Steven Calabresi (Northwestern), The Amar Brief in Moore v. United States Should Not be Embraced:

On December 5, 2023, the Supreme Court will hear oral argument in the most important federalism case since it upheld the constitutionality of President Obama's Affordable Care Act.  The case at issue – Moore v. United States – raises two vital matters:
1. Can Congress tax unrealized capital gains, as Yale Law Professor Bruce Ackerman argues in an amicus brief;
2. Can Congress enact a Bernie Sanders/Elizabeth Warren-style wealth tax, including on unrealized capital gains, as the two Amar brothers (Akhil Reed Amar [Yale] and Vikram David Amar [UC-Davis]) argue?

Because of the huge importance of this case, I am going to respond in this blog post to the Amar brothers (one of whom is my second-best friend in the world, notwithstanding our disagreement in this case). They devoted the third section of their amicus brief to critiquing an amicus brief that I co-filed in Moore arguing against congressional power to impose a wealth tax or to tax unrealized capital gains – a brief which was joined by former Attorney General Edwin Meese III and by Professor Gary Lawson. …

Article I, Section 9, Clause 4 … critically limits the federal taxing power by saying that:
"No Capitation, or other direct, Tax shall be laid, unless in Proportion to the Census or Enumeration herein before directed to be taken."

The rule of apportionment thus applies to "direct taxes"; the rule of uniformity applies only to such indirect taxes as "Duties, Imposts, and Excises.

The flaw in the Amar brothers' brief that I will discuss today is that it construes the text of the Constitution according to the expected applications of certain historical figures rather than its plain objective meaning. The Amar brothers rewrite Article I, Section 9, Clause 4 to say:
"No Capitation, or Land Tax shall be laid, unless in Proportion to the Census or Enumeration herein before directed to be taken."

They argue that wealth taxes and taxes on unrealized capital gains in your house or Vanguard fund are perfectly constitutional. They say, contrary to the text of the Constitution, that Article I, Section 9, Clause 4 bans only federal capitation and land taxes and that nothing else is a direct tax.

The original public meaning of the words "direct tax" is clearly set forth in two law review articles: Robert Natelson, What the Constitution Means by "Duties, Imposts, and Excises"— and "Taxes" (Direct or Otherwise), 66 Case W. Res. L. Rev. 297 (2015), and Erik M. Jensen, The Apportionment of "Direct Taxes": Are Consumption Taxes Constitutional?, 97 Colum. L. Rev. 2334 (1997).  Both authors conclude that "direct taxes" included many more taxes than merely a capitation or federal land tax. …

In 1787, people held their wealth in land because there was no stock market or bond market yet and few banks.  It is thus not surprising that Hamilton and Chase in 1796 would read broad constitutional language like "direct taxes" as applying only to capitation and "land" taxes.  A wealth tax today would fall "straight; and not crooked" upon one person in exactly the same way a capitation or a land tax would have done in 1787.

In sum, Professor Amar's broad readings of the Commerce Clause, the Necessary and Proper Clause, the First Amendment, and the Fourteenth Amendment all suggest a broad reading of the requirement that the words "Direct Taxes" impose today.  That clause thus, in 2023, applies to a wealth tax as well as to a federal capitation or land tax.  Such taxes are subject to the rule of apportionment and not of uniformity.

Prior TaxProf Blog coverage:

• Christopher Cox (Former Rep. (1989-2005) & SEC Chair (2005-2009)) & Hank Adler (Chapman), The Ninth Circuit Upholds A Wealth Tax (Jan. 30, 2023)
• Reuven Avi-Yonah (Michigan), If Moore Is Reversed, 179 Tax Notes Fed. 2215 (June 26, 2023)
• John Brooks (Fordham) & David Gamage (Indiana), Moore v. United States and the Original Meaning of Income (June 27, 2023) (reviewed by Michelle Layser (San Diego) here) (presented at Columbia workshop)
• Daniel Hemel (NYU), The Low And High Stakes Of Moore, 180 Tax Notes Fed. 563 (July 24, 2023) (reviewed by Young Ran (Christine) Kim (Cardozo) here)
• Alex Zhang (Emory), Moore, Eisner v. Macomber, and the Future of Structural Tax Reform, 92 Geo. Wash. L. Rev. __ (2024) (Aug. 29, 2023)
• Thomas Lee (BYU), Lawrence Solum (Virginia), James Cleith Phillips (Chapman) & Jesse Egbert (Northern Arizona), Moore, Corpus Linguistics, And The Original Public Meaning Of The Sixteenth Amendment (Sept. 14, 2023)
• Reuven Avi-Yonah (Michigan), Moore Questions Than Answers, 180 Tax Notes Fed. 2256 (Sept. 25, 2023)
• Christopher Hanna (SMU), Moore, The 16th Amendment, And The Underpinnings Of The TCJA’s Deemed Repatriation Provision (Sept. 28, 2023) (reviewed by Mirit Eyal-Cohen (Alabama) here)
• Joint Committee on Taxation, Tax Code Provisions Implicated In Moore (Oct. 3, 2023)
• Natasha Sarin (Yale), The Supreme Court Tax Case That Could Blow A Hole In The Federal Budget (Oct. 7, 2023)
• John Brooks (Fordham) & David Gamage (Indiana), “From Whatever Source Derived”: The Sixteenth Amendment and Congress’s Income Tax Power (Oct. 9, 2023) (reviewed by David Elkins (Netanya) here and Blaine Saito (Ohio State) here) (presented at Loyola-L.A. workshop and San Diego workshop)
• Steven Rosenthal (Tax Policy Center), Moore Could Invalidate Decades Of Tax Rules, 181 Tax Notes Fed. 285 (Oct. 9, 2023)
• Lawrence Zelenak (Duke), Reading The Taxpayers’ Brief In Moore (Oct. 18, 2023)
• NYU Tax Law Center, Guide To Moore (Oct. 25, 2023)
• Blaine Saito (Ohio State), Review Of  “From Whatever Source Derived”: The Sixteenth Amendment and Congress’s Income Tax Power, by John Brooks (Fordham) & David Gamage (Indiana) (Oct. 27, 2023)
• Tax Prof Amicus Briefs In Moore v. United States, 23 For Government, 1 For Taxpayer (Oct. 31, 2023)
• Steven Calabresi (Northwestern), Moore: Taxes On Wealth And Unrealized Capital Gains Are Unconstitutional (Nov. 1, 2023)
• Michael Graetz (Columbia), To Avoid The Moore Morass, The Court Should DIG It (Dismiss As Improvidently Granted), 181 Tax Notes Fed. 1253 (Nov. 13, 2023)
• Taxpayer's Reply Brief In Moore v. United States, 'Macomber Decided The Question Of Realization, Decided It Correctly, And That Holding Remains Good Law' (Nov. 17, 2023)