Article 1, Section 9, Clause 4: Prohibition on direct taxation

No Capitation, or other direct, Tax shall be laid, unless in Proportion to the Census or Enumeration herein before directed to be taken.

Under U.S. constitutional law, a direct tax is a tax per person (a capitation tax), a tax on personal property, or a tax on real property. This clause does not actually ban direct taxes, nor was it likely the Founders’ intent to ban such taxes, but in practice the effect of this clause has been to bar direct taxes. The reasons are practical and political: A direct tax must be apportioned by state population, so that (for example) a state where the value of land averages twice as much as the next state, but has identical population, must have its federal property tax rate prorated to be half per dollar of land value as the poorer state. Put another way, almost all direct taxes will burden poorer states more than richer states. Regressive taxes of this sort are non-starters politically, not to mention the practical difficulty of administering them.

The 16th Amendment was enacted precisely to get around this barrier, and it is no surprise that the federal income and payroll taxes are now the only significant direct federal taxes, making up 86% of total federal tax revenues in 2021.