Tax Analysts®Tax Analysts®

Article Archive

October 4, 2002
The Taxing Power, the Sixteenth Amendment, and the Meaning of 'Incomes'
Erik M. Jensen

Full Text Published by Tax AnalystsTM

The Taxing Power,
The Sixteenth Amendment,
And the Meaning of 'Incomes'

By Erik M. Jensen

                          Table of Contents

  I. The 1894 Income Tax and Its Predecessor

 II. On to the Sixteenth Amendment

     A. To Amend or Not to Amend

     B. The Amendment Language: Taxes on Incomes

     C. What's an Income Tax?

III. A Wealth Tax Isn't an Income Tax

Hardly anyone these days believes that the Sixteenth Amendment imposes a substantive limitation on congressional power, and the Amendment reads as if it were a grant of, not a restriction on, power: "The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration."1

On its face, however, the Amendment isn't an unlimited expansion of the taxing power. It was a response to the Income Tax Cases (Pollock v. Farmers' Loan & Trust Co.),2 and it exempts only "taxes on incomes" from the apportionment rule that otherwise applies to direct taxes.3 In a famous 1920 dissent, Justice Holmes wrote that "[t]he known purpose of this Amendment was to get rid of nice questions as to what might be direct taxes,"4 but Holmes provided no evidence or authority to support that proposition. Professor Owen Fiss's narrow interpretation comes closer to explaining the Amendment's text: "it simply removed what appeared to be a technical objection or impediment that [the Income Tax Cases ] had posed to the income tax."5

In this article, I examine the history of the Sixteenth Amendment to determine how the term "taxes on incomes" was understood by the drafters and ratifiers. From the beginning, supporters of the modern income tax stressed that it was necessary to tie taxation to ability to pay -- to ensure that the wealthy would pay their fair share of the nation's tax liability. By taxing more than what was spent on consumption and, as a result, reaching the wealthy in a way that tariffs didn't, the income tax was considered fundamentally different from a tax on consumption.

I conclude that an income tax and a consumption tax are, as a constitutional matter, different kinds of levies, and that the Sixteenth Amendment was intended to exempt only "taxes on incomes" from apportionment, not to repeal the direct-tax clauses. Those conclusions have contemporary relevance. If a tax is direct but isn't "on incomes," it should still have to be apportioned. As a result, if an unapportioned direct tax falls only on consumption, say, or only on wealth, the tax cannot derive any legitimacy from the Amendment.

I. The 1894 Income Tax and Its Predecessor

Arguments made in debates on the 1894 income tax were, in substance, no different from those that would be made, after the Supreme Court rejected that tax, in promoting and resisting the Sixteenth Amendment. Controversies from the early 1890s until ratification in 1913 can be seen as a continuing discussion about the role income taxes should play in the United States. And that controversy illuminates the meaning of "taxes on incomes."

The debate really began at the end of the Civil War, which had been funded in part by the first national income tax, a graduated tax applying to incomes over $600.6 Enacted in 1862, the tax was an emergency measure.7 But it had some inherent appeal8 -- it supplemented the consumption tax system with a "tax that bore a closer relationship to 'ability to pay' than did tariffs and excises"9 -- and it survived, in modified form, until 1872.10

It could have lasted longer. Some congressmen wanted to make the income tax a permanent part of the national system. Ohio Senator John Sherman, for example, made several strong statements in support of retaining the Civil War tax. To the embarrassment of Sherman, who opposed the 1894 tax,11 those statements were repeated by tax supporters in 1894: An income tax is fair, it reaches the wealthy, and it doesn't have the unfortunate effects of consumption taxes.12 In one often-quoted speech, Sherman said the public

    is not yet prepared to apply the only key to a genuine revenue reform. A few years of further experience will convince the body of our people that a system of national taxes which rests the whole burden of taxation on consumption, and not one cent on property or income, is intrinsically unjust. . . . [T]he consumption of the rich does not bear the same relation to the consumption of the poor as the income of the one does to the wages of the other.13

Whatever its intellectual justification, the Civil War tax expired because by the early 1870s tariffs were bringing in enough to keep the country going. But good economic times didn't last. The period between the 1872 expiration of the Civil War tax and the enactment of the 1894 income tax saw several panics and depressions, including one in 1893 (which gave a sense of immediacy to the 1894 debates). That period nevertheless also saw an astonishing accumulation of wealth by some very visible Americans. The contrast between wealth and suffering was one of the reasons several radical political parties, including the People's (Populist) Party, were created in the late nineteenth century.14

The 1894 income tax is often called a populist measure,15 and the People's Party was in the forefront of the income tax movement. In 1892, the platform of the party proclaimed, "We demand a graduated income tax."16 The reason for the plank was obvious: Populists thought the wealthy weren't paying their fair share under the tariff regime. Populist Senator William Peffer of Kansas said bluntly: "We propose to equalize taxation as far as it is possible to do so, and we propose to make the wealth of the country bear its just and fair proportion of the taxes of the country."17

The income tax had populist antecedents and populist support; no similar plank had appeared in the Democratic and Republican platforms. But the People's party didn't have enough power to get its way without help, and the idea of an explicitly graduated tax fell by the wayside quickly. The allure of an income tax was nevertheless unmistakable to many members of the old-line parties, particularly Democrats, who had taken control of both Houses of Congress and who saw an opportunity for party realignment.18 Consumption taxes like tariffs were thought to be shifted to purchasers,19 and, if that was right, a poor man bore the same tax burden in buying a bag of sugar as did a rich man. The tax burdens, that is, had nothing to do with respective abilities to pay the taxes, and that wasn't fair.

Democratic Representatives Benton McMillin of Tennessee, chairman of the Ways and Means Subcommittee on Internal Revenue and a longtime proponent of income taxation, and the already legendary William Jennings Bryan of Nebraska recommended a 2 percent tax on incomes of $4,000 or more. That proposal, with differences in detail, in many ways mirrored the Civil War income tax, and it survived the subsequent legislative wrangling as an amendment to a major tariff revision bill.20

The difference between an income tax and a consumption tax -- one's consistent with ability to pay, one's not -- was stressed throughout the debates. McMillin explained the legislation in this way:

    I ask of any reasonable person whether it is unjust to expect that a small per cent of this enormous revenue shall be placed upon the accumulated wealth of the country instead of placing all upon the consumption of the people. . . . And yet when it is proposed to shift this burden from those who can not bear it to those who can; to divide it between consumption and wealth; to shift it from the laborer who has nothing but his power to toil and sweat, to the man who has a fortune made or inherited, we hear a hue and cry raised by some individuals that it is unjust and inquisitorial in its nature. . . . 21

The wealthy weren't paying their share because of the form American taxation had taken -- taxes on consumption. High- and low- income people who, McMillin posited, spend about the same on necessities "pay the same taxes to the Government, because taxes are to be paid upon what they consume!"22

Many other congressmen, like Senator Henry Teller of Colorado, made the same questionable point, that the rich were paying no more than the poor under the tariff system: "The man who holds millions of dollars' worth of property pays no more, perhaps, under the general taxes levied upon consumption than the man who has not any property."23 Other income tax supporters went further, suggesting the rich might even have been paying less than the poor. Populist Senator Omer Ken of Nebraska, for example, compared a poor man who consumes his entire income providing necessities for his family to a miser who owns a thousand times as much property but spends almost nothing:

    Since each is taxed in proportion to the amount he consumes, it can readily be seen that this poor man will contribute ten times as much to the support of the Government as this old bachelor millionaire, although the latter receives from the Government protection for one thousand times as much property as the former. . . . Should not this burden be shifted from the shoulders of the man who is struggling to feed, clothe, and educate his family to the shoulders of the financial giant who is more than able to bear it?24

It's hard to imagine that on the average, the rich weren't paying far more in tariffs than the poor, something opponents of the income tax pointed out.25 But, silliness aside -- opponents provided their absurd examples, too26 -- the income tax supporters made an important point: A rich man with 10 times the income or wealth of a poor man might pay more in consumption taxes, but he probably didn't pay anything close to 10 times as much.27 Assuming the burden of tariffs was shifted to consumers, the poor man almost certainly paid a higher percentage of his income and wealth in taxes than did the rich, as Senator Sherman had posited in 1872. And, said McMillin, the relative burdens on the poor had been growing: "The taxes having continually increased upon consumption, and no corresponding increase having been placed upon accumulation, we see such colossal fortunes amassed as were never concentrated in any other age or in any other country of the world."28

Having the wealthy pay more to support the government was thought to be fair in itself, but there were other reasons why tax obligations should be connected with ability to pay. For one thing, income tax supporters believed the rich were rich because of what government had done, and it was payback time to Uncle Sam. Stated Michigan Representative George Richardson: "I favor the income tax because it is asking a contribution of those citizens of the country who have accumulated great wealth and enjoy large incomes by reason of special privileges afforded by legislation."29 Moreover, the wealthy received more from government -- the value of protecting property, for example, goes up with the value of property protected, or so it was said -- and income tax proponents argued that the wealthy should have to pay for the extra services.

