What did the drafters of the 16th Amendment mean when they granted Congress the power to levy taxes on “incomes, from whatever source derived”? Perhaps more important, what did state lawmakers understand these words to mean when they voted to ratify the amendment?
These are not idle questions, now that the Supreme Court has agreed to hear Moore v. United States, which raises a constitutional challenge to the mandatory repatriation tax imposed by the Tax Cuts and Jobs Act. Specifically, the case asks whether income must be realized for it to be taxable under the 16th Amendment.
The case turns on the Supreme Court’s decision in Eisner v. Macomber. Even more fundamentally, however, it turns on the meaning of income as used in the 16th Amendment — an issue that Macomber engaged but did not pursue, as John R. Brooks and David Gamage have pointed out in their recently posted article, “Moore v. United States and the Original Meaning of Income.”
The petitioners in Moore have been much more direct, insisting that income requires realization because that’s what income meant to the drafters and ratifiers of the 16th Amendment. And since the mandatory repatriation tax is not based on realization, it doesn’t qualify for the amendment’s constitutional end run; it’s an unapportioned direct tax and therefore unconstitutional.
The Moores’ lawyers have been very helpful in explaining the centrality of history to this argument, especially to the definition of income. “The Constitution does not allow Congress to point at any pot of money and call it ‘income’ and then income-tax it,” insisted Andrew Grossman of Baker & Hostetler LLP in a media release. “‘Income’ means the same thing now that it did when the Sixteenth Amendment was ratified: gains that have been realized by the taxpayer.”
That would be a very convincing argument — if it were accurate. But to be correct, Grossman would have to demonstrate that the drafters and ratifiers of the 16th Amendment shared a broadly understood definition of income. But they did not. The meaning of “income” was the subject of dispute and debate in 1913.
Dubious Claims
There’s no history like the kind of history that finds its way into a Supreme Court petition for a writ of certiorari. The petition filed by Charles G. Moore and Kathleen F. Moore is no exception; it is filled with questionable assertions framed as incontrovertible facts. That’s fine, as long as we remember that advocacy is not actually history. A few examples:
“The Sixteenth Amendment's exemption from apportionment is limited to taxes on realized gains.”
“That limitation is plain on the face of the Amendment's text, which contemplates that ‘income’ will be ‘derived’ from a ‘source,’ and is the only interpretation consistent with the universal understanding of ‘income’ at the time of the Amendment's adoption.”
“Begin with the text. The Sixteenth Amendment's exemption from apportionment is limited to ‘taxes on incomes, from whatever source derived.’ As Macomber astutely observed, that text plainly contemplates that ‘incomes’ must be realized: a gain is not income unless and until it has been ‘derived’ by the taxpayer from some ‘source.’”
In a weak or attenuated form, these assertions might be plausible. But in this overstated, amplified version, they are basically indefensible. Before turning to that, however, let’s consider for a moment the entire project of legal originalism, which makes historical meaning so important to legal reasoning in the first place. After all, it’s not necessarily obvious that original meaning should control in tax cases — or anywhere else, for that matter.
Historians and Originalism
Originalism is a contingent historical phenomenon with its own history. For a long time, historians gave it little attention and even less respect. As Stanford history professor Jonathan Gienapp observed in 2017, professionally trained historians tended to dismiss legal originalism as a “quaint curiosity, outlandish absurdity, or both.” But the durable influence of originalism — as an intellectual movement and an element of constitutional jurisprudence — has forced historians to engage with the concept.
Historians have an obvious reason to pay attention to originalism, since the theory “implicates the role of historical study in constitutional interpretation.” Indeed, historians have not just a right but a responsibility to engage the issue. After all, Gienapp pointed out, “it is hard to imagine any area of contemporary civic life where historical expertise could play a more consequential role.”
Notably, originalism has always been rooted in the present, not the past. “The theory’s main agenda was to recalibrate how judges, lawyers, and citizens related to the Constitution in the present,” Gienapp explained. Originalism was never about studying the legal past for its own sake. It explored the past as a way to reshape the present and constrain the future.
In its early years, originalism assigned a privileged place to historical study — hardly surprising, since “recovering something like original constitutional meaning would seemingly require doing history.” But the sort of history practiced by legal originalists was deeply and immediately unpopular with professional historians (and some non-originalist legal scholars).
Critics asked some obvious questions, especially about originalist interpretations of the nation’s founding era. With so many founders helping to write the Constitution, whose meanings and intentions should carry the most weight? How could originalism explain and interpret disagreements among the founders? And what about the numerous state officials who ratified the Constitution? Did their understandings and intentions matter, too?
