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C. What's an Income Tax?
In this article, I examine the history of the Sixteenth Amendment to determine how the term "taxes on incomes" was understood by the drafters and ratifiers. From the beginning, supporters of the modern income tax stressed that it was necessary to tie taxation to ability to pay -- to ensure that the wealthy would pay their fair share of the nation's tax liability. By taxing more than what was spent on consumption and, as a result, reaching the wealthy in a way that tariffs didn't, the income tax was considered fundamentally different from a tax on consumption.
I conclude that an income tax and a consumption tax are, as a constitutional matter, different kinds of levies, and that the Sixteenth Amendment was intended to exempt only "taxes on incomes" from apportionment, not to repeal the direct-tax clauses. Those conclusions have contemporary relevance. If a tax is direct but isn't "on incomes," it should still have to be apportioned. As a result, if an unapportioned direct tax falls only on consumption, say, or only on wealth, the tax cannot derive any legitimacy from the Amendment.
Arguments made in debates on the 1894 income tax were, in substance, no different from those that would be made, after the Supreme Court rejected that tax, in promoting and resisting the Sixteenth Amendment. Controversies from the early 1890s until ratification in 1913 can be seen as a continuing discussion about the role income taxes should play in the United States. And that controversy illuminates the meaning of "taxes on incomes."
The income tax had populist antecedents and populist support; no similar plank had appeared in the Democratic and Republican platforms. But the People's party didn't have enough power to get its way without help, and the idea of an explicitly graduated tax fell by the wayside quickly. The allure of an income tax was nevertheless unmistakable to many members of the old-line parties, particularly Democrats, who had taken control of both Houses of Congress and who saw an opportunity for party realignment.18 Consumption taxes like tariffs were thought to be shifted to purchasers,19 and, if that was right, a poor man bore the same tax burden in buying a bag of sugar as did a rich man. The tax burdens, that is, had nothing to do with respective abilities to pay the taxes, and that wasn't fair.
Having the wealthy pay more to support the government was thought to be fair in itself, but there were other reasons why tax obligations should be connected with ability to pay. For one thing, income tax supporters believed the rich were rich because of what government had done, and it was payback time to Uncle Sam. Stated Michigan Representative George Richardson: "I favor the income tax because it is asking a contribution of those citizens of the country who have accumulated great wealth and enjoy large incomes by reason of special privileges afforded by legislation."29 Moreover, the wealthy received more from government -- the value of protecting property, for example, goes up with the value of property protected, or so it was said -- and income tax proponents argued that the wealthy should have to pay for the extra services.
If the wealthy had to pay more in taxes, the argument went, they would pay more attention to government and help curb its excesses.
And so on. Trust me, there are many, many more examples. I'm not making this up.
But the statements of the revolution-may-be-coming sort are perfectly consistent with ability to pay. Taxing on that basis is what Representative Hugh Dinsmore of Arkansas meant when he said "the hand of the tax-gatherer shall loosen its grasp, held so long and so firmly on the necks of the poor, and shall bear more heavily upon the rich, who are abler to meet its demands."41 So, too, with Representative Hudson of Kansas: "[T]he majority of the very wealthy are haughty, overbearing, autocratic, mean, and it is that class in particular that the income tax is designed to reach."42 The wealthy should pay because they can pay, and they weren't paying their share with only consumption taxes on the books.
Because of the push for fairness, the disputes inevitably had a class-versus-class flavor. With a proposed rate of only 2 percent, the charges of socialism seem a bit much: "vicious, socialistic and un-American,43 and "a measure of purely socialistic tendency,"44 noted two authors. But there was a class aspect to the legislation. The tax affected only 1 percent of the population, the attack on the wealthiest of the wealthy was no accident, and, once the income-tax principle had been accepted, there was no guarantee rates would stay low.45 James Carter, representing a bank nominally defending the tax before the Supreme Court, conceded it was "class legislation in th[e] sense [of distinguishing between rich and poor]. That was its very object and purpose."46 It's hard to disagree.
It is true that the proposition to levy a tax upon incomes is a Populist proposition. No national platform except that of the People's party indorse it.
The debates were heated, but opponents and proponents of the 1894 tax agreed on one basic point: The income tax was fundamentally different from the consumption tax system then in existence. In the next part of the article, I'll demonstrate that arguments in 1909 about the merits of income tax legislation and the proposed Sixteenth Amendment were the same as those made in 1894. What was said in 1894 informs what the term "taxes on incomes" means: A consumption tax is not an income tax.
But hopes that the Court might unequivocally repudiate Pollock were dashed. There was an obvious chicken-and-egg problem. If the Court were going to reconsider the constitutionality of an unapportioned income tax, Congress would have to enact such a tax, and, with Pollock on the books, that would be a bold step. But if Congress didn't act, the Court wouldn't have the opportunity to reexamine its decisions -- even though many observers thought the Court was ready to do just that.
