Joel S. Newman is a professor of law at the Wake Forest University School of Law.

This article describes federal attempts, both successful and unsuccessful, to tax slavery before 1865. It analyzes the pre-1865 discourse on slave taxes as a form of sin taxes, from a contemporary perspective. Professor Newman would like to thank his colleague, Professor Michael Curtis, and Amanda Branam, WFU Law Class of 2004, for their help.

How do 18th and 19th century discussions of slave taxes as sin taxes compare to modern sin tax analysis? The economic discourse seems a bit lacking, since they probably did not think in quite those terms. However, the moral discourse is quite similar.

This essay will begin with a discussion of the issues raised by excise taxes generally and sin taxes in particular. It will then sketch a brief history of federal slave taxes, followed by a collection of statements made mostly on the floor of Congress, grouped according to the arguments made. It will conclude with some thoughts on who made the better case.

Vertical equity is also a problem. Does the incidence of wearing, manufacturing, and selling gloves fall in equal proportions on all income groups?⁶ If not, then depending on where they do fall, taxing gloves may be more progressive, or more regressive, than one might like.⁷

There are also compliance problems. Wouldn't it be far simpler to administer one broad tax than to administer dozens of narrow ones? Wouldn't keeping up with so many rates be a mind-boggling task for taxpayer and collector alike?

B. Sin Taxes: A Special Case

Taxing sin, however, might justify an excise tax, despite the problems. Taxes on commodities and activities which the society finds to be harmful, or even immoral, might be urged on both economic and moral grounds. Presumably, we can fix the economy, or even our moral fiber, and make a little money, too.

1. The economic argument. The economic grounds involve the internalization of external, social costs.⁸ Imagine, for example, that the government nationalized the steel industry and then provided steel for free to anyone who cared to use it. Bad idea. The price of automobiles, and other commodities made of steel, would drop precipitously.⁹ Anyone who had a choice of using steel or something else would choose steel. Decisions about when to use steel versus other components would be distorted in a radically inefficient way, to the competitive detriment of the nation.

The lesson is simple. To achieve a maximally efficient, national allocation of economic resources, the pricing of commodities and services needs to reflect their true costs. Automobile prices must include the costs of all of the material and labor that went into them, including, of course, steel. Only then will those who buy automobiles, and not the general taxpaying public, pay for all of the costs. Only then will the nation make the right choices between steel automobiles and their alternatives.

The market pricing mechanism works reasonably well for physical materials and labor. However, it works less well for social costs. The price of cigarettes, for example, reflects the material and labor that goes into them, but it does not reflect the social costs of smoking. Since these costs are not reflected, cigarettes are underpriced. Too many cigarettes are produced and consumed, and some of their costs are borne not by those who smoke, but by all of us.

If we cannot force the price of cigarettes to reflect directly the social costs incurred, then we should do the next best thing -- tax cigarettes. Such a tax will do two good things. First, by raising the price of cigarettes, it will deter smoking, thus eliminating some of the social costs. Second, for those who continue to smoke, it will create a fund of cigarette tax revenues, which can then be used to defray those social costs that remain.¹⁰

2. The moral argument. If behavior is immoral, then we should abolish it. If abolition is not possible, then taxation is the next best thing. Raise the taxes high enough, and we can price the behavior out of existence.¹¹ Even if we can't raise the taxes to that level, at least we can make a strong statement of institutional disapproval. At the very least, if we tax moral activity, we had better tax immoral activity, lest we be accused of favoring immorality.¹²

These considerations can afford telling rejoinders to those who raise horizontal and vertical equity concerns. So what if everyone is not being taxed; that is precisely the point. The economist would argue that we are taxing only those people -- the sinners -- who pay too little. The moralist would argue that the immorality of the sin provides a rational basis for discriminating against the sinner. Any sinner who feels unfairly treated can simply stop sinning. Moreover, the manufacturers, distributors, and sellers would have no complaint if they simply stopped enabling the immorality of others.

3. Arguments against sin taxes. Even if sin taxes have some of the positive effects described, they have some negative effects as well. In addition to the problems of all excise taxes, they have their own specific infirmities. Doesn't taxation imply at least recognition, if not approval? Isn't it true that, once the government taxes something, it legitimizes it, and implicitly binds itself to protect that activity?

The problems are even worse if we assume that tax revenues will not be earmarked to defray the social costs of the activity being taxed. If so, isn't the government profiting from an unseemly and inappropriate partnership with sin?¹³ Won't the legislature secretly hope that the harmful, immoral activity continue, lest their tax revenues plummet?

Then there is the difficulty of determining, or at least reaching agreement, on precisely what is sinful, and how to get at it. Does everyone agree that drinking alcohol is sinful? Is the drinking of wine just as sinful as the drinking of beer or liquor? Moreover, if the real sin is drinking to excess, how do we attack the excess without unduly penalizing the moderate drinkers? Put in another context, is it better to tax the gas, or the gas guzzler?

Finally, doesn't it seem odd to use taxation as a form of punishment? Shouldn't punishment be the province of the criminal law, not the tax law? Isn't any other stance likely to sully both sets of laws, leaving them overly complex, and much harder to enforce and administer?¹⁴

How do slave taxes as sin taxes fit into this general scheme? What happened? What did the legislature say about it? How did their discourse fit into the arguments and analysis sketched out above?

