This is an important case in the history of United States, dealing with the interpretation of two constitutional provisions. Article 1, section 9 states that “no Capitation, or other direct taxes shall be laid, unless, in proportion to the Census.” Article 1, section 2 provides that “direct Taxes shall be apportioned among the several States which may be included within this Union, according to their respective Numbers.” In Hylton, a tax on carriages was not found to be a direct tax to be apportioned among the States on the basis of population. The Court ruled that the tax was indirect and, thus, constitutional. The only direct taxes were capitation, i.e. poll taxes and taxes on land.
Article 1, section 9 states that “no Capitation, or other direct taxes shall be laid, unless, in proportion to the Census.” Article 1, section 2 provides that “direct Taxes shall be apportioned among the several States which may be included within this Union, according to their respective Numbers.”
Justice Patterson, while giving his opinion, stated that whether direct taxes, in the sense of the Constitution, comprehend any other tax than a capitation tax, and tax on land, is a questionable point. If Congress, for instance, should tax, in the aggregate or mass, things that generally pervade all the States in the Union, then, perhaps, the rule of apportionment would be the most proper, especially if an assessment was to intervene. This appears, by the practice of some of the States, to have been considered as a direct tax. Whether it is so under the Constitution of the United States is a matter of some difficulty; but as it was not before the court, it was considered to be improper to give any decisive opinion upon it. He further said that he never entertained a doubt that in principle the only objects that the framers of the Constitution contemplated as falling within the rule of apportionment were a capitation tax and a tax on land. Local considerations, and the particular circumstances and relative situations of the States, naturally lead to this view of the subject. The provision was made in favour of the southern States. They possessed a large number of slaves and had extensive tracts of territory, thinly settled, and not very productive. A majority of the States had but few slaves, and several of them a limited territory, well settled, and in a high state of cultivation. 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 a case, might tax slaves, at discretion or arbitrarily, and land in every part of the union at the same rate or measure. To guard them against imposition in these particulars was the reason for introducing the clause in the Constitution which directs that representatives and direct taxes shall be apportioned among the States according to their respective numbers. Justice Chase opined that a tax on carriages can be laid by the rule of apportionment without very great inequality and injustice. For example, suppose two States, equal in census, were to pay 80,000 dollars each by a tax on carriages. If in one State there are 100 carriages and in the other 1000, the owners of carriages in one State would pay ten times the tax of owners in the other. Person A, in one State, would pay for his carriage 8 dollars, but Person B, in the other State, would pay 80 dollars in taxes. He further asserted that an annual tax on carriages, for the conveyance of persons, may be considered as within the power granted to Congress to lay duties. He said that a tax on expenses is an indirect tax and an annual tax on carriages for the conveyance of persons is also of that kind because a carriage is a consumable commodity, and such an annual tax on it is at the expense of the owner. Justice Iredell, while giving his opinion, said that as all direct taxes must be apportioned. It is evident that the Constitution contemplated no taxes as direct but such as could be apportioned. If the tax cannot be apportioned it is not a direct tax in the sense of the Constitution.