Support was there, but income tax proponents had to resolve a difficult threshold question: Whether to seek a new statute or to go first for a constitutional amendment. In this part of the article, I first discuss the debates on whether an amendment was necessary or desirable. I then turn to an analysis of the meaning of the Amendment, focusing on the changes in language that occurred during the deliberations and what those changes mean for our understanding today. Finally, I describe the discussions of the merits of income taxes that occurred in connection with the Sixteenth Amendment, discussions that were substantively no different from those that had occurred in 1894.
My thesis is that the move for an amendment was intended to do what income tax proponents had attempted in 1894: Shifting the tax base from consumption to income, and thereby tying tax burdens to ability to pay.73 That was a fundamental change, but it was limited in its effects. The Sixteenth Amendment didn't eliminate the concept of "direct taxes," and it shouldn't be read, as Professor Ackerman and others have suggested, as vindicating congressional plenary power in taxation.
The merits of income taxes came close to being an afterthought in congressional deliberations in 1909 because there was little more to say. The positions on both sides had been exhaustively developed in 1894, and, as I'll demonstrate shortly, the substantive arguments were a reprise of 1894 -- with discussion about how income taxes are different from consumption taxes.
The focus of much of the debates in 1909, in form at least, was on whether a constitutional amendment was the way to proceed. Many income tax supporters thought no amendment was necessary. Moreover, some advocates, like Cordell Hull, resisted an amendment because, they worried, a few people in a few states could prevent ratification and thereby delay, if not altogether destroy, the movement. Without the support of House Speaker Joe Cannon, Hull couldn't get his proposal for reenactment of the 1894 legislation onto the fast track,74 but in the Senate there were income tax supporters ready and willing to move ahead.
The risk of a negative decision from the Court wasn't a reason to stand pat. Quite the contrary. If the Court rejected a new income tax statute, the case for a constitutional amendment would be clear. But without a new judicial decision on the books, an amendment could get bogged down precisely because it wouldn't be clear the amendment was needed.
Since commentators today almost universally reject Pollock, it's become easy to question the motives of those who pushed for a constitutional amendment rather than a new income tax statute.81 Perhaps everyone wasn't acting with the best of intentions -- on that point, more in a moment -- but it was hardly frivolous to worry about offending the Supreme Court. The potential for real conflict was there, and public confidence in the Court may have been at stake, too. Pollock had been decided only 14 years earlier; it was no old-and-cold decision of a bygone era.
And it was probably the case that some "supporters" -- Nelson Aldrich is the culprit most often named -- viewed the proposals as a way to resist the 1909 move for an income tax; to send the issue to the states, where the possibility of rejection was high (only 12 states needed to say no); and to use rejection to resist future income tax pressures.85 An income tax might have been inevitable -- today it looks that way -- but not all congressmen wanted it to happen on their watch.
Discussions about a possible constitutional amendment didn't proceed in isolation. There was a lot going on in 1909 -- the Bailey- Cummins proposals to enact an income tax without waiting for a constitutional amendment, tariff revision, and a presidential proposal for a corporate income tax to operate at least until the Constitution could be amended to permit a personal income tax. Despite the confusing mass of material, it's possible to get a good sense of what the Sixteenth Amendment was supposed to do, and that was to remove only taxes on incomes from the apportionment requirement.
However meritorious a constitutional amendment might have been in the abstract, Senator Isidor Rayner of Maryland quickly pointed out that Brown's language was useless. Congress already had the power to tax incomes and inheritances, he noted. The problem, at least with an income tax, was that the Court had said such a tax must be apportioned: "[I]f this amendment . . . were to go through, it would not affect the [direct-tax clauses] and there would still have to be an apportionment."92 Rayner was obviously right, and this Brown proposal went nowhere.
A month and a half later, on June 16, President Taft gave support to a constitutional amendment, stressing the danger of enacting a tax based on the hope the Court might reverse itself.93 Although Taft may have favored a personal income tax, he proposed enactment of a corporate tax (something thought to be permissible already)94 until the Constitution could be amended. We don't know for sure why Taft took this position -- it's been suggested Senator Aldrich manipulated Taft to kill any possibility of a personal income tax in 190995 -- but the Taft proposals took the wind out of the sails of those who favored enacting an individual tax without first amending the Constitution.
The next day, June 17, with the president now on the side of a constitutional amendment, Senator Brown tried again, proposing the following language: "The Congress shall have power to lay and collect direct taxes on incomes without apportionment among the several States according to population."96 Here we get to the beginning of some good, nitty-gritty interpretational issues.
Brown said No: "That may be true, Mr. President; but my purpose is to confine it to income taxes alone, and to forever settle the dispute by referring the subject to the several States."98 Had the McLaurin proposal been accepted, it would have made analysis of the taxing power far simpler today, but Brown's intention was unmistakable, to limit the Amendment to "taxes on incomes." Nothing that happened later in the amendment process changed that critical language or that basic intention.
