Have you ever tried to read the U.S. Constitution, straight up? I bet your eyes glazed over as soon as you got to Article 1, section 2, clause 3 (which is pretty early in):
Representatives and direct taxes shall be apportioned among the several states which may be included within this union, according to their respective numbers, which shall be determined by adding to the whole number of free persons, including those bound to service for a term of years, and excluding Indians not taxed, three fifths of all other Persons.
Reinforcing the same idea is Article 1, section 9, clause 4:
No capitation, or other direct, tax shall be laid, unless in proportion to the census or enumeration herein before directed to be taken.
What the heck does that mean? I’m re-reading a book which happens to explain it. For historical interest only, I shall explain to you.
A “direct tax” is money that you, the citizen, pay to the government directly. Contrast to an “indirect tax” which is a tax on some product (like alcohol) being manufactured, bought, shipped etc. You pay the tax in the end; but indirectly – because some other party is there as an intermediary: they collect from you, and then the government collects from them.
“Apportioned” means that Congress had to do two things, when it came to the direct tax.
- Declare the exact amount of money that it wanted to raise (say, $20 million).
- Declare the amount to come from each State, based on certain rules.
The rules were the “apportionment” part. The amount of money would be apportioned by State population, which would be calculated as: the number of free persons, plus 3/5 the number of slaves (if any).
What was the point of the 3/5 requirement? To make the slave states pay more. Here is a fictitious example. Trigger warning: Maths! and slavery!
Suppose the U.S. had exactly 2 States, Free and Slave. And it needed to raise $180 for the next budget cycle. First, Congress would declare “We need to raise exactly $180. And whiskey taxes aren’t good enough; we want to do a direct tax.”
Now suppose that Free state had 60 citizens (all free of course), and Slave state had 30. So, Free had twice as many. At first blush, Free would have a tax on its citizens where they cough up 2/3 of the money for the feds (which is $120), while Slave state would cough up 1/3 (which is $60).
But let’s say Slave state didn’t only have 30 free citizens; it also had 50 slaves. The 3/5 rule said that Slave state should cough up more.
Applying the 3/5 rule, Slave state had 30 + (3/5 * 50) = (30 + 30) = 60 people for apportionment purposes. So both States had 60 people, for apportionment purposes. So the tax would be apportioned half-and-half. Free state would be designated to cough up $90, and Slave state also $90.
Both states would probably tax their free citizens. So, Slave state would have a higher tax *rate* on its 30 free citizens, to get them coughing up $90. Free state would have a lower rate on its 60 citizens, to get them coughing up $90.
Weird and antiquated, but now you know!