At Law & Liberty, Donald Drakeman: Where is the Wall of Separation Between Direct and Indirect Taxes? From the introduction:
Rob Natelson’s essay, “The Constitutional Line on Direct Taxes,” concludes that the Supreme Court’s decisions involving direct and indirect taxes have been “conflicting, uncertain—and wrong.” Those decisions may have been conflicting and uncertain, but whether they are wrong is a more complicated question.
He urges us to do a deep dive into “eighteenth-century tax vocabulary and … contemporaneous tax laws” to identify a clear and consistent understanding of these terms. Joel Alicea and I did just that a few years ago, and we focused on the carriage tax upheld in the landmark 1796 Hylton case. This was the Court’s first exercise of judicial review, and it is well worth reading, not least because we discovered that “the case was trumped up, the facts were bogus, the procedure was defective, and the Court lacked a quorum.”
We also learned that the framers actually had very different views of the meaning of indirect and direct taxes, especially as related to personal property. That is the main reason why prominent founders came down on opposite sides of the question in Hylton. The issue even split two of the Federalist authors. Alexander Hamilton argued that the carriage tax law was constitutional over Madison’s strenuous objections.
The constitutional conflict arose because many people did not realize that the key words, such as the constitutional term “excise,” had different meanings in different parts of the country. …
Posted at 6:09 AM