The Claim of 'Apportionment Wasn’t Meant to Protect Wealth'
This article is part of the wealth tax series.
Many on the political left are running a full-court press to defend their notion that a wealth tax is constitutional. Some are even claiming the rule of apportionment was just a mechanism to raise revenue and it wasn’t meant to handcuff Congress’s ability to reach for an individual’s wealth.
What these advocates are saying is both true and false. The true part is that apportionment is a legitimate way of directly taxing existing wealth. Apportionment applies to only direct taxation, but not the income tax which was permanently removed from the rule by the Sixteenth Amendment.
The rule requires a complicated calculation where you have to consider the population of each state to determine how much each person owes. Each state will have different rates or amounts due. So a person who was the object of a tax living in Colorado would owe a different amount than if they lived in Idaho.
Because the rule is so difficult to administer and its perceived unfairness, the chance Congress will impose such a tax is virtually zero. What proponents of a wealth tax say is that back during the Founding Era a direct tax would have been easier to enact because the rule was only meant to apply to land values or capitations, which didn’t greatly vary in value back then.
They say since implementing such a tax isn’t feasible today; the rule shouldn’t apply to any taxation, even direct taxes on land and capitations. This is because, they contend, the rule was just a mechanism to raise revenue which is too difficult in today’s world.
So not only do they maintain the rule wasn’t meant to protect wealth, but also its purpose to raise revenue has become outdated. Therefore, it should be scrapped with the cooperation of all three branches of the federal government, especially the Supreme Court.
Protection of Wealth
Today’s left argues that apportionment was just a method to raise funds and it was never meant to protect property. Before the Constitution’s ratification, however, there was a great debate on the power of the national government to directly tax.
The Anti-Federalists of that time were against direct taxation because it reached into private property instead of just taxation on commerce, which could be avoided. They printed the following in newspapers throughout the United States:
The power of direct taxation will further apply to every individual, as congress may tax land, cattle, trades, occupations, etc. in any amount, and every object of internal taxation is of that nature, that however oppressive, the people will have but this alternative except to pay the tax, or let their property be taken, for all resistance will be in vain. The standing army and select militia would enforce the collection.1
Speaking at the Virginia Convention on the adoption of the Federal Constitution, James Monroe said he would give the government “absolute control over commerce,” but take one power away, that of direct taxation. He believed direct taxation to be “not necessary” and called it “the subversion of liberty.”2
Alexander Hamilton, hoping to satisfy concerns, wrote in Federalist 36 that apportionment “effectually shuts the door to partiality or oppression (emphasis mine).” Hamilton insisted the rule of apportionment would prevent an oppressive government.
The reason people were against direct taxation was because they didn’t want their property (wealth) to be taken by a powerful federal government. To say they were okay with such a tax as long as it was fair and uniform is a false portrayal of history. The apportionment rule isn’t easily administered and therefore, protects wealth, at least according to Hamilton.
Does anyone think a government run by the likes of Bernie Sanders wouldn’t become oppressive if they had unrestricted power to confiscate wealth? If Marxists can tax wealth, they can then setup their socialist economic system, "From each according to their ability, to each according to their needs."
The left also believes the rule of apportionment is outdated because it was only a fair system back at the time of our Founding, but not so today. Consequently, apportionment as a rule shouldn’t apply to direct taxation in today’s world.
It may be more complicated now, but it was never a simple taxing method or was it equal. Would it have been easy to value different properties across a diverse and growing country? And if it was implemented, using apportionment to tax land owners back then would still end up being unfair to some who would have to pay a higher rate than others.
Direct taxes were so difficult that politicians and judges had to misconstrue the income tax. They ridiculously called it an excise tax so it wouldn’t be considered what it truly was, a direct tax.
The 16th Amendment was enacted which allows the income tax to be imposed without apportionment. By giving Congress this taxing method, it replaced consumption taxes as the main source of revenue. The Sixteenth as well has relegated direct taxation as obsolete.
The Founders were concerned about emergency expenses that could arise such as in wartime. That was the purpose of a direct tax. General expenses would be supplied by consumption taxes, otherwise known as indirect taxes.
James Madison made the following points in the Virginia debate on the Constitution’s adoption regarding direct taxation:3
“It can be of little advantage to those in power to raise money in a manner oppressive to the people (emphasis mine).”
“Direct taxes will only be recurred to for great purposes… Not the expenses of their governments, but war.”
“It is necessary to establish funds for extraordinary exigencies, and to give this power (direct taxation) to the general government.”
In other words, direct taxes are oppressive and shouldn’t be used unless in extreme circumstances like war. Accordingly, the power should be given the federal government.
James Monroe thought differently. Not only did he believe direct taxation to be a subversion of liberty, but also unnecessary. Our future 5th President said direct taxation wasn’t necessary because indirect taxation methods would be sufficient to pay for the federal necessities and because we could borrow money. He also mentioned unused lands that had value and a requisition system for small amounts.
Monroe concluded that the nation’s credit “will enable us to procure, by loans, any sums we may want.”4
As it turns out, borrowing has become how the United States pays for emergencies. Given the fact that direct taxation doesn’t apply to income and that a direct tax was only meant for emergencies, there is no reason to utilize such a taxing method today to reach the people’s wealth. If we have an emergency, we have access to loans. Direct taxation, therefore, is what has become outdated.
"The Dissent of the Minority of the Pennsylvania Convention, Pennsylvania Packet." Pennsylvania Packet 1787-12-18 : . Rpt. in The Documentary History of the Ratification of the Constitution. Vol. 15. Ed. Gaspare J. Saladino and John P. Kaminski. Madison: Wisconsin Historical Society Press, 1984. 13-34. Print. https://www.consource.org/document/the-dissent-of-the-minority-of-the-pennsylvania-convention-pennsylvania-packet-1787-12-18/20160502215941/
The debates in the several state conventions on the adoption of the federal Constitution, as recommended by the general convention at Philadelphia, in 1787. Together with the Journal of the federal convention, Luther Martin’s letter, Yates’s minutes, Congressional opinions, Virginia and Kentucky resolutions of ‘98-‘99, and other illustrations of the Constitution … 2d ed., with considerable additions. Collected and rev. from contemporary publications, by Jonathan Elliot. Pub. under the sanction of Congress. (1836), 5 vols. https://oll.libertyfund.org/titles/1907#Elliot_1314-03_415