In addition, the Constitution provided that the importation of slaves could not be banned until 1808.¹⁹ As long as the importation went on, however, the federal government was allowed to tax it, up to 10 dollars per person imported.²⁰

B. Events Through the War of 1812

The 10 dollar tax, as allowed by the Constitution, was proposed in 1789 but went nowhere.²¹ A year later, a delegation of Quakers memorialized Congress to abolish slavery, and a tax was again considered. The proposal was tabled amid fears that any such tax would lead to arguments over whether slaves were persons or property.²²

In 1797, a direct tax was proposed, in light of fiscal needs caused by the wars in Europe. It was enacted in 1798.²³ A fixed sum would be levied to each state. Then, each state would allocate its share among its citizens, according to their ownership of houses, land, and slaves. The tax was intended to generate $2 million, of which $300,000 could come from a tax on slaves aged 12 to 50, at 50 cents per slave.²⁴ It was abolished in 1802 when the fiscal need abated.²⁵

In 1804, South Carolina, which had previously banned the importation of slaves, lifted its ban. Apparently, they could not enforce it, nor could they afford to try any longer.²⁶ Nonetheless, the federal Congress was outraged, and debated a 10 dollar tax on the importation of slaves, largely with a view to punishing South Carolina.²⁷ The measure was postponed, presumably to give South Carolina a chance to change its mind. Finally, it was dropped.

When the War of 1812 loomed, the federal government again needed money. Treasury Secretary Gallatin proposed a tax very similar to the 1798 tax, which was enacted in 1813. It was to be levied on land, houses, and slaves "at the rate each of them is worth in money."²⁸ The tax was increased in 1815 and 1816, and finally repealed in 1817.²⁹

C. Civil War

In the period leading up to the Civil War, there was considerable discussion of abolition, and its alternative, colonization. There was not much talk about taxation.³⁰ Just before the Civil War, though, Hinton Rowan Helper proposed an elaborate scheme to tax slavery out of existence:

So far from allowing slaveholders any compensation for their slaves, we are, and we think justly, in favor of imposing on them a tax of sixty dollars for each and every Negro now in their possession, as also for each and every one that shall be born to them between now and the 4th of July, 1863; after which time, we propose that they shall be taxed forty dollars per annum, annually, for every person by them held in slavery, without regard to age, sex, color, or condition -- the money, in both instances, to be used for the sole advantage of the slaves. As an addendum to this proposition, we would say that, in our opinion, if slavery is not totally abolished by the year 1869, the annual tax ought to be increased from forty to one hundred dollars; and furthermore, if the institution does not then almost immediately disappear under the onus of this increased taxation, the tax ought in the course of one or two years thereafter, to be augmented to such a degree as will, in harmony with other measures, prove an infallible deathblow to slavery on or before the 4th of July, 1876.³¹

On May 28, 1862, Senator Charles Sumner proposed:

That any person who shall claim the service or labor for life of any other person under the laws of any State shall pay, on account of such person so claimed, the sum of ten dollars.³²

In the course of the discussion, there were proposals to set the tax at $5 per slave,³⁴ and then $2 per slave.³⁵ Senator John Sherman proposed an amendment to change slaves to cotton, with the thought that a tax on cotton would have the same incidence, without troublesome questions over whether slaves were property or persons.³⁶ Sumner, however, objected, claiming sarcastically, "Slaves and cotton belong to the same section of country precisely as alligators and cotton."³⁷ Sherman's amendment was ultimately rejected, 22 to 15.³⁸

Later in the debate, there was a proposal to tax slavery only in those states without an emancipation plan in place.³⁹ However, it was generally thought that this scheme, protective of the border states, would be illegal. There was ultimately a tax on cotton,⁴⁰ but not on slaves. Finally, the Emancipation Proclamation and the Thirteenth Amendment made the issue of a slave tax moot.

A. Horizontal Equity

Horizontal equity concerns were at the heart of the excise tax debates in the 19th century.⁴¹ Since the members of Congress represented geographical constituencies, geographical concerns were vociferously expressed. A tax on gloves was unfair to the town of Gloversville, New York.⁴² A tax on pig iron was unfair to Pennsylvania.⁴³ Everyone professed a willingness to pay a fair share, but not more.

So it was with slave taxes. Of course, a slave tax by its nature would fall only on slaveholders, on slaveholding states, and on economies that depended on slave labor. When the tax was first proposed in 1789, Roger Sherman objected, saying:

Considering it as an object of revenue, it would be unjust, because two or three States would bear the whole burthen, while he believed they bore their full proportion of all the rest.⁴⁴

The tax is a general one; no State in the Union is exempted; it will operate wherever its object can be found. It may be that some States will pay more and some less, but it will be at the option of any State how much, or whether it will pay any of this tax; for it will be just as the State shall please to deal in this article of commerce.⁴⁵

The horizontal equity point was particularly troublesome in 1862. As Senator John Sherman rightly pointed out:

If you attempted to collect this tax on slaves, from whom could you collect it now? Only from the loyal men in the border states -- from no one else. It could affect no one else. You know very well that you cannot collect this tax now from the men from whom you would like to collect it; but it would fall on those from whom you ought not now to collect it -- those who are suffering the most from this war. Persons like the Senator from Kentucky [Mr. Davis], living in the border states, who own this description of property, as they consider it, or who hold this class of persons, as the Senator from Massachusetts considers them, and they alone would suffer from this tax.⁴⁷

