Fixing the constitutional absurdity of the apportionment of direct tax.

Author:Johnson, Calvin H.

The Constitution requires that direct taxes be apportioned among the states according to population. (1) Before the abolition of slavery, the formula for apportionment counted each slave as three-fifths of a free person. Indeed, apportionment of tax was brought into the Constitution to impose a disincentive on slavery. An apportioned or direct tax is like a requisition from a state with each state having a quota to satisfy, except that the Congress determines the objects and rates of tax and collects the state quota directly from individuals. Apportionment requires that federal tax rates must vary among the states so that two states with the same population, counting slaves as required, will have the same tax payment.

Apportionment of tax among the states by population turns out to be an absurd requirement, almost always impossible or else so perverse in effect that no democracy, indeed no rational government, could adopt it. Apportionment by population preys upon poor states, requiring tax rates to be highest where the tax base is thinnest. Apportionment by state can force an entire state's quota to fall upon a few taxpayers, perhaps upon a single innocent taxpayer. We now know that the drafters of the Constitution did not see the perversities. The framers said kind things about apportionment of tax that are impossible to reconcile with its unavoidable effects.

The apportionment clause has had an accidental but venomous effect on federal tax policy over the years. The Sixteenth Amendment to the Constitution now allows a federal income tax without apportionment among the states. Apportionment, however, threatens to make a tax unconstitutional if Congress strays beyond some narrow and silly definition of "income." Basing federal income tax on "unrealized" changes in fair market value, for instance, is probably the only way to solve some very knotty problems in tax policy and to minimize the damage that taxation does to the economy. (2) It is argued, however, that a tax on unrealized amounts is not constitutional because unrealized amounts are not income under the Sixteenth Amendment and because tax on unrealized amounts is a direct tax that fails because it cannot be apportioned. (3) There have been calls from the right for replacing federal income tax with a national consumption tax or sales tax (4) and calls from the left for enacting a federal wealth tax. (5) Apportionment is said to cast vetoes in both directions. (6) Depending on your politics, the killing effect of apportionment is sometimes a tragedy and sometimes a lucky strike. Still, none of it has anything to do with the values and purposes that created the constitutional requirement--or with rational tax policy. The killing effect in random directions cannot be consistently or coherently right.

This article argues that nothing in the original meaning of apportionment justifies treating apportionment as a barrier to any federal tax. Apportionment was brought into the Constitution, in the midst of a debate about determining representation in Congress, so as to discourage the South from acquiring more slaves. The critical aspect, originally, was that slaves would be included in the count at three-fifths. "Direct tax" in 1787 was a synonym for "apportioned tax," and the meaning of the term varied according to whether the tax was apportioned at the federal level. The best understanding of the original bargain, accordingly, is that the mandatory remedy was not that any taxes should be apportioned, but rather that the slaves had to be included in the calculation of Southern taxes, counted at three-fifths, should Congress choose to apportion a tax. There is no evidence in the original debates that anyone, whether in favor of or opposed to federal direct tax, thought of apportionment as preventing any federal tax. For better or worse, both proponents and opponents of the Constitution called the power to lay direct taxes "unrestricted." The grand purpose of the Constitution was to give Congress such tax powers as necessary to pay Revolutionary War debts. A serious restraint on tax in that context would have been unthinkable.

When the Constitution was young and flexible, the Supreme Court, still composed of Founders, avoided the nonsense of apportionment by interpretation. The Supreme Court held in Hylton v. United States (7) in 1796 that where apportionment was unreasonable, the tax was therefore not "direct." That wise interpretation survived for 100 years and justified federal tax, for instance, on income, corporate capital, and estates.

