Brushaber v. Union Pacific Railroad

Brushaber v. Union Pacific Railroad

Infobox SCOTUS case
Litigants=Brushaber v. Union Pacific Railroad
ArgueDateA=October 14
DecideDate=January 24
FullName=Frank R. Brushaber v. Union Pacific Railroad Company
Citation=36 S. Ct. 236; 60 L. Ed. 493; 1916 U.S. LEXIS 1418; 1 U.S. Tax Cas. (CCH) P4;3 A.F.T.R. (P-H) 2926
Prior=Dismissed by the District Court for the Southern District of New York
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; (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.
LawsApplied=U.S. Const. amend. XVI

"Brushaber v. Union Pacific Railroad," 240 U.S. 1 (1916), was a landmark 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 (Oct. 3, 1913), enacted pursuant to Article I, section 8, clause 1 of, and the Sixteenth Amendment to, the United States Constitution, imposing a 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: the Pollock case

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 (a tax 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 stockholder 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 to enjoin it from paying the tax, on the contention that statute enacting the tax violated the Fifth Amendment's prohibition against the government taking property without due process of law, and further contending that the statute further violated due process by exempting certain kinds of income. The U.S. government filed a brief supporting the validity of the tax.


The Sixteenth Amendment removes the requirement that income taxes be apportioned among the states according to population. The Revenue Act of 1913, imposing income taxes that are not apportioned among the states according to each state's population, is not unconstitutional.

The Federal income tax statute does not violate the Fifth Amendment's prohibition against the government taking property without due process of law.

The Federal income tax statute does not violate the uniformity clause of Article I, section 8 of the U.S. Constitution.


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 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."

ubsequent interpretation

Although the court stated that income taxes inherently belong in the category of excise tax (indirect tax), "Brushaber" is sometimes misunderstood by persons who argue that the case stands for the opposite meaning. Since 1913, however, the Supreme Court of the United States has never ruled that any Federal income tax is anything but an excise tax, not required to be apportioned as a direct tax, but requiring geographic uniformity. As one group of writers has stated:

: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 that an income tax, to the extent that it is a direct tax, must be apportioned among the states. [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.).]

No income tax enacted by the U.S. 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 (i.e., 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. In subsequent cases, the courts have interpreted the Sixteenth Amendment and the "Brushaber" decision as standing for the rule that the Amendment allows a direct tax on "wages, salaries, commissions, etc. without apportionment." ["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).]

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:

: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...

Indeed, that had been the understanding with respect to all income taxes until the "Pollock" decision. The Sixteenth Amendment removed the need — that had been 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. Nothing, however, in the Sixteenth Amendment or in the "Brushaber" decision relieves excises (indirect taxes) from the constitutional rule of geographical uniformity. Thus, for example, an income tax on compensation for service (such as a wage, salary, or commission), as an indirect tax, is still required to be imposed with geographical uniformity. No court has ever ruled any Federal income tax to be in violation of the uniformity rule.

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 U.S. Congress were to enact a national property tax (i.e., a tax on property "by reason of its ownership") or a national capitation (i.e., a poll tax or head tax), such taxes would be required to be apportioned.


External links

*caselaw source
case="Brushaber v. Union Pacific Railroad", 240 U.S. 1 (1916)

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