Gene Magidenko has posted Classifying Federal Taxes for Constitutional Purposes (45 University of Baltimore Law Review 57 (2015)) on SSRN. Here is the abstract:
In 2012, ruling on a challenge to President Obama’s landmark healthcare legislation, the Supreme Court upheld the legislation’s individual mandate penalty as a tax. The Court’s decision relied in part on the finding that the penalty was not a direct tax and so its lack of apportionment was not fatal. This was the first Supreme Court case in decades to address direct taxes, but regrettably it provided only a cursory examination of the subject. It did, however, serve as a useful reminder that the constitutional analysis of taxes is not a foregone conclusion and confirmed that there is a tenable distinction between direct and indirect taxes.
As the national government’s expenditures continue to outpace revenues, calls for new forms of federal taxation to right the balance will become more persistent. This pressure leads to the understandable desire to test the outer limits of the federal government’s taxation power, with creative minds finding new methods of levying and collecting taxes never contemplated by the Founding Fathers. To adequately assess the validity of any proposed tax and fit it into the constitutional system, it is useful to have a roadmap from which to proceed. This Article seeks to develop such a model. As the examination that follows demonstrates, this is far from straightforward; however, having categorized the tax in question, it is often relatively simple to determine just what one can and cannot do with it. This Article focuses on taxes that may be imposed by the federal government, so constitutional limits on the powers of state taxation will not be addressed.
The Article’s first part examines the text of the Constitution’s tax clauses and the history behind them. The second part surveys the Supreme Court cases interpreting these provisions. The third part outlines a five-category model for classifying taxes for constitutional purposes. The fourth and final part examines how this model applies to selected taxes proposed in recent years.