Finally, the case for an income tax had a civic-virtue component. Some thought participation in politics by the wealthy was skewed by their disproportionately low tax bills. As Representative Josiah Patterson of Tennessee not very persuasively explained:

    It would be ideally just and equitable to make the separate incomes of all the citizens contribute accordingly as they have prospered, to make up at least in part the aggregate income required to maintain the Government. . . . Under the system now existing, where all revenues of the Government are raised by means of taxes imposed on articles of daily consumption, the reverse is the case. Those who own wealth are not only exempt from the imposition of public burdens, but they are reckless and extravagant in all public expenditures.30

If the wealthy had to pay more in taxes, the argument went, they would pay more attention to government and help curb its excesses.

The constant theme advanced by income tax supporters was that, to conform to ability-to-pay standards, tax law had to relieve burdens on consumption. The Ways and Means Committee report made the point like this: "The wealth of this country amounts to more than $65,000,000,000, and the question arises whether it is not just and fair that a portion of this money should be raised by a tax on the earnings of wealth instead of imposing it all, or nearly all, on consumption."31

The evidence is overwhelming. Populist Representative T. J. Hudson of Kansas argued, for example, that the income tax "relieves from taxation very largely the necessities consumed by the poor and struggling masses and places at least a portion of the burdens upon superfluity." The governing principle is that "superfluous wealth, instead of the necessities of life, shall pay the taxes necessary to support the Govenrment [sic]."32

A sampling of quotations will demonstrate how pervasive the discussion about the distinction between income taxes and consumption taxes was in the 1894 debates:

Representative Henry A. Coffeen (Wyoming): "The tariff method of taxation is aptly termed a tax on the wants or necessities of the people, for it is paid generally unconsciously in the shape of an increase of the price on nearly all necessary articles that the people must buy."33

Representative David A. De Armond (Missouri): "The income tax is a levy upon the full purse, upon the riches in the strong-box of wealth."34 De Armond was "in favor of taxing wealth according to its abundance rather than poverty according to its necessities."35

Representative Clifton R. Breckinridge (Arkansas):

    You can tax, as we do under our existing tariff and excise system, the consumption of the people, the necessaries of life, and the luxuries of life, and if a man be but a farthing above the point of starvation, under a system which taxes consumption we impose a burden upon him. But under this system what a man has above what he spends pays no Federal tax at all. In taxing incomes we pursue a far more enlightened policy.36

Senator George G. Vest (Missouri): "The theory of the income-tax law . . . is that the citizen pays upon consumption under the present system of taxation in the United States. In my judgment it is an unjust and unequal taxation."37

Senator James Z. George (Mississippi): "If the humble are to be taxed for Federal purposes, as they are in the tax on consumption in all that they eat, in all that they wear, in all that they consume, . . . the wealthy . . . ought not to . . . claim an exemption from a tax so light as this."38

And so on. Trust me, there are many, many more examples. I'm not making this up.

It's possible to lose the income-tax-versus-consumption-tax thread in the 1894 debates because there was a lot of bombast, some of it downright personal and nasty,39 and some of it (on both sides) conjuring images of class warfare and revolution. For example, South Dakota Senator James Kyle, an independent of Populist bent, condemned the "thirty years with Shylock in power," noting that "[r]evolutions have occured [sic] with less ferment than we see in the United States to-day. . . . [T]he capitalistic press of the United States to-day jeer and taunt the efforts of the bond-burdened serfs on the farms and in the workshops who attempt to rise from their pitiful condition."40

But the statements of the revolution-may-be-coming sort are perfectly consistent with ability to pay. Taxing on that basis is what Representative Hugh Dinsmore of Arkansas meant when he said "the hand of the tax-gatherer shall loosen its grasp, held so long and so firmly on the necks of the poor, and shall bear more heavily upon the rich, who are abler to meet its demands."41 So, too, with Representative Hudson of Kansas: "[T]he majority of the very wealthy are haughty, overbearing, autocratic, mean, and it is that class in particular that the income tax is designed to reach."42 The wealthy should pay because they can pay, and they weren't paying their share with only consumption taxes on the books.

Because of the push for fairness, the disputes inevitably had a class-versus-class flavor. With a proposed rate of only 2 percent, the charges of socialism seem a bit much: "vicious, socialistic and un-American,43 and "a measure of purely socialistic tendency,"44 noted two authors. But there was a class aspect to the legislation. The tax affected only 1 percent of the population, the attack on the wealthiest of the wealthy was no accident, and, once the income-tax principle had been accepted, there was no guarantee rates would stay low.45 James Carter, representing a bank nominally defending the tax before the Supreme Court, conceded it was "class legislation in th[e] sense [of distinguishing between rich and poor]. That was its very object and purpose."46 It's hard to disagree.

The Revolution wasn't really coming, of course, but one can understood how some thought it might be.47 In any event, tax opponents were as capable of exaggeration as the most populistic of Populists. For instance, Senator George Hoar of Massachusetts intoned: "We all want if we can to see a time when we can get rid of the internal-revenue system altogether. It is odious, it is a sore, it is an irritation, it is a sting in all parts of the country."48 Indeed, characterizing the tax as populist would, it was hoped, bring the legislation down. Populist Senator William Allen of Nebraska complained, "Every Senator that has spoken against the income tax has taken the occasion to say that it was Populistic,"49 and he was pretty much correct. For example, New York Senator David Bennett Hill, a staunch opponent of the tax (although a Democrat), stated:

    It is conceded that it is a plank, not of the Democratic or Republican parties, but of the newly formed Populist party. It is conceded that it is a war tax which was never imposed in the whole history of the Government except during the stress of our civil war, and was one of the first war taxes abolished when peace was restored. It is conceded that it has never been approved by a vote of the people anywhere.50

They may have grumbled about being used as punching bags, but the Populists were delighted to claim responsibility for the income tax. Representative Lafe Pence of Colorado said:

    It is true that the proposition to levy a tax upon incomes is a Populist proposition. No national platform except that of the People's party indorse it.

    All Populists favor it, and in the contest now being waged and to be continued until this or some similar law is enacted, the most valiant and enthusiastic of its supporters are found amongst the active and leading members of the People's party.51

Although he preferred a graduated land tax -- something that wasn't going to happen -- Kansas Senator Peffer proudly noted the income tax "is a populist measure. It is the offspring of the Populist party."52

Income tax opponents didn't limit themselves to questioning the populist origins of the tax; they also marshaled an arsenal of substantive arguments against the tax, and in favor of a consumption tax system. The income tax had historically belonged to the states,53 they argued, and it ought to be used by the national government only in emergencies, if at all.54 It was socialistic,55 nothing but class legislation,56 and it was sectional in purpose -- aimed at the East, where the wealthy were concentrated.57 Moreover, it was a pernicious tax that would encourage Americans to lie about their economic situations and, if the tax was going to be enforced, require that government agents pry into the private affairs of citizens. "Inquisitorial" was an often used adjective.58

Yet another argument was made against the income tax and, implicitly, in favor of the existing consumption taxes. Although Pollock is often described as having been a shock to Court- watchers in 1895, potential constitutional problems were raised in the 1894 debates. New York Senator Hill stated (with a touch of hyperbole, one imagines), "I have never talked with a lawyer or the bench of a court who has not stated that he believes this is a direct tax, and therefore unconstitutional."59 Others agreed that enacting an income tax would bring serious constitutional challenges.60

The debates were heated, but opponents and proponents of the 1894 tax agreed on one basic point: The income tax was fundamentally different from the consumption tax system then in existence. In the next part of the article, I'll demonstrate that arguments in 1909 about the merits of income tax legislation and the proposed Sixteenth Amendment were the same as those made in 1894. What was said in 1894 informs what the term "taxes on incomes" means: A consumption tax is not an income tax.

II. On to the Sixteenth Amendment

The Supreme Court struck down the 1894 income tax in the Income Tax Cases. The reaction in many quarters was outrage, and some even urged impeachment of the "nullifying judges."61 The decision was particularly suspect, critics said, because by the barest majority (5-4) the Court had rejected a century's worth of jurisprudence.62 Professor Brownlee is convinced Pollock actually "stimulated some support for income taxation."63

The possibility of a constitutional amendment that would clearly permit an unapportioned income tax was raised soon after the Court handed down its decisions in 1895, but little of significance happened until 1909. Because the Court began to nibble away at the scope of its decisions,64 some held out hope no amendment would be necessary. In the meantime, Congress had found alternative means of raising revenue, lessening any sense of urgency about an income tax.65 And throughout this period, the attention of progressives was focused on other matters, like antitrust.66

But hopes that the Court might unequivocally repudiate Pollock were dashed. There was an obvious chicken-and-egg problem. If the Court were going to reconsider the constitutionality of an unapportioned income tax, Congress would have to enact such a tax, and, with Pollock on the books, that would be a bold step. But if Congress didn't act, the Court wouldn't have the opportunity to reexamine its decisions -- even though many observers thought the Court was ready to do just that.

