I’m posting this entry for its creator, Professor Steven Calabesi:
On December 5, 2023, the Supreme Court docket will hear oral argument in an important federalism case because it upheld the constitutionality of President Obama’s Inexpensive Care Act. The case at concern – Moore v. United States – raises two important issues:
1) Can Congress tax unrealized capital beneficial properties, as Yale Regulation Professor Bruce Ackerman argues in an amicus transient; and
2) Can Congress enact a Bernie Sanders/Elizabeth Warren-style wealth tax, together with on unrealized capital beneficial properties, as the 2 Amar brothers (Akhil Reed Amar and Vikram David Amar) argue?
Due to the massive significance of this case, I’m going to reply on this weblog put up to the Amar brothers (one among whom is my second-best buddy on the planet, however our disagreement on this case). They devoted the third part of their amicus transient to critiquing an amicus transient that I co-filed in Moore arguing towards congressional energy to impose a wealth tax or to tax unrealized capital beneficial properties – a quick which was joined by former Legal professional Normal Edwin Meese III and by Professor Gary Lawson.
The constitutional query in Moore v. United States is whether or not wealth taxes and taxes on unrealized capital beneficial properties need to be apportioned among the many states based mostly on their respective populations, which it’s virtually not possible to do, or whether or not wealth taxes and taxes on unrealized capital beneficial properties need to be merely uniform in each state, which could possibly be simply achieved. Ed Meese, Gary Lawson, and I argue that such taxes are direct taxes, which have to be apportioned among the many states, whereas the Amar brothers say they’re oblique taxes that should merely be uniform among the many states, which might make them a lot simpler to enact.
The Taxing Energy itself is granted in Article I, Part 8, Clause 1, which says:
“The Congress shall have Power To lay and collect Taxes, Duties, Imposts 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.”
Article I, Part 9, Clause 4 then critically limits the federal taxing energy by saying that:
“No Capitation, or other direct, Tax shall be laid, unless in Proportion to the Census or Enumeration herein before directed to be taken.”
The rule of apportionment thus applies to “direct taxes”; the rule of uniformity applies solely to such oblique taxes as “Duties, Imposts, and Excises.
The flaw in the Amar brothers’ brief that I will discuss today is that it construes the text of the Constitution according to the expected applications of certain historical figures rather than its plain objective meaning. The Amar brothers rewrite Article I, Section 9, Clause 4 to say:
“No Capitation, or Land Tax shall be laid, except in Proportion to the Census or Enumeration herein earlier than directed to be taken.”
They argue that wealth taxes and taxes on unrealized capital gains in your house or Vanguard fund are perfectly constitutional. They say, contrary to the text of the Constitution, that Article I, Section 9, Clause 4 bans only federal capitation and land taxes and that nothing else is a direct tax.
The original public meaning of the words “direct tax” is clearly set forth in two law review articles: Robert Natelson, What the Constitution Means by “Duties, Imposts, and Excises”— and “Taxes” (Direct or Otherwise), 66 Case West. U. L. Rev. 297 (2015) and Erik M. Jensen, The Apportionment of “Direct Taxes”: Are Consumption Taxes Constitutional?, 97 Colum. L. Rev. 2334 (1997). Both authors conclude that “direct taxes” included many more taxes than merely a capitation or federal land tax.
Natelson demonstrates conclusively that the phrase “direct taxes” also included taxes on:
“1) Wealth employed in enterprise and home life. Direct taxes included these imposed on land, enhancements to land, (‘inventory in commerce’), enterprise tools, and livestock; 2) Private and enterprise earnings. Direct taxes included levies on rents, enterprise earnings, wages, curiosity, and different earnings; 3) Enterprise enterprises. Levies on enterprise earnings and occupational charges had been direct taxes; 4) Heads. Ballot taxes, additionally known as head taxes or capitations, existed in all the New England states and in most different states as effectively. They had been levied each on free individuals and slaves. Capitations had been the prevalent means of taxing slaves.” Natelson, supra at 314-316.
It is true that Alexander Hamilton and one Supreme Court Justice, Samuel Chase in Hylton v. United States, 3 U.S. 171 (1796) construed a statute laying a “Obligation” on carriages to be a “Obligation” but said “I’m inclined to suppose, however of this I don’t give a judicial opinion, that the direct taxes contemplated by the structure, are solely two, to wit, a capitation or ballot tax *** and a tax on land.” But, this was the original expected application of Hamilton and Chase as to the meaning of very broad constitutional language requiring apportionment of all direct taxes. The word direct in 1787 meant “Straight; not crooked” according to Samuel Johnson’s 1755 Dictionary of the English language and according to Merriam-Webster it means the same thing today in 2023.
The Amar brothers would limit a general term in the Constitution—”direct tax”—to its original expected application “capitation and land taxes” simply because that is what Alexander Hamilton, an extreme nationalist, thought it meant. (Hamilton wanted to abolish the state governments at the Philadelphia Convention while having a President and Senators who served for life). This is not the way my friend Professor Akhil Amar usually interprets words in the Constitution.
For example, most Americans expected in 1787, that the Commerce Clause applied only to buying and selling. Professor Akhil Reed Amar, however, quite rightly reads it as applying to non-mercantile interstate transactions like recreational traveling or sailing from one State to another. Professor Amar’s view is that “we should keep in mind that it’s a Structure that we’re expounding” that would last “for the ages” as John Marshall said in McCulloch v. Maryland, 17 U.S. 316 (1819). Professor Amar thus praises McCulloch for not giving the word “needed”, in the Necessary and Proper Clause, its Samuel Johnson 1755 dictionary meaning of “indispensable”, but he reads it instead to mean “handy, or helpful.”
Professor Akhil Reed Amar also, quite rightly in my view, reads the Fourteenth Amendment’s guarantee of birth equality to apply to laws that discriminate on the basis of sex or gender and not only to laws that discriminate on the basis of race – which was the original expected application of the Fourteenth Amendment. And, he reads the First Amendment’s protection of freedom of speech and of the press as applying, not only to printing presses—the original expected application—but also to movies radio, television, and the internet.
In 1787, people held their wealth in land because there was no stock market or bond market yet and few banks. It is thus not surprising that Hamilton and Chase in 1796 would read broad constitutional language like “direct taxes” as applying only to capitation and “land” taxes. A wealth tax today would fall “straight; and never crooked” upon one person in exactly the same way a capitation or a land tax would have done in 1787.
In sum, Professor Amar’s broad readings of the Commerce Clause, the Necessary and Proper Clause, the First Amendment, and the Fourteenth Amendment all suggest a broad reading of the requirement that the words “Direct Taxes” impose at the moment. That clause thus, in 2023, applies to a wealth tax in addition to to a federal capitation or land tax. Such taxes are topic to the rule of apportionment and never of uniformity.