In 1895, however, Pollock came into the garden. By a margin of five to four, Pollock v. Farmers' Loan & Trust (8) overruled the Hylton line of cases and used the apportionment requirement to strike down a federal income tax. Pollock concocted a history and rationale for apportionment that was the opposite of the original meaning. Apportionment arose to reach the wealth of the states, using numbers as a measure of wealth, but Pollock supposed that apportionment must have been intended to protect wealth and wealthy states from assault by mere numbers. Pollock is a model of bad judicial behavior. The majority Justices used apportionment as a convenient excuse to kill a federal tax that the Justices disliked for private political reasons. Their interpretation displayed their ignorance of the true historical rationale. Shallow readings of constitutional text are dangerous things in willful or ignorant hands.

Pollock was wrongly decided at the time and elite opinion soon turned against it. The Supreme Court began to limit the case to its facts, stretching the term "excise tax" to avoid apportionment whenever the requirement was suggested. The nation as a whole then reversed Pollock on its facts by overwhelmingly enacting the Sixteenth Amendment, which allowed an income tax without apportionment among the states.

It is time now to overrule Pollock in full and to return to Hylton. Pollock can be and has been contained by manipulative definition of "excise tax" or "income" so that the case is avoidable in every instance. Pollock is dead on its holding as to the income tax. Indeed, courts have a duty to distinguish Pollock in every case. Apportionment is too awful a requirement to enforce. Since Pollock should never apply, it should be overruled outright. A full reversal of Pollock would eliminate apportionment as a constraint on contemporary federal tax policy. "Income" could then be defined sensibly by Congress. Congress could replace or supplement the income tax with some other tax as it wishes. Apportionment would never threaten any federal tax. Congress would then decide the issues of tax policy by the ordinary process of democracy, unhindered by an absurd requirement.

Professors William Eskridge and Sandy Levinson recently collected essays on constitutional stupidities and tragedies. (9) They asked various authors to identify the worst feature of the United States Constitution. Apportionment of direct tax is a profound stupidity. Although slavery, at least, is worse, apportionment of direct tax is a constitutional stupidity that we can eliminate without a civil war. Through proper constitutional interpretation, we can sure that apportionment of tax will never again be a tragedy.


    Article I, section 8 of the Constitution gives Congress the power to lay and collect taxes in order "to pay the Debts and provide for the common Defense and general Welfare." (10) The apportionment requirement is found in article I, section 2, which requires that both representation in the House of Representatives of the Congress and "direct taxes" shall be apportioned among the states according to their respective numbers. Section 2 further requires that the states' numbers be determined by adding the whole number of free persons and three-fifths of all slaves. (11) Section 9 repeats the requirement by saying that no capitation or other direct tax shall be laid unless in proportion to the census. (12) Section 9 also prohibits any tax on exports from the states. (13) Section 8 requires that all duties, imposts, and excises be uniform in rate throughout the United States. (14) "Direct tax" is not defined, but an apportioned tax cannot have a uniform rate in every state, absent impossible assumptions. We can deduce therefore that the taxes for which a uniform rate is required--duties, excises, and imposts--cannot be direct taxes. "Impost" was a reference to a tax on imports, now more commonly called "tariffs" or "custom duties." (15) "Duty" was apparently a reference to a stamp tax on legal documents. (16) "Excise tax" referred, originally but not exclusively, to tax on whiskey. (17) The original Constitution has been amended, first, to end slavery. (18) The Sixteenth Amendment, ratified in 1913, allows Congress to impose a tax on income from whatever source derived, without apportionment among the states. (19) In sum, a tax is constitutional if is apportioned among the state, except for export taxes. Even if not apportioned, a tax is constitutional if the tax is a duty, excise, impost, or income tax.


      1. Population as a Measure Of Wealth

        The rule that tax be apportioned among the states according to population was introduced during the debates at the Philadelphia Constitutional Convention over the allocation of votes in the national legislature. Population, counting slaves at three-fifths, was consistently understood as a measure of wealth. The apportionment formula was intended to allocate votes in Congress according to the comparative wealth of the states.

        At the time of the Convention, there was still ambiguity as to whether the government should represent people of property. Pierce Butler, delegate from South Carolina, argued, for instance, that wealth was the only just measure of representation, because property was the "the great object of Govern[men]t" and...

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