Brown didn't explain why he resisted the apparently friendly McLaurin suggestion. As we shall see, Professor Ackerman accuses Brown of bad faith. But one can imagine legitimate reasons for drafting the amendment the way Brown did. His proposal kept the changes narrow, limiting the effect to income taxes -- which was, after all, what tax proponents were pushing for -- and a narrow proposal made ratification easier. Maybe Brown was leery of eliminating the apportionment rule, making an unapportioned real- estate tax possible. Or perhaps he was concerned about the unknown. If you're not sure what might be included in the category of "direct taxes," or what sorts of taxes might be devised in the future, you might well resist giving future Congresses the power to enact any tax without limitation.
Whatever Brown's reasons, he wasn't willing to broaden the language, and his proposal was sent to the Finance Committee. The form of the Amendment that emerged in June, with an explanation of why a constitutional amendment should be sought,99 read somewhat differently, but it was still limited to "taxes on incomes": "The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States and without regard to any census or enumeration."100 With a comma added, that's the way the Amendment now reads.
The traditional understanding of the language change, in Ratner's words, is that, if the Brown version had been accepted, "the source of all income would have continued to be open to constitutional challenge and the source of the income would still have been considered by the Court the object of the tax."107 (I'll return to that questionable proposition shortly.) Senator Brown seemed to have accepted the Court's determination that at least certain types of income taxes (on income from property) are direct -- hence his reference to "direct taxes on incomes." Unlike many income tax proponents, Brown was apparently willing to concede the Court had gotten it right, and he wanted to change the constitutional principle the Court had relied on. The committee didn't want to endorse that principle, the argument goes, and that's why Ratner referred to the changes as "crucially important and liberal."
Ackerman's version of events is full of problems. An awful lot happens in his rendition that wasn't explicit at all. Ackerman presents no evidence of what the "draftsmen" were thinking, or what "special efforts" they were taking, as they "explicitly" wrote what became the Amendment.
I also see no reason to think the Finance Committee was doing what Ackerman says it was. Once the committee reported, the changes were accepted with little discussion; if a seismic shift was occurring, nearly everyone missed it.115 And let's remember who ran the show. The committee chair was Nelson Aldrich of Rhode Island, usually characterized as an anti-tax villain. (Indeed, that's how Ackerman sees Aldrich.)116 That Aldrich would have pushed a text meant to resurrect pre-Pollock understanding boggles the mind. "[T]he draftsmen . . . took special efforts to avoid freezing Pollock's doctrine concerning the scope of the 'direct tax' clauses?" I don't think so.
But whether the final version of the Amendment made any substantive changes in Senator Brown's proposal is almost beside the point. The crucial consideration from this history is that the Amendment is limited to taxes on incomes, and Brown specifically rejected doing away with apportionment for all direct taxes. With that language, other direct taxes remain subject to apportionment, as Brown apparently knew, and neither version of the Amendment, Brown's or the committee's, includes anything that changes the characterization of any taxes as direct or indirect.
There should be no doubt the Amendment was limited to "taxes on incomes." After the resolution had been reported by the Finance Committee, with some language changed but with the reference to "taxes on incomes" intact, Senator McLaurin once again suggested it would be better to amend the Constitution to delete references to "direct taxes."120 McLaurin said his proposal would "eliminate from the Constitution every cause of contention over the question of the authority of Congress to levy an income tax, except as to the power of Congress to grade an income tax." Furthermore, he was worried that by passing a resolution applicable only to income taxes, Congress might be seen as "recogniz[ing] the income tax as a direct tax"121 -- something that could matter if the Amendment in its committee- approved version weren't ratified. But McLaurin got no support.
Of course, Ackerman has an explanation for Congress's not taking a broader step, and part of it is plausible: "Why create unnecessary political problems by drafting a broader amendment when the Court was retreating to its tradition of restrained interpretation of 'direct' taxation on other fronts?"122 Do what needs to be done to make the tax possible. Deal with the narrow holding of Pollock and nothing else. Don't create unnecessary issues to complicate ratification.
If Ackerman had stopped there, I'd be politely applauding. Instead he pulls an elephant out of his hat: "[T]he decision by the People [in ratifying the Amendment] expressly to overrule one branch of Pollock should make other aspects of that decision more, not less, questionable."123 It's because the Amendment was purposely, narrowly drafted, and ratified in that form, that we should read it broadly!
Obviously if McLaurin's proposal to do away with references to "direct taxes" had been accepted, Professor Ackerman would now be claiming, with reason, that the direct-tax clauses are dead. But it's because Congress didn't do that, because Congress produced a much narrower version of the Amendment, that the direct-tax clauses are dead! I'm not convinced.
To this point, I've argued the Sixteenth Amendment was intended to remove only "taxes on incomes" from the apportionment requirement, not to abolish the direct-tax clauses. But even if that's "all" the Amendment did, it was quite a lot: The category of "taxes on incomes" was hardly trivial. It was what members of Congress had been talking about since 1894 (and, in some cases, since 1862).