Vertical equity concerns, however, made for some strange bedfellows in the 1798 tax. Recall that a fixed levy was assigned to each state. Then, that levy was allocated among the citizens of each state in proportion to their ownership of land, houses, and slaves. In effect, allocating some of a state's burden to slaves meant that the share allocated to the ownership of real estate in that state was correspondingly reduced.⁴⁹ And Congress knew it:

Mr. Jeremiah Smith was aware that a tax on slaves would lighten the tax on land in the Southern States, and therefore he did not wonder at the Representatives from those states wishing it to take place. But by so apportioning the tax, would not the land-holders of the southern states pay less than the land-holders in parts of the Union where no slaves were kept? He believed they would.⁵⁰

C. Compliance

There were obvious compliance problems, especially in 1862, when the ones most likely to own the taxable commodities did not recognize the authority of the taxing government. As Senator Sherman⁵² pointed out, it simply would not do for the United States to take possession of a slave, and sell him for nonpayment of the slave tax. Clearly, such a sale would put the United States in an anomalous moral position.

D. The Economic Argument

The modern economic argument for a slave tax as sin tax would proceed as follows: The exploitation of slave labor by some people causes harm to all people. This harm, and its costs, should figure in the price of goods produced by this exploitation -- cotton and other agricultural products of the slaveholding states. If the market fails to internalize these costs, then the government must do so by levying a tax equal to those costs. If this tax does not completely abolish the behavior, then the government can use the tax revenues to alleviate the harm.

This analysis would pose the following questions:

(1) What is the harm, in money terms?

(2) How, and whom, do we tax?

(3) What do we do with the tax revenues to alleviate the harm?

In 1850, the average value per acre, of land in the Northern States was $28.07; . . . in the Southern $5.34. . . . We conclude, therefore, and we think the conclusion is founded on principles of equity, that you, the slaveholders, are indebted to us, the non-slaveholders, in the sum of $22.73, which is the difference between $28.07 and $5.34, on every acre of Southern soil in our possession. This claim we bring against you, because slavery, which has inured exclusively to your benefit, if, indeed, it has been beneficial at all, has shed a blighting influence over our lands, thereby keeping them out of market, and damaging every acre the amount specified. Sirs! Are you ready to settle the account?⁵³

No legislator even approached this mode of analysis. Luther Martin, during the Constitutional Convention, at least recognized that slavery might benefit some at the expense of all when he said, "Slaves weakened one part of the Union, which the other parts were bound to protect."⁵⁵ As to the cost of slavery, perhaps those who justified a slave tax by arguing that slavery caused the Civil War were implying that the cost of slavery was equal to the cost of the war.⁵⁶ However, there was little direct discourse on cost.

As to whom to tax, there were proposals to tax imports,⁵⁷ slaves,⁵⁸ slaveowners,⁵⁹ and cotton.⁶⁰ Of course, this issue was complicated by the divisive arguments over whether slaves were property or persons. Finally, as to the use of the revenues, there was some thought of compensating former slaveholders for the loss of their slaves.⁶¹ There was much talk of colonization,⁶² but, before the Civil War, very little of reparations.⁶³ In sum, perhaps one can back into some answers, but it is difficult when the right people weren't asking the right questions.

The 18th and 19th century legislators, then, did not address directly the economic issues inherent in slave taxes as sin taxes. Not surprisingly, without asking the questions, they did not answer them very well. Then again, who is to say that we moderns, in our sin tax discourse, have done any better?

E. The Moral Argument

1. The moral case for the taxation of slaves. There were two moral arguments:

• Slavery is immoral, so it must be abolished. Since abolition itself is not legally possible, taxation is the best we can do.
• If we tax other economic enterprise, then we must tax slavery. Failure to do so creates the appearance, and the reality, of putting slavery at a competitive advantage.

He was sorry that the Constitution prevented Congress from prohibiting the importation altogether; he thought it a defect in that instrument that it allowed of such a practice; . . . but as he could not do all the good he desired, he was willing to do what lay in his power.⁶⁴

To impose a tax on imported slaves is the extent of their power; but every one must see that it is infinitely disproportionate to what the morality, the interest, the peace and safety of individuals and of the public at this moment, demand. And though in regard to their present case the power of the General Government may be insufficient to check the mischief, yet I hope they are disposed to discourage it, as far as they are authorized by the Constitution.⁶⁵

In laying this tax we are only exercising the power which the Constitution confers. Nor can the Constitution or our statute books be stained by Congress doing that which the Constitution itself empowers. Deeming the importation an evil, we shall, by laying this tax, do all in our power to diminish it, and, to the extent of our ability, extract the little good it is capable of providing. In making these remarks I am not the mere moralist, or the visionary speculatist. I consult the Constitution, and am governed by its language. As the Constitution acknowledges the right of a State to admit the importation of slaves, I also acknowledge it; and as the same Constitution vests us with the right of taxing them, I consider that also to be proper.⁶⁶

. . . if all imported articles are to be taxed, then surely the importation of slaves should be taxed. If not, there would be a "bounty" on the importation of slaves.⁶⁷

I said I was inclined to apprehend at times that the nation was in danger of being ruined by its morality, but I will tell you how I am relieved from that fear. By this system of legislation morality seems to me to be discouraged, discountenanced, because if you refuse to put this $20,000,000 on this kind of property, or this substitute for property, or this relation, or whatever you call it, this vice, this immorality, you have got to put it on something that is not immoral, is not a vice; you have got to impose it on the virtue of the nation, on the morality of the nation; they have to make up the deficiency. I respectfully submit to the Senators that I do not believe the morality of the nation will stand it.⁶⁸