Despite (or maybe because of) the uncertainty about the status of Pollock, the movement for an income tax hit its stride near the end of the first decade of the twentieth century. Democratic Representative Cordell Hull of Tennessee introduced income tax legislation in 1907, and the Democratic party called for an income tax amendment in its 1908 platform:67

    [W]e favor an income tax as part of our revenue system, and we urge the submission of a constitutional amendment specifically authorizing congress to levy and collect a tax upon individual and corporate incomes, to the end that wealth may bear its proportionate share of the burdens of the federal government.68

Support for an income tax had been building among Republicans as well. In 1906 President Theodore Roosevelt stated that a "graduated income tax of the proper type would be a desirable feature of federal taxation, and it is to be hoped that one may be devised which the supreme court will declare constitutional."69 How to do that wasn't clear, however, and Roosevelt showed only sporadic interest in the project.70 But the seed had been planted, and Roosevelt's successor, William Howard Taft, also appeared to accept the constitutionality and desirability, at least in emergencies, of an income tax. In accepting the Republican nomination in 1908, Taft said, "I believe that an income tax, when the protective system of customs and the internal revenue tax shall not furnish enough for governmental needs, can and should be devised which, under the decisions of the Supreme Court, will conform to the Constitution."71 Furthermore, "insurgent Republicans" had come to Congress willing to join with Democrats and any remaining Populists to push for an income tax.72

Support was there, but income tax proponents had to resolve a difficult threshold question: Whether to seek a new statute or to go first for a constitutional amendment. In this part of the article, I first discuss the debates on whether an amendment was necessary or desirable. I then turn to an analysis of the meaning of the Amendment, focusing on the changes in language that occurred during the deliberations and what those changes mean for our understanding today. Finally, I describe the discussions of the merits of income taxes that occurred in connection with the Sixteenth Amendment, discussions that were substantively no different from those that had occurred in 1894.

My thesis is that the move for an amendment was intended to do what income tax proponents had attempted in 1894: Shifting the tax base from consumption to income, and thereby tying tax burdens to ability to pay.73 That was a fundamental change, but it was limited in its effects. The Sixteenth Amendment didn't eliminate the concept of "direct taxes," and it shouldn't be read, as Professor Ackerman and others have suggested, as vindicating congressional plenary power in taxation.

A. To Amend or Not to Amend

The merits of income taxes came close to being an afterthought in congressional deliberations in 1909 because there was little more to say. The positions on both sides had been exhaustively developed in 1894, and, as I'll demonstrate shortly, the substantive arguments were a reprise of 1894 -- with discussion about how income taxes are different from consumption taxes.

The focus of much of the debates in 1909, in form at least, was on whether a constitutional amendment was the way to proceed. Many income tax supporters thought no amendment was necessary. Moreover, some advocates, like Cordell Hull, resisted an amendment because, they worried, a few people in a few states could prevent ratification and thereby delay, if not altogether destroy, the movement. Without the support of House Speaker Joe Cannon, Hull couldn't get his proposal for reenactment of the 1894 legislation onto the fast track,74 but in the Senate there were income tax supporters ready and willing to move ahead.

In 1909 Senators Joseph W. Bailey of Texas, a Democrat, and Albert B. Cummins of Iowa, a Republican, both introduced legislation to add an income tax provision, modeled on the 1894 statute, to a tariff bill.75 Their thinking was straightforward. Early cases had read the direct-tax clauses as applying to very little. The Supreme Court in 1895 had rescued the clauses, but it had been badly divided (5-4), and it later seemed to have retreated. Furthermore, the composition of the Court had changed. Why bother with a constitutional amendment if the Court was likely to uphold an income tax anyway? In introducing his version of an amendment to the tariff bill, Senator Bailey said he didn't believe Pollock

    is a correct interpretation of the Constitution, and I feel confident that an overwhelming majority of the best legal opinion in this Republic believes that it was erroneous. With this thought in my mind, and remembering that the decision was by a bare majority, and that the decision itself overruled the decisions of a hundred years, I do not think it improper for the American Congress to submit the question to the reconsideration of that great tribunal.76

Bailey and Cummins favored the statutory route although they recognized the Court might adhere to Pollock and strike down a new statute. The status quo was unacceptable. As Cummins said, "If that opinion is to stand in its full scope and with its full vigor, then the United States must abandon for all time, or until the Constitution is amended, the exercise of a power and authority which had been recognized for a hundred years before the opinion was announced." Congress can interpret the Constitution as well as the Court, Cummins said, and "I believe it to be the bounden duty of Congress at this time to again invoke the deliberate reexamination of this question by the Supreme Court."77

The risk of a negative decision from the Court wasn't a reason to stand pat. Quite the contrary. If the Court rejected a new income tax statute, the case for a constitutional amendment would be clear. But without a new judicial decision on the books, an amendment could get bogged down precisely because it wouldn't be clear the amendment was needed.

Not surprisingly, despite ridicule from Senator William Borah and others, those resisting the Bailey-Cummins legislation stressed the Court's honor.78 Some amendment supporters, like Nebraska Senator Norris Brown, had urged deference to Pollock all along.79 Others, like Rhode Island Senator and Republican majority leader Nelson Aldrich, whose motives weren't necessarily high-minded, agreed: "The imposition of an income tax now is not only an attempt to adopt an unconstitutional provision, but it is an assault, a rebuke in any way, of the Supreme Court of the United States."80

Since commentators today almost universally reject Pollock, it's become easy to question the motives of those who pushed for a constitutional amendment rather than a new income tax statute.81 Perhaps everyone wasn't acting with the best of intentions -- on that point, more in a moment -- but it was hardly frivolous to worry about offending the Supreme Court. The potential for real conflict was there, and public confidence in the Court may have been at stake, too. Pollock had been decided only 14 years earlier; it was no old-and-cold decision of a bygone era.

In any event, President Taft weighed in with support for a constitutional amendment, stressing, among other things, the desirability of "stability of judicial construction of the Constitution."82 The Senate Finance Committee, which reported out the language that became the Sixteenth Amendment, recommended the conservative route as well:

    The committee decided that it would be unwise to pass an income-tax amendment [to a tariff] in form and substance like those introduced by the Senator from Texas [Bailey] and the Senator from Iowa [Cummins]. We felt that, in view of the decision . . . in the Pollock case, it would be indelicate, at least, for the Congress of the United States to pass another measure and ask the Supreme Court to pass upon it, when they had already passed upon the proposition. . . . 83

Other reasons, some legitimate and some perhaps not so legitimate, also pointed toward amending the Constitution before enacting an income tax. For one thing, while the Supreme Court might uphold a new statute, a later Court could reverse course as, it was said, had happened in 1895. Only an amendment would protect against future judicial usurpation of congressional power. Senator Thomas Carter of Montana, a Republican, argued that, "in the midst of that bewildering condition, it is infinitely better for us to refer the constitutional amendment to the several States, so that the question involving the power of Congress to levy an income tax may be forever and effectually put at rest."84

And it was probably the case that some "supporters" -- Nelson Aldrich is the culprit most often named -- viewed the proposals as a way to resist the 1909 move for an income tax; to send the issue to the states, where the possibility of rejection was high (only 12 states needed to say no); and to use rejection to resist future income tax pressures.85 An income tax might have been inevitable -- today it looks that way -- but not all congressmen wanted it to happen on their watch.