On the merits -- in discussing both the proposed statutory changes introduced by Senators Bailey and Cummins and the possibility of a constitutional amendment -- income tax debates in 1909 mirrored those of 1894. Indeed, Representative Champ Clark of Missouri suggested there was nothing more to say: "[T]here is not very much necessity for speech making on this occasion or on this proposition. The income tax is a Democratic proposition. We put it in the tariff bill of 1894. A very large majority of us have been in favor of it ever since."130 The significant debate in 1909 was about whether to seek a constitutional amendment. On the question of what an income tax is, the debates on proposed statutory changes and on the proposed constitutional amendment were really one big debate.
Once again I'm going to risk overkill with a series of quotations to demonstrate how ability to pay dominated discussions of income tax proponents: Income taxes are consistent with that principle, consumption taxes aren't. This is a representative sample; I could provide many more examples.
Overall, the tone of the debates was more civil than in 1894. There were fewer populists around, and, given the reduced opposition to an income tax, less reason to debate with "agrarian ferocity."141 But except for differences in tone, passages could be moved from 1894 to 1909 and back again without changing the nature of the debate in either year.
Fights about appropriate rates will go on as long as there's an income tax, of course, and the constitutionality of a graduated rate structure turned out to be a nonissue.149 Given the extent to which income tax proponents wanted to implement the ability-to-pay principle, it did no textual damage to see progressivity as inherent in the grant of power to tax "incomes" without apportionment. Nevertheless, the Sixteenth Amendment covered only "taxes on incomes." The Amendment isn't authority for an unapportioned direct-consumption tax; it was the perceived failure of consumption taxes that made the income tax -- and hence the Sixteenth Amendment -- necessary.
The basic distinction drawn in the debates in 1894 and 1909 was between a tax on income and a tax on consumption, but another point needs to be made about the original understanding. Although the goal behind the Sixteenth Amendment was to ensure that the wealthy paid their fair share of the nation's taxes, Amendment proponents weren't proposing a wealth tax as we have come to understand that term. The Amendment isn't authority for an unapportioned tax on wealth.
I've presented evidence that, in the debates culminating in the Sixteenth Amendment, participants thought of income taxes and consumption taxes as fundamentally different. The Amendment came into being because the consumption taxes used throughout American history were thought to be flawed, and a significant change was needed. The term "taxes on incomes" had a generally understood meaning, and it should be interpreted today with the income tax-consumption tax distinction in mind.
1 U.S. Const. amend. XVI.
2 157 U.S. 429 (1895) (holding unapportioned tax on income from real estate unconstitutional); 158 U.S. 601 (1895) (extending principle to income from personal property and rejecting entire 1894 tax).
3 Direct taxes must generally be apportioned among the states on the basis of population. See U.S. Const. art. I, section 2, cl. 3; U.S. Const. art. I, section 9, cl. 4; see Erik M. Jensen, "The Apportionment of 'Direct Taxes': Are Consumption Taxes Constitutional?" 97 Colum. L. Rev. 2334 (1997).
4 Eisner v. Macomber, 252 U.S. 189, 220 (1920) (Holmes, J., dissenting).
5 Owen M. Fiss, History of the Supreme Court of the United States: Troubled Beginnings of the Modern State, 1888- 1910, at 100 (1993).
6 See Act of July 1, 1862, ch. 119, sections 89- 93, 12 Stat. 432, 473-75 (imposing 3 percent tax on "annual gains, profits, or income of every person residing in the United States" above $600, with 5 percent rate applicable over $10,000). In 1864, rates increased to 5, 7 1/2, and 10 percent for income ranges $600-$5,000, $5,000-$10,000, and over $10,000, respectively. See Act of June 30, 1864, ch. 173, section 116, 13 Stat. 223, 281; see also Springer v. United States, 102 U.S. 586 (1880) (upholding unapportioned Civil War income tax); Edwin R. A. Seligman, The Income Tax: A Study of the History, Theory and Practice of Income Taxation at Home and Abroad 430-80 (1911); Randolph E. Paul, Taxation in the United States 9-15 (1954); John F. Witte, The Politics and Development of the Federal Income Tax 67-70 (1985).
7 See Roy G. Blakey and Gladys C. Blakey, The Federal Income Tax 7 (1940). Not until 1894 did many think such a tax might become a permanent part of the revenue system.
8 The Blakeys said "[f]ew had anything good to say for it," id. at 7, but Ratner argued that "the great mass of the people were not interested in having the income tax repealed." Sidney Ratner, Taxation and Democracy in America 143 (1967). Nevertheless, the wealthy who accepted it "as an emergency measure . . . lobbied vigorously" for repeal, and "[l]ittle organized support emerged for permanent income taxation." W. Elliott Brownlee, Federal Taxation in America 29 (1996).
9 Brownlee, supra note 8, at 25.
10 Rates were reduced by the Act of March 2, 1867, ch. 169, section 13, 14 Stat. 471, 478 (imposing 5 percent tax on incomes above $1,000), and the Act of July 14, 1870, ch. 255, sections 6-11, 16 Stat. 256, 257-59 (imposing 2 1/2 percent tax on incomes over $2,000). The effect was to reduce the number of taxpayers from 460,170 in 1866 to 72,949 in 1872. See Ratner, supra note 8, at 143.
