Divided Argument

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Episode Summary

Unpredictably, our recent torrent of episodes continues. We take a deep dive into Moore v. United States, which addressed the scope of Congress's constitutional power to tax.

Episode Notes

Unpredictably, our recent torrent of episodes continues. We take a deep dive into Moore v. United States, which addressed the scope of Congress's constitutional power to tax. 

Episode Transcription

[Divided Argument theme]

 

Will: Welcome to Divided Argument, an unscheduled, unpredictable Supreme Court podcast. I'm Will Baude. 

 

Dan: And I'm Dan Epps. So, we're continuing to get the episodes out as quickly as possible. Just learned that you will be going on vacation for much of August, so don't get too used to it. 

 

Will: I got off the waitlist at the camp, so.

 

Dan: Pulled some strings. You just call them up and say, “Don't you know who I am?”

 

Will: You know, it's all the listeners who heard about our plight. 

 

Dan: Your contributions on Section 3 don't carry much weight with camp officials. 

 

Will: [laughs]More liable to get me into trouble. 

 

Dan: Yeah. Okay. So, we've been trying to do maybe smaller episodes, discrete, focused a little bit. And so, we are going to do an episode, just about one case. This is the tax case, Moore v. United States. But before we get there, any things to catch up on?

 

Will: I got a recent email from a listener, a question we get occasionally about the intro to the podcast, and somebody said-- this is an email from a regular emailer who said that, “The voice at the start of the show saying, ‘the judicial power of the United States,’ who is that? Is that Chief Justice Roberts?” And I wrote back, “No, it's University of Chicago professor David Currie.” David Currie, author of an amazing series of books on The Constitution in Congress, who once recorded himself reading the entire Constitution.

 

Dan: Is that recording available publicly? Is that on YouTube or something? 

 

Will: It's on SoundCloud anyway. And you can get on the University of Chicago website. It's a fun listen. I sometimes listen to it before teaching Con Law, because [Dan chuckles] I ask the students to read. 

 

Dan: That's your hype music? 

 

Will: [laughs]

 

Dan: You're in the tunnel, before that, you've got your headphones on, you're doing your little dance, and then you just run into the classroom. 

 

Will: Exactly. Every morning. No, usually the first assignment of my Con Law class is to just read the Constitution. And I make myself read the Constitution too, even though I've read it a lot of times at this point, and sometimes when I'm flagging on reading it, I'll also listen to it. So, not before every class, but before the whole-- [crosstalk] 

 

Dan: I'll give that a shot next time I teach Con Law. 

 

Will: Takes an hour. The recording is like 53 minutes.

 

Dan: On 1x.

 

Will: I only listen to it on 1x, Dan. I'm not one of these Barbarians. 

 

Dan: [laughs] My time is too valuable. 

 

Will: Anyway, and then when I wrote that back, the person said, “Wow.” I asked a bunch of other listeners and nobody knew, which made me think. It's been a while since we mentioned that. 

 

Dan: Yeah, I think we probably said that in the very early days of the show, but I've not said it since then. So, maybe we need to say that once a year. 

 

Will: Yeah, every so often. 

 

Dan: Or just let it be a mystery. 

 

Will: Well, I like that too. 

 

Dan: Yeah. 

 

Will: David Currie was my hero in law school. 

 

Dan: What makes him so great? 

 

Will: He was just an insightful, down the line analyst of Constitutional history without any real agenda, but with plenty of analytical ability. So, you learned a ton from him. You learned he was not unopinionated, but he wasn't trying to spin the refs or like-- 

 

Dan: How would he have described himself vis-a-vis originalism? 

 

Will: I don't think he ever described himself as an originalist, although there definitely is some of-- I think he describes himself as just a lawyer. And there was a time before the word originalism was invented by Paul Brest, when there was the battle between the interpretivists and the non-interpretivists, like John Hart Ely. And I think he would have described himself as an interpretivist, like he thought that you should ultimately be interpreting the Constitution.

 

Dan: As opposed to just making it up. 

 

Will: And now, of course, there used to be people who admitted they were non interpretivists. They were self-declared, making it up people. Now, there are no such people. Everybody's an interpretivist. And the question is, how do we interpret it? And what's the balance between precedent and pragmatism and commonsense versus James Madison's notes or something? And I don't know that he would have had a real position on that stuff. 

 

Dan: Well, alas, he's no longer with us. Did you get to know him well, or did he die before you came around? 

 

Will: He was still teaching when I was an undergrad, and I once sat in on his Con Law class for a day, the day he taught Lopez, which was masterful. And I occasionally emailed him, if I found some random thing that he hadn't found or something, I would occasionally email him to try to impress him, [Dan chuckles] I mean back-- [crosstalk] 

 

Dan: Did you succeed? 

 

Will: I doubt it. He was hard to impress, but I would buy his books, which were these thick academic press books when I was in law school, and then I would stay up all night reading them.

 

Dan: Instead of doing your class reading? 

 

Will: Oh, well, clearly. It's not like if I hadn't had the book with the class reading, it would have been the next thing I did. 

 

[laughter]

 

Dan: It would have been pleasure reading. 

 

Will: He was famous for the Socratic method, and supposedly he once taught or maybe regularly taught Marbury v. Madison, as the class for day without ever issuing a single declaratory sentence. Every single thing he said was just a question and nonetheless could get everybody through all the key points in Marbury and get them all to see all the moves entirely in the form of a question. 

 

Dan: That sounds incredibly challenging. 

 

Will: What is mandamus? 

 

Dan: I don't think I could even attempt that. 

 

Will: I've dreamed about it. 

 

Dan: [laughs] You could do it. 

 

Will: What else? 

 

Dan: Other news, we have our annual set of Biskupic scoops. Joan Biskupic for CNN seems to have a steady supply of post term leaks. I don't know who's leaking them, but given that it seems to happen year after year, I suspect maybe somebody in the court is doing it and not a clerk who is there only for a year. 

 

A couple pieces. The first one I thought didn't have too much content in it. It was about Moyle, Idaho abortion case. Not a lot of scoops in there. More recent one about Justice Alito, which confirms what some people had suspected is claims that he actually lost the majority in two different cases this term.

 

Will: Yeah. 

 

Dan: As a result, ended up with only four majority opinions, which is a quite low number for someone who is the second most senior associate Justice on the court. 

 

Will: Yeah. And again, I think most people who had been looking carefully figured that out because that was an unusually low number of opinions. And so, you look at the months where he didn't get assigned an opinion, and you look at the times he has a long concurring opinion that might plausibly have been a majority opinion. But one of those was NetChoice, the regulation of social media case, which I think we mostly haven't talked about. 

 

Dan: Yeah. 

 

Will: Where apparently, he pushed too far and lost Justice Barrett and Justice Jackson to Justice Kagan. 

 

Dan: Yeah. And then the other one was Gonzalez v. Trevino case, which we also haven't talked about. And in both of these cases, we're told that he wrote opinions that went too far that maybe said, “We're deciding this case narrowly, but let me go out and say a bunch of additional stuff that suggests how I think the case maybe should come out down the road and that ended up costing him some votes.”

 

Will: According to the story, they're phrased a little differently. It's clear that in NetChoice, he tried to write a majority opinion that he hoped five people would join, and they didn't. The description of Trevino was that as Justice Alito began writing, he went further than the other Justices in his review of Gonzalez’s case. Alito and his colleagues realized he couldn't, ‘hold five’ as the expression goes. A new majority agreed to dispatch the case, the limited rationale that one might be saying that Justice Alito himself, as he dug into it, was like, “Ugh, I've got to say some stuff. And I realize you guys aren't going to be able to agree with it, and so you all are going to need to put together a per curiam.” 

