Former Dean of the Columbia University School of Law, David Schizer, and I have recently published a manuscript on SSRN. You can find it at: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4867878. The manuscript will be published in the Florida Law Review in 2025.
In our manuscript, we argue that the Direct Taxes Clause applies to taxes that directly impact individuals, while imposts, duties, and excises are levied on specific transactions such as importing goods, buying or selling goods, inheriting estates, giving gifts, renting property, or selling labor for money. We contend that a wealth tax falls directly on individuals, as explained in our draft law review article.
We delve into the original meaning of the Taxation Clauses, court opinions from the Founding era to the present, and arguments presented in law review articles and amicus briefs by prominent scholars. The requirement for direct taxes to be apportioned prevents a majority of states in Congress from imposing taxes that disproportionately affect certain states and regions. This Clause not only limits taxes on enslaved individuals and undeveloped land, which were abundant in the South in 1787, but also prohibits Congress from taxing ships, manufacturing, or small farms, prevalent in the North but scarce in the South. The Direct Tax Clause makes it politically unfeasible to implement both types of fiscal measures.
The Framers intended for the federal government to rely on indirect taxes during peacetime, while direct taxes that are not geographically biased would be available during wartime. Indirect taxes offer a sense of voluntariness, as individuals can choose to avoid the tax by refraining from engaging in the taxed transaction. This element of voluntariness is absent in the imposition of direct taxes.
