In one of the most controversial decisions of the late nineteenth century, the Supreme Court ruled a peacetime federal income tax unconstitutional.
In the first decision, Justice Melville W. Fuller
At issue was the constitutionality of the 1894 income tax law, a statute imposing the first income tax that was not a wartime measure. The Court could have avoided hearing the case on the grounds that it was not a true case and controversy because the plaintiff was suing his bank to keep it from paying an income tax that it had no desire to pay anyway. However, instead of ducking the issue, the Court expedited the hearing of the case. The plaintiff’s argument was more emotional and political than legal as the Court had already upheld a wartime income tax. The plaintiff argued that the income tax was a direct tax in contravention of the Constitution, but this position contradicted precedents because the Court had long held that a direct tax was very narrowly construed. Other arguments such as the contention that the income tax was a tax on the state and, therefore, a violation of state sovereignty were asserted by the Court in the first decision but abandoned in the second decision, which rested mainly on the argument that the income tax was a direct tax that could be constitutionally valid only if apportioned according to the states’ populations an obvious impossibility. For all the controversy, this decision was set aside by the Sixteenth Amendment, which explicitly authorized an income tax, but the case remains useful to show the laissez-faire point of view of the late nineteenth century Court regarding the Constitution.
Hylton v. United States
Springer v. United States