 

Dan: Yeah, sometimes when there's a flip like that or a steal of an opinion, you see the majority opinion is authored by a Justice, and then there's a separate opinion by the original author, and you can infer that the new majority writer had previously been writing a dissent or concurrence and then just peeled off votes where there's a per curiam instead, that does mean there was some larger, more collective decision-

 

Will: -to get this out. 

 

Dan: Right. But in that case, which we may yet talk about, it does have a little bit of a majority opinion feel in that it has a Roman numeral section, part one that has background of the case, facts of the case, the thing you would begin drafting if you were drafting a majority opinion. So, did he circulate it? Did he? Unclear. But either way, it's not the kind of thing you would imagine a Justice would be happy about. 

 

Will: Now, on the source of the leak, the story, at least today's the most recent entry, says, “This exclusive series in the Supreme Court is based on CNN sources inside and outside the court with knowledge of the deliberations.” 

 

Dan: Yeah, I was wondering about that. 

 

Will: So, people outside the court with knowledge of the deliberations, it seems like that has to be either ex-clerks, I guess, if they talk to somebody now who clerked last, just finished clerking. 

 

Dan: Yeah. I don't know if that's-- I think that would be a misleading way to characterize it. 

 

Will: I agree. A more natural source would be a spouse. 

 

Dan: Yeah. Or just a close friend. 

 

Will: Right. Whatever it is, it suggests that somebody inside the court is talking to people outside the court about the deliberations--

 

Dan: Which is plausible. I mean, I think that some of the Justices themselves may feel like they have flexibility to decide what they want to talk about, and they might be a little bit open with friends.

 

Will: Apparently. I don't know if I approve, but that's how it works now. 

 

Dan: Okay, so maybe we will get to those cases someday. Maybe not. But an interesting development, and the overall thrust of this article claims that Alito is super mad about it, and that you can tell that he's mad by the way he acts on the bench. I don't know what to make of that. But it does seem-- [crosstalk]

 

Will: Alito is always mad, or people are always convinced Alito is mad. 

 

Dan: Alito has a grumpy demeanor I would say. 

 

Will: Anybody who says, like, “Oh, I can tell Alito is mad now because…” I'm just very dubious of that.” You know the famous saying, when Calvin Coolidge died, he was famously taciturn President, and then somebody said, “Well, how can they tell?”

 

Dan: Fair enough. But you would think that a Justice at his level of seniority, who in theory, should be enjoying this new majority and the chance to do what he wants, might be a little frustrated that he's not getting to have these wins that he's looking for. 

 

Will: But people also said he was mad after Dobbs. 

 

Dan: Maybe he was.

 

Will: Maybe. But, I mean, maybe he is mad all the time, or maybe nobody actually knows the inner life of Justice Alito. 

 

Dan: Yeah. 

 

Will: Let's talk about tax law. 

 

Dan: Tax, Constitutional law. 

 

Will: Yeah. 

 

Dan: A special field. 

 

Will: As we've discussed repeatedly, tax law is not my specialty, but Constitutional law is. So, we'll see whether this makes it into something we can avoid embarrassing ourselves talking about. 

 

Dan: Okay, so the Constitution does say some stuff about tax and the federal government's power to tax. And so, I think maybe we need to walk people through what the Constitution says, albeit a bit cryptically, to set up this case. 

 

Will: We should be cryptic, or are you saying the Constitution? 

 

Dan: No, the Constitution is a bit cryptic. 

 

Will: Yeah. Okay.

 

Dan: So, Article I, which is the part of the Constitution that lays out the powers of Congress, Section 8, which is the list of specific powers, has various powers. And the first one says, “The Congress shall have power to lay and collect taxes, duties, imposts and excises, blah, blah, blah, and blah but all duties, imposts and excises shall be uniform throughout the United States.”

 

Will: And then it also importantly limits that power, right? 

 

Dan: Yep. 

 

Will: In Article I, Section 9, I think it actually mentions this twice, both in Article I, Section 9, and then earlier in the parts about apportionment. But in Article I, Section 9, it says, “No capitation or other direct tax shall be laid unless in proportion to the census or enumeration herein before directed to be taken. So, a direct tax or capitation, whatever that is, has to be apportioned. Duties, impost and excises, whatever those are, have to be uniform throughout the United States.” Okay, so far so good. 

 

Dan: So, capitation, it's like the opposite of decapitation. 

 

Will: Yeah. They give you an extra head. 

 

Dan: Yeah. 

 

Will: A capitation is a head tax. It's just like a per person tax. And it is inherently apportioned because if you charge the same number of dollars per person, then every state will pay that number of dollars per portion of the number of people it has. If you try to do other direct taxes, they still have to be apportioned, like capitations. That can get very confusing when you're trying to tax real estate or something else. That's not-- [crosstalk] 

 

Dan: But we don't know exactly what is in that box. 

 

Will: It's one of many mysteries of the Constitutional power to tax. Maybe [unintelligible [00:12:08] [crosstalk] 

 

Dan: So, I think maybe 100% agreement that it's a capitation. 

 

Will: Yep. 

 

Dan: Right. If they just say, here's a tax for every person, that has to be apportioned. But that's easy, because if they're taxing people, that's also going to track population. 

 

Will: And there's almost 100% agreement that a tax on land is definitely a direct tax historically, which means that if Congress wanted to pass a national property tax, the property tax rates would have to be different in different states. Because if you do the math of land area versus people, places with a lot of people have to come up with more revenue than places without very many people. And then there's much debate going back to the 1790s.

 

Dan: It would also turn on the underlying value of the property in those places too. So, it could be complicated. 

 

Will: Yeah. About what else is a direct tax. 

 

Dan: Yeah. And this is one of my favorite little pieces of Constitutional drafting history and pieces of evidence that people point to when trying to figure out the meanings of obscure Constitutional provisions. If we're trying to figure out what direct taxes are, one of the sources to look at is Madison's notes about what was going on at the Constitutional Convention back in Philadelphia. [Chuckles] And on this one, here's what we have from the notes. Mr. King, that's Rufus King, asked what was the precise meaning of direct taxation, no one answered. 

 

[laughter]

 

So, we know that they wanted to put this in the Constitution. We have some sense of what the concerns were. Small states were worried that they were going to get screwed over, and they made this category, but apparently, they didn't know what it meant. 

 

Dan: They certainly didn't seem to have a clear meaning or consensus. If the people drafting the Constitution themselves, no one could explain what this was. 

 

Will: Well, we don't know why no one answered. Maybe no one answered because it was a dumb question. Everybody was like, “Just read Adam Smith. There goes Rufus King again, asking a stupid rhetorical question.” 

 

Dan: Maybe.

 

Will: I mean, no, I tend to think you're right. And when the Supreme Court gets this case, shortly after the founding, called Hilton, about whether a tax on carriages is a direct tax, it's a question that Madison and Jefferson and Hamilton disagree on. And the court does resolve unanimously saying, “It's not a direct tax.” But the opinions, the Justices all say some version of, “It's a little confusing what a direct tax is. Here's what we know.” There's been some scholarship on it, but it's a-- This is something I teach every year in Constitutional law, trying to make the students puzzle through it. I would not say it's usually the student’s favorite class. 

 

Dan: So, why do you do it every year? 

 

Will: Well, it's important.

 

Dan: To set up NFIB v. Sebelius, or you just think it's important in and of itself? 

 

Will: It's important in and of itself. And then it's especially important to set up NFIB v. Sebelius, because eventually it come to the question of, as we impose judicially enforceable limits on Congress's other powers, like its commerce power, to what extent, is there a hydraulic pressure on the other powers? So, once we know what the limits are on the commerce power, what are the necessary and proper clause, what are the spending clause, what are the tax power. And to get students to think about limits on all the integrated powers together and what they do. 

 

Dan: I taught when I was teaching last year, I taught out of your book, but I didn't teach the whole tax section. I taught about half of it, just mostly the notes, just to try to set up what the basic categories. 

 

Will: The next edition of the book, we might have to just put in Moore. 

 

Dan: Are you going to put this one in, Moore? 

 

Will: I've been thinking about it. I was going to ask for your advice. We can get there. 

 

Dan: Sorry, I thought you said we're going to have to put in more. But you were saying Moore, yeah. [Will laughs] So, also more. But that will be a longer section, potentially.

 

Will: Moore, more, yeah.

 

Dan: I don't know if it should be a principal case unless you're particularly gung-ho about it. 

 

Will: So then, to make a long story short, should we move forward to the 16th Amendment?

 

Dan: Yes. 

 

Will: Okay. So then, to make a long story short, Congress enacted an income tax. For a while, the income tax was thought to be Constitutional. There was an income tax adopted by sign into law by President Lincoln. But in the 1890s, the Supreme Court confronted a version of the income tax and concluded that it was an unconstitutional direct tax in a case called Pollock v. Farmers' Loan & Trust. And that whole opinion is a little confusing. It comes up some in today's opinions. At a minimum, the court thought that income derived from property, like rents to land, was the same as property, and therefore was a direct tax. And maybe that was also true of personal property, maybe not. It's a little vague. And then that was enough to decide the whole income tax regime was inseverable. And so, the whole income tax regime was unconstitutional, unclear exactly how much it held. 

 

And it ends up not mattering very much, because then Congress proposes and States ratified the 16th Amendment to make clear that Congress does have the power to pass an income tax. And so, the 16th Amendment says, “The Congress shall have power to lay and collect taxes on incomes from whatever source derived, without apportionment among the several states and without regard to any census or enumeration.” So, you can have income taxes and you don't have to worry about this direct tax thing. 

 

Dan: Yeah, and there's different ways to read that. I mean, one is, this is creating this totally new power, and the other is this is just overruling Pollock and trying to just take us back to whatever the law was before that case. 

 

Will: Right. Yeah. Similarly, you could read this to say income taxes would be direct taxes were it not for the 16th Amendment. Pollock is right, and we're now changing it. Or you can read it as trying to step aside of it. And it either a debate which Moore, I think, speaks to about whether Pollock, “Is Pollock right or wrong, or is Pollock an accurate statement of the law in the absence of the 16th Amendment or not.” And that's a debate that often comes up when you amend the Constitution to overrule a Supreme Court decision. 

 

And of course, now, since most of the money the federal government raises is through income taxes and then through us excise taxes and tariffs, this direct tax thing rarely comes up, because if it's an income tax or some other clearly indirect tax, you don't have to worry about it. There's been a sort of, in the shadows debate about this because there are occasional proposals that Congress should enact some a wealth tax instead of income tax, which would do discourage work less and be a way at getting at large amounts of capital that's not currently being spent in the form of wages. But then that raises the specter of whether a wealth tax would also be a direct tax and thus raise all these apportionment issues. And that's maybe floating the background of some of the arguments in this case. 

 

Dan: So, that Congress hasn't done that exactly yet. So, the court does not have to confront that question yet, but this can certainly bear on that. So, what did Congress do here? 

 

Will: Okay. In 2017, during the first years of the Trump administration, Congress passed a major tax cut and reform bill. And one piece of that bill was something that we call the mandatory repatriation tax, which taxed income that had been earned in foreign companies that had American shareholders. But the income is still in the foreign country, right? 

 

Dan: Yeah.

 

Will: Right.So, until--

 

Dan: It had never been distributed as dividends to shareholders, it was just sitting around there. 

 

Will: Until that act passed, you would just say to take the example of the Moores. Apparently, in 2006, they invest $40,000 in an American controlled foreign corporation that one of their friends had started India KisanKraft. By 2017, their shares are worth $500,000. And so, they have some income in some sense, but the money is still there. They haven't actually taken the income. They haven't gotten a check, cashed out their partnership share and gotten the money and used it to buy a boat or whatever. And so, the question is how to think about that income. And under normal tax law principles, we'd say that income hasn't been earned yet. It hasn't been realized in tax law lingo. And the MRT says, “We don't care about that. We got to know the money's there.” And it's an accounting trick to say they haven't realized it. And indeed, one of the things you worry about is people are just going to build up money in foreign accounts and entities in various ways, avoid the US taxes. We're going to declare a one-time claim of that kind of money. 

 

Dan: So, this is not the only time that Congress does something like this, though, right? So, Congress already taxes some foreign corporate income to its… taxes income by shareholders of foreign companies in this thing called Subpart F. 

 

Will: Yes. 

 

Dan: So, it's not like this is a totally wacky thing. The MRT is doing more of that. 

 

Will: Right.

 

Dan: And then also has this other piece of it that it's retroactive. 

 

Will: Right. Arguably distinguishable in various ways. But there are other examples of it having happened. 

 

Dan: Yeah. And I guess there was a Constitutional objection to the retroactivity, but then that drops out of the case when it gets to the Supreme Court. 

 

Will: Yes.

 

Dan: That would have been interesting. 

 

Will: Yes. Okay, so what this case requires the court to figure out is, is this tax an income tax? In which case any of these, you don't have to worry about any of these direct tax principles. If it's an income tax, Congress can do it or is it not an income tax? Because the Moores haven't really yet gotten the income. They made an investment, haven’t cashed out, so they don't have the income yet. If that were true, it would be a direct tax, which means it would have to be apportioned, which in practice is virtually impossible. So, for practical purposes, saying it's a direct tax means you can't do it, even though formally you could try to do it somehow. So, it goes to, what is the Constitutional definition of income tax? What is the scope of the 16th Amendment? 

 

Dan: We aren't going to get a complete answer on that question. 

 

Will: Indeed, we're going to get very little of answer to that question. 

 

Dan: Yeah. So, I mean, one way to decide the case would have been to say, “Okay, let's figure out what an income tax is.” An income tax requires realization. So, the money has to come to you in some way, and does this have that or not? And instead, we're not going to get that determination that realization is 100% required. 

 

Will: Right or even 0% required. We just don't know. 

 

Dan: Yeah, I mean, they're not going to tell us it isn't required. They're going to decide they don't need to conclusively resolve that. 

 

Will: So, if you think of the case, I don't remember if they formally divided into two QPs, but the case, in a way, has two QPs, one of which is, “Does income need to be realized to be within the scope of the 16th Amendment? And then, if so, was this income realized?” And the first question will have huge implications for the design of the tax system caused by colleague David Weisbach to get angry at me every time I mentioned the Supreme Court because of the likelihood that they were going to screw this up. And the second question about this particular tax might not be as important as the answer to the first question. 

 

I think if you look at an economist and you're just thinking about the efficient design of a tax system and avoiding manipulation of deadweight loss, you'd say, “In some ways, the ideal income tax system might be what we call a mark to market system.” We're just like, “Every year we figure out how much is your total package of stuff all worth. And if it's worth more this year than last year, you had income, and we'd like to tax you on the upside. In practice, we don't do that for multiple reasons.” And that means that you can avoid taxes for a while, but just holding on to everything. And so even if your assets are rising in value, you pay no income tax until you go to sell them. 

 

Dan: Yeah. Or never if your heirs inherit them, they can get the so-called step up in basis and that income, that capital growth, can just completely vanish from the tax system. 

 

Will: Exactly. And then, of course, with artificial entities that don't die, there's a whole other ways to do this kind of thing. And a famous tactic called “buy, borrow, die,” where people who own a lot of stock or CEO's own a lot of stock can effectively get tax free income by never actually taking something in the form of income. 

 

Dan: Yeah, you do have to die for the strategy to come to fruition. But I'd prefer to just buy, borrow. 

 

Will: Yeah. Well, again, if you're corporations--- corporations never die. So, can we talk about the first-- I don't know whether to talk about the opinion first or just talk about the questions.

 

Dan: You decide. 

 

Will: The majority opinion by Justice Kavanaugh avoids answering the first question. Does the 16th Amendment require realization for money to be taxable? We don't know. The majority just says, “We don't have to answer that question because this tax is okay.” And part of what they do is they start with these examples like Subpart F. There are other examples, but Subpart F is the most prominent one. So, we'll just call them all Subpart F and say, “Look, Congress has been doing this for a long time. So, we have examples where there is income that's deemed attributed to somebody, even though it hasn’t been -- [crosstalk] 

 

Dan: It hasn't been passed through.

 

Will: Formally realized. I think the heart of it begins with four. The Moores are obviously aware of those longstanding congressional practices and Supreme Court precedents. So, they had two choices of how to deal with that stark reality in this court. They could have argued that all those taxes are unconstitutional and that all those precedents should be overruled or in an effort to contain the blast radius of their legal theory, they could have tried to distinguish the MRT from those other taxes and argue that only the MRT is unconstitutional. They chose the latter approach. So, it's like leaning into the framing. 

 

Dan: Yeah. 

 

Will: You guys are conceding Subpart F is okay. You're containing the blast radius. So, then you have to ask whether you have some reason that the MRT is different from all these other taxes. And then basically they say, “Well, there are reasons for distinguishing them are stupid.” 

 

Dan: Yeah. Do we give people the lineup? Maybe we should just do that before we get deeper into it. This is an opinion by Justice Kavanaugh, joined by the Chief Justice and Justices Sotomayor, Kagan and Jackson. So, liberal Justices forming a coalition with two of the slightly less conservative Justices. I'd say the two of them that are on a little bit more on team common sense than team the Constitution is a suicide pact. And we have a concurrence in the judgment by Justice Barrett, joined by Justice Alito, and then a dissent by Justice Thomas, joined by Justice Gorsuch. 

 

Will: That's right. Okay. So, team anti blast radius, which may be how I would now think of that, that common sense coalition says, “Once they've decided they're going to concede the constitutionality of Subpart F, everything rises and falls. And whether they can come up with plausible distinctions between this new tax and the subpart they say are okay. And they can't really-- There's a claim about whether partnerships weren't understood as separate legal entities in 1913 and the 16th Amendment is enacted, a possibility of consent being one theory, to explain some of these different things, the doctrine of constructive realization. But all of them boil down to the legal fictions or whatever the legal reasoning is that caused us tolerate these parts of the tax system already. This is just more of the same, and they haven't really come up with a good reason to think that this tax is different. 

 

Dan: So, what do you think about this? Is the court just trying to dodge a hard question? 

 

Will: Kind of, yeah. I mean, it's funny-- there's nothing wrong with that, this is a method of reasoning is to say, “Look, if your argument rises and falls on distinguishing this from everything that's ever happened before, then we're going to look and see whether you can really distinguish this from everything that's happened before.” But what's weird is, of course, the court does that all the time. Every time, the court has a new case about Miranda, they come up with some reason this case is different from Miranda or every time the court has a new Bivens cause of action, there's some reason this cause of action is different from Bivens because the people involved are not named Bivens. They don't hold it to a super high standard. They don't say, “Is this distinction really doing the work?” 

 

Dan: Yeah, but also, it's weird because they don't have to be bound by the concession. 

 

Will: Right.

 

Dan: Right. I mean, basically, they're saying, “Well, you say this other thing is Constitutional, therefore we're going to just take that out of the case. And therefore, because you don't have a good reason to say why it's different, you lose.” But they could just as easily say, “Well, they say this is unconstitutional.”

 

Will: Yeah.

 

Dan: “We agree it's unconstitutional. They argue it's different. We actually don't think it's different from this other stuff, but we don't need to conclusively resolve that question.” 

 

Will: I agree. And so, this has the feel of a dodge in that sense, that they'd like to get in and out of this case and reject this challenge without actually taking a position on the big question, which I find a little puzzling. I mean, on the one hand, I admire the restraint, but I find it a little puzzling in that, I don't know, why don't they just say, “No, it doesn't require realization” if that's what they think. We're common-sense people. We don't want to be second guessing the Constitutional attack system. So, they could just say the challenge fails for that reason. 

 

Dan: I mean, maybe one of them in the five doesn't think that, right? 

 

Will: Yeah. 

 

Dan: So, it seems among the other opinions, there's at least four votes for realization as a Constitutional requirement. 

 

Will: Yes, I agree. The other four Justices, we have to, they all think there is a Constitutional requirement of realization. They maybe disagree on whether it was met here or not, but they'd all take a position on that. Yeah. So, maybe the members of the jury disagree on that question, or maybe they just don't know what they think on that question. Maybe if you're still worried about a wealth tax, if you still have the intuition that switching from an income tax to a wealth tax seems like it'd be a big shift that raises a serious Constitutional question that you don't want to prejudge. You might want to avoid writing an opinion that just says, “Don't worry, there's no content to this requirement.”

 

And on the other hand, if you've been yelled at by David Weisbach enough, you might worry that even trying to formulate what the requirement is to get you into trouble, but interfering with parts of the tax code you never thought about before. I'm told, for instance, that the taxation of debt instruments is implicated by this doctrine, even though it's not mentioned as one of the examples in here. I don't know if it's true. The Justices don't know if it's true. I do think there might be an element of, we got a tiptoe around the tax system here. 

 

Dan: Did they have to grant this case? 

 

Will: Well, I was going to say that one puzzle, then, is if you really think that, why take the case? This would make sense if the lower court had struck down the MRT, and the court was like, “All right, we got to get in here. We got to uphold the MRT and not say too much about why.” But there was no split, and the law was upheld below. Now, maybe it only takes four runs to grant cert. So, maybe the four Justices who are not in the majority in this case, all strongly believe there is a realization requirement and pushed the court to take the case. And the other five are just trying to do their best to wiggle out [chuckles] of the rule of four. Maybe they had a different view of the case then they took it. Maybe it was a really good cert petition. And then as they got the case, they thought, “Oh, crap, this is a big one.” 

 

I also remember this is a case where the SG, I think this is argued personally by Elizabeth Prelogar, and I think she made the decision to take a less aggressive position than you might have expected. You didn't just say, we can do whatever we want. And again, you might worry about that because that's going to come back to bite the government one day if they try to do something. But maybe that was an attempt to make sure that they'd uphold this. 

 

Dan: Yeah. And maybe enough Justices were persuaded that this would be really problematic and have effects on the economy and government's fiscal situation. 

 

Will: Yeah. Or just that they weren't sure what the effects would be. 

 

Dan: Yeah. 

 

Will: Yeah. I think if the case, if you imagine as a, I don't know, as some preference or instinct or whatever, this seemed unconstitutional to them and unfair, and they'd be happy to strike it down because they like striking things down. But then, they weren't sure exactly what else, what the blast radius would be. And if they couldn't be sure the blast radius was small, they decided not to set off the fireworks. 

 

Dan: Yeah. 

 

Will: I would like to ask your view about the 16th Amendment question, but first, just two other things about the majority opinion I thought were interesting from the point of view of teaching this stuff. So, one of the questions I often ask when I'm teaching the Con Law materials is, “Are all taxes either in the category of direct taxes that have to be apportioned or duties, impost and excises that have to be uniform until you get to the income tax?” 

 

Dan: Yeah. 

 

Will: Or is there some intermediate category of things that are not duties, imposts and excises, but also not direct taxes, which can be neither. 

 

Dan: Would have been helpful if someone at the convention had answered the question about direct taxes and given us a little bit of a dissertation about this. Yeah, I've wondered that myself. And I remember trying to figure this out as I was prepping for teaching this material the first time and texting you about it. 

 

Will: Yeah. So, now we have answer. The court does say, page six, that under the Constitution, all indirect taxes must be uniform throughout the United States. They treat the indirect taxes and the category that has to be uniform as the same and seem to get rid of the idea of any middle category of indirect, non-duty imposed and excise taxes. And I think some of the other separate opinions do the same thing. That seems plausible to me. That's not obvious to me, and there's some--

 

Dan: Do you think the court needed to say that here? Not clearly. 

 

Will: Not clearly. I mean, I think so I guess it is dicta, but they did clearly decide to lay out some basic framework of how to think through the Constitutional constraints here. I'm not sure if that played some role for them. 

 

And the other is in their discussion of Pollock. I think I mentioned there's this debate about whether Pollock was right or wrong, and about, especially once Pollock has been overruled by the 16th Amendment, whether to think about the 16th Amendment as expressing the view that Pollock was always wrong all along, or it was a correct statement of the law, which we now have to change. And the court seems to lean pretty far in the direction of Pollock is wrong. 

 

It mentions the way the income tax is upheld before Pollock, and then it says the 16th Amendment expressly confirmed what had been the understanding of the Constitution before Pollock. Taxes on income are indirect taxes that need not be apportioned. So, they seem to be pushing pretty hard the narrative of Pollock was this weird deviation from the understanding of the Constitution. 

 

Dan: And the 16th Amendment just takes it off the map. 

 

Will: Of course. Correct. Yeah. Which I think that's interesting because there's lots of reasoning in Pollock about what is a direct and indirect tax. And if we think of that as not being a very persuasive authority, we might think about the issues differently in the future than if we think of it as being useful background. So, I thought that was interesting. 

 

Dan: So, did you say you had a couple things about the majority, or--

 

Will: Those were the two. 

 

Dan: Those are the two. Okay. All right. So, should we mention Justice Jackson's concurrence? 

 

Will: Yeah. [laughs]

 

Dan: You're laughing. 

 

Will: Sorry.

 

Dan: Okay. What's funny about it? 

 

Will: I just forgot about it. 

 

Dan: Oh, you forgot that it existed? 

 

Will: There are a lot of Jackson concurrences in the episodes we've been doing lately. 

 

Dan: You know, she's really coming into her own writing more. So, she has a couple things to say. She says, “Before taking up petitioner's invitation to strike down a lawfully enacted tax, the court would need to be persuaded of several additional arguments that we wisely do not reach.” Okay, I highlight two. So first, one is the court would have to be persuaded that Congress can tax income only if it is actually received or realized. And she is skeptical of that. She seems to think that's not the case. And then second, and I think this is important, she says, “We'd still need to confirm that the tax was a direct tax before saying it's unconstitutional because it's not apportioned.” And I think this is quite important. 

 

Will: Yes. 

 

Dan: Right. And this is something that my colleague Connor Clarke, next door office neighbor, mentioned him sometimes on the show, he's been pushing this idea, which is that there is this category of things of excises that could cover this, and it's a mistake to just look at the 16th Amendment and just say, “Well, it's not income under the 16th Amendment, therefore unconstitutional.” There are missing steps in that argument. 

 

Will: Right.

 

Dan: And Conor's work, he went back and looked at, there's a range of things that were upheld as excises over the last 200 years, some of which he thinks are quite analogous to the tax at issue in this case.

 

Will: Right. So, yeah, you could uphold-- this is another way of asking is like, “Would this tax have been Constitutional even in a pre-16th Amendment world.” 

 

Dan: Yeah. 

 

Will: And of course, if Pollock is wrong and income taxes are generally non-direct taxes, then that could well be true of this one too. And even if Pollock is not totally wrong, this tax could be an excise tax in ways that not all income taxes would be--

 

Dan: Or just not a direct tax. I mean, the category of direct taxes could be large or could be small. It seems plausible that it's quite small. 

 

Will: And this goes back to the two different things the majority is taking a position on that wasn't clear they needed to. So, you could think there are non-excise, non-direct taxes, like an intermediate category. The majority seems to think there isn't, although I don't know how hard they thought about that. Or you could think, no, those are the only two categories. But this is still in the excise category. But either way, the general point is, once you decide that Congress has exceeded its powers under the 16th Amendment, that still means you're just thrust back into one of the thorny areas of the scope of Congress's Article I taxation authority that you shouldn't think is obvious at all. 

 

Dan: Yeah, and this is something I found a little difficult about both Barrett concurrence in the judgment and the Thomas dissent, which is they seem to step over that second part of the analysis pretty quickly. 

 

Will: Yes. 

 

Dan: They seem to be looking at the 16th Amendment like it's an affirmative, enumerated power. And then if you conclude that something doesn't count as income, then next step unconstitutional and that clearly is wrong. 

 

Will: Well, it's not clearly wrong. 

 

Dan: Well, it's not clearly wrong that it's unconstitutional. It's clearly wrong that you don't ask more questions. 

 

Will: Right. But you could take Pollock as having settled that question as relevant here, that forms of income tax are direct taxes, and that precedent is presumptively correct and hasn't been-- Nobody's persuasively show that it's wrong. 

 

Dan: But if it is in fact an income tax, doesn't that then mean it's Constitutional? I thought the whole point was if for the petitioners to be right, we have to conclude this is not an income tax. 

 

Will: Well, it's not a 16th Amendment income tax, but it could be another kind of income tax, an income tax and the-- 

 

Dan: The non income income tax. Because I thought the whole point of this argument is, if it's not realized it's not income at all, if it's not income at all, then it seems like-- 

 

Will: Well, maybe, but so another source of the argument and this is, I think maybe a better one, is to say the 16th Amendment says, “The Congress shall have power to lay and collect taxes on incomes from whatever source derived.” So, you could just say, “Textually, the 16th Amendment only applies to income that has been derived.” 

 

Dan: Yes. 

 

Will: And derived is another way of saying realized, goes the argument. 

 

Dan: Yes. And I don't think that's crazy--

 

Will: But that's what I mean is you could think that there are potentially taxes on incomes that are not derived, which are not covered by the 16th Amendment and still banned by Pollock. 

 

Dan: I guess I don't know what it means for something to be income but not derived. I read the 16th Amendment as just saying they can tax income from wherever it's derived, not just certain places. As saying to Pollock, you thought income from personal and real property was a direct tax. No, it isn't. Income from whatever source is fine. 