Income tax proponents certainly thought there was something fishy about "support" for an amendment. For example, Senator Cummins said the amendment was "brought forward here, not by its original author, the Senator from Nebraska [Brown], but by its more recent sponsors, simply as one of the instruments to defeat the income-tax provision . . . , and I shall vote for it without the slightest hope that it will ever become a part of the Constitution."86

Mississippi Senator Anselm McLaurin, who wanted an income tax and who thought an amendment unnecessary, was also pessimistic about what the process would bring: "I think the effect will be to defer the enactment of any law providing for an income tax. I think the effect of it will be that there will be probably more than a fourth of the States of the Union which will refuse to ratify the action of Congress." Worse, he predicted, that failure "would be urged as a very plausible argument before the Supreme Court of the United States that the people are not in favor of an income tax."87

Regardless of the motives of amendment "supporters," however, income tax proponents had to accept reality: There would be no income tax until the Constitution was amended. As Representative William Adamson of Georgia put it, "I do not believe it necessary to amend the Constitution in order to levy an income tax, but the majority will not let us have it any other way." But, Adamson argued, if we have to do it, let's do it fast: "Let all lovers of their country press the matter at once and continuously before all state legislatures."88 And history was on the side of the tax. It was going to happen -- if not now, later: "Representatives here admit that they do not expect to pass an income-tax law after this amendment is adopted. If they do not, men sent here in their places will."89

B. The Amendment Language: Taxes on Incomes

Discussions about a possible constitutional amendment didn't proceed in isolation. There was a lot going on in 1909 -- the Bailey- Cummins proposals to enact an income tax without waiting for a constitutional amendment, tariff revision, and a presidential proposal for a corporate income tax to operate at least until the Constitution could be amended to permit a personal income tax. Despite the confusing mass of material, it's possible to get a good sense of what the Sixteenth Amendment was supposed to do, and that was to remove only taxes on incomes from the apportionment requirement.

A key player was Republican Senator Norris Brown of Nebraska. The important chronology began in late April, when Brown proposed the following language: "The Congress shall have power to lay and collect taxes on incomes and inheritances."90 Brown, like many others, was leery of enacting another statute that might be rejected by the Supreme Court: "It is for that reason, Senators, that I present to you to-day the imperative and commanding necessity for an amendment to the Constitution which will give the court a Constitution that can not be interpreted two ways."91

However meritorious a constitutional amendment might have been in the abstract, Senator Isidor Rayner of Maryland quickly pointed out that Brown's language was useless. Congress already had the power to tax incomes and inheritances, he noted. The problem, at least with an income tax, was that the Court had said such a tax must be apportioned: "[I]f this amendment . . . were to go through, it would not affect the [direct-tax clauses] and there would still have to be an apportionment."92 Rayner was obviously right, and this Brown proposal went nowhere.

A month and a half later, on June 16, President Taft gave support to a constitutional amendment, stressing the danger of enacting a tax based on the hope the Court might reverse itself.93 Although Taft may have favored a personal income tax, he proposed enactment of a corporate tax (something thought to be permissible already)94 until the Constitution could be amended. We don't know for sure why Taft took this position -- it's been suggested Senator Aldrich manipulated Taft to kill any possibility of a personal income tax in 190995 -- but the Taft proposals took the wind out of the sails of those who favored enacting an individual tax without first amending the Constitution.

The next day, June 17, with the president now on the side of a constitutional amendment, Senator Brown tried again, proposing the following language: "The Congress shall have power to lay and collect direct taxes on incomes without apportionment among the several States according to population."96 Here we get to the beginning of some good, nitty-gritty interpretational issues.

If the goal was to permit an unapportioned income tax, Brown's language seemed to work: It removed any "direct taxes on incomes" from the apportionment requirement. But Senator McLaurin wasn't satisfied. The impediment they were facing was the direct-tax clauses, he argued, so why not strike out the references to direct taxes in the Constitution, leaving apportionment to apply only to capitation taxes? That would "accomplish all that [Brown's] amendment proposes to accomplish and not make a constitutional amendment for the enacting of a single act of legislation."97

Brown said No: "That may be true, Mr. President; but my purpose is to confine it to income taxes alone, and to forever settle the dispute by referring the subject to the several States."98 Had the McLaurin proposal been accepted, it would have made analysis of the taxing power far simpler today, but Brown's intention was unmistakable, to limit the Amendment to "taxes on incomes." Nothing that happened later in the amendment process changed that critical language or that basic intention.

Brown didn't explain why he resisted the apparently friendly McLaurin suggestion. As we shall see, Professor Ackerman accuses Brown of bad faith. But one can imagine legitimate reasons for drafting the amendment the way Brown did. His proposal kept the changes narrow, limiting the effect to income taxes -- which was, after all, what tax proponents were pushing for -- and a narrow proposal made ratification easier. Maybe Brown was leery of eliminating the apportionment rule, making an unapportioned real- estate tax possible. Or perhaps he was concerned about the unknown. If you're not sure what might be included in the category of "direct taxes," or what sorts of taxes might be devised in the future, you might well resist giving future Congresses the power to enact any tax without limitation.

Whatever Brown's reasons, he wasn't willing to broaden the language, and his proposal was sent to the Finance Committee. The form of the Amendment that emerged in June, with an explanation of why a constitutional amendment should be sought,99 read somewhat differently, but it was still limited to "taxes on incomes": "The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States and without regard to any census or enumeration."100 With a comma added, that's the way the Amendment now reads.

The committee had deleted Brown's reference to "direct taxes" and added the phrase "from whatever source derived," but how these changes occurred isn't clear. According to Professor Ratner, "These crucially important and liberal changes were introduced by Senator Aldrich at the suggestion and the insistence of Senator Knute Nelson of Minnesota. . . . Nelson, although a conservative . . . , seems to have become responsive to the progressive upsurge in Minnesota . . . "101 The Blakeys, relying on a letter published in 1920, also named Nelson: "[I]t was there amended at the insistence of Nelson . . . to include the phrase 'from whatever source derived' and omit the word 'direct'. . . . "102 Buenker suggested Nelson's "object was to foreclose the possibility of any class of income being held exempt from taxation by the Court."103 Seligman noted simply: "No explanation was made of the change, and when Senator Aldrich reported the amendment, he asked to have it disposed of without debate. It was indeed debated, but the discussion was exceedingly slight."104 The joint resolution containing the Amendment passed unanimously in the Senate (77- 0),105 and in the House a week later, after about four hours' debate, by a vote of 318 to 14.106

The traditional understanding of the language change, in Ratner's words, is that, if the Brown version had been accepted, "the source of all income would have continued to be open to constitutional challenge and the source of the income would still have been considered by the Court the object of the tax."107 (I'll return to that questionable proposition shortly.) Senator Brown seemed to have accepted the Court's determination that at least certain types of income taxes (on income from property) are direct -- hence his reference to "direct taxes on incomes." Unlike many income tax proponents, Brown was apparently willing to concede the Court had gotten it right, and he wanted to change the constitutional principle the Court had relied on. The committee didn't want to endorse that principle, the argument goes, and that's why Ratner referred to the changes as "crucially important and liberal."

Professor Ackerman buys into that theory, and takes it to breathtaking heights. Senator Brown was guilty of a "clever verbalism, [aiming] to transform this tactical retreat [of the amendment process] into a long-run conservative victory" by conceding the direct character of income taxes, thereby "explicitly endorsing the Pollock majority's vast expansion of the concept,"108 and implicitly endorsing the idea that the universe of direct taxes was much larger than previously thought.109 When new language emerged from the Finance Committee, it was

    a major retreat from Brown's conservative ambitions. Gone was [Brown's] express vindication of Pollock's decision to expand the category of "direct" taxation; in its place we find an explicit repudiation of Pollock's effort to expand the category by insisting that an income tax, from whatever source derived, should be immune from the rule of apportionment.110

The committee drafters, Ackerman says, knew exactly what they were doing. They "took special efforts to avoid freezing Pollock's doctrine concerning the scope of the 'direct tax' clauses."111 The language, in short, "had been revised to eliminate all explicit endorsement of Pollock's reasoning."112

Ackerman's version of events is full of problems. An awful lot happens in his rendition that wasn't explicit at all. Ackerman presents no evidence of what the "draftsmen" were thinking, or what "special efforts" they were taking, as they "explicitly" wrote what became the Amendment.

And his rendition doesn't make sense. The result in Pollock wasn't repudiated by the Committee's change in language. Yes, many income tax supporters were reluctant to indicate acceptance of Pollock, and they were afraid an amendment would do exactly that. Nevertheless, as long as an amendment was ratified quickly, so that an unapportioned income tax could be enacted, it wouldn't have mattered. The real concern was what it would mean if a proposed amendment weren't ratified. That failure could be seen as validating Pollock -- making an income tax virtually impossible. But this concern arose because of the very idea of a constitutional amendment, not because of Brown's language. Accepting Pollock was inherent in the decision to seek any amendment, whatever the wording.113 If the Amendment hadn't been ratified, the change Ackerman praises would have been cold comfort to income tax supporters -- something Senator McLaurin noted in floor debates.114

I also see no reason to think the Finance Committee was doing what Ackerman says it was. Once the committee reported, the changes were accepted with little discussion; if a seismic shift was occurring, nearly everyone missed it.115 And let's remember who ran the show. The committee chair was Nelson Aldrich of Rhode Island, usually characterized as an anti-tax villain. (Indeed, that's how Ackerman sees Aldrich.)116 That Aldrich would have pushed a text meant to resurrect pre-Pollock understanding boggles the mind. "[T]he draftsmen . . . took special efforts to avoid freezing Pollock's doctrine concerning the scope of the 'direct tax' clauses?" I don't think so.

