Direct tax: Difference between revisions

In the United States, the term “direct tax” has acquired specific meaning under constitutional law: a direct tax includes taxes on property<ref name="Pollock">{{cite court|litigants=Pollock v. Farmers' Loan & Trust Co.|vol=158|reporter=U.S.|opinion=601|year=1895|url=https://tile.loc.gov/storage-services/service/ll/usrep/usrep158/usrep158601/usrep158601.pdf}}</ref>{{rp|618}} by reason of ownership<ref>{{cite court|litigants=Fernandez v. Wiener|vol=326|reporter=U.S.|opinion=340|pinpoint=362|year=1945|url=https://tile.loc.gov/storage-services/service/ll/usrep/usrep326/usrep326340/usrep326340.pdf}}</ref><ref>{{cite court|litigants=Bromley v. McCaughn|vol=280|reporter=U.S.|opinion=124|pinpoint=137|year=1929|url=https://tile.loc.gov/storage-services/service/ll/usrep/usrep280/usrep280124/usrep280124.pdf}}</ref> (such as an ordinary real estate [[property tax]] imposed on the person owning the property as of January 1 of each year) as well as [[Poll tax|capitations]].<ref name="Hylton"/>{{rp|175 ([[Samuel Chase|Chase]], J.)}}<ref name="Hylton"/>{{rp|183 ([[James Iredell|Iredell]], J.)}} Income taxes on income from personal services such as wages are indirect taxes in this sense.<ref>{{cite court|litigants=Springer v. United States|vol=102|reporter=U.S.|opinion=586|pinpoint=598|date=1871|url=https://tile.loc.gov/storage-services/service/ll/usrep/usrep102/usrep102586/usrep102586.pdf}}</ref><ref name="Brushaber">{{cite court|litigants=Brushaber v. Union Pacific Railroad|vol=240|reporter=U.S.|opinion=1|date=1916|url=https://tile.loc.gov/storage-services/service/ll/usrep/usrep240/usrep240001/usrep240001.pdf}}</ref>{{rp|15}}<ref>{{cite court|litigants=[[Moore v. United States (2024)|Moore v. United States]]|vol=602|reporter=U.S.|opinion=___|pinpoint=*7|year=2024|url=https://www.supremecourt.gov/opinions/23pdf/22-800_jg6o.pdf}}</ref>{{efn|text=Nonetheless, [[Adam Smith]] appears to have considered taxes on “revenue” to have been direct, explaining the advent of indirect taxation as a result of “the state not knowing how to tax, directly and proportionably, the revenue of its subjects.”<ref name="Smith"/>{{rp|331}} Moreover, [[Justice (title)|Justice]] [[William Paterson (judge)|William Paterson]] quotes this passage approvingly.<ref name="Hylton"/>{{rp|180}}}} The [[United States Court of Appeals for the District of Columbia Circuit]] has stated: “Only three taxes are definitely known to be direct: (1) a capitation [...], (2) a tax upon real property, and (3) a tax upon personal property.”<ref>Opinion on rehearing, July 3, 2007, p. 20, ''Murphy v. Internal Revenue Service and United States'', case no. 05-5139, United States Court of Appeals for the District of Columbia Circuit, 2007-2 U.S. Tax Cas. (CCH) paragr. 50,531 (D.C. Cir. 2007) ([[Obiter dictum|dicta]]).</ref> In ''[[National Federation of Independent Business v. Sebelius]],'' the Supreme Court held that the [[Affordable Care Act|ObamaCare]] penalty imposed upon individuals for failure to possess health insurance, though a tax for constitutional purposes,<ref name="NFIB">{{cite court|litigants=[[National Federation of Independent Business v. Sebelius|NFIB v. Sebelius]]|vol=567|reporter=U.S.|opinion=519|date=2012|url=https://tile.loc.gov/storage-services/service/ll/usrep/usrep567/usrep567519/usrep567519.pdf}}</ref>{{rp|570}} is not a direct tax, reasoning that the tax is neither a tax on property, nor a capitation in that “it is triggered by specific circumstances” rather than levied “‘without regard to property, profession, or ''any other circumstance.''’”<ref name="NFIB"></ref>{{rp|571}}

 

 

In the context of income taxes on wages, salaries and other forms of compensation for personal services, see, e.g., ''United States v. Connor'', 898 F.2d 942, 90-1 U.S. Tax Cas. (CCH) paragr. 50,166 (3d Cir. 1990) (tax evasion conviction under {{usc|26|7201}} affirmed by the [[United States Court of Appeals for the Third Circuit]]; taxpayer's argument—that because of the Sixteenth Amendment, wages were not taxable—was rejected by the Court; taxpayer's argument that an income tax on wages is required to be apportioned by population also rejected); ''Perkins v. Commissioner'', 746 F.2d 1187, 84-2 U.S. Tax Cas. (CCH) paragr. 9898 (6th Cir. 1984) ({{usc|26|61}} ruled by the [[United States Court of Appeals for the Sixth Circuit]] to be “in full accordance with Congressional authority under the Sixteenth Amendment to the Constitution to impose taxes on income without apportionment among the states”; taxpayer's argument that wages paid for labor are non-taxable was rejected by the Court, and ruled frivolous).