11 See 26 Cong. Rec. 6694-95 (June 22, 1894) (statement of Sherman that he agreed in 1894 with what he'd said in the 1870s, but conditions had changed, income tax was no longer necessary, and so on).
12 See, e.g., 26 Cong. Rec. app. 315 (Jan. 31, 1894) (statement of Ind. Rep. Elijah V. Brookshire); 26 Cong. Rec. 6685 (June 22, 1894) (statement of S.D. Sen. James H. Kyle).
13 Internal Taxes and Tariff (statement of Mar. 15, 1872), reprinted in John Sherman, Selected Speeches on Finance and Taxation, from 1859 to 1878, at 336, 348-49 (1879). In fighting repeal, Sherman regularly contrasted the income tax with consumption taxes. See, e.g., "Receipts and Expenditures -- Reduction of Taxation" (statement of May 23, 1870), in Sherman, supra, at 284, 291 ("The real objection to [customs duties] is that they fall entirely on consumption.").
14 See Ratner, supra note 8, at 145-67.
15 E.g., David E. Kyvig, Explicit and Authentic Acts: Amending the U.S. Constitution, 1776-1995, at 194-96 (1996).
16 Quoted in 26 Cong. Rec. app. 601 (Jan. 30, 1894) (statement of Populist Colorado Rep. Lafe Pence) (emphasis added).
17 26 Cong. Rec. 6634 (June 21, 1894).
18 See Brownlee, supra note 8, at 38 (arguing that Democrats "sensed an opportunity to use tax issues for a major realignment of the two political parties along sectional and class lines. . . . ") (footnote omitted).
19 See, e.g., 26 Cong. Rec. app. 406 (Jan. 30, 1894) (statement of Mo. Rep. David A. De Armond) ("A tariff is a tax, and the foreigner does not pay it. It is paid by the consumer, and is a tax on consumption.").
20 President Cleveland played little role. He'd called for "a small tax upon incomes derived from land and certain corporate investments." Quoted in Seligman, supra note 6, at 496. But while he "regarded the tax on personal incomes as just, . . . it would antagonize the financial interests to whom [Democrats] looked for support of the gold standard." Ratner, supra note 8, at 173-74. Cleveland allowed the bill to become law without his signature. Id. at 189.
21 26 Cong. Rec. app. 413 (Jan. 29, 1894).
22 26 Cong. Rec. app. 415 (Jan. 29, 1894).
23 26 Cong. Rec. 6692 (June 22, 1894).
24 26 Cong. Rec. app. 293 (Jan. 31, 1894) (discussing People's Party platform).
25 For example, New York Senator David Bennett Hill stated that a "tariff duty is an indirect tax upon consumption, and wealth pays its share of whatever it consumes. There are no classes exempt from its operation, and the greater the consumption the larger is the tax." 26 Cong. Rec. 6616 (June 21, 1894).
26 For example, Senator Hoar of Massachusetts stated that "[u]nder this [income tax] plan a man who consumes all he raises in luxurious living escapes altogether, while the man who earns and is paid wages which he has to expend for the honest and frugal support and education of his family is taxed." 26 Cong. Rec. 6630 (June 21, 1894).
27 Cf. John D. Buenker, The Income Tax and the Progressive Era 31 (1985) (noting that, after Civil War, "[n]ot until the enactment of the 1909 corporate excise tax was there any federal tax which did not fall directly on . . . 'things men eat and wear.'").
28 26 Cong. Rec. app. 415 (Jan. 29, 1894).
29 26 Cong. Rec. app. 271 (Jan. 31, 1894); see also 26 Cong. Rec. 6706-07 (June 22, 1894) (statement of Neb. Sen. Allen).
30 26 Cong. Rec. app. 76 (Jan. 23, 1894).
31 H.R. Rep. No. 53-276, at 3 (1894).
32 26 Cong. Rec. app. 57 (Jan. 15, 1894).
33 26 Cong. Rec. app. 289 (Jan. 30, 1894).
34 26 Cong. Rec. app. 405 (Jan. 30, 1894).
35 26 Cong. Rec. app. 406 (Jan. 30, 1894).
36 26 Cong. Rec. app. 439 (Jan. 30, 1894).
37 26 Cong. Rec. 6866 (June 27, 1894).
38 26 Cong. Rec. 6819 (June 26, 1894).
a millionaire through active operations in protected industries, and yet he is determined to contribute no more to the payment of his own salary than does the limping, limbless defender of the stars and stripes who has neither wealth nor income except what he can earn in broken health, together with the pension provided by law. What a spectacle! A member of Congress not only pleading for continued protection who has a large share of the business in his own city that yields an average profit of 24 per cent, but he insists that none of that income shall be taxed to liquidate the obligations to that roll of honor, the pension roll.
