a direct tax should be levied and collected under the Federal Government, the determination of what is a direct tax has not been an easy matter; and the question came up for solution before the United States Supreme Court shortly after the adoption of the Constitution, or in 1794, in a case that has become historic in the annals of American jurisprudence.
Congress having imposed a tax on pleasure carriages—or chariots, as they were then termed—its collection was resisted by one Hylton, of Virginia, on the ground that such a tax was a direct tax, and had not been apportioned among the States, as required by the Constitution. The court held that the tax in question was to be considered as a tax on the expenses of living and not a direct tax within the meaning of the Constitution, as the evils which would attend its apportionment according to population would be so great "that the Constitution could not have intended that an apportionment should be made." "The Constitution," said the Court, "evidently contemplated no taxes as direct taxes, but such as Congress could lay in proportion to the census. A tax on carriages can not be laid by the rule of apportionment without very great inequality and injustice. Suppose two States, equal in census, to pay eighty thousand dollars each, by a tax on carriages of eight dollars on every carriage, and in one State there are one hundred carriages and in the other one thousand. A, in one State, would pay for his carriage eight dollars; but B, in the other State, would pay for his carriage eighty dollars." (Opinion by Justice Chase, 3 Dall., 171.)
These, and other decisions of the United States Supreme Court, have accordingly been regarded as affirming, that within the meaning of the Constitution of the United States there are only two forms of taxation that can be considered as direct—namely, a capitation or poll tax, simply, and without regard to property, profession, or any other circumstance, and a tax on land; and that no other taxes can be regarded as direct by the Federal authorities. It is also worthy of note that since the decision in the carriage case in 1796, Congress, in the few instances in which it has imposed a tax which it recognized as direct, has never made it applicable to any objects other than real estate and slaves.
The following additional memoranda are pertinent to this discussion: "While the carriage case was pending before the United States Supreme Court in 1796, Mr. Madison, who participated in the convention that framed the Constitution, wrote to the effect that the action of Congress in imposing this tax was constitutional, but that he doubted whether the court would so regard it. Hamilton, who appeared as one of the counsel for the United States in this case, also left behind him a legal brief in which he says: "What is the distinction between direct and indirect taxes?