• We should not be making moral statements at all
• Rather than dealing indirectly with the problem through taxation, we should address it directly by
  • Abolishing it
  • Adopting resolutions of the legislature disapproving of slavery
• Taxing slavery will not work
• Collecting a tax on slavery is unseemly, for it implies
  • Recognition and approval
  • An obligation to protect
  • A partnership with the forces of evil
  • A dependency on slave tax revenues

With regard to the moral principle involved in the slave trade, we have nothing to do with it. On this point the Union ought to be silent.⁶⁹

When I am ready to meet the question of emancipation, I want to do it in a bold and direct manner. It may be that before this war closes the question of emancipation may come upon us; and whenever I think this Union cannot be preserved except by proclaiming the emancipation of slaves, I will ask to do it by act of Congress, or I will sustain the President in making emancipation effectual; but I will not do it in an indirect way under the power of taxation. I do not think that either expedient, politic, or constitutional.⁷⁰

I hope this House will discourage the impolitic set of the Legislature of one of the Southern States [South Carolina's decision to allow importation], not by imposing a tax on those unfortunate people imported into the United States, but by passing a resolution expressive of its disapprobation of all acts permitting the importation of certain people into the United States.⁷¹

. . . was as hostile to the slave trade as any man in the Union; and if he could believe that a tax of ten dollars upon every imported negro would end the importation, we would vote for it. But he believed the resolution would have a different effect, and would rather sanction than discourage the trade.⁷²

Thomas Lowndes agreed, in an earlier session:

Mr. Speaker, I cannot vote for this resolution, because I am sure that it is not calculated to promote the object which it has in view. I am convinced that the tax of ten dollars will not prevent the introduction into the country of a single slave. Gentlemen must be sensible of the truth of this observation, when they are informed, and the fact is too notorious to be doubted, that, notwithstanding the expense and risk which attend an illicit trade, they have been introduced in very great numbers.⁷⁴

No one could suppose him favorable to slavery; he detested it from his soul; but he had some doubts whether imposing a duty on the importation would not have the appearance of countenancing the practice.⁷⁵

When a Government, by laying taxes, derives a revenue from a trade, and by that amount participates in the profits and the guise of it, it is in my opinion giving an approbation of it.⁷⁶

It will appear to the world that Congress are raising revenue from a commerce in slaves. I am not for introducing such a law, calculated to have this impression, on our statute books. Were it in our power to prohibit the trade, there is not, I trust, a member on this floor that would not unite in the prohibition. But on this point, our hands are tied. We can only avail ourselves of the trade as a subject of revenue. The sum likely to be raised from this tax may be as great as has been mentioned; but if the raising of it be connected with the passage of a law that recognizes a traffic in human flesh, so far as fixing the point at which it may be freely carried on, will have this effect, I, for one, must protest against it.⁷⁷

The avowed object of the proposed tax was to show the hostility of Congress to the principle of the importing slaves. How would this opposition of Congress be manifested, when it would become the duty of the armed ships of the United States, as soon as the tax was imposed, to protect that trade, as well as all other trade on which taxes were laid? He asked whether vessels engaged in this trade would not, under such circumstances, possess the same right to the protection of the Government as any other vessels engaged in any other kind of trade?⁷⁸

As to the expediency of the measure, will it be of any advantage to the United States to lay this tax? Will they not by laying it pledge the United States to protect the trade? Is not the principle correct that taxation and protection are reciprocal? He had always understood this to be the case, and if it was, would not the General Government, by the imposition of this tax, pledge themselves to protect the trade? If then we are not prepared to protect the trade shall we undertake to draw revenue from it?⁷⁹

I do not know how we are going to tax an interest that we would not protect. If you propose to tax an interest in this country, I suppose you intend to protect that interest.⁸⁰

If the tax will not prohibit the trade, upon what principle can it be passed or justified? Can it be passed with the view of bringing into the public coffers a certain sum? Is it from so impure a fountain that streams are to flow to enable the Government to meet the national emergencies? If this is the object, I will put a striking case. Suppose all of the expenses of the Government of the United States would be defrayed by a tax on the slave trade, would gentlemen grasp it on this account? Would they agree that a nation of freemen should support their government by a tax on slaves? Would they proclaim to the world that a free nation existed by slavery?⁸¹

• Taxes do not imply recognition and approval of slavery. In fact, slavery is already recognized, so all that taxes can do is to imply disapproval of the fact of slavery.
• We are already committed to protect all legal commerce. Taxation adds nothing to that commitment.

