The basic idea of the three-fifths compromise was that the Southern states got more representatives in Congress than they would have if slaves hadn’t been counted, but they would also have to pay a higher percentage of a head tax, based on the same proportion of their slave population.
The 14th Amendment to the Constitution repealed the shameful three-fifths clause. But it didn’t repeal the proportionality requirement that originally went along with it. So yes, slavery is haunting us still in the Constitution.
Warren’s proposal then raises this basic constitutional issue: What is a “direct tax”? That’s a good question, and it came up at the constitutional convention in the summer of 1787 in Philadelphia. James Madison’s shorthand notes include this unfortunate notation: Rufus King of New York “asked what was the precise meaning of direct taxation? No one answd.”
The lack of an answer led to a 1795 court challenge to a federal law imposing a luxury tax on carriages. In Congress, Madison opposed the law, saying it was unconstitutional because it was a direct tax that wasn’t imposed proportionally. That fit the small-government philosophy he was espousing at the time, fueled by his fear of expanding congressional power. That means Madison can be invoked in support of the theory that Warren’s tax is unconstitutional.
Alexander Hamilton, Madison’s great antagonist at the time and George Washington’s secretary of the Treasury, supported the carriage tax and went to the Supreme Court to argue that it was constitutional because it was an “excise tax,” not a direct tax. Hamilton’s brief then explained what he thought were direct taxes:
Capitation or poll taxes, taxes on lands and buildings, general assessments, whether on the whole property of individuals or on their whole real or personal estate.
Notice that Hamilton did include a wealth tax here — making him another source for the view that Warren’s tax is unconstitutional.
The Supreme Court then allowed the carriage tax.
But a century later, in 1895, the court in Pollock v. Farmers’ Loan and Trust Co. cited Hamilton’s brief while striking down a federal income tax as unconstitutional because it was not proportional. The 16th Amendment was passed to repudiate that holding.
So what’s the law today? Two different groups of liberal law professors have written letters and articles saying that a wealth tax is permissible.