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Brushaber v. Union Pacific Railroad Co.
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{{Use mdy dates|date=September 2023}} {{more citations needed|date=January 2011}} <!-- Pursuant to community consensus reached at Talk:Tax protester/Request for comment, any POV tags will be removed unless they refer to a talk page section showing specific examples of bias. --> {{Infobox SCOTUS case |Litigants=Brushaber v. Union Pacific Railroad |ArgueDateA=October 14 |ArgueDateB=15 |ArgueYear=1915 |DecideDate=January 24 |DecideYear=1916 |FullName=Frank R. Brushaber v. Union Pacific Railroad Company |USVol=240 |USPage=1 |ParallelCitations=36 S. Ct. 236; 60 [[Lawyers' Edition|L. Ed.]] 493; 1916 [[LexisNexis|U.S. LEXIS]] 1418; 1 U.S. Tax Cas. ([[CCH (company)|CCH]]) ΒΆ 4;3 A.F.T.R. (P-H) 2926 |Prior=Dismissed by the District Court for the Southern District of New York |Subsequent=None |Holding=(1) The Sixteenth Amendment removes the requirement that income taxes (whether considered to be direct taxes or indirect taxes) be apportioned among the states according to population (Article I, section 9, clause 4 of the US Constitution); (2) the Federal income tax statute does not violate the Fifth Amendment's prohibition against the government taking property without due process of law; (3) the Federal income tax statute does not violate the uniformity clause of Article I, section 8 of the U.S. Constitution. |Majority=White |JoinMajority=unanimous |NotParticipating=McReynolds |LawsApplied=[[Sixteenth Amendment to the United States Constitution|U.S. Const. amend. XVI]] }} '''''Brushaber v. Union Pacific Railroad Co.''''', 240 U.S. 1 (1916), was a landmark [[Supreme Court of the United States|United States Supreme Court]] case in which the Court upheld the validity of a tax statute called the [[Revenue Act of 1913]], also known as the Tariff Act, Ch. 16, 38 Stat. 166 (October 3, 1913), enacted pursuant to Article I, section 8, clause 1 of, and the [[Sixteenth Amendment to the United States Constitution|Sixteenth Amendment]] to, the [[United States Constitution]], allowing a [[income tax in the United States|federal income tax]]. The Sixteenth Amendment had been ratified earlier in 1913. The Revenue Act of 1913 imposed income taxes that were not apportioned among the states according to each state's population. ==Background== Prior to 1895, all income taxes had been considered indirect taxes (not required to be apportioned among the states according to the population of each state). In the controversial 1895 case of ''[[Pollock v. Farmers' Loan & Trust Co.]]'', however, the Court had overturned longstanding precedent and ruled that while a tax on income from labor was an excise, or indirect tax (which was not required to be apportioned), a tax on ''income derived from property'' such as interest, dividends, or rents was or should be treated as a direct tax. ==Facts in the Brushaber case== The [[plaintiff]] in this case, Frank R. Brushaber, was a [[shareholder]] in the [[defendant]] [[Union Pacific Railroad]] company. The Sixteenth Amendment had recently been passed, and the [[U.S. Congress]] had enacted legislation pursuant to the amendment assessing taxes to the wealthiest of income earners, including the railroad company in this case. Brushaber brought a lawsuit against the railroad company for an [[injunction]] to stop the company from paying the tax. Brushaber's contention was that statute enacting the tax violated the [[Fifth Amendment to the United States Constitution|Fifth Amendment]]'s prohibition on the government taking property without [[due process]] of law and that the statute also violated due process by exempting certain kinds of income. He also argued because the tax was not apportioned among the states according to population, it was unconstitutional. The U.S. government filed a brief supporting the validity of the tax. ==Holdings== In an 8β0 decision (Justice [[James Clark McReynolds]] did not participate in the decision), the Court held, in an opinion written by Chief Justice [[Edward Douglass White]], that the Sixteenth Amendment removes the requirement that income taxes be apportioned among the states according to population ([[Article One of the United States Constitution#Section 9: Limits on Congress|Article I, Section 9]], clause 4 of the [[United States Constitution|U.S. Constitution]]). The Revenue Act of 1913, imposing income taxes that are not apportioned among the states according to each state's population, is constitutional. The Court stated: "...there can be no dispute that there was power by virtue of the Amendment during that period to levy the tax, without apportionment, and so far as the limitations of the Constitution in other respects are concerned, the contention is not open...."