Could the Constitution’s deal with slavery could doom Elizabeth Warren’s wealth tax?
I’ve written before about the claims that Senator Elizabeth Warren’s proposed wealth tax violates the Constitution. The New York Times’s 1619 Project gives occasion to hone in on the history of slavery lurking in the background of that constitutional debate. Four hundred years after the first slave ships arrived upon American shores, the long arm of American slavery still exerts itself in unexpected ways. Old political compromises made with mass enslavement could even stymy efforts by today’s leaders to remedy economic inequality.
In her campaign for the 2020 Democratic presidential nomination, Senator Warren has run on a wealth tax on ultra-millionaires — a 2-cent tax on each additional dollar of wealth for people worth more than $50 million. This would both pay for a slew of new social programs and slow the massive wealth inequality that has exploded in the United States.
Yet there’s a potentially fatal hurdle in the way of Warren’s wealth tax: two provisions of the Constitution rooted in a compromise with slavery. Article I of the Constitution mandates both that “No Capitation, or other direct, Tax shall be laid, unless in Proportion” to the population of each state, and again that “direct taxes shall be apportioned among the several states.”
Though the language is opaque, these provisions were a delicate compromise worked out at the constitutional convention to protect southern slave property from taxation by northern states. With the North poised to have a numerical advantage in the new Congress, southern delegates insisted on locking in tax protection for southern property. Under these clauses, any “direct tax” on property, such as slaves or land, would have to be divvied up proportionately among the states according to their population. So if a hypothetical slave tax would generate $10 million in federal revenue, that $10 million tax burden would have to be borne equally by the citizens of each state — even though the overwhelming majority of slaves were held in southern states.
The same constitutional provision designed to frustrate attempts to tax slavery could similarly frustrate attempts to tax concentrated wealth today. If Warren’s wealth tax is, as some have argued, a “direct tax” under the meaning of the Constitution, then it must be apportioned according to each state’s population. That would leave residents of Missouri paying a greater share of the tax than Maryland because, even though Maryland is a significantly wealthier state, Missouri has more people. That kind of absurdity from forced population-based apportionment could render a wealth tax completely unworkable.
For many years, the courts endeavored to limit the damage from these slavery-tinged clauses. In 1796, the U.S. Supreme Court heard a challenge to a federal tax on carriages, the luxury vehicle of the time. Several justices on the Court in the case, Hylton v. United States, were delegates to the constitutional convention and witnessed its compromises up close. Justice William Paterson explained the history of the direct tax provision:
“The provision was made in favor of the southern states. They possessed a large number of slaves [. . . .] The southern states, if no provision had been introduced in the constitution, would have been wholly at the mercy of the other states. Congress in such case, might tax slaves, at discretion or arbitrarily [. . . .] To guard them against imposition, in these particulars, was the reason of introducing the clause in the constitution.”
Because the direct tax provision was a compromise with slavery, Justice Paterson wrote, it “ought not to be extended by construction” to apply to other types of taxes. The Court therefore upheld the carriage tax, limiting the reach of the Constitution’s bargain with slavery in the process.
Similarly, in the 1881 case Springer v. United States, the Court upheld a national income tax. Again acknowledging the direct tax clauses’ roots in slavery, the Court refused to subject the income tax to apportionment. Doing so would be “intolerably oppressive” in states “[w]here the population is large and the incomes are few and small.” The Court refused to interpret the Constitution to impose “such evils” of “inequality and injustice.”
Yet a decade and a half later, a differently composed Supreme Court reversed course to defeat a new national income tax, breathing new life into the Constitution’s slave bargain. In Pollock v. Farmers’ Loan & Trust Company, the Court read the direct tax provision broadly to all protect personal property from unapportioned taxation, including stocks and bonds. The decision reflected the justices’ own anxieties with the contemporary economic unrest, with Justice Stephen Field warning that “[t]he present assault upon capital is but the beginning,” foreseeing a “war of the poor against the rich[.]”
In dissent, Justice John Marshall Harlan reminded the Court that it was locating protections for the property for the rich in “constitutional provisions[ ] originally designed to protect . . . slave property[.]” As legal scholar Bruce Ackerman put it, “[r]ather than treating the ‘direct tax’ clause as a bargained-for anomaly, the Court transformed it into a driving engine of class war.”
Pollock was partially overturned by the Sixteenth Amendment, which authorized the federal income tax. But its expansive definition of what constitutes a “direct tax” still stands. Which means that the Constitution’s carveout for slave owners still binds us today.
How should we handle the vestiges of slavery in our Constitution? Must we fully honor a devil’s bargain? Or should we strictly cabin that bargain to contain the reach of slavery’s tentacles, as the Hylton Court’s bench full of Founding Fathers once did? It would be tragic if the Founders’ compromise were allowed to prevent action today to alleviate the inequalities of our New Gilded Age and its persistent racial wealth gap — that is, if one legacy of slavery prevented us from treating another.
In fact, the author of the direct tax compromise, Governeur Morris of New York, thought that it ought to be abandoned before even leaving the constitutional convention. According to James Madison’s notes on the convention, Morris “had only meant it as a bridge to assist us over a certain gulph; having passed the gulph the bridge may be removed.” Having overcome the slavery issue to forge a union between the North and South, Morris thought the direct tax compromise had outlived its usefulness. The other delegates did not act on Morris’s suggestion. But since we traversed Morris’s bridge some 150 years ago with the abolition of slavery in the wake of the Civil War, can we discard it at long last?
Perhaps those questions will be answered by the Supreme Court in a future constitutional showdown over a progressive president’s signature legislation. But for now those questions lurk, and the roots of the poisonous tree of slavery remain embedded in our Constitution and twisted around our political economy, four hundred years after arriving on our shores.