Finally, the traditional justification for the language change, whether or not embellished by Professor Ackerman, is full of holes. Recall Ratner's explanation: Had Brown's proposal succeeded, "the source of all income would have continued to be open to constitutional challenge and the source of the income would still have been considered by the Court the object of the tax."117 But with the Brown language -- "The Congress shall have power to lay and collect direct taxes on incomes without apportionment among the several States according to population"118 -- why does source matter? If a tax on incomes isn't a direct tax, the Brown language would have done nothing; the amendment wouldn't have applied. If a tax on income from certain sources (real property, for example) is direct, however, Brown's proposal would have permitted the tax without apportionment. If a tax on income from other sources isn't direct, the amendment wouldn't have been implicated, but such a tax isn't subject to apportionment anyway. A "direct tax on incomes," if there's such a thing, needn't be apportioned, and an indirect tax on incomes, if there's such a thing, needn't be apportioned. Either way, Brown's version would have worked the way he wanted it to, without regard to source of income.119

But whether the final version of the Amendment made any substantive changes in Senator Brown's proposal is almost beside the point. The crucial consideration from this history is that the Amendment is limited to taxes on incomes, and Brown specifically rejected doing away with apportionment for all direct taxes. With that language, other direct taxes remain subject to apportionment, as Brown apparently knew, and neither version of the Amendment, Brown's or the committee's, includes anything that changes the characterization of any taxes as direct or indirect.

There should be no doubt the Amendment was limited to "taxes on incomes." After the resolution had been reported by the Finance Committee, with some language changed but with the reference to "taxes on incomes" intact, Senator McLaurin once again suggested it would be better to amend the Constitution to delete references to "direct taxes."120 McLaurin said his proposal would "eliminate from the Constitution every cause of contention over the question of the authority of Congress to levy an income tax, except as to the power of Congress to grade an income tax." Furthermore, he was worried that by passing a resolution applicable only to income taxes, Congress might be seen as "recogniz[ing] the income tax as a direct tax"121 -- something that could matter if the Amendment in its committee- approved version weren't ratified. But McLaurin got no support.

Of course, Ackerman has an explanation for Congress's not taking a broader step, and part of it is plausible: "Why create unnecessary political problems by drafting a broader amendment when the Court was retreating to its tradition of restrained interpretation of 'direct' taxation on other fronts?"122 Do what needs to be done to make the tax possible. Deal with the narrow holding of Pollock and nothing else. Don't create unnecessary issues to complicate ratification.

If Ackerman had stopped there, I'd be politely applauding. Instead he pulls an elephant out of his hat: "[T]he decision by the People [in ratifying the Amendment] expressly to overrule one branch of Pollock should make other aspects of that decision more, not less, questionable."123 It's because the Amendment was purposely, narrowly drafted, and ratified in that form, that we should read it broadly!

Obviously if McLaurin's proposal to do away with references to "direct taxes" had been accepted, Professor Ackerman would now be claiming, with reason, that the direct-tax clauses are dead. But it's because Congress didn't do that, because Congress produced a much narrower version of the Amendment, that the direct-tax clauses are dead! I'm not convinced.

The fight was often intense, but the Amendment was ratified in less than four years. As Randolph Paul said, "[T]he struggle for the amendment had the quality of anti-climax."124 There were bumps along the way, most significantly opposition from New York Governor Charles Evans Hughes. Hughes worried that the phrase "from whatever source derived" would permit taxing "not only incomes from ordinary real or personal property, but also incomes derived from State and municipal securities,"125 something Pollock had precluded under the doctrine of intergovernmental immunity.126 If the Amendment was intended to overturn Pollock, Hughes's fears weren't trivial.127 This concern delayed ratification in a few states, but Hughes received assurances that the Amendment wasn't intended to extend the taxing power to new categories of income.128 By early 1913, 42 states, including New York, had ratified the Amendment.129

C. What's an Income Tax?

To this point, I've argued the Sixteenth Amendment was intended to remove only "taxes on incomes" from the apportionment requirement, not to abolish the direct-tax clauses. But even if that's "all" the Amendment did, it was quite a lot: The category of "taxes on incomes" was hardly trivial. It was what members of Congress had been talking about since 1894 (and, in some cases, since 1862).

On the merits -- in discussing both the proposed statutory changes introduced by Senators Bailey and Cummins and the possibility of a constitutional amendment -- income tax debates in 1909 mirrored those of 1894. Indeed, Representative Champ Clark of Missouri suggested there was nothing more to say: "[T]here is not very much necessity for speech making on this occasion or on this proposition. The income tax is a Democratic proposition. We put it in the tariff bill of 1894. A very large majority of us have been in favor of it ever since."130 The significant debate in 1909 was about whether to seek a constitutional amendment. On the question of what an income tax is, the debates on proposed statutory changes and on the proposed constitutional amendment were really one big debate.

As was true in 1894, much of the discussion was about how an income tax would further the ability-to-pay principle in a way that consumption taxes didn't. It was déjà vu all over again. Senator Bailey explained his amendment to the tariff bill: "I believe [the income tax] is the only tax ever yet devised by the statesmen of the world that rises and falls with a man's ability to pay it."131

When Cummins introduced his bill, Senator Augustus Octavius Bacon of Georgia pressed him. Would Cummins favor the income tax if enough revenue could be raised by tariffs? Bacon wanted to know "whether it was rested upon the importance of shifting the burden of taxation from the great masses of consumers, so far as we may be able to do it, to rest it in part, at least, upon the shoulders of those who have the wealth of the country." Cummins finally answered: "[I]f I could change the situation I would so rearrange and readjust these schedules as to decrease the revenue derived from the custom-houses and place it where it should belong -- upon those fortunate people who enjoy large incomes." Said Bacon: "Now the Senator has stated exactly the thing I wanted him to state."132

Once again I'm going to risk overkill with a series of quotations to demonstrate how ability to pay dominated discussions of income tax proponents: Income taxes are consistent with that principle, consumption taxes aren't. This is a representative sample; I could provide many more examples.

Sen. Bailey (Texas): "Under any circumstances an income tax is more equitable than a tax on consumption. It is more just as between the different classes, and it better conforms to that sound canon of taxation which enjoins upon us to lay all taxes on those who can bear them. . . . "133

Sen. Cummins (Iowa): "[A]n income tax, levied upon those who ought to bear the burdens of government, . . . will meet even that principle more perfectly than to levy duties upon things that the people must use, and impose the weight of government only by the rule of consumption."134

Rep. Ollie M. James (Kentucky): "[N]o tax was ever more unjust . . . than a tax upon consumption. . . . A tax upon what some people eat and what they wear would deny them the necessities of life, while others, rolling in opulence . . . , would not feel such a tax."135

Rep. Adam M. Byrd (Mississippi): A tariff falls "upon consumption and not upon wealth, upon what one eats and wears and not upon his property; it means that the citizen who can scarcely provide food and raiment for his wife and children contributes as much or more to the support of the Government as does the multimillionaire."136

Rep. William Sulzer, a Democrat (New York):

    [N]early all the taxes . . . are levied on consumption -- on what the people need to eat and to wear and to live; on the necessaries of life; and the consequence is that the poor man . . . pays practically as much to support the Government as the rich man. . . . This system of tariff tax on consumption . . . is an unjust system of taxation, and the only way to remedy the injustice and destroy the inequality is by a graduated income tax. . . . 137

Rep. De Armond (Missouri): "There is no good reason why taxation should not be according to ability to pay -- according to wealth, according to income. Your tariff tax is a tax upon necessity, a tax in proportion to the amount you buy, a tax in proportion to what you must have. . . . "138

Rep. Courtney W. Hamlin (Missouri): "The tariff tax is levied entirely upon consumption. The laboring man must expend his income for food, fuel, clothing, and tools of industry, and these taxes are heavier upon the necessities." He advocated shifting the burden of government "from the backs of the poor to those who can bear it; to divide these burdens between wealth and consumption."139

Rep. William R. Smith (Texas): "No one can contend that our system of indirect taxation [has no] objectionable features, because . . . its burdens are measured by what the citizen's needs require him to purchase for consumption and not by the amount of his wealth, nor by his ability to pay."140

Overall, the tone of the debates was more civil than in 1894. There were fewer populists around, and, given the reduced opposition to an income tax, less reason to debate with "agrarian ferocity."141 But except for differences in tone, passages could be moved from 1894 to 1909 and back again without changing the nature of the debate in either year.