Mr. M. then replied to an argument from the gentleman from North Carolina (Mr. Macon) that the imposition of the tax would be a recognition of the right to trade in slaves, and bind the nation to protect it with the force of the Navy. He considered slavery already recognized in many of the states, and permitted by the Constitution. It was a fact that it did exist, and Congress could not put an end to it. But this body might interpose its authority and discountenance it as far as possible; and by laying the duty as high as the Constitution permitted, a very desirable addition would be made to the revenue.⁸²

Gentlemen say the proposed tax will legalize the trade, and render it the duty of the United States to protect it. This argument is conclusively answered by asking whether any vessel sailing under the flag of the United States and pursuing a lawful commerce, is not entitled to the protection of the Government? By asking whether a vessel sailing to the coast of Africa, and there kidnapping Negroes, under the authority of a State, is not as much entitled to protection as any other vessel, however differently engaged? On this point our laws know of no distinction. All vessels, engaged in unforbidden traffic, are entitled to the same protection. So that we shall not, by imposing this tax, legalize the trade, to any further extent than it is already legalized by the existing state of things.⁸³

But nobody questions the existence of slavery. It is a monstrous fact, beyond our reach in the States, except through the war power, and yet none the less a fact, which taxation will only recognize, and not sanction. It is an intolerable nuisance intrenched in State lines; but we shall not treat it otherwise than as a nuisance when we tax it. In taxing it we do not assume its rightfulness. We only assume its undeniable existence as a fact, and nothing else.

If our tax were in the nature of an encouragement, it would be clearly immoral. But it will be a discouragement. Exemption from taxation is encouragement. Taxation is discouragement just in proportion to its extent, until, in the progress of events, it becomes destructive. Looking at the present question in light of this principle, our course is plain. It is not permissible that we should encourage slavery, while every principle of economy and every sentiment of justice and humanity urges its discouragement.⁸⁴

So who had the better argument? It is hard to tell, since so much of the argument was at cross purposes. The two sides did, however, cross swords directly on one issue -- phrased variously: Do taxes encourage or discourage the taxed activity? Do taxes imply an obligation on the part of the government to protect, or not?

A. Taxation as Discouragement

It is important to separate the behavioral response to taxation from the message taxation sends. As to behavioral response, it seems reasonably clear that taxpayers tend to do less of a taxed activity, as the taxes go up.⁸⁵ As to governmental messages, things are less clear. Are we to consider the message received, or only the message intentionally sent?

It seems highly unlikely that broad-based taxes, such as income taxes and sales taxes, have inherent messages -- either sent or received. Surely, few among us believe that a tax on income is a legislative statement that income is bad.⁸⁶ Narrow excise taxes, however, are something else again. Why, indeed, are gloves, or slaves, isolated for taxation when other commodities or activities are not? Can we deduce that these activities are to be condemned? Probably not. In most cases, the government levies excise taxes because that's where the money is. However, when the government makes direct statements about its reasons for taxation, we should be allowed to believe them. If the government says that we are taxing sin because it is sinful, they probably mean it.

So where does the argument lie? Does taxation discourage the taxed activity? Behaviorally, it discourages it. As a matter of legislative message, it discourages it only if the legislature says so directly.

B. Taxation as Encouragement

Does taxation ever encourage the taxed activity? Surely never, in terms of behavioral response. Surely never, in terms of direct legislative statements. Taxation does, however, recognize the taxed activity, and it might even legitimize it. If we tax slavery, then surely we are estopped from denying its existence. Moreover, we thereby grant it status as a category of serious, commercial, taxable enterprise -- like income, tobacco, and gloves.⁸⁷

Does taxation imply an obligation to protect? Yes, in the sense that the government protects serious, commercial, taxable enterprises. Arguably yes, also, because, if government justifies taxation on the ground that it should be paid for protecting its citizens and their activities,⁸⁸ then it follows that it should not tax that which it will not protect.

Should sin taxes be abolished, then, because they imply recognition and protection of the taxed activities? No, as long as the government is careful to tell us why it levies the tax. One would think that direct legislative statements against sin would trump whatever pro-sin inferences one might draw.

C. So Who Won?

Despite my feeling that the pro-sin-tax forces won the one argument when the issue was joined, I still feel that the anti-sin- tax crowd wins the day -- in this century, and in previous ones. I begin, in an increasingly heterogeneous society, with a great reluctance to see the government legislate morality. Even in those cases in which governmental intervention might be appropriate, I still would prefer some approach other than taxation. The tax code is in enough trouble already, without further adventures in social engineering, far more likely to offend and divide the taxpayers than they are to achieve their stated purpose.

Finally, although I am not overly concerned about the perception of an unseemly partnership between government and sinner, I am concerned about the reality. In an age of declining public funds, there is a real danger that governments will develop a dependency relationship with anything that might generate needed tax revenue. Such a dependency can arise even for activities the government claims to abhor.⁸⁹

Our market economy is far from perfect. Sometimes not all social costs are figured in the market price of a commodity. Unfortunately, taxes cannot fix that. Our morality is not perfect either. Sometimes, commodities and activities that some of us deem immoral are traded and practiced. Unfortunately, taxes cannot fix that, either. What is more, any attempted fix is far more likely to harm the tax system than it is to improve either our economy or our morals.

It is probably just as well that we never did enact a federal slave tax as a sin tax. Then again, it is probably a good thing that we at least talked about it.

Pennsylvania may have taxed slavery on sin tax grounds. See W.E.B. DuBois, The Suppression of the African Slave Trade 20-24 (Russell & Russell 1965) (1898).

² Although there is considerable overlap between the set of rich people and the set of sinners, the two are not identical.

³ Excise taxes were considered far less intrusive than income taxes. The British introduced their schedular system at least in part on similar privacy grounds. See John Tiley, Revenue Law, 3d ed. 39 (1981). The New York state Chamber of Commerce, in a report to the U.S. Congress, said the following about an income tax, which they characterized as "already odious to the people before its operation has been felt":

Besides all the other objections to which it is liable, its inquisitorial character is such as must always render it odious, however trifling may be the amount abstracted. "The New Scheme of Government Taxation," 16 Bankers Magazine, 916 (Apr. 24, 1862).