 

Will: That's the Jackson reading, and it's a plausible reading too. But I just mean you could think, and we talk in the tax system about both realized and unrealized income. And so realized income is clearly reachable by the 16th Amendment. And unrealized income maybe is. And maybe you'd say, “Unrealized income isn't really income. Like almost definitionally, if it's not realized, it's not income.” Or you could say, “Well, it is income, but it's not realized. And therefore, the 16th Amendment may or may not be able to reach it, depending on whether from whatever source derived means collect taxes on income that has been derived from whatever source,” or collect taxes on income that may or may not have been derived without regard to where or how or whether it was derived, which are both plausible textual readings. 

 

Dan: Yeah. What do you, as a paid up, fully credentialed originalist, think we should do about these situations where we have this Constitutional category and people have tried to answer this question, there really does not seem like history is going to yield a good answer to this question. We go to Madison's notes, and there's just a big-- In his notes, there's just a bunch of question marks, circled with his pen or whatever. And we go to the early precedent, and the early precedent is the Justices being like, “I don't know, man, this is really hard.” And what do we do with that? I mean, maybe we can get you and Steve Sachs in a room and you guys can come up with the answer that nobody thought of for a couple hundred years. 

 

Alternatively, we could just say, “Look, often maybe we can get a good answer. But here we have so little to work on that probably the wisest thing to do is to redirect tax as applying to the core of stuff that we know it covers, which is capitations and ensure land taxes. And then otherwise, we should not try to expand that category further and just basically be deferential to the political process on this, given that taxes generally are something about which there's a lot of political attention.” 

 

Will: Do you want me to fight the hypo or answer the question? 

 

Dan: Both. 

 

Will: I'll answer the question first. I do think there's lots of stuff like that, and I think this is a good example of the role of liquidation, where you say, “Okay, we know two things are direct taxes. We know a bunch of things that are not direct taxes, and then there's this weird muddy zone in between. And no amount of rereading the debate between Hamilton and Jefferson is going to answer that question for us. So, let's assume I'll fight the hypo the second, let's assume no amount of that will answer the question for us. So then, yeah, you follow the path that's interpreted by history, and then it matters that Hilton came out the way it came out. If Hilton would have come out differently and struck down the carriage tax, the course of history would be different and we'd have a different view. 

 

And it matters to me a lot that Abraham Lincoln enacted the income tax and the Supreme Court unanimously upheld it in Springer in 1885, and there was a sort of [unintelligible [00:41:22] settlement. Now, what to think about the court 5-4 disrupting that settlement in Pollock and 16th Amendment, disrupting the court's disruption, is a little interesting, but I generally would take a liquidation approach. 

 

I'm not sure that it's just limited to property and head taxes. I actually think there's a good argument that the individual mandate is a direct tax. This comes up in NFIB v. Sebelius, where that's one of the least well written and persuasive parts of the opinion. Frankly, the court thought it was just driving very fast because the court is simultaneously talking about the weird fact that the individual mandate is a tax on an activity and whether it's a direct tax. 

 

They're like, I guess you can have taxes on an activity, because, after all, head taxes are taxes on an activity. But maybe that's actually the definition of direct tax is like a tax on an activity, which is usually a head tax, and other occasionally weird stuff like the individual mandate. But I just generally take a liquidation approach. When liquidation fails, I'm a presumption of constitutionality guy too. So, then I think if we're really not sure, when in doubt, uphold the tax. That said, one important thing to remember is this is not just a case of James Madison's notes. It's a case of William Howard Taft's notes. Because part of issue here is the 16th Amendment. And so, now you still got the background question about if it falls outside the-- [crosstalk] 

 

Dan: Yeah, I'm still fixated on the earlier question, because, again, even if this isn't covered by the 16th Amendment, that's not enough for the Moores to win, right?

 

Will: Well, maybe. But if, for instance, the original meaning of the 16th Amendment, suppose it were clear, the 16th Amendment was understood to accept Pollock as the working framework for direct taxes and then make an exception to Pollock, but only for income that had been derived. 

 

Dan: So, it would be both an expansion and a narrowing of federal power. 

 

Will: Yeah, well, whether it narrowed it or not, again, depends a little on the liquidation thing. It would be expansion of federal power and then a limitation within the scope of the liquidation. At the time, it wouldn’t have been limiting it because the time would have just been ratifying the current precedent. But we could understand the 16th Amendment to do that. [crosstalk] 

 

Dan: If we think Pollock is wrong, it still could have the effect of just crystallizing Pollock and making it part of the Constitution, maybe.

 

Will: It could be. There is some interesting work that is in some of the amicus briefs about the context of the 16th Amendment, the nature of the legislative bargain, and things like that. So, I think we'd want to look at that too. Now, if we look at the 16th Amendment and concluded the opposite, there definitely was not a consensus to ratify Pollock. So, Pollock still has to rise or fall on its own. Then there is still a weird liquidation question because Pollock's been around, hasn't been overruled exactly-- 

 

Dan: Well, it hasn't needed to be though, right? Because we have the 16th Amendment. 

 

Will: Yeah, but it's actually parallel, I think, to the question of how to understand the 11th Amendment in relationship to Chisholm v. Georgia and sovereign immunity. And there too, my inclination is to say Chisholm was wrong. The 11th Amendment had a limited overruling of Chisholm, but Chisholm was wrong. So, in fact, the rule is much broader. Most other Con Law professors disagree with me. Most Con Law professors think the 11th Amendments limited overruling of Chisholm also ratifies Chisholm. There shouldn't be sovereign immunity when it's a suit by probably in the same state-- 

 

Dan: Do they think it ratifies it or do they just think that the background rule was different than what you think the background rule was? 

 

Will: I think a lot of them maybe think both, but definitely think the ratification thing. Like the John Manning article on the reading of precise constitutional texts. There's a lot of articles that say some version of, “Maybe Chisholm was right, maybe it was wrong. I think it was right.” But the 11th Amendment surely means that Chisholm is right now because if you thought Chisholm was wrong, you'd expect them to overrule it differently. Like most fed court professors don't think these things should turn on was Chisholm right as an original matter or not. Anyway, so I think those are parallel. And so then, and I haven't done the independent work on the 16th Amendment thing nearly as much. I know this work and I know it's interesting, but that would be part of what I'd want to know. 

 

And there has been some recent scholarship trying to provide an actual theoretical account of direct versus indirect taxes, like that maybe the differences about elasticity, that direct taxes were the things that you basically couldn't avoid, you couldn't get out of the activity that was being taxed, and indirect taxes were things that are high elasticities, like excises. 

 

Dan: I just don't know what to do with these clever arguments that come up hundreds of years later. 

 

Will: Some of them are clever, but you can see why they only came up now. They're based on corpus linguistics. So, if somebody has access to all the stuff that nobody had on hand when Rufus King asked at the time, [laughs] and now we have the librarians, we can go tell them. 

 

Dan: But in that case, if nobody there doing the drafting had access to that information, it's almost like if it has that meaning, it's just a coincidence. If none of them understood it to mean that. And the only way we can figure that out is by looking at the corpus linguistics. It's just a complete coincidence that it happens to have that meaning. Does that make any sense? 

 

Will: I don't think it's a coincidence because there could be a time, you're like, “There's a technical term.” You know it's a technical term, you're using it, and you know what it means, that's the thing you care about. You know what it means that it has some relevance for head taxes and land taxes, which is what you care about. And you're subscribing to however it cashes out for other stuff, even though it's not like the core application. But I'm not yet sold on a clear definition of direct and indirect taxes. But that's one of those things I try to keep up with the literature on, because I still think maybe we'll get there.