26 Cong. Rec. app. 272 (Jan. 31, 1894).
40 26 Cong. Rec. 6686 (June 22, 1894).
41 26 Cong. Rec. app. 275 (Jan. 29, 1894).
42 26 Cong. Rec. app. 57 (Jan. 15, 1894).
43 Amasa J. Parker Jr., "Income Tax of 1894 -- Its Provisions and Constitutionality," 50 Alb. L.J. 416, 421 (1894).
44 Robert Sewell, "The Income Tax: Is It Constitutional?" 28 Am. L. Rev. 808, 808 (1894).
45 See Loren P. Beth, The Development of the American Constitution 1877-1917, at 158 (1971) (suggesting opponents "were worried as much by the possibility that the amount of the tax would be increased in future years as they were by the 2 per cent in itself").
46 Pollock I, 157 U.S. at 518 (oral argument for appellee); see Jensen, supra note 3, at 2366 (1997).
47 See 26 Cong. Rec. 1609 (Jan. 29, 1894) (statement of Mo. Rep. Uriel Hall) ("[W]hen you oppose a measure of this kind, . . . you make a foundation for the argument of anarchy, socialism, and demagoguery, that eventually will sweep back and curse this country, as it did in France in the days of the French revolution.").
48 26 Cong. Rec. 6630 (June 21, 1894). Hear! Hear!
49 26 Cong. Rec. 6707 (June 21, 1894); see also 26 Cong. Rec. app. 601 (Jan. 30, 1894) (discussing the complaint of Populist Rep. Pence that New York Rep. Franklin Bartlett's characterization of the income tax bill as Populist was intended "to frighten away from support of the amendment some Democratic members of this House.").
50 26 Cong. Rec. 6611 (June 21, 1894).
51 26 Cong. Rec. app. 605 (Jan. 30, 1894).
52 26 Cong. Rec. 6634 (June 21, 1894).
53 See, e.g., 26 Cong. Rec. 6694 (June 22, 1894) (statement of Ohio Sen. Sherman).
54 See, e.g., 26 Cong. Rec. app. 207 (Jan. 26, 1894) (statement of Pa. Rep. Robert J. Adams Jr.) ("An income tax! A tax so odious that no administration ever dared to impose it except in time of war; and you will find that the people will not tolerate it in time of peace. . . . It does not belong to a free country. . . . [I]t is class legislation.").
55 See, e.g., 26 Cong. Rec. 6695 (June 22, 1894) (statement of Sen. Sherman) ("In a republic like ours, where all men are equal, this attempt to array the rich against the poor or the poor against the rich is socialism, communism, devilism. . . . ").
56 See, e.g., 26 Cong. Rec. app. 303 (Jan. 30, 1894) (statement of Me. Rep. Seth L. Milliken) ("The . . . income tax is clearly class legislation. It imposes barriers upon one portion of our people which it does not impose upon others.").
57 See, e.g., 26 Cong. Rec. 6627 (June 21, 1894) (statement of Del. Sen. Anthony Higgins).
58 See, e.g., 26 Cong. Rec. app. 395 (Jan. 30, 1894) (statement of N.Y. Rep. Joseph C. Hendrix).
59 26 Cong. Rec. 6637 (June 21, 1894).
60 See, e.g., 26 Cong. Rec. 6629 (June 21, 1894) (statement of Sen. Hoar) (arguing legislation would be unconstitutional at least to the extent it applied to income from real property).
61 Sylvester Pennoyer, "The Income Tax Decision, and the Power of the Supreme Court to Nullify Acts of Congress," 29 Am. L. Rev. 550, 558 (1895).
62 See Edward B. Whitney, "Political Dangers of the Income-Tax Decision," 19 Forum 521, 529 (1895) ("It now, by the casting of a vote of a single man, reverses two unanimous decisions of many years' standing, and in effect overrules a series of unanimous decisions reaching back for a century.").
63 Brownlee, supra note 8, at 39. The effect must have been minor; the Democrats endorsed an income tax in 1896 and went down to resounding defeat. Id.
64 See Jensen, supra note 3, at 2375-77.
65 To help fund the Spanish-American War, Congress enacted an "excise" tax on the gross receipts of companies refining petroleum or sugar. The Court upheld the tax as an indirect one not requiring apportionment. Spreckels Sugar Ref. Co. v. McClain, 192 U.S. 397 (1904).
66 See Blakey and Blakey, supra note 7, at 21 (noting that Democrats had no income tax plank in their 1904 platform).
67 See id. at 22; Buenker, supra note 27, at 54-55.
68 Quoted in Seligman, supra note 6, at 591-92.
69 Quoted in id. at 591.
70 See Blakey and Blakey, supra note 7, at 21.
71 Quoted in id. at 23.
72 See W. Elliot Brownlee, "Historical Perspective on U.S. Tax Policy Toward the Rich," in Does Atlas Shrug? The Economic Consequences of Taxing the Rich 28, 39 (Joel B. Slemrod ed., 2000).