Professional historians were especially critical of the methods employed by originalists, including their choice of sources and the ways in which they read them. Many historians dismissed originalist scholarship as “law office history,” heavy on cherry-picked evidence and light on contextualization. “The past, historians insisted, was deeply complex, requiring more careful study than originalists were willing to dedicate.”
In an effort to sidestep such criticism, originalists began looking for a way out. If they couldn’t write history that would please the historians, how about not writing history at all?
More specifically, originalists decided to write about words rather than people. They had always been focused primarily on words and texts, of course. But the second wave of originalists focused almost exclusively on words, banishing historical actors to the sidelines.
“Rather than attempting to recover the subjective intent or understanding of real eighteenth-century individuals — be it the framers who drafted the Constitution, the ratifiers who approved it, or the broader public who made sense of it — originalists began targeting the document’s so-called public meaning,” Gienapp explained.
This new form of originalism privileges the understanding of a notional average reader from the relevant historical period (either the founding era or the time of an amendment’s adoption). In Gienapp’s words, “there would be no more ‘channeling the Framers’ — an inherently subjective exercise. Originalists could instead focus on deciphering something they claimed was ‘objective’: what the constitutional text would have meant to an average reader when it first went public.”
A focus on the so-called public meaning of the text, divorced from its meaning to any actual person, allowed originalists to dispense with the historical methods they found most time-consuming and irritating. “With an eye towards respecting only what the sovereign people locked into the Constitution, they have dismissed most eighteenth-century historical evidence as irrelevant to their quest,” Gienapp wrote. “Deciphering public meaning, according to originalists, requires simply elucidating what the Constitution’s words would have communicated to an ordinary reader at the time of enactment. And contrary to other kinds of historical inquiry, as leading originalist Randy Barnett has put it, ‘You don’t need a PhD. in history to discover this.’”
This form of originalism is all about words — always in the abstract, never in the particular. The new form of text-only originalism became an exercise in keyword searching and dictionary exegesis.
Of course, this approach assumes that dictionaries are timeless artifacts, existing out of time and amenable to equally timeless forms of interpretation. It further presumes that modern readers are able to readily understand those dictionaries, using them as a guide to both archaic and contemporary meanings without understanding much of anything about the world in which those dictionaries were created, including the authors who wrote them, the publishers who sold them, and the consumers who bought them.
Originalists of the public-meaning variety are not unsophisticated; indeed, they ground their scholarship in complex theories of linguistics and meaning. But they sideline historical methods and scholarship, dismissing them as vague, ambiguous, and unnecessary. Gienapp summarized originalist thought these days: “Whether it be the various political, social, or economic contexts from which the Constitution developed, the motivations of the participants involved in its construction, or the broader purposes that constitutional partisans hoped to achieve through its enactment, none of these have much bearing on the Constitution’s purely linguistic public meaning.”
It is all very convenient for the originalists: constitutional jurisprudence that carried “the imprimatur of history without the actual work.” And the theory of this new originalism is sophisticated enough to shield it from most damaging attacks, especially from historians. “After being criticized by historians for years, originalists have built Originalism 2.0 such that no amount of historical empiricism can ever challenge it,” Gienapp wrote. “Charges of ‘law office history’ no longer apply. In fact, not only is it inapt when historians level them, but it actually reveals what originalists claim is the more pressing issue: historians’ penchant to practice ‘history office law,’ or what happens when historians weigh in on legal matters without a law degree.”
As Gienapp concluded, the battle between historians and legal originalists has become increasingly methodological rather than empirical. “The dispute is no longer over historical knowledge of the Founding era,” he wrote. “It is now over what methods are needed to identify the original meaning of a historical text.”
Original Misunderstanding
The originalists are wrong when they suggest that meaning can be discerned without resorting to traditional historical methods. Historical sources — including the Constitution — must be interpreted, and the only way to interpret something accurately is by reading documents in their broader historical context. While originalists tend to dismiss historians as collectors and curators of mere facts, they are better understood as interpreters.
“Of course, historians have vast empirical knowledge of the past and, of course, it is critical to what they do,” Gienapp wrote. “But, at base, historians’ expertise is that they know how to read historical sources and properly decipher their historical meaning — that is, the meaning such sources had in their original historical context.”
The real key to historical analysis is an ability to bracket present-day concerns and interpretive frameworks — something that legal originalism has never done well. “The foundational skill of historical practice is knowing how to think historically,” Gienapp wrote. “This gestures towards something far greater than mastery of facts; it means knowing how to abstract oneself from the present to navigate an alien, past world. It means knowing how to bracket the assumptions, values, and logics that shape contemporary consciousness in order to replace them with the assumptions, values, and logics that framed the very different mental universe of those living in a different time and place.”