<ref name=caseText>''Brushaber v. Union Pacific Railroad Co.'', 240 U.S. 1, at 20 (1916) ("''Brushaber''").</ref> The Court also held that the Revenue Act does not violate the [[Fifth Amendment to the United States Constitution|Fifth Amendment]]'s prohibition against the government taking property without due process of law. The Court stated: "So far as the due process clause of the 5th Amendment is relied upon [by Mr. Frank Brushaber], it suffices to say that there is no basis for such reliance, since it is equally well settled that such clause is not a limitation upon the taxing power conferred upon Congress by the Constitution...."<ref name="Brushaber 1916">''Brushaber'', 240 U.S. 1, at 24 (1916).</ref> The Court further held that the Revenue Act does not violate the uniformity clause of [[Article One of the United States Constitution#Section 8: Powers of Congress|Article I, Section 8]] of the U.S. Constitution. The Court stated: "So far as these numerous and minute, not to say in many respects hypercritical, contentions [by Mr. Frank Brushaber] are based upon an assumed violation of the uniformity clause, their want of legal merit is at once apparent, since it is settled that that clause exacts only a geographical uniformity, and there is not a semblance of ground in any of the propositions [by Mr. Brushaber] for assuming that a violation of such uniformity is complained of."<ref name="Brushaber 1916"/> ==Discussion== In ''Brushaber'' the Court noted that even before the Sixteenth Amendment was passed, the Congress had authority to tax income. If a particular income tax was a [[direct tax]] or was ''treated'' as a direct tax in the constitutional sense, that tax could be imposed (after ''Pollock'' but before the passage of the Amendment) only by apportionment among the states, according to their [[United States Census|census]] populations. In ''Brushaber'', the Court held that the Sixteenth Amendment eliminated the requirement of apportionment as it relates to "taxes on incomes, from whatever source derived." ==Subsequent interpretation== Tax law professor [[Boris Bittker]] and his co-authors have stated: <blockquote>As construed by the Supreme Court in the ''Brushaber'' case, the power of Congress to tax income derives from Article I, Section 8, Clause 1, of the original Constitution rather than from the Sixteenth Amendment; the latter simply eliminated the requirement (Article I, section 9, clause 4 of the US Constitution) that an income tax, to the extent that it is a direct tax, must be apportioned among the states.<ref>[[Boris Bittker|Boris I. Bittker]], Martin J. McMahon, Jr. & Lawrence A. Zelenak, ''Federal Income Taxation of Individuals'', ch. 1, paragr. 1.01[1][a], Research Institute of America (2d ed. 2005), as retrieved from 2002 WL 1454829 (W. G. & L.).</ref></blockquote> No income tax enacted by the US Congress (either before or after the Sixteenth Amendment) has ever been apportioned among the states by population. All income taxes enacted after the Amendment have been treated as excises (they have been imposed with geographic uniformity but have not been required to be apportioned). Since the income tax may be imposed on income from whatever source and without regard to any apportionment requirement (by virtue of the wording of the 16th Amendment), an income tax cannot be treated as a direct tax (as income taxes on income from property were so treated in the ''Pollock'' case). Essentially, all income taxes after the Sixteenth Amendment are again treated as indirect taxes. Subsequent lower court cases have interpreted the ''Brushaber'' decision ("the confusion is not inherent, but rather arises from the conclusion ... this erroneous assumption"<ref name=caseText />) and the Sixteenth Amendment as standing for the rule that the Amendment allows a direct tax on "wages, salaries, commissions, etc. without apportionment."