Tax Dissent

What the Supremes got wrong about taxes:

Moore v. United States posed the question of whether Congress could tax corporate shareholders for revenue received by their corporation but not yet distributed to them. The issue was a close one, so I won’t fault the court for answering “yes.” But you can fault most of the justices for labeling the income tax as an “indirect tax.” Apparently, they thought the Constitution’s 16th amendment dictated this conclusion. But it does not. Under the Constitution, the income tax is and always has been “direct.” The 16th amendment changed a rule governing how the income tax is treated. But it didn’t alter the levy’s direct nature—a point Justices Clarence Thomas and Neil Gorsuch recognized in their dissent. What the Constitution Says In the years leading up to the American Revolution, the colonists recognized a distinction between (1) financial charges designed mostly to regulate human behavior and (2) financial charges primarily designed to raise revenue. Americans called the latter category “taxes.” The Constitution incorporates the same distinction. In addition, the Constitution divides “taxes” into those that are indirect and those that are direct. The Constitution treats each category differently; Indirect tax rates must be uniform throughout the country. Direct tax rates must be adjusted so that each state pays the same per capita amount. (All the 16th amendment did was remove the latter requirement from the income tax.)

Some taxes stay the same...