Source: https://supreme.justia.com/cases/federal/us/3/171/case.html

Justice Iredell

By the second section of the first article of the Constitution of the United States it is ordained that representatives and direct taxes shall be apportioned among the states according to their respective numbers, which shall be determined by adding to the whole number of free persons, including those bound to service for a term of years, and including Indians not taxed, three fifths of all other persons.

The eighth section of the said article declares that Congress shall have power to lay and collect taxes, duties, imposts, and excises, but all duties, imposts and excises, shall be uniform throughout the United States.

The ninth section of the same article provides that no capitation or other direct tax shall be laid unless in proportion to the census or enumeration before directed to be taken.

Congress passed a law on 5 June, 1794, entitled, "An act laying duties upon carriages for the conveyance of persons."

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Daniel Lawrence Hilton, on 5 June, 1794, and therefrom to the last day of September next following, owned, possessed, and kept one hundred and twenty-five chariots for the conveyance of persons, but exclusively for his own separate use, and not to let out to hire, or for the conveyance of persons for hire.

The question is whether a tax upon carriages be a direct tax? If it be a direct tax, it is unconstitutional, because it has been laid pursuant to the rule of uniformity, and not to the rule of apportionment. In behalf of the plaintiff in error, it has been urged that a tax on carriages does not come within the description of a duty, impost, or excise, and therefore is a direct tax. It has, on the other hand, been contended that as a tax on carriages is not a direct tax, it must fall within one of the classifications just enumerated, and particularly must be a duty or excise. The argument on both sides turns in a circle; it is not a duty, impost, or excise, and therefore must be a direct tax; it is not tax, and therefore must be a duty or excise. What is the natural and common, or technical and appropriate, meaning of the words "duty" and "excise" it is not easy to ascertain. They present no clear and precise idea to the mind. Different persons will annex different significations to the terms. It was, however, obviously the intention of the framers of the Constitution that Congress should possess full power over every species of taxable property, except exports. The term "taxes" is generic, and was made use of to vest in Congress plenary authority in all cases of taxation. The general division of taxes is into direct and indirect. Although the latter term is not to be found in the Constitution, yet the former necessarily implies it. "Indirect" stands opposed to "direct." There may perhaps be an indirect tax on a particular article that cannot be comprehended within the description of duties or imposts or excises; in such case, it will be comprised under the general denomination of "taxes." For the term "tax" is the genus, and includes

1. Direct taxes.

2. Duties, imposts, and excises.

3. All other classes of an indirect kind, and not within any of the classifications enumerated under the preceding heads.

The question occurs how is such tax to be laid, uniformly or proportionately? The rule of uniformity will apply, because it is an indirect tax, and direct taxes only are to be apportioned. What are direct taxes within the meaning of the Constitution? The Constitution declares that a capitation tax is a direct tax, and both in theory and practice a tax on land is deemed to be a direct tax. In this way, the terms "direct taxes" and "capitation and other direct tax" are satisfied. It is not necessary

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to determine whether a tax on the product of land be a direct or indirect tax. Perhaps the immediate product of land, in its original and crude state, ought to be considered as the land itself; it makes part of it or else the provision made against taxing exports would be easily eluded. Land, independently of its produce, is of no value. When the produce is converted into a manufacture, it assumes a new shape; its nature is altered; its original state is changed; it becomes quite another subject, and will be differently considered. Whether direct taxes, in the sense of the Constitution, comprehend any other tax than a capitation tax and tax on land is a questionable point. If Congress, for instance, should tax, in the aggregate or mass, things that generally pervade all the states in the Union, then perhaps the rule of apportionment would be the most proper, especially if an assessment was to intervene. This appears by the practice of some of the states to have been considered as a direct tax. Whether it be so under the Constitution of the United States is a matter of some difficulty, but as it is not before the Court, it would be improper to give any decisive opinion upon it. I never entertained a doubt that the principal, I will not say, the only, objects that the framers of the Constitution contemplated as falling within the rule of apportionment were a capitation tax and a tax on land. Local considerations and the particular circumstances and relative situation of the states naturally lead to this view of the subject. The provision was made in favor of the southern states. They possessed a large number of slaves; they had extensive tracts of territory, thinly settled and not very productive. A majority of the states had but few slaves, and several of them a limited territory, well settled, and in a high state of cultivation. The southern states, if no provision had been introduced in the Constitution, would have been wholly at the mercy of the other states. Congress in such case might tax slaves at discretion or arbitrarily, and land in every part of the Union after the same rate or measure: so much a head in the first instance, and so much an acre in the second. To guard them against imposition in these particulars was the reason of introducing the clause in the Constitution which directs that representatives and direct taxes shall be apportioned among the states according to their respective numbers.