Excise taxes are also relatively painless. Justin Morrill, Chair of the Ways and Means Committee, said in 1862:

Seeking to avoid all extremes, the committee have thought best to propose duties upon a large number of objects, rather than confine them to a narrow field, and thereby be forced to make them excessive in amount, and for that reason entirely unreliable. Cong. Globe, 37th Cong., 2d Sess. 1195 (1862).

However, levying some excise taxes can create a horizontal equity argument for levying even more excise taxes. If we have already decided to tax overcoats, galoshes, scarves, and mittens, then don't we have to tax gloves? Wouldn't failure to tax gloves then be an unwarranted subsidy on the glove industry and glove wearers?

⁵ Senator Harris of New York was quite concerned about the impact of an excise tax on leathers on his constituents in Gloversville, N.Y. Cong. Globe, 37th Cong., 2d. Sess. 2400 (1862). For a discussion of the relative fairness and unfairness, in geographical and horizontal equity terms, of various commodities, see Cong. Globe, 37th Cong., 2d Sess. (1862) at 1405 (iron) 1405- 6, 1408 (coal) 1406 (pig iron). See generally Congressional Budget Office, Federal Taxation of Tobacco, Alcoholic Beverages, and Motor Fuels (1990); Joel Newman, "The Whiskey Rebellion Was a Regional Dispute, and It Still Is," Tax Notes, Sept. 10, 1990, p. 1423.

⁶ See generally Federal Excise Tax Structure, Panel Discussion Before the House Ways and Means Committee, 88th Cong. 2d Sess. 39 (statement of Professor Douglas Eldridge).

⁷ For early arguments that a duty on salt was a regressive duty, falling disproportionately on low-income groups, see Einhorn, supra note 3, at 165; Annals of Cong., 12th Cong., 1st sess., 1118-1124 (1812). For a discussion of the carriage tax, which was an early version of a luxury tax, see infra note 41. Notions of luxury change. In 1789, Fisher Ames of Massachusetts proposed duties on "china, crockeryware, and gunpowder, all of which he considered to be luxuries. Annals of Cong., 1st Cong. 1st Sess. 349 (1789). On luxury taxes generally, see Joel Newman, "Ex-Lux," Tax Notes, Apr. 13, 1992, p. 253.

⁸ See generally Norman Ture, "Social Policy and Excise Taxes," Tax Notes, Aug. 15, 1988, p. 737.

⁹ Alternatively, the automobile manufacturers might keep automobile prices constant and pocket the profits. This reaction, admittedly unlikely in a competitive industry, would have equally distortive effects.

¹⁰ Private litigation damages might have the same effect on both counts. See generally Graduated Cigarette Tax, Hearings before the House Ways and Means Committee, 83rd Cong. 1st Sess, for all sorts of arguments against the above analysis.

The second effect occurs only if the legislature has the discipline to earmark the tax revenues for this purpose. Few legislatures have this discipline.

¹¹ "An unlimited power to tax involves, necessarily, the power to destroy." McCulloch v. Maryland, 17 U.S. 316, 327 (1819). Then again, perhaps high taxation will simply drive the activity underground.

¹² The Supreme Court noted that we had to tax unlawful income " . . . to remove the incongruity of having the gains of the honest laborer taxed and the gains of the dishonest immune." James v. United States, 366 U.S. 213 , 218 (1961).

¹³ The British version of this argument is "His majesty's government does not share in the profits of prostitutes." I have had trouble tracking down this quote, but I believe it relates to the time when the British Government rented crown property to houses of ill repute.

For an American version of this argument see Steinberg v. United States, 14 F.2d 564, 566 (2d Cir. 1926): "The moral degradation, arising from the endeavor by law to collect a necessarily lawful tax out of occupations by equal necessity unlawful, corrupting, and immoral, may well give one pause"; and in Judge Manton's concurring opinion:

It is hard to conceive of Congress ever having had in mind that the government be paid a part of the income, gains, or profits derived from successfully carrying on this crime, or entering into a combination with the person engaged in this unlawful business to ascertain how and to what extent he shall be taxed. 14 F.2d at 569.

¹⁴ "Moral turpitude is not a touchstone of taxability." James v. United States, 366 U.S. 213, 226 (1961) (concurring opinion of Mr. Justice Black). If the taxed activity is criminal, and the tax itself is too punitive, then double jeopardy questions arise. See Dept. of Revenue of Montana v. Kurth Ranch, 511 U.S. 767 (1994). See generally Leo Martinez, "Taxes, Morals, and Legitimacy," 1994 B.Y.U. L. Rev. 521.

In this regard, fines and imprisonment for carrying on the slave trade are much more defensible than taxation. See 18 U.S.C. section 1582.

¹⁵ In 1782, Robert Morris proposed a poll tax of one dollar on all male slaves between the ages of 16 and 60, but it got nowhere. John Catanzariti and E. James Ferguson, eds., 6 The Papers of Robert Morris 65 (1984). It became abundantly clear that the slavery issue was extremely divisive. Compromise was essential, if there was to be a union at all. Consider John Lynch's statement in the 1776 attempt to draft Articles of Confederation, on behalf of his South Carolina constituents: "If it is debated, whether their Slaves are their Property, there is an end to the Confederation." Einhorn, supra note 3, at 159.

