) an excise was a domestic tax on the consumption of commodities, especially manufactured goods. Excises sometimes were referred to as "inland impositions," because they were the domestic equivalent of imposts and other duties on goods entering and leaving the country.

An excise might be imposed on all goods of a particular character, or only on foreign goods of that character, such as foreign watches or clocks. What rendered the latter an excise rather than an impost was that it was not levied at the time of import, but upon consumption within the levying jurisdiction. If the product was re-exported rather than consumed within the jurisdiction, no excise was imposed.

Excises were most commonly laid at the point of sale, but this was not invariably true. Excises on certain large, luxury goods, such as carriages, typically were levied on an annual basis. In England, a cider excise was imposed before sale.

Although an excise might be enacted either to regulate commerce or to raise revenue, usually the primary motivation was to raise revenue. An excise adopted to raise money was an indirect tax. Often, however, the legislature had a subsidiary interest in discouraging consumption of the items excised.

Duties. American usage defined a "duty" as any financial exaction that did not qualify as a direct tax. In other words, the term included all regulatory impositions and all indirect taxes. The Constitution's Taxation Clause authorized duties imposed principally to raise revenue. Other provisions, such as the Commerce and Post Office clauses, authorized regulatory duties.

Full understanding of the "duty" concept must await Part III's discussion of direct and indirect taxes. Suffice to say at this point that duties generally fell on consumption and on certain special transactions. Tonnage, imposts, and excises—whether revenue-raising indirect taxes or regulatory impositions—were all duties. The historical record contains copious examples of phrases like "impost duty" and "excise duty." The Constitution itself employs the phrase "Duty of Tonnage."

Some specialized levies that did not qualify as tonnage, imposts or excises did qualify as duties. Examples were fees laid on items exported, fees imposed on goods brought into a military fort, fees on vessels for using public wharves, fees on auction sales, fees on legal proceedings and charges on certain written documents. The notorious pre-Revolution Stamp Tax was a kind of duty. It was imposed on court orders, ship clearances, deeds, mortgages, licenses, pamphlets, newspapers, gambling supplies and college diplomas.

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