Notes
Notes on Taxing documentation
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Case Western Reserve Law Review·Volume 66·Issue 2·2015 What the Constitution Means by “Duties, Imposts, and Excises”—and “Taxes” (Direct or Otherwise) The Constitution’s framers understood the term “direct tax” to mean a tax on people’s lives, homes, or productive occupations. The term “indirect tax” was understood to mean a tax on consumption, boundary crossings, or certain special transactions.
“The objects of direct taxes are well understood . . .” —Future Chief Justice John Marshall at the Virginia Ratifying Convention
The Federal Income Tax: Published: 1921 Columbia University Press
THOMAS REED POWELL, LL.B., Ph.D. Professor of Law, Harvard University; Author of "Federal Taxation," "Federal Income Tax," "Federal Estate and Gift Taxation," etc.
CONSTITUTIONAL ASPECTS OF FEDERAL INCOME TAXATION
Other cases prior to the Sixteenth Amendment make clear that taxes on acts or occupations are excise taxes which may be levied by the United States without any apportionment among the states according to population. They make clear also that excises on acts and occupations may be measured in other ways than by net income. The cases that have sustained as indirect taxes the various excises on particular acts and particular occupations show that an excise on doing business in general would be an indirect tax.
True, in so far as its power depends upon the Sixteenth Amendment, it can assess only what the Supreme Court thinks may reasonably be regarded as income, or possibly only what the Supreme Court thinks is really income. But without the aid of the Sixteenth Amendment, the federal government has extensive fiscal powers. This was made clear in the first case which dealt with the Corporation Excise Tax of 1909. The Sixteenth Amendment was not then in existence. The Pollock Case was still the law of the land. Under it Congress could not levy an unapportioned tax on income from state or municipal bonds or on income from real or personal property. The restriction on taxing income from state and municipal bonds was predicated on the long-established principle that neither the states nor the United States may exercise their undoubted powers over the undoubted powers of the other." Income from property was sheltered for the reason that a tax on income was regarded as in substance a tax on the source of the income. As a tax on property was concededly a direct tax, a tax on the income therefrom was put in the same class. But a tax on business was never regarded as a direct tax. Therefore a tax on the income from business was not within the proscription of the Pollock Case. The tax on income from business fell only because it was thought that Congress would not have taxed such income unless it were allowed to reach other income as well. The inference was that taxes on income from business would be sustained as indirect taxes whenever they were unmixed with other taxes thought direct. In reliance on this inference Congress passed the Corporation Excise Tax of 1909. The subject selected for taxation was not income but carrying on business as a corporation. The measure of the annual demand on each corporation was its net income as computed under the provisions of the Act. In Flint v. Stone Tracy Co., 220 U. S. 107. decided in 1911, a unanimous Supreme Court held the tax an indirect one and permitted the assessment to include not only income directly from business but also income from municipal bonds and from other property not directly or actively used in the corporate business. We may criticise the legerdermain by which a few words in a statute turn a tax on income into a tax on something else merely measured by income; but we must believe in it as the gentleman believed in baptism, because he had seen it done. Mr. Justice Day assures us that the difference between the Income Tax of 1894 and the Corporation Excise Tax of 1909 "is not merely nominal, but rests upon substantial differences between the mere ownership of property and the actual doing of business in a certain way." The tax directly on income from property has an "element of absolute and unavoidable demand" 10 which makes it a tax on property merely because of its ownership. In taxes on privileges the element of absolute and unavoidable demand is lacking. "If business is not done in the manner prescribed in the statute, no tax is payable."
In Thomas v. United States, 192 U.S. 363 (1904)
There is no occasion to attempt to confine the words duties, imposts, and excises to the limits of precise definition. We think that they were used comprehensively to cover customs and excise duties imposed on importation, consumption, manufacture, and sale of certain commodities, privileges, particular business transactions, vocations, occupations, and the like. Taxes of this sort have been repeatedly sustained by this Court, and distinguished from direct taxes under the Constitution.
The term "Direct Taxes" were well understood to the framers of the Constitution.
The wide range of “articles” subject to direct tax reflects not merely a theoretical view but the actual operation of Anglo-American tax systems. Both in Britain and America, direct taxes commonly were imposed by omnibus statutes that combined a range of items into an integrated base and then imposed on the base one or more rates of tax. Case Western Reserve Law Review·Volume 66·Issue 2·2015 ~ What the Constitution Means by “Duties, Imposts, and Excises”—and “Taxes” (Direct or Otherwise)
Despite the variety among the objects of direct taxation, one can divine a unifying principle: A tax was direct if it was imposed on people’s lives, homes, or on the productive occupations by which they supported and expressed themselves. Direct taxes, in other words, were levies on living and producing.
Direct taxes encompassed a wide range of levies, but their common characteristic was that they were exactions on existing and producing. Indirect taxes were levies on consuming, on boundary crossings, and on certain special transactions.(187)
The word suffrage comes from Latin suffragium, which initially meant "a voting-tablet", "a ballot", "a vote", or "the right to vote". Suffragium in the second century and later came to mean "political patronage, influence, interest, or support", and sometimes "popular acclaim" or "applause". wikipedia.org/wiki/Suffrage