Hylton v United States (1796)

Originally Published On Substack
June 17th, 2022

The federal government is always proposing new things to tax. We know there is an income tax. However, the federal government also taxes things like gasoline, tobacco, alcoholic beverages, airfare, etc. These are not sales taxes. They are excise taxes. It is a tax levied on either the manufacturer to pay when making a product, or you to pay when purchasing a product.

House Democrats recently backed a proposal by Rep. Don Beyer, a member of the Ways & Means Committee to institute a 1000% federal tax on AR-15 style rifles, without even a pretense of levying this tax to raise revenue. In their minds, a tax that turns a $1,200 rifle into a $12,000 rifle is perfectly justified to make the cost of gun ownership prohibitively expensive.

When they could not get a de jure ban on a class of weapons in common use for lawful purposes, because of that inconvenient natural right of armed self-defense, they compromised with a de facto infringement of your inalienable rights.

(Ironically using a constitutionally delegated power as a weapon to deprive us of our constitutionally protected individual right to own weapons.)

 At what point did the federal government begin reading the constitutional taxing power so broadly it could become an instrument of social engineering?

For that matter, how many Americans ever truly stopped to consider if there are any restrictions on what or how the federal government can tax? Does the United States Constitution allow the federal government to tax anything it wants, whenever it wants, and in any way it wants?

At what point did a fundamental division take place between those who construe the federal government’s taxing powers as narrow and finite and those who construe a more liberal view on what the federal government could tax and for what ends?

This disagreement eventually led to a tax revolt in Virginia in 1794.

Just 7 years after the ratifying of the U.S. Constitution, a case came before the Supreme Court that required the Justices to rule on the nature and scope of federal taxation.

Ironically, the revolt led to a Supreme Court case that many people at the time thought was poorly decided and many people today have never heard of. That, all the same, would eventually become one of the most important Supreme Court decisions for the way it enabled an ever-expanding federal taxation power.

Let’s examine the 1796 U.S. Supreme Court case of Hylton vs. The United States to learn what the Constitution actually says about taxation and why a simple tax on carriages exposed a deep ideological split within the new country itself.

In June 1794 the United States Congress passed a tax on the ownership of carriages. The tax called for a levy:

When the tax came due in September, Daniel Lawrence Hylton, a wealthy Virginia businessman, refused to pay it because in his opinion it was unconstitutional and void. He was not alone in his refusal to pay the tax. Virginia jurist and constitutional scholar St. George Tucker wrote to future president James Monroe:

The place was Williamsburg, Virginia. And the men who refused to pay the tax were some of the brightest legal minds in the country. They, like Hylton, also believed that the tax was unconstitutional and thus void. Their reasoning went like this:

The federal government’s carriage tax was a direct tax. The tax however was not apportioned among the states but directly on the citizens of the states. Therefore, the tax was unconstitutional and thus did not have to be paid.

 At the urging of Alexander Hamilton, the federal government rejected this argument and proceeded to sue Daniel Hylton in federal court over the tax. The case eventually made its way to the Supreme Court and became known as Hylton v. United States.

Hylton went ahead without any justices’ questioning the court’s authority to hear the case or directly questioning the court’s power to nullify congressional acts on constitutional grounds. The court thus implicitly accepted its power to nullify an act of Congress seven years before the better-known decision in Marbury v. Madison (1803)

 Nonetheless, in a 4-0 decision the Court ruled against Hylton. Justices Chase, Iredell, Paterson, and Wilson unanimously found that the federal government’s direct excise tax on the ownership of carriages was constitutional. The justices’ opinion was essentially based on two main arguments.

The first went like this:

The second went like this:

Both of these lines of reasoning are a particular kind of logical fallacy known as a syllogism, which is the application of deductive reasoning to arrive at a conclusion based on two propositions which are asserted or assumed to be true creating a subtle but specious reasoning.

Both of those legal justifications rely on the kind of flimsy false equivalence that would be embarrassing to try and use in a high school debate team competition, much less as part of the primary holding in a landmark Supreme Court case regarding a topic as fundamental as the meaning and scope of the Congressional taxing power.

Though many at the time considered the justices’ premises to be faulty and believed that the decision was based purely on politics, the case nonetheless became a landmark decision. While Hylton was decided over two centuries ago, it has played an important role in numerous Supreme Court decisions that have justified the expansion of federal taxation. While many today have not heard of Hylton v. United States, it has played a pivotal role in the development of current federal tax policy. Consider this list of past cases where Hylton’s precedent was used to justify expanded federal taxation:

Hylton v United States : Cited In Subsequent Supreme Court Cases

• 1868 Pacific Insurance Company v. Soule The federal government’s 1866 law that taxed the income and dividends of insurance companies was constitutional
• 1869 Veazie Bank v. Fenno The 1866 federal government’s tax of 10% on state banknotes was constitutional
• 1874 Scholey v. Rew A federal tax on the inheritance of land was constitutional
• 1880 Springer v. United States The federal government’s income tax of 1864 was constitutional
• 1895 Pollock v Farmers’ Loan and Trust Company The federal government’s 1894 tax on income from rental property was found to be unconstitutional. The dissenters cited Hylton extensively.
• 2012 NFIB v Sebelius The Affordable Care Act (ACA) or “Obamacare” is constitutional.

In Sebelius, Chief Justice John Roberts cited the Hylton case in support of his opinion that the Individual Mandate provision of the Affordable Care Act was constitutional. By doing so, Roberts followed the lead of a long line of Supreme Court justices who also appealed to Hylton in order to find a new federal tax constitutional. Why is this such an important precedent for past and present Supreme Court cases?

For 3 years, from 1787 – 1790, beginning at the Constitutional Convention in Philadelphia and later in state ratification conventions, Federalists and Anti-Federalists debated the merits of the newly proposed U.S. Constitution. These debates often became contentious and many questioned whether the new Constitution should even be ratified. Anti-Federalist George Mason, a delegate from Virginia to the Constitutional Convention, declared: