Former Columbia Law School Dean David Schizer and I just published a manuscript today on SSRN at:
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4867878
It will be published in the Florida Law Review (2025).
We believe that direct tax provisions apply to taxes that fall directly on an individual, while import duties, customs duties and excise taxes only apply to transactions involving: importing goods, buying or selling goods, inheriting an inheritance or making a gift, leasing someone’s property, or Sell your labor to others in exchange for money. We believe that a wealth tax targets individuals rather than transactions, as we explain in the draft law review article referenced above.
We discuss the original meaning of the Tax Clause, court opinions from the founding to the present, and the arguments of leading scholars in law review articles and amicus briefs. The requirement to allocate direct taxes was by no means a minor issue in the Constitution, but rather prevented a majority of states in Congress from imposing onerous taxes on certain states and territories. Thus, the clause not only limited taxation on slaves and the large amount of undeveloped land that the South held in 1787; The Direct Tax Clause also prohibited Congress from imposing taxes on shipping, manufacturing, or small farms, which were common in the North but rare in the South. Direct tax provisions make both types of fiscal blitzes politically unfeasible.
The Framers meant that the federal government relied only on indirect taxes in peacetime, but they provided direct taxes without geographic bias in wartime. An attractive voluntary element of indirect taxes is that one can always avoid tax by not engaging in taxable transactions. This voluntariness does not exist when direct taxes are imposed.