On the part of the plaintiff in error it has been contended that the rule of apportionment is to be favored rather than the rule of uniformity, and of course that the instrument is to receive such a construction as will extend the former and restrict the latter. I am not of that opinion. The Constitution has been considered as an accommodating system; it was the

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effect of mutual sacrifices and concessions; it was the work of compromise. The rule of apportionment is of this nature; it is radically wrong; it cannot be supported by any solid reasoning. Why should slaves, who are a species of property, be represented more than any other property? The rule therefore ought not to be extended by construction.

Again, numbers do not afford a just estimate or rule of wealth. It is indeed a very uncertain and incompetent sign of opulence. There is another reason against the extension of the principle laid down in the Constitution.

The counsel on the part of the plaintiff in error have further urged that an equal participation of the expense or burden by the several states in the Union was the primary object which the framers of the Constitution had in view, and that this object will be affected by the principle of apportionment, which is an operation upon states, and not on individuals, for each state will be debited for the amount of its quota of the tax and credited for its payments. This brings it to the old system of requisitions. An equal rule is doubtless the best. But how is this to be applied to states or to individuals? The latter are the objects of taxation, without reference to states, except in the case of direct taxes. The fiscal power is exerted certainly, equally, and effectually on individuals; it cannot be exerted on states. The history of the United Netherlands and of our own country will evince the truth of this position. The government of the United States could not go on under the confederation, because Congress was obliged to proceed in the line of requisition. Congress could not, under the old confederation, raise money by taxes, be the public exigencies ever so pressing and great. It had no coercive authority -- if it had it must have been exercised against the delinquent states, which would be ineffectual or terminate in a separation. Requisitions were a dead letter unless the state legislatures could be brought into action, and when they were, the sums raised were very disproportional. Unequal contributions or payments engendered discontent and fomented state jealousy. Whenever it shall be thought necessary or expedient to lay a direct tax on land, where the object is one and the same, it is to be apprehended that it will be a fund not much more productive than that of requisition under the former government.

Let us put the case. A given sum is to be raised from the landed property in the United States. It is easy to apportion this sum or to assign to each state its quota. The Constitution gives the rule. Suppose the proportion of North Carolina to be $80,000. This sum is to be laid on the landed property in the state, but by what rule, and by whom? Shall every acre pay

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the same sum, without regard to its quality, value, situation, or productiveness? This would be manifestly unjust. Do the laws of the different states furnish sufficient data for the purpose of forming one common rule, comprehending the quality, situation, and value of the lands? In some of the states there has been no land tax for several years, and where there has been, the mode of laying the tax is so various and the diversity in the land is so great that no common principle can be deduced and carried into practice. Do the laws of each state furnish data from whence to extract a rule whose operation shall be equal and certain in the same state? Even this is doubtful. Besides, subdivisions will be necessary; the apportionment of the state, and perhaps of a particular part of the state, is again to be apportioned among counties, townships, parishes, or districts. If the lands be classed, then a specific value must be annexed to each class. And there a question arises how often are classifications and assessments to be made? Annually, triennially, septennially? The oftener they are made, the greater will be the expense, and the seldomer they are made, the greater will be the inequality and injustice. In the process of the operation, a number of persons will be necessary to class, to value, and assess the land, and after all the guards and provisions that can be devised, we must ultimately rely upon the discretion of the officers in the exercise of their functions. Tribunals of appeal must also be instituted to hear and decide upon unjust valuations or the assessors will act ad libitumwithout check or control.