73 Defending the income tax, Professor Graetz says, "A flat-rate tax on consumption would shift substantial amounts of taxes from higher- to lower-income families. . . . [T]he American people will not accept such a tax as fair. Indeed, the Sixteenth Amendment was added to the Constitution to redress such a situation." Michael J. Graetz, The Decline (and Fall?) of the Income Tax 222, 262 (1997).
74 See Kyvig, supra note 15, at 201.
75 Bailey's proposal mirrored the 1894 act, except for exempting state and local bond interest. Cummins's proposal was for graduated rates of 2 percent to 6 percent on incomes exceeding $6,000. The proposals were later combined as the "Bailey-Cummins amendment" to the tariff bill. See Witte, supra note 6, at 74-75; Seligman, supra note 6, at 592.
76 44 Cong. Rec. 1351 (Apr. 15, 1909).
77 44 Cong. Rec. 1422 (Apr. 21, 1909).
Where great and powerful intellects . . . differ by a bare margin of one, and by such difference overturn the precedents and practice of a century, and by such difference overturn the precedents upon which we had collected millions from the American people . . . , who will tell me that . . . it is an assault to the dignity of the court or an undermining of its confidence to ask it . . . to reconsider that question?
79 See infra text accompanying note 91.
80 44 Cong. Rec. 3931 (June 29, 1909).
81 See, e.g., Bruce Ackerman, "Taxation and the Constitution," 99 Colum. L. Rev. 1, 36 (1999). But see infra notes 108-116 and accompanying text (questioning Ackerman's version of events).
82 Presidential Message, Tax on Net Income of Corporations, S. Doc. No. 61-98, at 2 (1909); see Ratner, supra note 8, at 286. Taft coupled his recommendation with a proposal for a corporate income tax. Taft's "compromise" position may have been the result of Aldrich's manipulation. See Kyvig, supra note 15, at 202. Or Taft may have been manipulating Aldrich. See Ackerman, supra note 81, at 34-35.
83 44 Cong. Rec. 3936 (June 29, 1909) (statement of Cal. Sen. Frank P. Flint).
84 44 Cong. Rec. 3995 (July 1, 1909).
85 See Kyvig, supra note 15, at 202-03; Ratner, supra note 8, at 307.
86 44 Cong. Rec. 3974 (June 30, 1909).
87 44 Cong. Rec. 4067 (July 3, 1909).
88 44 Cong. Rec. app. 119 (July 12, 1909).
89 Id. at app. 121.
90 S.J. Res. 25, 61st Cong., 44 Cong. Rec. 1568 (Apr. 28, 1909).
91 44 Cong. Rec. 1568 (Apr. 28, 1909).
92 44 Cong. Rec. 1569 (Apr. 28, 1909).
93 Presidential Message, supra note 82, at 2; Ratner, supra note 8, at 286.
94 A corporate income tax had been characterized as an excise. Flint v. Stone Tracy Co., 220 U.S. 107 (1911).
95 See supra note 82. Or maybe Taft was jerking Aldrich around. See id. Or maybe both actually believed in what they were doing. It's been known to happen.
96 S.J. Res. 39, 61st Cong., 44 Cong. Rec. 3377 (June 17, 1909).
97 44 Cong. Rec. 3377 (June 17, 1909); see infra notes 120-121 and accompanying text (discussing McLaurin's later attempt to change substance of amendment).
98 44 Cong. Rec. 3377 (June 17, 1909) (emphasis added).
99 See supra text accompanying note 83 (statement of Sen. Flint).
100 S.J. Res. 40, 61st Cong., 44 Cong. Rec. 3900 (June 28, 1909).
101 Ratner, supra note 8, at 299.
102 Blakey and Blakey, supra note 7, at 61.
103 Buenker, supra note 27, at 127.
104 Seligman, supra note 6, at 595.
105 44 Cong. Rec. 4121 (July 5, 1909).
106 44 Cong. Rec. 4440 (July 12, 1909). The level of opposition was greater than the votes suggest, because of absences and abstentions. Nevertheless, the votes were overwhelmingly favorable.
107 Ratner, supra note 8, at 299.
108 Ackerman, supra note 81, at 37.
109 Id. Ackerman says McLaurin's response to Brown, see supra text accompanying note 97, defeated Brown's "gambit." Ackerman, supra note 81, at 37. Since McLaurin's suggestion went nowhere, I don't understand the point.
110 Ackerman, supra note 81, at 38.
111 Id. at 51 (emphasis deleted).
113 See supra text accompanying note 87 (statement of Sen. McLaurin).
114 See infra notes 120-121 and accompanying text.
115 See supra notes 104-106 and accompanying text.
116 See, e.g., Ackerman, supra note 81, at 34 (noting that plan for income tax statute "encountered stiff resistance from congressional conservatives, led by Nelson Aldrich of New York [sic] [who] was opposed to all forms of income taxation").
