The Congressional Research Service

The Congressional Research Service

SOME CONSTITUTIONAL QUESTIONS REGARDING THE FEDERAL INCOME TAX LAWS

... In Brushaber v. Union Pacific R.R. Co. (1916), the Supreme Court held that the income tax , including a tax on dealings in property, was an indirect tax, rather than a direct tax, and that the

"the command of the amendment that all income taxes shall not be subject to the rule of apportionment by a consideration of the source from which the taxed income may be derived forbids the application to such taxes of the rule applied in the Pollock case by which alone such taxes were removed from the great class of excises, duties, and imposts subject to the rule of uniformity and were placed under the other or direct class." 240 U.S. 1 18-19 (1916)

This same view was reiterated by the Court in Stanton v. Baltic Mining Co. (1916) in which the court stated that the:

"Sixteenth Amendment conferred no new power of taxation but simply prohibited the previous complete and plenary power of income taxation possessed by Congress from the beginning from being taken out of the category of indirect taxation to which it inherently belonged." 240 U.S. 112 (1916)

Therefore, it is clear that the income tax is an "indirect" tax of the broad category of "Taxes, Duties, Imposts and Excises," subject to the rule of uniformity, rather than the rule of apportionment.

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