 

Dan: You keep up with a lot of literatures, and you have a lot of confidence that we are going to rationalize everything. And by the time you hit emeritus, we will have just solved all these questions. 

 

Will: Oh, I have no confidence. But James Madison, you mentioned his notes. He wrote in-- after he was President, he had this long career of correspondence. It took him to the 1820s, I think, maybe even the early 1830s, before he was willing to publish his notes for people to read. And he has some correspondence where he explains that he's waiting to publish his notes until all of the major ambiguities in the Constitution have been liquidated. He doesn't want the notes because the proceedings are supposed to be secret. He doesn't really think they should be considered for purposes of figuring out the meaning. But he seems to be confident [laughs] that it's going to happen in his lifetime. [laughs] We're almost there. So, I think James Madison was a little over optimistic.

 

Dan: Maybe. Maybe when we finally solve the last riddle, he'll be resurrected. He's been in hiding somewhere then he can actually die. 

 

Will: Yeah, that'd be funny. But I'm with you on there being more moving parts in the background than the analysis totally reveals. 

 

Dan: Yeah. 

 

Will: So, should we talk through their opinions? 

 

Dan: Yeah. So, Justice Barrett, opinion. So, she's going to approach the case a little differently. She is going to consider and answer the question of whether realization is constitutionally required. And she says--

 

Will: Yes.

 

Dan: Okay. She is going to say, you have to have realization for this to be something that Congress can do, at least under the 16th Amendment. And that would have potentially pretty profound consequences for other parts of the tax code, and it would definitely rule out something like a wealth tax. Now, the majority opinion we didn't note does contain a little caveat saying, “Don't worry, wealth tax would be a different issue. We're not answering that question.” And the other thing, but we didn't talk about the majority is there's this other question about, “Can Congress go too far in attributing income?” 

 

So, the majority is like, “This is okay because we are basically, Congress is just attributing income that actually was realized from the corporation, attributing it to the owners. And we can do that.” But then majority opinion says, “It might violate due process under some circumstances to go too far. Like, if you just make some attribution that's totally wacky, that might be a due process problem.” And also seems to suggest that maybe you can't do both. You can either attribute it to the company or to the shareholder, but you couldn't say income to both simultaneously. Not totally clear on that. 

 

Will: I wonder why those are only due process problems. Because if realization is a 16th Amendment requirement, then you might think that there's a 16th Amendment doctrine of-

 

Dan: Who realizes.

 

Will: -what realization is or some Boerne v. Flores. Congress can define what realization is somewhat. And after Justice Barrett decides that realization is a constitutional requirement, and she reads precedent a little differently than the court as well as the text, then there's still a question about, so what does that mean for the Moores? 

 

Dan: Yeah, and she thinks they didn't realize anything, but can we attribute? And she thinks the attribution question is a little harder. 

 

Will: Right. They didn't actually realize it, but maybe it's okay for Congress to attribute their income to them. So, maybe they're deemed to have realized it, or it's realized by KisanKraft and they owe the taxes for it. I found this part of the opinion, the funniest part of the opinion in some ways, because it's the last paragraph. “Congress's power to attribute the income of closely held corporations to their shareholders is a difficult question. And unfortunately, the parties barely addressed it without focused briefing on the attribution question. I would not resolve it.” And then she says, “Taxpayers generally bear the burden to show they are entitled to a refund. Given the Moore's concession, they have not met that burden here. For that reason, I concur in the court's judgment, affirming the judgment below.”

 

Will: Is that a cop out? 

 

Dan: Yeah. In the same way that the majority is. So, just to make sure we understand. So, the majority says that the Moores concede that Subpart F is constitutional. They don't have a good reason for treating it differently. Therefore, MRT is constitutional. She says Moore's concede that Subpart F is constitutional. I agree. It's not meaningfully different. I don't know about this attribution thing. Seems hard, but you didn't make a good enough argument to persuade me. Therefore, you lose.

 

Will: Yeah. You haven't even really tried. You haven't really briefed this. There's like a sub-sub question of this issue that you were so focused on the big issue that you didn't brief, therefore you lose. It's not they waived it exactly. They did argue it. She just wants more argument. 

 

Dan: Yeah. 

 

Will: Don't we normally expect Justices to either figure it out or ask for supplemental briefing? 

 

Dan: Yeah. This reminds me of Justice Gorsuch's dissent in Carpenter, Fourth Amendment case, where that was about the Constitutionality of government, warrantless tracking of cell site location information. When your cell phone pings the tower, or if they can use that to find out where you are, whether that's a Fourth Amendment search. Justice Gorsuch has this long opinion where he seems extremely sympathetic to the Fourth Amendment argument. Then he gets to the end. He's like, “Well, we'd have to answer some of these hard questions about property law, and you guys didn't brief that well enough for me, so I dissent and government should win.”

 

Will: Yes, it is similar. I mean, and I'll say I'm not totally against letting the background presumptions or burdens of proof do more work than they usually do, but it's pretty rare for the Justice to do that. And so, when that happens, it always seems funny. 

 

Dan: Yeah. What is it about tax that makes it special that the taxpayer has the burden to show unconstitutionality? Is that an overarching principle that the plaintiff, the person trying to get something from the government, always has the burden? Is that the idea of the presumption of the constitutionality, or is that different? 

 

Will: I think it's both. And she cites two things. She cites a tax specific principle for the taxpayer bears the burden of showing their entitled to refund, which I think is a special tax rule that we don't give the money too easily. But then she also cites her own majority opinion in Haaland v. Brackeen just for the general proposition that there's a burden to show unconstitutionality. And she did something similar there, where there was this attack on federal Indian law, and the opinion says something like, “Look, there's a lot of Federal Indian law. Either you're attacking all of it, in which case it's a really big deal, or it's all fine, and this is somehow different from the ones that are okay, in which case, you got to show us why. And you've neither admitted that you're trying to attack all of Indian law nor done a good job of convincing us you're not trying to attack all of Indian law, therefore you lose.” 

 

I think it's a consistent move, and I just have mixed feelings about it. Like, at the level of argumentative hygiene, I guess it's good to be like, “There are cases where we're going to blow everything up, and there are cases where we're not. And you've got to put your case in one of the boxes.” [laughs] So, we don't want to blow things up by accident. But realistically, a lot of the time, major doctrinal shifts happen, in part because at the first case, people didn't have to commit. 

 

The road to Brown v. Board of Education started with the NAACP litigating, several but equal cases and saying, “Well, this isn't really equal. This isn't really equal.” And then eventually got them to say, “Well, obviously we've been shipping away at this doctrine for a while, and so it's funny they're not allowed to do that now.” 

 

Dan: Yeah. Also, I think that it seems weird to decide a big constitutional question in a case where you think the party hasn't actually met its burden of making sufficient arguments to show unconstitutionality. It seems like if you can't get all the way there, they haven't given you enough to even decide the ultimate question in the case. Maybe you just wait to decide the subsidiary or the antecedent really big question. 

 

Will: Yeah. I take it she's saying, “They did give me enough information to decide the big question. They just didn't give me enough information to decide how it actually applies to them.” But of course, if you take seriously the idea that courts are not supposed to issue advisory opinions, they're only supposed to decide big questions in the context of the application to individual people, then it's backwards to say, “Here's my opinion of the big question.” Does it matter who knows? 

 

Dan: Yeah, I mean, maybe it's less objectionable if in a concurrence, but if it were a majority, it would seem troubling to me. 