Opponents made the same points that had been made in 1894. An income tax, it was said, was socialistic and inquisitorial.142 It ought to be available, if at all, only in emergencies.143 And, as in 1894, there were references about the extent to which an income tax helps, or hinders, civic virtue.144

The income tax proponents prevailed, of course, with ratification of the Sixteenth Amendment and enactment of an income tax in 1913.145 That first statute seems quaint -- with rates on income above $3,000 ranging from 1 percent to 7 percent146 -- and we've certainly moved far beyond what anyone could have imagined in 1909 or 1913. In 1909, Senator William Borah responded to the charge that an income tax is necessarily socialistic, by sarcastically criticizing positions taken by opponents:

    When the State or the Government sees fit to lay a [tariff] which may take 30 per cent of the income, the fruits of the labor, of the man of ordinary means, that is the exercise of constitutional power. But when you lay a tax of 2 per cent upon incomes, so slight a burden that it would scarcely be felt, that is socialism. Man's intelligence should not be so universally discredited. But he says if you can levy a tax of 2 per cent you may lay a tax of 50 or 100 per cent. Who will lay the tax of 50 or 100 per cent? Whose equity, sense of fairness, of justice, of patriotism does he question? Why, the representatives of the American people. . . . 147

How could the "representatives of the American people" do such a thing? Well, the marginal rates never reached 100 percent, but they got close -- and they got there fast.148

Fights about appropriate rates will go on as long as there's an income tax, of course, and the constitutionality of a graduated rate structure turned out to be a nonissue.149 Given the extent to which income tax proponents wanted to implement the ability-to-pay principle, it did no textual damage to see progressivity as inherent in the grant of power to tax "incomes" without apportionment. Nevertheless, the Sixteenth Amendment covered only "taxes on incomes." The Amendment isn't authority for an unapportioned direct-consumption tax; it was the perceived failure of consumption taxes that made the income tax -- and hence the Sixteenth Amendment -- necessary.

III. A Wealth Tax Isn't an Income Tax

The basic distinction drawn in the debates in 1894 and 1909 was between a tax on income and a tax on consumption, but another point needs to be made about the original understanding. Although the goal behind the Sixteenth Amendment was to ensure that the wealthy paid their fair share of the nation's taxes, Amendment proponents weren't proposing a wealth tax as we have come to understand that term. The Amendment isn't authority for an unapportioned tax on wealth.

Income tax proponents in 1894 and, to a lesser extent, 1909 routinely contrasted the consumption taxes they despised with taxes on wealth, which would meet ability-to-pay criteria, and the income tax was often characterized as a tax on wealth or property.150 When they used those terms, however, supporters were talking about taxing "earnings of wealth"151 -- that's what was on the table for discussion -- rather than measuring the tax by the value of a person's wealth.152 Indeed, some Populist supporters plaintively wished it were possible to impose a tax directly on land,153 but it was understood that such a tax wouldn't fly politically and that, in any event, it would present constitutional problems.154

The tax enacted in 1894 wasn't an ad valorem tax on wealth; nor was it like what is proposed today as a wealth tax. If our understanding of the Sixteenth Amendment should be informed by the 1894 and 1909 debates, as I've argued, we shouldn't take from those debates the idea that a wealth tax is a "tax on incomes."155

* * * * *

I've presented evidence that, in the debates culminating in the Sixteenth Amendment, participants thought of income taxes and consumption taxes as fundamentally different. The Amendment came into being because the consumption taxes used throughout American history were thought to be flawed, and a significant change was needed. The term "taxes on incomes" had a generally understood meaning, and it should be interpreted today with the income tax-consumption tax distinction in mind.


1 U.S. Const. amend. XVI.

2 157 U.S. 429 (1895) (holding unapportioned tax on income from real estate unconstitutional); 158 U.S. 601 (1895) (extending principle to income from personal property and rejecting entire 1894 tax).

3 Direct taxes must generally be apportioned among the states on the basis of population. See U.S. Const. art. I, section 2, cl. 3; U.S. Const. art. I, section 9, cl. 4; see Erik M. Jensen, "The Apportionment of 'Direct Taxes': Are Consumption Taxes Constitutional?" 97 Colum. L. Rev. 2334 (1997).

4 Eisner v. Macomber, 252 U.S. 189, 220 (1920) (Holmes, J., dissenting).

5 Owen M. Fiss, History of the Supreme Court of the United States: Troubled Beginnings of the Modern State, 1888- 1910, at 100 (1993).

6 See Act of July 1, 1862, ch. 119, sections 89- 93, 12 Stat. 432, 473-75 (imposing 3 percent tax on "annual gains, profits, or income of every person residing in the United States" above $600, with 5 percent rate applicable over $10,000). In 1864, rates increased to 5, 7 1/2, and 10 percent for income ranges $600-$5,000, $5,000-$10,000, and over $10,000, respectively. See Act of June 30, 1864, ch. 173, section 116, 13 Stat. 223, 281; see also Springer v. United States, 102 U.S. 586 (1880) (upholding unapportioned Civil War income tax); Edwin R. A. Seligman, The Income Tax: A Study of the History, Theory and Practice of Income Taxation at Home and Abroad 430-80 (1911); Randolph E. Paul, Taxation in the United States 9-15 (1954); John F. Witte, The Politics and Development of the Federal Income Tax 67-70 (1985).

7 See Roy G. Blakey and Gladys C. Blakey, The Federal Income Tax 7 (1940). Not until 1894 did many think such a tax might become a permanent part of the revenue system.

8 The Blakeys said "[f]ew had anything good to say for it," id. at 7, but Ratner argued that "the great mass of the people were not interested in having the income tax repealed." Sidney Ratner, Taxation and Democracy in America 143 (1967). Nevertheless, the wealthy who accepted it "as an emergency measure . . . lobbied vigorously" for repeal, and "[l]ittle organized support emerged for permanent income taxation." W. Elliott Brownlee, Federal Taxation in America 29 (1996).

9 Brownlee, supra note 8, at 25.

10 Rates were reduced by the Act of March 2, 1867, ch. 169, section 13, 14 Stat. 471, 478 (imposing 5 percent tax on incomes above $1,000), and the Act of July 14, 1870, ch. 255, sections 6-11, 16 Stat. 256, 257-59 (imposing 2 1/2 percent tax on incomes over $2,000). The effect was to reduce the number of taxpayers from 460,170 in 1866 to 72,949 in 1872. See Ratner, supra note 8, at 143.

11 See 26 Cong. Rec. 6694-95 (June 22, 1894) (statement of Sherman that he agreed in 1894 with what he'd said in the 1870s, but conditions had changed, income tax was no longer necessary, and so on).

12 See, e.g., 26 Cong. Rec. app. 315 (Jan. 31, 1894) (statement of Ind. Rep. Elijah V. Brookshire); 26 Cong. Rec. 6685 (June 22, 1894) (statement of S.D. Sen. James H. Kyle).

13 Internal Taxes and Tariff (statement of Mar. 15, 1872), reprinted in John Sherman, Selected Speeches on Finance and Taxation, from 1859 to 1878, at 336, 348-49 (1879). In fighting repeal, Sherman regularly contrasted the income tax with consumption taxes. See, e.g., "Receipts and Expenditures -- Reduction of Taxation" (statement of May 23, 1870), in Sherman, supra, at 284, 291 ("The real objection to [customs duties] is that they fall entirely on consumption.").

14 See Ratner, supra note 8, at 145-67.

15 E.g., David E. Kyvig, Explicit and Authentic Acts: Amending the U.S. Constitution, 1776-1995, at 194-96 (1996).

16 Quoted in 26 Cong. Rec. app. 601 (Jan. 30, 1894) (statement of Populist Colorado Rep. Lafe Pence) (emphasis added).

17 26 Cong. Rec. 6634 (June 21, 1894).

18 See Brownlee, supra note 8, at 38 (arguing that Democrats "sensed an opportunity to use tax issues for a major realignment of the two political parties along sectional and class lines. . . . ") (footnote omitted).

19 See, e.g., 26 Cong. Rec. app. 406 (Jan. 30, 1894) (statement of Mo. Rep. David A. De Armond) ("A tariff is a tax, and the foreigner does not pay it. It is paid by the consumer, and is a tax on consumption.").

20 President Cleveland played little role. He'd called for "a small tax upon incomes derived from land and certain corporate investments." Quoted in Seligman, supra note 6, at 496. But while he "regarded the tax on personal incomes as just, . . . it would antagonize the financial interests to whom [Democrats] looked for support of the gold standard." Ratner, supra note 8, at 173-74. Cleveland allowed the bill to become law without his signature. Id. at 189.

21 26 Cong. Rec. app. 413 (Jan. 29, 1894).

22 26 Cong. Rec. app. 415 (Jan. 29, 1894).

23 26 Cong. Rec. 6692 (June 22, 1894).