The work, it is to be feared, will be operose and unproductive and full of inequality, injustice, and oppression. Let us, however, hope that a system of land taxation may be so corrected and matured by practice as to become easy and equal in its operation and productive and beneficial in its effects. But to return. A tax on carriages, if apportioned, would be oppressive and pernicious. How would it work? In some states there are many carriages and in others but few. Shall the whole sum fall on one or two individuals in a state who may happen to own and possess carriages? The thing would be absurd and inequitable. In answer to this objection, it has been observed that the sum, and not the tax, is to be apportioned, and that Congress may select in the different states different articles or objects from whence to raise the apportioned sum. The idea is novel. What, shall land be taxed in one state, slaves in another, carriages in a third, and horses in a fourth, or shall several of these be thrown together in order to levy and make the quoted sum? The scheme is fanciful. It would not work well, and perhaps is utterly impracticable. It is easy to discern that great and perhaps insurmountable obstacles must arise in forming the subordinate

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arrangements necessary to carry the system into effect; when formed, the operation would be slow and expensive, unequal and unjust. If a tax upon land, where the object is simple and uniform throughout the states, is scarcely practicable, what shall we say of a tax attempted to be apportioned among, and raised and collected from, a number of dissimilar objects. The difficulty will increase with the number and variety of the things proposed for taxation. We shall be obliged to resort to intricate and endless valuations and assessments in which everything will be arbitrary and nothing certain. There will be no rule to walk by. The rule of uniformity, on the contrary, implies certainty, and leaves nothing to the will and pleasure of the assessor. In such case the object and the sum coincide, the rule and the thing unite, and of course there can be no imposition.

The truth is that the articles taxed in one state should be taxed in another; in this way the spirit of jealousy is appeased and tranquility preserved; in this way the pressure on industry will be equal in the several states, and the relation between the different subjects of taxation duly preserved. Apportionment is an operation on states, and involves valuations and assessments which are arbitrary and should not be resorted to but in case of necessity. Uniformity is an instant operation on individuals, without the intervention of assessments or any regard to states, and is at once easy, certain, and efficacious. All taxes on expenses or consumption are indirect taxes. A tax on carriages is of this kind, and of course is not a direct tax. Indirect taxes are circuitous modes of reaching the revenue of individuals, who generally live according to their income. In many cases of this nature the individual may be said to tax himself. I shall close the discourse with reading a passage or two from Smith's Wealth of Nations.

"The impossibility of taxing people in proportion to their revenue by any capitation seems to have given occasion to the invention of taxes upon consumable commodities; the state, not knowing how to tax directly and proportionally the revenue of its subjects, endeavors to tax it indirectly by taxing their expense, which it is supposed in most cases will be neatly in proportion to their revenue. Their expense is taxed by taxing the consumable commodities upon which it is laid out."

Vol. 3, p. 331.

"Consumable commodities, whether necessaries or luxuries, may be taxed in two different ways: the consumer may either pay an annual sum on account of his using or consuming goods of a certain kind or the goods may be taxed while they remain in the hands of the dealer, and before they are delivered to the consumer. The consumable goods, which

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last a considerable time before they are consumed altogether, are most properly taxed in the one way, those of which the consumption is immediate or more speedy in the other; the coach tax and plate tax are examples of the former method of imposing; the greater part of the other duties of excise and customs of the latter."

Vol. 3, p. 341.

I am therefore of opinion, that the judgment rendered in the Circuit Court of Virginia ought to be affirmed.