taxing power

The taxing power of Congress is in Article I, Section 8 of the Constitution. The 16th Amendment allows a tax on income not apportioned among the states. I don't see any direct/indirect references.

The individual mandate penalty is Section 5000A of title 26, subtitle D, Excise Taxes. Where it gets fun is that rather than imposing an excise tax the text calls it a "penalty."

So, how does the Chief Justice get from "penalty" to "tax"? Well, SCOTUS has done it before. I haven't read (and don't intend to read) the decision, but it did trigger a memory of a bankruptcy case from the 70's, in re Sotelo:

Phil Marti VITA/TCE Volunteer Clarksburg, MD

The 16th Amendment REQUIRES that taxes on income NOT be apportioned among the states based on population.

The 16th Amendment ALLOWS it.

Article 1 requires taxes to be taxes to be apportioned among the states.

What I don't understand is where is the authority for the Estate Tax?

As neither party nor any other lower court called it a tax, I think it was improper for the Chief Justice to classify it as such on his own. Even though he did, his decision did not address whether the tax was one of the valid types (nor which one) permitted. Therefore, I expect further challenges.

The 16th Amendment allows a tax on income not apportioned among the states. I don't see any direct/indirect references.

Excise Taxes. Where it gets fun is that rather than imposing an excise tax the text calls it a "penalty."

done it before. I haven't read (and don't intend to read) the decision, but it did trigger a memory of a bankruptcy case from the 70's, in re Sotelo:

(IRC 6672), which resides in the Assessable Penalties neighborhood of the Code. The Court ruled that the penalty was actually a tax and, thus, not dischargeable in a title 11 bankruptcy case. I'm especially fond of this case because of Chief Justice Renquist's dissent, which included a reference to the majority's "thrice-twisted analysis" which turns a penalty into a tax. While Sotelo isn't anywhere near on point regarding the current case, it's a fun example of one way to get from penalty to tax.

The case you cite is interesting in light of the Scalia, Thomas, Kennedy & Alito dissent in the recent health care decision. Here is what they said about penalties and taxes.

In a few cases, this Court has held that a ?tax? imposed upon private conduct was so onerous as to be in effect a penalty. But we have never held?never?that a penalty imposed for violation of the law was so trivial as to be in effect a tax. We have never held that any exaction imposed for violation of the law is an exercise of Congress? taxing power?even when the statute calls it a tax, much less when (as here) the statute repeatedly calls it a penalty.

Yet in the case you cite, the court agreed that the penalty identifed in Sec. 6672 (it's 100% of the amount of the tax not paid over) is considered to be a tax for purposes of the Bankruptcy Act and could not be discharged.

"The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States;..."

That power is pretty broad. Where is a restriction on a direct tax? Perhaps it has to be a tax that is apportioned based on the census since it's not an income tax - but what in the world does that mean? Only that the citizens of one state are not treated differently than citizens of another state.

___ Stu

I believe the answer is that Article I, Section 2, Clause 3 dealing with direct taxes and apportioning among the states is not relevant as the gift & estate tax is not a direct tax (a tax "which falls upon the owner merely because he is owner, regardless of his use or disposition of the property."). It has been held to be an indirect tax or event tax. It is a tax on the transfer of property.

He may have written the opinion but he was joined by 4 other justices. As such, he did not do it on his own

Of course it addressed whether the tax was valid. If not valid, the opinion would have said it was not a valid tax. The court in 1945 said that a direct tax (one that is subject to Article I, Section 2, Clause

Therefore, I expect

I think not. I believe the court issued an order denying certiorari in all the other cases.

I'll bet the founding fathers are kicking themselves for overlooking that detail.

"Stuart A. Bronstein" wrote in news:XnsA08499A86D170spamtraplexregiacom@130.133.4.11:

Well, it's interesing if "Taxes" (as opposed to Duties, Imposts, Excises, and per 16th, Income-Taxes), are considered "capitation or other direct" in this case.

Historically, when the Articles of Confederation were being debated, it was decided that states would be taxed based on wealth for the support of the general government. Two methods were debated: one, being based on a real property assessment, the other, using population as a proxy for wealth. The population method was debated over the treatment of slaves. The southern states wanting slaves not to be counted, while the northern states wanted them counted. A compromise was arranged to count slaves at 3/5ths (revisited of course in the Constitution).

At the end of the day, the population method was defeated in favor of the assessment method. In practice the assessment proved difficult/unworkable.

The constitution continued to allow the option of a direct tax. To that end, beginning in July 1798 laws were passed to require assessment of all lands, dwelling-houses, and slaves. States were divided into assessment districts. Each property owner was required to submit a list of real property, including construction details of dwelling-houses, and numbers of slaves

The first direct tax was imposed on the assessed valuations that same year. Total tax due in dollars was listed per state based on the census. To collect that amount, a tax rate was imposed on dwelling houses at a rate of 0.2%-1% depending on value, and $0.50 per slave. When the resulting tax was totaled up per state, the difference between that amount and the total due from the state was imposed on the land.

Thus the problem that the tax had to be figured on a per-state basis, besides the problem of developing an accurate assessment list.

During the civil war a direct tax was again imposed, but there was concern that certain wealthy individuals had holdings such as joint-stock corporations which they "carried in their vest-pockets" and weren't subject to the tax. Thus the idea of a tax on incomes to capture the value of such holdings.

scott s. ..

Thanks for interesting information.

At this point my question is, is the estate tax a direct tax? If so, (since it's not an income tax) it apparently would have to be apportioned among the states. As you say that kind of an approach, while is sounds good, is unworkable in practice.

___ Stu

I'm pretty sure that the inheritance tax is an indirect tax. Practically, I don't think direct taxes are used any more.

The Supreme Court has held that both the estate tax and the gift tax are excises, not direct taxes. The taxes are imposed upon the transfer of property at death or inter vivos.