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Are property taxes and income taxes both called 'direct taxes' in the United States?

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Property taxes are a direct tax. Income taxes are an indirect tax. All direct taxes must be apportioned, and all indirect taxes must be uniform. "The Congress shall have power to lay and collect taxes, duties, imposts and excises." Art. 1, § 8. If the tax is a direct one, it shall be apportioned according to the census or enumeration. If it is a duty, impost, or excise, it shall be uniform throughout the United States. Together, these classes include every form of tax appropriate to sovereignty."
Steward Machine Co. v. Davis, 301 U.S. 548, at 581 (1937).


The importance of defining a tax as either a direct or indirect is necessary to the extent that country needs to define the object of taxation: In the direct income tax (this is non-existent in the United States) the subject of the tax is income (property); In an indirect tax the subject of the tax is the event that produces the income. Imagine this scenario:
Tax collector: Knocks on door
Taxpayer: Hello how can I help you?
Tax collector: I am here to collect $1400 in taxes.
Taxpayer: I was not aware that I owe these taxes!
Tax collector: Yes sir you do, please pay now or you will be prosecuted. If you are found guilty heavy fines will be levied and/or you may be imprisoned.
Taxpayer: How did i come to owe this tax? What exactly are they taxing?
Tax collector: Well sir we don't need to tell you what we are taxing. It should suffice that we follow the law, and right now the law says that you owe $1400 dollars in taxes.
Taxpayer: I just want to know...are you taxing my house my car, what exactly are you taxing!


The personal income tax is an indirect tax:
  • "Moreover in addition the conclusion reached in the Pollock Case did not in any degree involve holding that income taxes generically and necessarily came within the class of direct taxes on property, but on the contrary recognized the fact that taxation on income was in its nature an excise entitled to be enforced as such...."
  • The 16th Amendment did not give any new power to tax income. The 16th Amendment merely forbade congress from labeling the income tax a direct tax:
  • "[B]y the previous ruling [Brushaber Case] it was settled 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 [of our national government under the Constitution] from being taken out of the category of indirect taxation to which it inherently belonged...." Brushaber v. Union Pacific R.R. Co., 240 U.S. 1, at 16-17 (1916) Stanton v. Baltic Mining Co., 240 U.S. 103, at 112 (1916)






Direct and indirect taxes are natural events, the founding fathers merely define them for the purpose of collecting taxes. The distinction cannot be destroyed any more than the effects of gravity can be destroyed by definition.



What is an indirect tax?
"A tax laid upon the happening of an event, as distinguished from its tangible fruits, is an indirect tax." Tyler v. United States, 281 U.S. 497, at 502 (1930)



The subject of the income tax is the event that produced the income. For example if you were sweeping the floor, you are being taxed for sweeping the floor; if you are applying CPR as an EMT worker you are being taxed on saving someones life. If you produce tobacco or alcohol title 26 readily labeled these as taxable events. All taxable events are clearly stated in Title 26.


Indirect tax samples: 1) When you pay a toll to cross a bridge. The tax is on the event of crossing the bridge. The tangible fruit is the money the toll booth receives. The money is not the subject of the tax, and neither is the bridge but rather it is the crossing of the bridge. 2) When you purchase a television from Walmart and pay sales tax the sales tax is not on the television or the receipt of money. The tax is on the event of buying / selling.


Interpreting the 16th Amendment:
"The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration."
United States Constitution, Sixteenth Amendment.



1) The 16th Amendment did not give congress any taxing power. The 16th Amendment did not create the income tax as the income tax was legal since the beginning of this country. The legality of collecting income tax stems from Article 1 section 8. However, not all income producing events are taxable. Those that are taxable are clearly stated in Title 26.


2) Since the 16th Amendment all personal income taxes are indirect. They must follow the rule of uniformity and not apportionment. The rule for apportionment or enumeration are only for direct taxes.

3) The 16th Amendment was a result of the Pollock decision: Pollock v. Farmers' Loan & Trust Co., 158 U.S. 601, at 637 (1895)


The lower courts have been challenged with this distinction: One court defines the subject of the tax as income (property), while another court in the next county as the event. For one hundred years, and in confusion, the lower courts have varied the subject of the income tax. When the courts do make the correct distinction, that the subject of the income tax is the event, the event is clouded in generalities.


1) "16th Amendment eliminated the indirect/direct distinction as applied to taxes on income."
United States v. Turano, 802 F.2d 10, 12 (1st Cir. 1986)


2) "The tax is, of course, an excise tax, as are all taxes on income..."
White Packing Co. v. Robertson, 89 F.2d 775, 779 (4th Cir. 1937)


3)"[T]he Supreme Court explicitly stated that taxes on income from one's employment are not direct taxes and are not subject to the necessity of apportionment."
Ficalora v. Commissioner, 751 F.2d 85, 87 (2nd Cir. 1984)


4) "The Supreme Court promptly determined in Brushaber... that the sixteenth amendment provided the needed constitutional basis for the imposition of a direct non-apportioned income tax."
Parker v. Commissioner, 724 F.2d 469, 471 (5th Cir. 1984)


5) "The cases cited by Francisco clearly establish that the income tax is a direct tax, thus refuting the argument based upon his first theory. See Brushaber v. Union Pacific Railroad Co., 240 U.S. 1, 19, 36 S.Ct. 236, 242, 60 L.Ed. 493 (1916) (the purpose of the Sixteenth Amendment was to take the income tax 'out of the class of excises, duties and imposts and place it in the class of direct taxes')"
United States v. Francisco, 614 F.2d 617, 619 (8th Cir. 1980)
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