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.

Under Article I, Section 9, Clause 4 and Article I, Section 2, Clause 31 of the Constitution, direct taxes are subject to the rule of apportionment.2 Though the Supreme Court has not clearly distinguished direct taxes from indirect taxes,3 the Court has identified capitation taxes—a tax “paid by every person, ‘without regard to property, profession, or any other circumstance’” 4 —and taxes on real and personal property as direct taxes.5 Under the rule of apportionment, Congress sets the total amount to be raised by a direct tax, then divides that amount among the states according to each state’s population.6 Thus, a state with one-twentieth of the Nation’s population would be responsible for one-twentieth of the total amount of direct tax, without regard to that state’s income or wealth levels.7

An 1861 federal tax on real property illustrates how the rule of apportionment operates.8 Congress enacted a direct tax of $20 million.9 After apportioning the direct tax among the states, territories, and the District of Columbia, the State of New York was liable for the largest portion of the tax, $2,603,918.67,10 and the Territory of Dakota was liable for the least, $3,241.33.11 The act called for the President to assign collection districts to states, territories, and the District of Columbia to apportion “to each county and State district its proper quota of direct tax” 12 and determine the amounts taxpayers in each collection district would be required to pay.13

The lack of clarity surrounding the meaning of a direct tax14 and the Federal Government’s desire for additional revenues ultimately contributed to the adoption in 1913 of the Sixteenth Amendment, which authorizes Congress to impose taxes on income without regard to the rule of apportionment.15

Footnotes

1

U.S. Const. art. I, § 2, cl. 3 ( “Representatives and direct Taxes shall be apportioned among the several States which may be included within this Union, according to their respective Numbers, which shall be determined by adding to the whole Number of free Persons, including those bound to Service for a Term of Years, and excluding Indians not taxed, three fifths of all other Persons.” ). The Fourteenth Amendment subsequently modified apportionment of Representatives. U.S. Const. amend. XIV, § 2 ( “Representatives shall be apportioned among the several States according to their respective numbers, counting the whole number of persons in each State, excluding Indians not taxed.” ).

2

U.S. Const. art. I, § 9, cl. 4 ( “No Capitation, or other direct, Tax shall be laid, unless in Proportion to the Census or enumeration herein before directed to be taken.” ); Id. art. I, § 2, cl. 3 ( “Representatives and direct Taxes shall be apportioned among the several States which may be included within this Union, according to their respective Numbers . . . .” ).

3

Article I, Section 8, Clause 1 of the U.S. Constitution subjects duties, imposts, and excise taxes—collectively referred to as indirect taxes—to the rule of uniformity. U.S. Const. art. I, § 8, cl. 1. The rule of uniformity requires an indirect tax to operate in the same manner throughout the United States.

4

Nat’l Fed’n of Indep. Bus. v. Sebelius, 567 U.S. 519, 571 (2012) [hereinafter NFIB] (emphasis omitted) (citing Hylton v. United States, 3 U.S. 171, 175 (1796) (opinion of Chase, J.)).

5

Pollock v. Farmers’ Loan & Trust Co., 157 U.S. 429 (1895); Hylton v. United States, 3 U.S. 171 (1796); see also NFIB, 567 U.S. at 571 (holding that the individual mandate provision in the Patient Protection and Affordable Care Act was not a direct tax because it did “not fall within” any of the “recognized categor[ies]” of direct taxes, capitation taxes and taxes on real or personal property).

6

See, e.g., Act of Aug. 5, 1861, ch. 45, 12 Stat. 292; Act of Jan. 9, 1815, ch. 21, 3 Stat. 164.

7

Erik M. Jensen, The Taxing Power, the Sixteenth Amendment, and the Meaning of “Incomes,” 33 Ariz. St. L.J. 1057, 1067 (2001). See also Hylton, 3 U.S. at 174.

8

Act of Aug. 5, 1861, ch. 45, 12 Stat. 292, 294; see also Act of Jan. 9, 1815, ch. 21, 3 Stat. 164.

9

Act of Aug. 5, 1861, ch. 45, 12 Stat. 292, 294.

10

Id. at 295 ( “To the State of New York, two million six hundred and three thousand nine hundred and eighteen and two-third dollars.” ).

11

Id. at 296 ( “To the Territory of Dakota, three thousand two hundred and forty-one and one-third dollars.” ).

12

Id. at 301.

13

Id. at 296 ( “That, for the purpose of assessing the above tax and collecting the same, the President of the United States be, and he is hereby authorized, to divide, respectively, the States and Territories of the United States and the District of Columbia into convenient collection districts, and to nominate and, by and with the advice of the Senate, to appoint an assessor and a collector for each such district, who shall be freeholders and resident within the same.” ); id. at 302 ( “[T]he said assessors, respectively, shall make out lists containing the sums payable according to the provisions of this act upon every object of taxation in and for each collection district; which lists shall contain the name of each person residing within the said district, owning or having the care or superintendence of property lying within the said district which is liable to the said tax.” ).

14

In National Federation of Independent Business v. Sebelius, the Court noted that “[e]ven when the Direct Tax Clause was written it was unclear what else, other than a capitation (also known as a “head tax” or a “poll tax” ), might be a direct tax.” Nat’l Fed’n of Indep. Bus. v. Sebelius, 567 U.S. 519 (2012). See also 2 Records of the Federal Convention 350 (Max Farrand ed., 1911) ( “Mr. King asked what was the precise meaning of direct taxation? No one answered.” )

15

U.S. Const. amend. XIV. See Amdt14.1 Overview of Fourteenth Amendment, Equal Protection and Rights of Citizens.