<ref>''Parker v. Commissioner'', 724 F.2d 469, 84-1 U.S. Tax Cas. (CCH) paragr. 9209 (5th Cir. 1984) (closing parenthesis in original has been omitted). For other court decisions upholding the taxability of wages, salaries, etc., on various grounds, see ''United States v. Connor'', 898 F.2d 942, 90-1 U.S. Tax Cas. (CCH) paragr. 50,166 (3d Cir. 1990); ''Perkins v. Commissioner'', 746 F.2d 1187, 84-2 U.S. Tax Cas. (CCH) paragr. 9898 (6th Cir. 1984); ''White v. United States'', 2005-1 U.S. Tax Cas. (CCH) paragr. 50,289 (6th Cir. 2004), ''cert. denied'', ____ U.S. ____ (2005); ''Granzow v. Commissioner'', 739 F.2d 265, 84-2 U.S. Tax Cas. (CCH) paragr. 9660 (7th Cir. 1984); ''Waters v. Commissioner'', 764 F.2d 1389, 85-2 U.S. Tax Cas. (CCH) paragr. 9512 (11th Cir. 1985); ''United States v. Buras'', 633 F.2d 1356, 81-1 U.S. Tax Cas. (CCH) paragr. 9126 (9th Cir. 1980).</ref> ==Geographical uniformity== The Court in ''Brushaber'' noted that income taxes inherently belonged in the "category" of indirect tax (or [[excise]]). The court stated that incomes taxes are indirect excise taxes by reinforcing the ''Pollock'' decision: <blockquote>As this conclusion but enforced a regulation as to the mode of exercising power under particular circumstances, it did not in any way dispute the all-embracing taxing authority possessed by Congress, including necessarily therein the power to impose income taxes if only they conformed to the constitutional regulations which were applicable to them. Moreover, in addition, the conclusion reached in the Pollock Case did not in any degree involve holding that income taxes generically and necessarily came within the class of direct taxes on property, but, on the contrary, recognized the fact that taxation on income was in its nature an excise...</blockquote> Indeed, that had been the understanding with respect to all income taxes until the ''Pollock'' decision. The Sixteenth Amendment removed the need imposed by the ''Pollock'' decision to determine whether an income tax in any particular case was required to be apportioned, as the Congress could again (after 1913) tax income from any source without having to apportion the tax according to population. ==Property taxes and capitations== Nothing in the Sixteenth Amendment or in ''Brushaber'' (and the other cases interpreting the tax provisions of the U.S. Constitution) changes the general rule that direct taxes are still required to be apportioned among the states by population. For example, if the US Congress were to enact a national property tax (a [[property tax]] or other tax ''by reason of its ownership'') or a national capitation (a [[Tax per head|poll tax]] or head tax), such taxes would be required to be apportioned. ==See also== *[[Union Pacific R. Co. v. Cheyenne|''Union Pacific R. Co. v. Cheyenne'' (1885)]] *[[Kansas Pacific R. Co. v. Dunmeyer|''Kansas Pacific R. Co. v. Dunmeyer'' (1885)]] *[[Union Pacific Railway Company v. Botsford|''Union Pacific Railway Company v. Botsford'' (1891)]] *[[Union Pacific Railroad v. Brotherhood of Locomotive Engineers|''Union Pacific Railroad v. Brotherhood of Locomotive Engineers'' (2009)]] ==Notes== {{reflist}} ==External links== *{{wikisource-inline|Brushaber v. Union Pacific Railroad Company}} *{{caselaw source | case=''Brushaber v. Union Pacific Railroad'', {{ussc|240|1|1916|el=no}} | courtlistener =https://www.courtlistener.com/opinion/98629/brushaber-v-union-pacific-r-co/ | findlaw=http://caselaw.lp.findlaw.com/scripts/getcase.pl?navby=CASE&court=US&vol=240&page=1 | googlescholar = https://scholar.google.com/scholar_case?case=5893140094506516673 | justia=http://supreme.justia.com/us/240/1/case.html | loc =http://cdn.loc.gov/service/ll/usrep/usrep240/usrep240001/usrep240001.pdf }} {{USArticleI}} {{US16thAmendment}} [[Category:United States Constitution Article One case law]] [[Category:United States Supreme Court cases]] [[Category:United States Supreme Court cases of the White Court]] [[Category:United States Sixteenth Amendment case law]] [[Category:Taxing and Spending Clause case law]] [[Category:1916 in United States case law]] [[Category:Union Pacific Railroad]] [[Category:1916 in case law]] [[Category:1916 in rail transport]] [[Category:United States railway case law]] [[Category:January 1916 in the United States]]
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