24 26 Cong. Rec. app. 293 (Jan. 31, 1894) (discussing People's Party platform).

25 For example, New York Senator David Bennett Hill stated that a "tariff duty is an indirect tax upon consumption, and wealth pays its share of whatever it consumes. There are no classes exempt from its operation, and the greater the consumption the larger is the tax." 26 Cong. Rec. 6616 (June 21, 1894).

26 For example, Senator Hoar of Massachusetts stated that "[u]nder this [income tax] plan a man who consumes all he raises in luxurious living escapes altogether, while the man who earns and is paid wages which he has to expend for the honest and frugal support and education of his family is taxed." 26 Cong. Rec. 6630 (June 21, 1894).

27 Cf. John D. Buenker, The Income Tax and the Progressive Era 31 (1985) (noting that, after Civil War, "[n]ot until the enactment of the 1909 corporate excise tax was there any federal tax which did not fall directly on . . . 'things men eat and wear.'").

28 26 Cong. Rec. app. 415 (Jan. 29, 1894).

29 26 Cong. Rec. app. 271 (Jan. 31, 1894); see also 26 Cong. Rec. 6706-07 (June 22, 1894) (statement of Neb. Sen. Allen).

30 26 Cong. Rec. app. 76 (Jan. 23, 1894).

31 H.R. Rep. No. 53-276, at 3 (1894).

32 26 Cong. Rec. app. 57 (Jan. 15, 1894).

33 26 Cong. Rec. app. 289 (Jan. 30, 1894).

34 26 Cong. Rec. app. 405 (Jan. 30, 1894).

35 26 Cong. Rec. app. 406 (Jan. 30, 1894).

36 26 Cong. Rec. app. 439 (Jan. 30, 1894).

37 26 Cong. Rec. 6866 (June 27, 1894).

38 26 Cong. Rec. 6819 (June 26, 1894).

39 At one point, New York Representative William Bourke Cockran, an opponent of the income tax, had referred to the tax as "an assault on Democratic institutions." 26 Cong. Rec. app. 463 (Jan. 30, 1894). George Richardson of Michigan responded that Cockran was

    a millionaire through active operations in protected industries, and yet he is determined to contribute no more to the payment of his own salary than does the limping, limbless defender of the stars and stripes who has neither wealth nor income except what he can earn in broken health, together with the pension provided by law. What a spectacle! A member of Congress not only pleading for continued protection who has a large share of the business in his own city that yields an average profit of 24 per cent, but he insists that none of that income shall be taxed to liquidate the obligations to that roll of honor, the pension roll.

26 Cong. Rec. app. 272 (Jan. 31, 1894).

40 26 Cong. Rec. 6686 (June 22, 1894).

41 26 Cong. Rec. app. 275 (Jan. 29, 1894).

42 26 Cong. Rec. app. 57 (Jan. 15, 1894).

43 Amasa J. Parker Jr., "Income Tax of 1894 -- Its Provisions and Constitutionality," 50 Alb. L.J. 416, 421 (1894).

44 Robert Sewell, "The Income Tax: Is It Constitutional?" 28 Am. L. Rev. 808, 808 (1894).

45 See Loren P. Beth, The Development of the American Constitution 1877-1917, at 158 (1971) (suggesting opponents "were worried as much by the possibility that the amount of the tax would be increased in future years as they were by the 2 per cent in itself").

46 Pollock I, 157 U.S. at 518 (oral argument for appellee); see Jensen, supra note 3, at 2366 (1997).

47 See 26 Cong. Rec. 1609 (Jan. 29, 1894) (statement of Mo. Rep. Uriel Hall) ("[W]hen you oppose a measure of this kind, . . . you make a foundation for the argument of anarchy, socialism, and demagoguery, that eventually will sweep back and curse this country, as it did in France in the days of the French revolution.").

48 26 Cong. Rec. 6630 (June 21, 1894). Hear! Hear!

49 26 Cong. Rec. 6707 (June 21, 1894); see also 26 Cong. Rec. app. 601 (Jan. 30, 1894) (discussing the complaint of Populist Rep. Pence that New York Rep. Franklin Bartlett's characterization of the income tax bill as Populist was intended "to frighten away from support of the amendment some Democratic members of this House.").

50 26 Cong. Rec. 6611 (June 21, 1894).

51 26 Cong. Rec. app. 605 (Jan. 30, 1894).

52 26 Cong. Rec. 6634 (June 21, 1894).

53 See, e.g., 26 Cong. Rec. 6694 (June 22, 1894) (statement of Ohio Sen. Sherman).

54 See, e.g., 26 Cong. Rec. app. 207 (Jan. 26, 1894) (statement of Pa. Rep. Robert J. Adams Jr.) ("An income tax! A tax so odious that no administration ever dared to impose it except in time of war; and you will find that the people will not tolerate it in time of peace. . . . It does not belong to a free country. . . . [I]t is class legislation.").

55 See, e.g., 26 Cong. Rec. 6695 (June 22, 1894) (statement of Sen. Sherman) ("In a republic like ours, where all men are equal, this attempt to array the rich against the poor or the poor against the rich is socialism, communism, devilism. . . . ").

56 See, e.g., 26 Cong. Rec. app. 303 (Jan. 30, 1894) (statement of Me. Rep. Seth L. Milliken) ("The . . . income tax is clearly class legislation. It imposes barriers upon one portion of our people which it does not impose upon others.").

57 See, e.g., 26 Cong. Rec. 6627 (June 21, 1894) (statement of Del. Sen. Anthony Higgins).

58 See, e.g., 26 Cong. Rec. app. 395 (Jan. 30, 1894) (statement of N.Y. Rep. Joseph C. Hendrix).

59 26 Cong. Rec. 6637 (June 21, 1894).

60 See, e.g., 26 Cong. Rec. 6629 (June 21, 1894) (statement of Sen. Hoar) (arguing legislation would be unconstitutional at least to the extent it applied to income from real property).

61 Sylvester Pennoyer, "The Income Tax Decision, and the Power of the Supreme Court to Nullify Acts of Congress," 29 Am. L. Rev. 550, 558 (1895).

62 See Edward B. Whitney, "Political Dangers of the Income-Tax Decision," 19 Forum 521, 529 (1895) ("It now, by the casting of a vote of a single man, reverses two unanimous decisions of many years' standing, and in effect overrules a series of unanimous decisions reaching back for a century.").

63 Brownlee, supra note 8, at 39. The effect must have been minor; the Democrats endorsed an income tax in 1896 and went down to resounding defeat. Id.

64 See Jensen, supra note 3, at 2375-77.

65 To help fund the Spanish-American War, Congress enacted an "excise" tax on the gross receipts of companies refining petroleum or sugar. The Court upheld the tax as an indirect one not requiring apportionment. Spreckels Sugar Ref. Co. v. McClain, 192 U.S. 397 (1904).

66 See Blakey and Blakey, supra note 7, at 21 (noting that Democrats had no income tax plank in their 1904 platform).

67 See id. at 22; Buenker, supra note 27, at 54-55.

68 Quoted in Seligman, supra note 6, at 591-92.

69 Quoted in id. at 591.

70 See Blakey and Blakey, supra note 7, at 21.

71 Quoted in id. at 23.

72 See W. Elliot Brownlee, "Historical Perspective on U.S. Tax Policy Toward the Rich," in Does Atlas Shrug? The Economic Consequences of Taxing the Rich 28, 39 (Joel B. Slemrod ed., 2000).

73 Defending the income tax, Professor Graetz says, "A flat-rate tax on consumption would shift substantial amounts of taxes from higher- to lower-income families. . . . [T]he American people will not accept such a tax as fair. Indeed, the Sixteenth Amendment was added to the Constitution to redress such a situation." Michael J. Graetz, The Decline (and Fall?) of the Income Tax 222, 262 (1997).

74 See Kyvig, supra note 15, at 201.

75 Bailey's proposal mirrored the 1894 act, except for exempting state and local bond interest. Cummins's proposal was for graduated rates of 2 percent to 6 percent on incomes exceeding $6,000. The proposals were later combined as the "Bailey-Cummins amendment" to the tariff bill. See Witte, supra note 6, at 74-75; Seligman, supra note 6, at 592.

76 44 Cong. Rec. 1351 (Apr. 15, 1909).

77 44 Cong. Rec. 1422 (Apr. 21, 1909).

78 See 44 Cong. Rec. 3989 (June 30, 1909) (statement of Sen. Borah):

    Where great and powerful intellects . . . differ by a bare margin of one, and by such difference overturn the precedents and practice of a century, and by such difference overturn the precedents upon which we had collected millions from the American people . . . , who will tell me that . . . it is an assault to the dignity of the court or an undermining of its confidence to ask it . . . to reconsider that question?

