The Volokh Conspiracy
Mostly law professors | Sometimes contrarian | Often libertarian | Always independent
Final Post on Moore v. United States
First, the government and the Wall Street Journal are trying to persuade the Supreme Court to decide this case extremely narrowly after very publicly calling into question the ownership by private homeowners and stockholders of the unrealized gains on their assets thus limiting the ability of owners to borrow against those gains. This is completely unfair because word that this case was pending in the Supreme Court caused those assets to be less highly valued than would otherwise be the case. Justice should be done to all the millions of homeowners and owners of small amounts of stock who never knew that the federal government claimed a power to tax unrealized capital gains or to impose a direct wealth tax. The Supreme Court owes 330,000,000 Americans a clear affirmation of their right not to have unrealized capital gains or wealth directly taxed.
Second, the Constitution requires the rule of apportionment for all "direct taxes" and not merely for "land taxes", which are a subset of the general term "direct tax." A direct tax is a tax that falls straight on an individual and not on a transaction. A wealth tax is such a tax. Taxes which fall on transactions include: tariffs, sales taxes, income taxes, inheritance taxes, gift taxes, and value added taxes. Transactional taxes are indirect and need only be uniform among the states.
Third, the best evidence that wealth taxes are direct taxes are Chief Justice John Marshall's statement to the Virginia Ratifying Convention and Chief Justice Oliver Ellsworth's statement to the Connecticut Ratifying Convention to that effect. Even Alexander Hamilton, himself, said in his brief for the United States in Hylton v. United States, 3 U.S. (3 Dall.) 171 (1796) that:
"The following are presumed to be the only direct taxes.
Capitation or poll taxes.
Taxes on lands and buildings.
General assessments, whether on the whole property of individuals, or on their whole real or personal estate; all else must of necessity be considered as indirect taxes."
In other words, even Alexander Hamilton himself said that wealth taxes were direct taxes in Hylton. Now to be fair, it is true that Hamilton sometimes said that direct taxes were only capitations or land taxes, but Hamilton was also the most nationalist member of the Philadelphia Constitutional Convention. He favored a President and a Senate that served for life; the abolition of the states; and the federal appointment of "territorial" governors. Alexander Hamilton was the most nationalist of the Framers at Philadelphia, and even he admitted that a wealth tax was a direct tax in his brief in Hylton v. United States.
In any event, the history of the Philadelphia Convention was deliberately kept secret so that the Constitution's meaning to the 13 State Ratifying Conventions would be the controlling original public meaning. What happened at Philadelphia was indicative ONLY of the original intent of Framers such as Justice Patterson. It was NOT indicative of the original public meaning of the phrase "direct tax" at all. Originalists long ago eschewed arguments from original intent in favor of arguments about the original public meaning of words. General constitutional language like "direct taxes", "commerce among the States", laws that are "necessary and proper", "freedom of speech and of the press", and "privileges or immunities of citizens of the United States" are always construed expansively because it is after all "a constitution, which we are expounding." Of necessity, "it lacks the prolixity of a legal code."