117 Ratner, supra note 8, at 299.
118 S.J. Res. 39, 61st Cong., 44 Cong. Rec. 3377 (June 17, 1909).
119 If source of income mattered under the Brown proposal, it's for the reason suggested by Buenker -- that Senator Nelson wanted to make sure all income (including any that had previously been off limits for an apportioned tax) could be subject to an unapportioned tax. See supra note 103 and accompanying text. But if the final language was intended to change intergovernmental immunity law, for example, to make it possible to tax interest on municipal bonds, that point eluded most congressmen. That possibility caused consternation in ratification debates. See infra notes 124-129 and accompanying text (discussing Gov. Hughes's reservations about Amendment).
120 See 44 Cong. Rec. 4067 (July 3, 1909); 44 Cong. Rec. 4109 (July 5, 1909).
121 44 Cong. Rec. 4109 (July 5, 1909); see also supra text accompanying note 87 (noting McLaurin's concern that failure to ratify would be used as evidence of lack of support for income tax).
122 Ackerman, supra note 81, at 5.
124 Paul, supra note 6, at 97.
125 Ratner, supra note 8, at 304 (quoting Special Message from the Governor, New York Senate, No. 3, at 5 (1910)).
126 Pollock I, 157 U.S. at 584-586.
127 That specific part of the holding in Pollock was overturned in South Carolina v. Baker, 485 U.S. 505 (1988).
128 See Evans v. Gore, 253 U.S. 245, 260-61 (1920); see also Buenker, supra note 27, at 255-61.
129 See Buenker, supra note 27, at 158.
130 44 Cong. Rec. 4392 (July 12, 1909).
131 44 Cong. Rec. 1351 (Apr. 15, 1909).
132 44 Cong. Rec. 1429 (Apr. 21, 1909).
133 44 Cong. Rec. 1538 (Apr. 26, 1909).
134 44 Cong. Rec. 3968 (June 30, 1909).
135 44 Cong. Rec. 4398 (July 12, 1909).
136 44 Cong. Rec. 4416 (July 12, 1909).
137 44 Cong. Rec. 4417 (July 12, 1909).
138 44 Cong. Rec. 4420 (July 12, 1909).
139 44 Cong. Rec. 4433 (July 12, 1909).
140 44 Cong. Rec. app. 127 (July 12, 1909).
141 Brownlee, supra note 8, at 38 (describing 1894 debates).
142 See 44 Cong. Rec. 4390 (July 12, 1909) (statement of N.Y. Republican Rep. Sereno E. Payne, chair of Ways and Means Committee) ("As to the general policy of an income tax, I am utterly opposed to it. I believe with Gladstone that it tends to make a nation of liars. . . . ").
143 44 Cong. Rec. 4391 (July 12, 1909) (statement of Mass. Rep. Samuel W. McCall) ("[W]hy not . . . limit it expressly to time of war?").
144 Senator McLaurin said an income tax would make the "wealthy . . . interested in an economical administration of the Government instead of extravagance." 44 Cong. Rec. 4109 (May 27, 1909).
145 Income Tax Law of 1913, ch. 16, 38 Stat. 114.
146 In form, the tax was 1 percent on "net income" above $3,000. Id. sections IIA.1, II.C. But surtaxes ranging from 1 percent to 6 percent applied to higher levels of income. Id. section II.A.2.
147 44 Cong. Rec. 3999 (July 1, 1909).
148 Marginal rates went up to 77 percent in 1918, see Revenue Act of 1918, ch. 18, sections 210-211, 40 Stat. 1057 (1919); Brownlee, supra note 72, at 45, but the wartime rates were temporary.
149 See Brushaber v. Union Pacific Railroad Co., 240 U.S. 1 (1916).
150 Many of the passages I've quoted have language like that. See, e.g., supra text accompanying notes 21 (McMillin), 138 (De Armond), 139 (Hamlin).
151 H.R. Rep. No. 53-276, at 3 (1894) (emphasis added).
152 A few congressmen were clear about this distinction. Populist James Maguire of California recognized the income tax wouldn't reach unrealized appreciation in land value; he therefore proposed a direct tax on that value. 26 Cong. Rec. app. 329 (Jan. 31, 1894).
153 See, e.g., 26 Cong. Rec. 6634 (June 21, 1894) (statement of Sen. Peffer).
154 Some said apportionment had outlived its usefulness, see, e.g., 44 Cong. Rec. 4392 (July 12, 1909) (statement of Rep. Clark), but it was hard to imagine an unapportioned tax on real property surviving judicial review.
155 Professor Schenk has suggested the Supreme Court might be convinced to see the ex ante wealth tax she proposes as "an income tax with a base equal to the risk-free return to certain assets," Deborah H. Schenk, "Saving the Income Tax With a Wealth Tax," 53 Tax L. Rev. 423, 441 (2000), and therefore as "a tax on income within the Sixteenth Amendment." Id. at 442. But if so, it wouldn't be because income taxes and wealth taxes were viewed the same way when the Amendment was ratified. Schenk recognizes the Court might see her reformulation "as a mere semantic change that does not cure the constitutional infirmity of a wealth tax." Id.

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