That sort of bracketing is alien to originalism, which began as a presentist project and has always remained one. Originalism takes much for granted about the past, including its ready knowability.
But in fact, the past is hard to know. It remains (as the old saying goes) "a foreign country." And like many foreign countries, the past can be difficult to navigate. “Words and concepts that appear in historical sources often bear a superficial similarity to our own, but grasping what they actually meant in their original historical context requires first reconstructing the foreign conceptual world from which they issued,” Gienapp wrote.
Refuting the Moores
In their article on the original meaning of “income” under the 16th Amendment, Brooks and Gamage dismantle many of the key historical assertions included in the Moores’ petition, quoted above. While not exactly engaging in full-scale historical research, they demonstrate how a broader, more nuanced reading of historical sources can produce a more accurate understanding of textual meaning.
In other words, they illustrate the limits of cherry-picking. (Or the value of cherry-picking if you are engaged in advocacy rather than writing actual history.)
For instance, Brooks and Gamage challenge the petition’s dictionary analysis, noting that it relies on “a strained reading of contemporaneous dictionary definitions that focuses on the word ‘derived’ in phrases like ‘income derived from capital.’” The petitioners insist that “derive” implies that some sort of action is required to turn an economic gain into taxable income — an action like realization.
But that conclusion depends on a narrow, selective reading of the sources. “To make this argument, the taxpayers ignore other definitions that do not use the word derived or similar words,” Brooks and Gamage point out. “They also misreport the definition from the 1910 edition of Black’s Law Dictionary; the taxpayers, dissenters, and amici all quote language from a paragraph explaining the difference between income and profit as if it were the definition while omitting the actual definitions — one of which is simply ‘gains, profit, or private revenue.’”
Moreover, the petitioners studiously ignore the frequent use of the word "gain" in connection with definitions of income — presumably because that word might imply the existence of income that doesn’t depend on realization. Had they bothered to explore the meaning of "gain" in this period, they would have discovered that it “clearly included general accessions to wealth, accumulations, and increases in value of assets, without any requirement of realization or other action.”
Brooks and Gamage do a good job of dismantling the Moores’ argument on its own, dictionary-based terms. But of course, this myopic fixation on dictionaries is itself problematic (for the Moores, not their critics). If you were trying to learn more about a complex and nuanced subject today, would you expect a dictionary to be your go-to reference tool? Even the august volumes of the Oxford English Dictionary can’t shed much light on intricate or contentious problems. And while specialized legal dictionaries can be useful for some basic orientation, they are hardly definitive (ahem) when it comes to contested issues.
And make no mistake: The concept of income was definitely contested in 1913. The income tax was not entirely novel when the 16th Amendment made room for its return to the federal revenue system. Congress had levied one during the Civil War and would have repeated the experiment in the 1890s had the Supreme Court not intervened.
But the understanding of what might be taxable as income remained in flux. During the Civil War, for instance, the levy had reached unrealized forms of income. But upon its return in 1913, many observers believed it should be restricted to realized income. It was something of an open question — which was hardly surprising, given the newness of the levy.
Indeed, in 1913 many issues that we consider foundational to the smooth operation of an income tax were still up for debate. To be sure, lawmakers and tax administrators were drawing on past experience to shape the new regime. But they were also cognizant of the numerous questions that remained unsettled. One of these questions was the status of unrealized gains.
The Moores and their attorneys insist that the 16th Amendment “plainly contemplates that ‘incomes’ must be realized: a gain is not income unless and until it has been ‘derived’ by the taxpayer from some ‘source.’” The amendment did no such thing. Yes, some observers and commentators plainly contemplated that assertion — both in 1913 and in the years since. But it was a subject of lively debate, as Brooks and Gamage make clear in their article. Indeed, even the authors quoted in the Moores’ petition acknowledge the unsettled state of the law, as a broader reading of their writings readily reveals.
Advocacy, Not History
But again, it’s unfair to treat the historicized arguments of a petition as though they were actual history. Those arguments are a form of rhetorical posturing, and they may even be effective. But they do not accurately describe the past, the people in it, or the documents they produced. Rather, they make the case for a contemporary policy outcome that would be convenient and congenial for the taxpayers in question.
Here's the messy, distinctly inconvenient fact about the meaning of income under the 16th Amendment at the time the amendment itself was passed: It was uncertain. It was contested. It was confusing. And it would remain all those things for years to come. That’s why people are still arguing about the meaning of “income” more than a century later. The definition of income is one of the most indeterminate aspects of an income tax — the source of enduring complexity and inequity.
That’s certainly true today. But it was also true of the modern income tax at the moment of its (original) creation.