LPC wrote:Oliver Wendell Holmes (the author, not the judge) wrote that an ounce a page of history is worth a pound volume of logic, and I believe that the direct/indirect dichotomy can only be understood in the context of the history of the Constitution.
Fixed it for you. See
New York Trust Co. v. Eisner, 256 U.S. 345, 349 (1921).
LPC wrote: There are several problems with the meaning of “indirect taxes” as “all taxes paid primarily by persons who can shift the burden upon some one else” and “direct taxes” as taxes “the payment of which cannot be avoided”:
• First (and most importantly), there is no support for those meanings in the words of the Constitution, the Federalist Papers, or any writings of the authors of the Constitution.
I must respectfully disagree. Professor Erik Jensen (who has one of the clearest and most engaging writing styles ever seen in a law professor)* has argued that avoidability (of which shiftability is a subset) was the defining characteristic of an indirect tax:
In 1876, Thomas Cooley, perhaps the nineteenth-century American authority on the law of taxation, drew a distinction that has modern resonances, but it would have been comprehensible to Gouverneur Morris as well:
Taxes are said to be
Direct, under which designation would be included those which are assessed upon the property, person, business, income, etc., of those who are to pay them; and
Indirect, or those which are levied on commodities before they reach the consumer, and are paid by those upon whom they ultimately fall, not as taxes, but as part of the market price of the commodity. Under the second head may be classed the duties upon imports, and the excise and stamp duties levied upon manufactures.
The "indirect taxes" are generally those that the Constitution denominated duties, imposts, and excises, and in general those are taxes imposed on articles of consumption.
Cooley did not suggest that this distinction was mandated by the Constitution, but I suspect he would have done so had Hylton not been on the books. The distinction between direct and indirect taxation is found throughout the debates on the Constitution; it is a distinction like that described by Cooley.
For example, in The Federalist No. 36, Alexander Hamilton contrasted direct and indirect taxes. By indirect taxes "must be understood duties and excises on articles of consumption." Direct taxes are, presumably, everything else.
Such indirect taxes may wind up affecting the price, and therefore the consumption, of the products to which they relate. In The Federalist No. 21, Hamilton noted that "imposts, excises, and, in general, all duties upon articles of consumption, may be compared to a fluid, which will in time find its level with the means of paying them." Consumers will adjust their behavior to the cost of the products, a cost that may reflect the consumption taxes that have to be paid - the "imperceptible agency of taxes on consumption."…
Nevertheless, the assumption of most founders was that of Cooley: an indirect tax is one which the ultimate consumer can generally decide whether to pay by deciding whether to acquire the taxed product. For the Hamilton of The Federalist, before he became an advocate trying to validate the Hylton carriage tax, it was enough to characterize consumption taxes as indirect in that they were usually passed on: "The maxim that the consumer is the payer is so much oftener true than the reverse of the proposition ...."
Jensen, The Apportionment of Direct Taxes: Are Consumption Taxes Constitutional?, 97 Columbia L. Rev. 2334, 2393-2396 (1997) (footnotes omitted)
Of course, Jensen doesn’t think for one minute that this is the current Supreme Court jurisprudence regarding direct v. indirect taxes, and he has acknowledged that the Court has expanded the category of “excises” to cover just about everything except capitations and property taxes. His point is that the Court has departed from the original concept of indirect taxes, a view that is hinted at by the last sentence of the Murphy case that you cited (“Regardless what the original understanding may have been…”)
As far as the Hylton case is concerned, I’ve always thought it is overrated. First of all, the case was a trumped-up job that the Supreme Court had no jurisdiction to hear in the first place. As Jensen notes:
It was a test case crafted out of whole cloth by a number of Virginians unhappy with the tax - "everyone knew that the case ... was feigned," writes William Casto - and it was embraced by a Federalist bench that, one might infer, wanted to make a statement about national power. Hylton claimed to have 125 carriages for his own use (more, wrote Edward Whitney, "than then existed in Virginia"), presumably because the threshold jurisdictional amount required for Supreme Court review was $ 2000 (125 carriages with tax and penalties totaling $ 16 per carriage). Even if believed, the patently phony claim should not have worked: for Supreme Court jurisdictional purposes, the dollar amount at issue was supposed to exceed, not merely equal, $ 2000, and the parties had agreed that any liability of Hylton's could be discharged for only sixteen dollars, equaling the tax due on one carriage plus penalties. Nevertheless, Hylton went ahead without any Justices questioning the Court's authority to hear the case or directly questioning the Court's power to nullify congressional acts on constitutional grounds. Jensen, supra, at 2351-2352 (footnotes omitted).
Second, the statements by Justices Chase and Iredell that direct taxes are only those that can be practically apportioned without inequities is inconsistent with their view that taxes on land are direct taxes. Any apportioned tax based on land values, which will vary from state to state, will inevitably result in different tax rates from state to state, thereby resulting in the very inequity that Chase illustrated in his opinion.
Third, the carriage tax involved in Hylton wasn’t a one-shot deal like a sales tax; it was imposed annually, just as if it were a personal property tax. In fact, I believe it
was a personal property tax, even though some have characterized it as a tax on the use of the carriages. There is little if any difference between a tax on ownership and a tax on use, and the carriage tax would have been payable even if Hylton had never actually used the carriages but had simply stored them in his barn. The reason I bring this up is that Pollock and dicta in several SCOTUS cases have indicated that a tax on the mere ownership of property is a direct tax, and I can’t see why the carriage tax wouldn’t be a tax on ownership. If it is, then Hylton was wrongly decided by today’s standards.
*Two of my favorite Jensen quotes:
In an article discussing whether Obamacare’s individual mandate is a direct tax, he poses the following hypothetical:
Suppose Congress enacted a taxing regime under which all citizens and resident aliens with annual incomes exceeding $ 50,000 were required to pay a tax of $ 1,000, but the liability for those with incomes of $ 50,000 or less would be $ 2,000.174
Fn 174: Yes, this is a law professor's hypothetical, dealing with something that could not possibly happen in the real world. But for what it is worth, if a law professor had hypothesized the individual mandate 25 or so years ago, he would have been viewed as out of his mind.
And in a letter discussing what a “tax on incomes” is:
Many assume that unapportioned Social Security “taxes” are constitutional because they are “taxes on incomes.” But the Supreme Court has never said that, and, to my mind, Social Security levies weren’t taxes at all as the system was created. If you make a payment to a government, and you get something specific in return – entry into a park, say – you’re not being taxed. And payors into Social Security are (or were) acquiring a specific benefit, a retirement and disability plan.5
Fn5: You also get benefits from paying taxes, I’ve been told, but those are the more amorphous benefits of a civilized society – i.e., before the designated hitter and gangsta rap came along.
"Run get the pitcher, get the baby some beer." Rev. Gary Davis
Another genius here. 