¹⁶ U.S. Const. Art. I section 2.

¹⁷ U.S. Const. Art. I, section 9 applied the same apportionment rule to direct taxes and capitation taxes. John Rutledge of South Carolina actually first proposed using three-fifths of the slaves to apportion taxes in 1783. Einhorn, supra note 3, at 163.

¹⁸ Mr. King asked what was the precise meaning of direct taxation. No one answered. Madison's Notes of Debates in the Federal Convention of 1787 (N.Y. 1987) 494. See generally Bruce Ackerman, "Taxation and the Constitution," 99 Colum. L. Rev. 1 (1999).

¹⁹ U.S. Const. Art. I section 9. If importation of new slaves were to cease, then the price of the slaves already here would go up. States like Virginia, who were thought to make more money selling slaves than using them, would profit.

²⁰ Id.

²¹ Einhorn, supra note 3, at 165, Annals of Cong. 1st Cong., 1st Sess. 349-355 (1789).

²² Annals of Cong., 1st Cong., 2d Sess. 1224 (1790).

²³ The only significant discussion can be found at Annals of Cong., 5th Cong. 2nd Sess. 2058-2061. There was no discussion of sin taxes.

²⁴ Act of July 9, 1798, ch. 70, "An Act to provide for the valuation of lands and dwelling-houses, and the enumeration of slaves within the United States" Einhorn, supra note 3, at 179.

²⁵ Act of April 6, 1802, ch. 19, "An Act to Repeal Internal Taxes" 2 U.S. Statutes at Large 148-150.

²⁶ Annals of Cong., 8th Cong., 1st Sess. February, 992. (1804).

²⁷ "Had I been informed that some formidable foreign power had invaded our country, I would not, I ought not, be more alarmed than on hearing that South Carolina had repealed her law prohibiting the importation of slaves." Annals of Cong., 8th Cong., 1st Sess. 820 (1804) (David Bard of Pennsylvania).

²⁸ Act of July 22, 1813, ch. 16, "An act for the Assessment and Collection of Direct Taxes and Internal Duties section 5" 3 U.S. Statutes at Large 22, 26. The only significant discussion found was at Annals of Cong., 13th Cong. 1st Sess., House, 319-328. Sin tax issues were not mentioned.

The change from fixed valuation to actual valuation reflects the most significant issue in state slave taxes. See, e.g., Donald Butts, supra note 1.

²⁹ 3 Statutes at Large 164 (1815); 3 Statutes at Large 255 (1816); 3 Statutes at Large 401 (1817).

³⁰ However, there was a failed attempt to finance the Mexican War in part on slave taxes. Kevin Outterson, supra note 1 at n.115; Sidney Ratner, Taxation and Democracy in America 44 (1942).

³¹ Hinton Rowan Helper, The Impending Crisis of the South and How to Meet It (1857) 178.

³² Cong. Globe, 37th Cong., 2d Sess., 2401 (1862) (Sen. Charles Sumner, N.Y.).

³³ Apparently, the Senate Finance Committee approved in principle. Id at 2402. It was quickly agreed that parents who used the labor of their children should be exempt. Id. at 2403.

³⁴ Id. at 2402.

³⁵ Id. at 2406.

³⁶ Id. at 2403 (John Sherman of Ohio).

³⁷ Id. at 2403.

³⁸ Id. at 2407.

³⁹ Id. at 2407.

⁴⁰ Id. at 2540-2541 for discussion of cotton.

⁴¹ Remember that the three-fifths compromise itself could be described in horizontal equity terms. Is it fair to levy a larger share of direct tax allocations on a slaveholding state? This concern was thought to be largely moot in 1789. However, in 1796, it became potentially more real. Hylton v. United States, 3 U.S. 171 (1796), held that a carriage tax could be constitutionally levied without apportionment. Many in the South were greatly concerned, for fear that Hylton v. United States paved the way for a constitutionally legal slave tax, which would in turn be the first step toward the abolition of slavery. See Einhorn, supra note 3 at 169-173 for discussion of Hylton. See also Bruce Ackerman, supra note 18.

⁴² Cong. Globe, 37th Cong., 2d Sess. 2400 (1862).

⁴³ Cong. Globe, 37th Cong., 2d Sess. 1406-1407 (1862).

⁴⁴ Annals of Cong., 1st Cong. 1st Sess. 351 (1789) (Roger Sherman of Connecticut). In 1804, Thomas Lowndes of South Carolina had a similar objection: But, Mr. Speaker, my greatest objection to this tax is, that it will fall exclusively on the agriculture of the State of which I am one of the Representatives. Annals of Cong., 8th Cong. 1st Sess. 993 (1804).

⁴⁵ Annals of Cong., 8th Cong., 1st Sess. 994 (1804).

⁴⁶ Annals of Cong., 1st Cong., 1st Sess. 224 (1789).

⁴⁷ Cong. Globe, 37th Cong., 2d Sess. 2402 (1862) (John Sherman of Ohio).

⁴⁸ Note 41 supra.

⁴⁹ John Page, also of Virginia, made the curious comment that one paying relatively high land taxes in a nonslaveholding state could at least garner the satisfaction "that his state was free from that evil." Annals of Cong., 4th cong., 2nd Sess. 1939. (1797). Einhorn, supra note 3 at 182.

⁵⁰ Annals of Cong., 4th Cong., 2d Sess. 1935 (1797).

