Facts of the Case

Provided by Oyez

The Constitution gave the states the power to impose direct taxation. The federal government could impose direct taxes as well, but only if those taxes were apportioned among the states in proportion to their representation in Congress. In this case, the Court examined the Income Tax Act of 1894. 

Questions

  1. Was the income tax a direct tax in violation of the Constitution (Article I, Section 9)?

Conclusions

  1. The Court held that the Act violated the Constitution since it imposed taxes on personal income derived from real estate investments and personal property such as stocks and bonds; this was a direct taxation scheme, not apportioned properly among the states. 

    The decision was negated by the adoption of the Sixteenth Amendment in 1913.

     

    Justices John Marshall Harlan, Howell Edmunds Jackson, Edward Douglass White, and Henry Billings Brown dissented from the majority opinion. Justice White argued: “this court should consider itself compelled to go back to a long repudiated and rejected theory of the constitution, by which the government is deprived of an inherent attribute of being – a necessary power of taxation.” Justice Brown wrote: “The decision involves nothing less than the surrender of the taxing power to the moneyed class.”