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Keywords

income tax; Pollock; wealth tax; Sixteenth Amendment; apportionment; constitutional law; tax law; tax policy; inequality

Abstract

The modern U.S. Supreme Court has elevated the apportionment requirement for direct taxes into the most important constitutional limitation to Congress’s taxing power. The U.S. Constitution requires that any “direct tax” must be apportioned among the states by population, which is impracticable or impossible for a tax today. The modern interpretative approach focuses on the formal categorization of the tax base, as either a “direct tax” or not. This approach could bar Congress from enacting certain taxes—such as a federal wealth tax or possibly even capital income tax reforms—simply through their formal labeling as direct taxes.

This interpretation inflates apportionment’s role in the Constitution and misreads the text. It breeds inconsistency and uncertainty in the tax law, and it shields the rich from the taxing power. As evidenced in the recent case Moore v. United States, it now casts a shadow over even Congress’s ability to tax capital income. The Court should return to its longstanding narrow interpretation of apportionment, which recognized that it was never meant to obstruct the taxing power in this way. This approach looked to the function and consequences of apportionment when interpreting the constitutional text and avoided a formalist interpretation that would unduly restrain the taxing power.

Returning to a narrow interpretation of apportionment would not leave Congress with unfettered taxing powers. This Article introduces a new and competing theory of how the Constitution limits Congress’s taxing power through other doctrines and provisions. The Article synthesizes these limitations to articulate a set of principles that operate together to constrain the taxing power in accordance with substantive constitutional values. These principles look to the legislative process, the identity of the taxpayers, the basis for taxation, and the severity of the tax burden when determining limits to the taxing power, rather than to the formal labeling of the tax base.

This Article’s understanding of how the Constitution limits Congress’s taxing power offers an alternative to the Court’s current path that places too much weight on apportionment as a bar to the taxing power. This alternative would ensure the democratic basis of tax legislation while also maintaining essential constitutional safeguards necessary to prevent Congress’s abuse of this broad power.

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