Natelson: Direct Taxes And The Founders’ Originalism

Rob Natelson (Montana), Direct Taxes and the Founders’ Originalism:

Professor Donald Drakeman’s response to my essay on direct and indirect taxes presents an opportunity to offer some background on constitutional originalism.

My thesis was that the longstanding uncertainty over the Constitution’s distinction between direct and indirect taxes persists because probative Founding-era evidence continues to be overlooked. In addition to references in eighteenth-century literature, that evidence consists of (1) uncontradicted comments by participants in the ratification debates which mesh well with (2) a plethora of eighteenth-century British and American direct tax statutes. (Detailed citations can be found here and here.)

These sources tell us that direct taxes include capitations and levies on real and personal property (i.e., wealth), income, and occupations. Indirect taxes (duties) include levies on consumption of domestically-sold goods (excises), customs (exactions on imports and exports), and levies on certain other transactions and events.

Professor Drakeman’s response cited his 2013 co-authored article on the 1796 Supreme Court case of Hylton v. United States.

The participants in that case included such leading Founders as Alexander Hamilton, James Iredell, and William Paterson. The central issue was whether an annual tax on carriages for personal use was direct or indirect. Professor Drakeman tells us that the disagreements among those directly and more remotely involved in Hylton demonstrate that evidence of original public meaning (the goal of what he calls the “new originalism”) sometimes conflicts. When it does conflict, he favors returning to the intention of the framers, which he calls the “old originalism.”

Professor Drakeman certainly is correct to say that evidence of original meaning sometimes conflicts. His co-authored article is not quite the “deep dive” into the direct-indirect distinction he suggests, but it is an excellent summary of Hylton and the general issues surrounding eighteenth-century excise taxes. I believe his suggestion, however, that Hylton is relevant to originalism, is based on misunderstandings.

As explained below, documentary interpretation during the Founding era was governed by “original understanding originalism.” This approach was different from either the “old” or “new” variety Professor Drakeman identifies. It also is far older than either. But under any version of originalism, the Hylton case is useless, or worse than useless, as evidence of constitutional meaning. It should be disregarded. ...

No method of documentary interpretation answers all questions all the time. Professor Drakeman is right about that. But we should not wander afield looking for ambiguity. Usable evidence of the ratifiers’ understanding (or of the Constitution’s objective meaning at the time) is extensive: Western and biblical history, contemporaneous word definitions, important public documents, recent and current events, newspapers, popular literature, existing statutory and case law, and the constitutional debates themselves. In my experience, this evidence is sufficient to answer most major constitutional questions.

The distinction between direct and indirect taxes is one of them.

Prior TaxProf Blog coverage:

• Rob Natelson (Montana), Clarifying The Uncertainty Over Direct And Indirect Taxes In Moore v. United States (July 13, 2024)
• Rob Natelson (Montana), More Evidence That ‘Direct Taxes’ Include Levies On Wealth And Income (July 24, 2024)
• Rob Natelson (Montana), The Constitutional Line On Direct Taxes (Aug. 7, 2024)
• Donald Drakeman (Notre Dame), Where is the Wall of Separation Between Direct and Indirect Taxes? (Aug. 13, 2024)

Editor's Note:  If you would like to receive a daily email with links to tax posts on TaxProf Blog, email me here.