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Encyclopedia > Brushaber v. Union Pacific Railroad
Brushaber v. Union Pacific Railroad

Supreme Court of the United States Image File history File links Seal_of_the_United_States_Supreme_Court. ...

Argued October 14 and 15, 1915

Decided January 24, 1916

Full case name: Frank R. Brushaber v. Union Pacific Railroad Company
Citations: 240 U.S. 1, 36 S.Ct. 236, 60 L.Ed. 493
Prior history: Dismissed by the District Court for the Southern District of New York
Subsequent history: none
It is erroneous to assume that the 16th Amendment provides for a hitherto unknown power of taxation; that is, a power to levy an income tax which, although direct, should not be subject to the regulation of apportionment applicable to all other direct taxes.
Court membership
Chief Justice Edward Douglass White
Associate Justices Willis Van Devanter, Oliver Wendall Holmes, James C. McReynolds, Joseph McKenna, William Rufus Day, Mahlon Pitney, Charles Evans Hughes (the Court decided the case with only eight justices sitting, due to the death of Joseph R. Lamar on January 2, 1916)
Case opinions
Majority by: White
Joined by: unanimous court
Laws applied
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 statute, enacted pursuant to the newly ratified Sixteenth Amendment to the United States Constitution, imposing a federal income tax. The Court ruled that Congress had, even before the Sixteenth Amendment was passed, the authority to tax income. If the income tax was a direct tax in the constitutional sense, it could be imposed (before the passage of the Amendment) only by apportionment among the states according to their census populations. In the controversial case of Pollock v. Farmers' Loan & Trust Co. the Court had overturned longstanding precedent and ruled that a tax on income derived from property was a direct tax. In Brushaber, however, the Court held that the Sixteenth Amendment eliminated the requirement of apportionment as it relates to "taxes on incomes, from whatever source derived" and thus affirmed that such taxes inherently belonged in the category of indirect tax (or excise). // Case citation is the system used in common law countries such as the United States, England and Wales, Canada, New Zealand, Australia and India to uniquely identify the location of past court cases in special series of books called reporters. ... 1916 (MCMXVI) was a leap year starting on Saturday (link will take you to calendar). ... The Supreme Court of the United States is the highest judicial body in the U.S. and leads the judicial branch of the U.S. federal government. ... Amendment XVI (the Sixteenth Amendment) of the United States Constitution, authorizing income taxes in their present form, was ratified on February 3, 1913. ... Page I of the Constitution of the United States of America The United States Constitution is the supreme law of the United States of America. ... The examples and perspective in this article or section may not represent a worldwide view. ... A direct tax a tax that is collected directly by government from the persons (legal or natural) on which it is levied. ... 1880 US Census of Hoboken, New Jersey The United States Census is mandated by the United States Constitution[1]. The population is enumerated every 10 years and the results are used to allocate Congressional seats (congressional apportionment), electoral votes, and government program funding. ... Holding --- Court membership Case opinions Laws applied --- Pollock v. ... The term excise has more than one legal meaning. ...



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. A plaintiff, also known as a claimant or complainant, is the party who initiates a lawsuit (also known as an action) before a court. ... A shareholder or stockholder is an individual or company (including a corporation), that legally owns one or more shares of stock in a joint stock company. ... A defendant or defender is any party who is required to answer the complaint of a plaintiff or pursuer in a civil lawsuit before a court, or any party who has been formally charged or accused of violating a criminal statute. ... The Union Pacific Railroad NYSE: UNP is the largest railroad in the United States. ... The Congress of the United States is the legislative branch of the federal government of the United States of America. ... An injunction is an equitable remedy in the form of a court order that either prohibits or compels (restrains or enjoins) a party from continuing a particular activity. ... Amendment V (the Fifth Amendment) of the United States Constitution, which is part of the Bill of Rights, is related to legal procedure. ...


After quoting the language of the Sixteenth Amendment, the Court states:

...the contention that the Amendment treats a tax on income as a direct tax although it is relieved from apportionment and is necessarily therefore not subject to the rule of uniformity as such rule only applies to taxes which are not direct, thus destroying the two great classifications which have been recognized and enforced from the beginning, is also wholly without foundation...

Later misunderstanding

Although the case is clear in its statement that the income tax is constitutional, and need not be apportioned, it is constantly misunderstood by those who refer to constitutional adherents as tax protesters. Their misunderstanding stems from the erroneous belief that the Court's decision in Brushaber relieves taxes on income from the rule of uniformity. Although they are correct in stating the Court's finding that the Sixteenth Amendment did not subject taxes on income to the rule of apportionment, the Court unequivocally dismisses the notion that the Sixteenth Amendment created a third class of taxes: that is, one that is direct and not subject to apportionment. In United States tax law enforcement, a tax protester (sometimes spelled protestor) is a person who resists or refuses payment of a tax for which he or she is liable based on a belief that the tax laws are inapplicable or unconstitutional. ...

Indeed, later in the same year the Court stated in Stanton v. Baltic Mining Co., 240 U.S. 103, 112-13 (1916), that Brushaber had determined // Case citation is the system used in common law countries such as the United States, England and Wales, Canada, New Zealand, Australia and India to uniquely identify the location of past court cases in special series of books called reporters. ...

that the provisions of the 16th Amendment conferred no new power of taxation, but simply prohibited the previous complete and plenary power of income taxation possessed by Congress from the beginning from being taken out of the category of indirect taxation to which it inherently belonged, and being placed in the category of direct taxation [ . . . . ]

The Court's decisions on this issue repeatedly assert that income taxation inherently belongs in the category of indirect tax. An indirect tax (such as sales tax, value added tax (VAT), or goods and services tax (GST)) is collected from the person who bears the tax by intermediaries and the proceeds passed on to government. ...

External link

  • 240 U.S. 1 (1916) – Full text of the case at FindLaw



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