 

Will: Yeah, but it's also weird that because Justice Barrett and Justice Alito’s opinion doesn't matter. There are already five votes for the majority opinion to hold it. Whether this is a concurrence or a dissent is unimportant. 

 

Dan: Yeah. 

 

Will: They could have called a dissent in the circuit courts. Sometimes you just see opinions that are called dubitante [Dan laughs] Judges, like, “I don't really know which way I vote-

 

[laughter]

 

I'm comfortable this whole thing, it doesn't really matter.” And it's considered not cool for Supreme Court justices because they have to pretend, they know everything. I think it's just a coincidence. But one other funny thing I was thinking about this is this was the case that Justice Alito got in some hot water about five rounds of ethics trouble ago because he gave that interview to the Wall Street Journal, where one of the two people he gave the interview to was David Rivkin, who was also a lawyer in this case. 

 

Dan: Oh, yeah. 

 

Will: And so, there was this idea that Justice-- I don't think they talked about the case, but Justice Alito should recuse from Moore because he's actually, now showed these too close to one of the lawyers. 

 

Dan: Yeah, I thought that was dumb. 

 

Will: I did. But it's interesting that the fact that the opinion is a concurrence means Justice Alito ruled against David Rivkin, thus eliminating any appearance in propriety.

 

Dan: I don't know about that. 

 

Will: Well, helping a lot. 

 

Dan: I mean, his lawyer, the Rivkin's interest may have been more partially in his client's interest, but also in vindicating the big principle. 

 

Will: Well, that's part of what's funny. I just think it's funny that the case ended with Justice Alito in some ways signing on to the challenge that everybody was worried he would sign on to, but doing it in a way they didn't technically sign on to the challenge. And I can't imagine Justice Barrett concurrence. I can't imagine Justice Barrett is carrying water for Justice Alito's ethics controversies. But I thought it was funny. That's where it landed. 

 

Dan: Maybe she wants a ride one of those private jets. 

 

Will: He doesn't even have them. 

 

[laughter]

 

Dan: He's got friends. 

 

Will: Yeah, maybe she wants her own friends. 

 

Dan: She'll get them. 

 

Will: She's [crosstalk] around for a little while. 

 

Dan: Mm?

 

Will: She has one of those really expensive book deals, right? 

 

Dan: She did, yeah, she got one of those sweetheart deals as soon as she joined the court from a conservative publishing house. Has the book materialized? 

 

Will: I don't think so. I think I would have ordered it if it did. 

 

Dan: Yeah. That deal, I thought, came through very shortly after she joined the court. So, you would think that the book should be appearing. 

 

Will: Maybe they're not in a rush to get the book. 

 

Dan: It's fishy. 

 

Will: And then Justice Thomas and Justice Gorsuch dissent. 

 

Dan: Long Justice Thomas dissent. Do you want to sum it up? Basically, says “Realization is a constitutional requirement for income taxes,” and then he doesn't buy the attribution point.

 

Will: So, what do you think of this, Dan? Is this, I'm guessing that your general common-sense approach means this just has to be okay and we shouldn't think too hard about it? 

 

Dan: I don't know if I would articulate it that way. I certainly think, first, I would come into it with some sense where a party is trying to come up with a clever argument that would have massive consequences like this. Let's make sure we're confident before agreeing with them. And second, I do think, and again, I'm influenced by my colleague here, it would have been nice to see the Justices in the court who were skeptical of this tax, to do a little bit more work with the other categories. They do seem to be skipping this important question about, okay, maybe this is an excise, because if it is, this is not unconstitutional. Showing that something isn't covered by the 16th Amendment does not get you to concluding that the tax is unconstitutional. Yeah, you have to conclude it's a direct tax. 

 

Will: Well, did the government argue it's an excise? Could we say that argument is waived? 

 

Dan: No, they preserved it. It's in the briefs. It's short. 

 

Will: Well, we know that if it's short, then it's inadequate. 

 

Dan: Yeah, it's not focused. It needs to be focused. 

 

Will: So, the QP, according to Justice Barrett, is whether the 16th Amendment authorizes Congress to tax unrealized sums, without apportionment of the states. So, could you resolve the case by saying-- [crosstalk]

 

Dan: The government doesn't write the QP if it's the respondent. 

 

Will: Right. But the petitioner said that's the question. So, could the court have just said, “The answer is no, this tax is not authorized by the 16th Amendment, which is what the 9th Circuit said it was. And so, the 9th Circuit is reversed. On remand if the government's preserved it, they're welcome to argue that it's a non-16th Amendment tax and the alternative, and maybe we'll take that case, maybe we won't.” They could deal with that.

 

Dan: Again, that seems like a big, bold step to take if it's possible that this is actually a constitutional tax. It seems like if you're going to do something like, don't issue a holding that's going to potentially massively disrupt the tax system if you don't have to. 

 

Will: The point is you might just think, I'm sure the 16th Amendment doesn't authorize this. And so, we do have to fall back. Connor Clarke is right. We do now have to fall back and figure out the Constitutional definition of excise tax. Sounds important. Somebody else should take the first cut at that precisely because it's so important. And we'll get into that later if we have to.

 

Dan: But alternatively, you could say, we actually want somebody else to decide the excise tax question first. You could say, we have reservations about the 16th Amendment question, but that resolution of that question may be unnecessary. And let's resolve the excise question, let's get briefing on that, maybe remand. And then it just seems like, don't decide the big Constitutional question. Say that there's a problem without also having determined whether there might be another fix to the problem, if you don't have to. 

 

Will: You know, every so often the court digs a case-- dismisses as improvidently granted, not because of any vehicle problem, but just because the case turns out to be really hard. And I think if I'd been on the court, I would have been sorely tempted to just dig this. 

 

Dan: I could see that. Although, I mean, I think the majority's opinion is reasonable. It gets in and out of the case, doesn't do a lot of damage. Seems fine.

 

Will: I guess, if the majority, I mean, frankly, again, as a Con Law professor, I welcome the majority of opining on the indirect excise issue and the rightness of Pollock. But I think for Justice, I'm not sure I would have wanted to join those. I might have asked them to take that out. [chuckles] But those are also big questions, [chuckles] which the court is not existent and do we really have to just opine on them here? The majority's way of getting in and out is like a dig in all but name in some sense. It's like, “Well, there are lots of big questions here. We're not going to answer them. We're just going to narrowly construe what the petitioners have argued and then conclude that they didn't argue very well.” [laughs] So, this case stands only for the proposition that--

 

Dan: But it invites the fact that these opinions are out there, and the separate opinions now invites further litigation, right? 

 

Will: Right. And again, you might think better not to. 

 

Dan: Yeah. Okay. Anything else to say about it? 

 

Will: No. 

 

Dan: All right. Thanks very much for listening. Please rate and review on the Apple Podcast app or wherever you get your podcasts, and generally share the show with anyone you think might be interested. We are always looking to expand our audience. Visit our website, dividedargument.com, where we have transcripts. The episodes posted fairly soon after their release. Go to store.dividedargument.com for merchandise. Send us an email at pod@dividedargument.com. We read them all, sometimes respond, sometimes drop the ball and leave us a voicemail 314-649-3790.

 

Will: Thanks to the Constitutional Law Institute for sponsoring all of our endeavors. And if there's a long delay between this and our next episode, it will because the government has chosen to impose a tax on all the unrealized gains from the massive increase in our brand value from these multiple years of podcasting.

 

Will: Yeah, I've never seen a cent of that. 

 

Dan: [laughs] Someday.

 

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