79 See infra text accompanying note 91.

80 44 Cong. Rec. 3931 (June 29, 1909).

81 See, e.g., Bruce Ackerman, "Taxation and the Constitution," 99 Colum. L. Rev. 1, 36 (1999). But see infra notes 108-116 and accompanying text (questioning Ackerman's version of events).

82 Presidential Message, Tax on Net Income of Corporations, S. Doc. No. 61-98, at 2 (1909); see Ratner, supra note 8, at 286. Taft coupled his recommendation with a proposal for a corporate income tax. Taft's "compromise" position may have been the result of Aldrich's manipulation. See Kyvig, supra note 15, at 202. Or Taft may have been manipulating Aldrich. See Ackerman, supra note 81, at 34-35.

83 44 Cong. Rec. 3936 (June 29, 1909) (statement of Cal. Sen. Frank P. Flint).

84 44 Cong. Rec. 3995 (July 1, 1909).

85 See Kyvig, supra note 15, at 202-03; Ratner, supra note 8, at 307.

86 44 Cong. Rec. 3974 (June 30, 1909).

87 44 Cong. Rec. 4067 (July 3, 1909).

88 44 Cong. Rec. app. 119 (July 12, 1909).

89 Id. at app. 121.

90 S.J. Res. 25, 61st Cong., 44 Cong. Rec. 1568 (Apr. 28, 1909).

91 44 Cong. Rec. 1568 (Apr. 28, 1909).

92 44 Cong. Rec. 1569 (Apr. 28, 1909).

93 Presidential Message, supra note 82, at 2; Ratner, supra note 8, at 286.

94 A corporate income tax had been characterized as an excise. Flint v. Stone Tracy Co., 220 U.S. 107 (1911).

95 See supra note 82. Or maybe Taft was jerking Aldrich around. See id. Or maybe both actually believed in what they were doing. It's been known to happen.

96 S.J. Res. 39, 61st Cong., 44 Cong. Rec. 3377 (June 17, 1909).

97 44 Cong. Rec. 3377 (June 17, 1909); see infra notes 120-121 and accompanying text (discussing McLaurin's later attempt to change substance of amendment).

98 44 Cong. Rec. 3377 (June 17, 1909) (emphasis added).

99 See supra text accompanying note 83 (statement of Sen. Flint).

100 S.J. Res. 40, 61st Cong., 44 Cong. Rec. 3900 (June 28, 1909).

101 Ratner, supra note 8, at 299.

102 Blakey and Blakey, supra note 7, at 61.

103 Buenker, supra note 27, at 127.

104 Seligman, supra note 6, at 595.

105 44 Cong. Rec. 4121 (July 5, 1909).

106 44 Cong. Rec. 4440 (July 12, 1909). The level of opposition was greater than the votes suggest, because of absences and abstentions. Nevertheless, the votes were overwhelmingly favorable.

107 Ratner, supra note 8, at 299.

108 Ackerman, supra note 81, at 37.

109 Id. Ackerman says McLaurin's response to Brown, see supra text accompanying note 97, defeated Brown's "gambit." Ackerman, supra note 81, at 37. Since McLaurin's suggestion went nowhere, I don't understand the point.

110 Ackerman, supra note 81, at 38.

111 Id. at 51 (emphasis deleted).

112 Id. at 38.

113 See supra text accompanying note 87 (statement of Sen. McLaurin).

114 See infra notes 120-121 and accompanying text.

115 See supra notes 104-106 and accompanying text.

116 See, e.g., Ackerman, supra note 81, at 34 (noting that plan for income tax statute "encountered stiff resistance from congressional conservatives, led by Nelson Aldrich of New York [sic] [who] was opposed to all forms of income taxation").

117 Ratner, supra note 8, at 299.

118 S.J. Res. 39, 61st Cong., 44 Cong. Rec. 3377 (June 17, 1909).

119 If source of income mattered under the Brown proposal, it's for the reason suggested by Buenker -- that Senator Nelson wanted to make sure all income (including any that had previously been off limits for an apportioned tax) could be subject to an unapportioned tax. See supra note 103 and accompanying text. But if the final language was intended to change intergovernmental immunity law, for example, to make it possible to tax interest on municipal bonds, that point eluded most congressmen. That possibility caused consternation in ratification debates. See infra notes 124-129 and accompanying text (discussing Gov. Hughes's reservations about Amendment).

120 See 44 Cong. Rec. 4067 (July 3, 1909); 44 Cong. Rec. 4109 (July 5, 1909).

121 44 Cong. Rec. 4109 (July 5, 1909); see also supra text accompanying note 87 (noting McLaurin's concern that failure to ratify would be used as evidence of lack of support for income tax).

122 Ackerman, supra note 81, at 5.

123 Id. at 50.

124 Paul, supra note 6, at 97.

125 Ratner, supra note 8, at 304 (quoting Special Message from the Governor, New York Senate, No. 3, at 5 (1910)).

126 Pollock I, 157 U.S. at 584-586.

127 That specific part of the holding in Pollock was overturned in South Carolina v. Baker, 485 U.S. 505 (1988).

128 See Evans v. Gore, 253 U.S. 245, 260-61 (1920); see also Buenker, supra note 27, at 255-61.

129 See Buenker, supra note 27, at 158.

130 44 Cong. Rec. 4392 (July 12, 1909).

131 44 Cong. Rec. 1351 (Apr. 15, 1909).

132 44 Cong. Rec. 1429 (Apr. 21, 1909).

133 44 Cong. Rec. 1538 (Apr. 26, 1909).

134 44 Cong. Rec. 3968 (June 30, 1909).

135 44 Cong. Rec. 4398 (July 12, 1909).

136 44 Cong. Rec. 4416 (July 12, 1909).

137 44 Cong. Rec. 4417 (July 12, 1909).

138 44 Cong. Rec. 4420 (July 12, 1909).

139 44 Cong. Rec. 4433 (July 12, 1909).

140 44 Cong. Rec. app. 127 (July 12, 1909).

141 Brownlee, supra note 8, at 38 (describing 1894 debates).

142 See 44 Cong. Rec. 4390 (July 12, 1909) (statement of N.Y. Republican Rep. Sereno E. Payne, chair of Ways and Means Committee) ("As to the general policy of an income tax, I am utterly opposed to it. I believe with Gladstone that it tends to make a nation of liars. . . . ").

143 44 Cong. Rec. 4391 (July 12, 1909) (statement of Mass. Rep. Samuel W. McCall) ("[W]hy not . . . limit it expressly to time of war?").

144 Senator McLaurin said an income tax would make the "wealthy . . . interested in an economical administration of the Government instead of extravagance." 44 Cong. Rec. 4109 (May 27, 1909).

145 Income Tax Law of 1913, ch. 16, 38 Stat. 114.

146 In form, the tax was 1 percent on "net income" above $3,000. Id. sections IIA.1, II.C. But surtaxes ranging from 1 percent to 6 percent applied to higher levels of income. Id. section II.A.2.

147 44 Cong. Rec. 3999 (July 1, 1909).

148 Marginal rates went up to 77 percent in 1918, see Revenue Act of 1918, ch. 18, sections 210-211, 40 Stat. 1057 (1919); Brownlee, supra note 72, at 45, but the wartime rates were temporary.

149 See Brushaber v. Union Pacific Railroad Co., 240 U.S. 1 (1916).

150 Many of the passages I've quoted have language like that. See, e.g., supra text accompanying notes 21 (McMillin), 138 (De Armond), 139 (Hamlin).

151 H.R. Rep. No. 53-276, at 3 (1894) (emphasis added).

152 A few congressmen were clear about this distinction. Populist James Maguire of California recognized the income tax wouldn't reach unrealized appreciation in land value; he therefore proposed a direct tax on that value. 26 Cong. Rec. app. 329 (Jan. 31, 1894).

153 See, e.g., 26 Cong. Rec. 6634 (June 21, 1894) (statement of Sen. Peffer).

154 Some said apportionment had outlived its usefulness, see, e.g., 44 Cong. Rec. 4392 (July 12, 1909) (statement of Rep. Clark), but it was hard to imagine an unapportioned tax on real property surviving judicial review.

155 Professor Schenk has suggested the Supreme Court might be convinced to see the ex ante wealth tax she proposes as "an income tax with a base equal to the risk-free return to certain assets," Deborah H. Schenk, "Saving the Income Tax With a Wealth Tax," 53 Tax L. Rev. 423, 441 (2000), and therefore as "a tax on income within the Sixteenth Amendment." Id. at 442. But if so, it wouldn't be because income taxes and wealth taxes were viewed the same way when the Amendment was ratified. Schenk recognizes the Court might see her reformulation "as a mere semantic change that does not cure the constitutional infirmity of a wealth tax." Id.