In December the Court will hear argument in Moore v. United States, which asks whether a federal tax on unrealized sums is authorized by the Sixteenth Amendment. Another way of putting the question is by asking whether a federal tax on unrealized capital sums is a direct tax subject to apportionment. I wrote about direct taxes at length in my book on William Jennings Bryan.
The idea that a tax on unrealized capital sums could be direct comes from the Supreme Court’s 1895 decision (actually two decisions) in Pollock. Pollock was poorly reasoned and was later repudiated by the Sixteenth Amendment. Thus, I am surprised to see many briefs in Moore citing Pollock as sound authority. Indeed, some of these briefs say that Pollock was not overruled. This is true as a formal matter but totally wrong as a practical matter
Consider a simple thought experiment along these lines. Suppose I cite Dred Scott positively with the explanation that the case was never overruled by the Supreme Court. That’s equally true and equally wrong as the claim about Pollock. A constitutional amendment ratified in response to a particular decision is the most powerful rejection our system can muster. It is the equivalent of calling a case wrong ab initio.
There are many other deficiencies in Pollock, as Justice Harlan explained in his dissent. (Normally in this era, you want to go with Harlan rather than with the Court.)
Posted by Gerard Magliocca on October 24, 2023 at 12:08 PM