⁵¹ Annals of Cong., 5th Cong., 2nd Sess. 2058- 2061. See also Einhorn, supra note 3 at 179.

⁵² Id.

⁵³ Hinton Rowan Helper, supra note 31 at 124.

⁵⁴ Id. at 156.

⁵⁵ Jonathan Eliot, Debates, 2d ed. 457 (1996).

⁵⁶ Cong. Globe, 37th Cong., 2d Sess. 2402 (1862) (Senator Charles Sumner of Massachusetts); see also, "The Treasury Report," The New York Times, July 8, 1861.

⁵⁷ Supra notes 21, 22.

⁵⁸ Supra note 23, 28.

⁵⁹ Supra note 32.

⁶⁰ Supra note 36.

⁶¹ In 1790, Representative Jackson asked, "I would beg to ask those who are desirous of freeing the Negroes, if they have funds sufficient to pay for them?" Annals of Cong., 1st Cong., 2d Sess. 1228 (1790). President Lincoln also favored paying for freed slaves. Carl Wieck, Lincoln's Quest for Equality, 136 (2003).

⁶² William Richardson of Illinois proposed that 2 percent of the 1862 tax revenues be used to provide land for freed slaves. Cong. Globe, 37th Cong., 2d Sess. 1217 (1862). See also Act of April 16, 1862, ch. 54; 12 U.S. Statutes at Large 376; Act of July 16, 1862, ch. 182; 12 U.S. Statutes at Large 582, both providing funds for colonization of slaves freed from the District of Columbia.

⁶³ For post-Civil War reparations proposals, see, e.g., S. 60, 39th Cong., 1st Sess. (1866), and Cong. Globe, 40th Cong., 1st Sess. 203 (1867). See Kevin Outterson, supra note 1, for modern proposals for reparations.

⁶⁴ Annals of Cong., 1st Cong., 1st Sess. 349 (1789) (Josiah Parker of Virginia).

⁶⁵ Annals of Cong., 8th Cong., 1st Sess. 819 (1804) (David Bard of Pennsylvania).

⁶⁶ Id. at 1009 (John Lucas of Pennsylvania).

⁶⁷ Eliot's Debates 459 (James Wilson of Pennsylvania). Also, Mr. Mason said during the Constitutional Convention, "Not to tax will be equivalent to a bounty on the importation of slaves." Quoted at Cong. Globe, 37th Cong. 2d Sess. 151 (1862). Two congressmen from Pennsylvania in 1804 were similarly concerned. Annals of Cong., 8th Cong., 1st Sess. 1025 (1804). Thomas Lowndes attributes these feelings to Mr. Gregg and Mr. Smilie.

⁶⁸ Cong. Globe, 37th Cong., 2d Sess. 2405 (1862) (Timothy Howe of Wisconsin).

⁶⁹ Annals of Cong., 8th Cong., 1st Sess. 1006 (1804) (Benjamin Huger of South Carolina).

⁷⁰ Cong. Globe, 37th Cong., 2d Sess. 2402 (1862) (John Sherman of Ohio).

⁷¹ Annals of Cong., 8th Cong., 1st Sess. 1003 (1804) (Thomas Moore of South Carolina).

⁷² Id. at 997 (George Bedinger of Kentucky).

⁷³ Id. at 1003 (Thomas Lowndes of South Carolina).

⁷⁴ Id. at 992-993.

⁷⁵ Annals of Cong., 1st Cong., 1st Sess. 351 (1789) (Fisher Ames of Massachusetts).

⁷⁶ Id. at 1025.

⁷⁷ Id. at 1029 (Roger Griswold of Connecticut).

⁷⁸ Id at 998 (Nathaniel Macon of North Carolina).

⁷⁹ Id. at 1007 (James Holland of North Carolina).

⁸⁰ Cong. Globe, 37th Cong., 2d Sess. 2405 (1862) (Samuel Pomery of Kansas).

⁸¹ Annals of Cong., 8th Cong., 1st Sess. 1033 (1804) (Caesar Rodney of Delaware).

⁸² Id. at 1002 (Samuel Mitchill of New York).

⁸³ Id. at 1032. Alas -- there were members of Congress named Jackson from both Georgia and Virginia.

⁸⁴ Cong. Globe, 37th Cong., 2d Sess. 151 (1862) (Charles Sumner of Massachusetts).

⁸⁵ Admittedly, as to income taxation, there is the substitution effect, and the income effect, which have opposite consequences. However, I am not convinced that both effects exist when one is taxing sin. Higher income taxes might well inspire some to earn more dollars so that they still have enough dollars after tax. Higher cigarette taxes, however, will not inspire anyone to buy more cigarettes so that they have more cigarettes after tax. Income dollars and tax dollars are exchangeable. Cigarettes and tax dollars are not.

⁸⁶ There are those who propose spending taxes, however, at least in part to communicate the notion that spending is bad.

⁸⁷ Does our failure to tax imputed income from household services demean housework in an inappropriate way? See Nancy Staudt, "Taxing Housework," 84 Geo. L. J. 1571 (1976); see also Katharine Silbaugh, "Turning Labor into Love: Housework and the Law," 91 NW U. L. Rev. 1 (1996).

⁸⁸ See Cook v. Tait, 265 U.S. 47 (1924).

⁸⁹ See Profile: States Becoming More Dependent on Cigarette Taxes (NPR radio broadcast, June 17, 2003).