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The Constitution and Wealth Taxes
Michael Ramsey

At Dorf on Law, Neil Buchanan: What Kind of Constitutional Mess Might a Wealth Tax Create?, and also at Justia: Can We Tax Wealth? Yes, and Even if Not, Still Yes.  From the latter:

Direct and Indirect Taxes

Where are the strictly legal issues hiding? The Constitution distinguishes between two types of taxes, direct and indirect. What is the difference? As I noted above, no one seems to be sure. True, the occasional conservative blogger might claim to have the key to understanding the difference, but even then we see a concession that, “[a]dmittedly, the line between direct and indirect taxes was not always crystalline.” That understatement deserves some kind of award.

The Constitution’s text is unhelpful, because section 9 of Article I says only that “No Capitation, or other direct, Tax shall be laid, unless in Proportion to the Census or Enumeration herein before directed to be taken.” So we know that a capitation—that is, a per-person tax—is one kind of direct tax, but we honestly have only the most limited clues as to what else would count as a direct tax. Clearly, the framers thought that there must be others, but they did not provide guidance.


What About Apportionment?


The key here is that the Court cannot invalidate a wealth tax. It can only say that a wealth tax is a direct tax, not an indirect tax, and thus that it must be apportioned. But again, so what? What is apportionment, and why does it matter?

Apportionment means that the tax must be levied in proportion to each state’s representation in the House of Representative. Because House seats are set roughly in proportion to population, this means that a direct tax must be levied such that the ratio of the money collected from each state to the total revenue collected by the tax is equal to the ratio of each state’s population to the total population of the country. Maryland’s population, for example, is currently just under two percent of the total population, so an apportioned tax would have to collect that percentage of its revenue from Marylanders... [and as he goes on to explain, this would create various perverse outcomes.]

Via the link above, here's a 2015 essay by Rob Natelson that addresses the direct/indirect question: The Constitution’s financial terms, part III: Direct and indirect taxes.  Here's his summary (after extensive originalist analysis):

Admittedly, the line between direct and indirect taxes was not always crystalline. One might argue that a particular Massachusetts “excise” levied on cider mill production was really a direct tax rather than an excise. As in Hylton v. United States, one might quarrel over whether an annually-imposed levy on consumer-owned carriages was direct or indirect. Nevertheless, contemporaneous tax statutes, public discussion, newspapers, treatises, and governmental publications render rather clear the fundamental difference between the categories: A tax was direct if laid on one’s status or on one’s living or livelihood — that is, if it was levied on heads, on the ordinary effects of daily life, or on production. Taxes on wealth, property, businesses, and income were all direct. Taxes were indirect (and w[ere] therefore duties) if imposed on the consumption or on certain specific transactions, such as importing, exporting, and issuing legal documents.

I expect we will be hearing more on these issues in the near future.