With the effort to repeal and replace Obamacare continuing to struggle in the House, the Trump administration and congressional Republicans are understandably eager to notch a major policy win and fulfill a Trump campaign promise. Thus, congressional leaders are turning their attention to the great white whale of their policy agenda: tax reform. Like Moby Dick, the opportunity to enact tax reform surfaces only rarely, and it has a penchant for turning on those who, like Captain Ahab, pursue it too closely. In fact, a squall of serious dimensions is already appearing on the horizon. A centerpiece of the Republican leadership’s tax-reform plan is a new $1 trillion tax that proponents call a “border adjustment.” Not surprisingly, many members of Congress are hearing from constituents opposed to being “adjusted” to the tune of a $1 trillion, and Republicans in both houses of Congress are talking openly about a mutiny. The Republican leadership’s proposed “border adjustment” sounds a lot like what United Airlines might call a “re-accommodation.” The Constitution granted to Congress the power “to lay and collect Taxes.” But it also placed an important restriction on that power known as the apportionment clause: Any “direct” tax – which is to say, any tax on a person or their property, as opposed to a tax on a specific transaction – had to be “apportioned among the several States . . . according to their respective numbers.” Because the Constitution also required that all bills concerning taxes originate in the House – the chamber in which representation is tied directly to population – the framers included the apportionment clause to ensure that the more populous states could not band together to enact taxes, such as a per-acre tax on land, that would fall disproportionately on less populous states. So, while the Constitution permitted Congress to raise whatever amount of money it wished through direct taxes, the apportionment clause mandated that each state would pay only that share corresponding to its percentage of the nation’s population as shown in the census. If this sounds like something out of the past, it is. More than a century ago, after the Supreme Court struck down a federal income tax for violating the apportionment requirement, the states ratified the 16th Amendment, which empowered Congress “to lay and collect taxes on incomes .?.?. without apportionment among the several States.” Ever since, income taxes have been the lifeblood of the federal government, and the fact that those taxes now fall disproportionately on certain states has been no concern whatsoever to Congress. The “border adjustment” plan will once again make it a concern. When businesses calculate their income for tax purposes, they subtract from their gross revenue the costs of goods sold; the net gain is their taxable income. Under the “border adjustment” proposal, however, while businesses still would be permitted to deduct from revenue the cost of raw materials or component parts purchased in the United States, they would be prohibited from deducting the costs of materials or parts acquired abroad. US businesses that use imported materials or components thus effectively would pay two taxes: a tax on their US income – their US revenue minus their costs of goods sold – and a second tax on the cost of their imported materials and components. That is why the Wall Street Journal reported that border adjustment “would operate like a tax on the trade deficit.” And it is that second tax from which the plan’s proponents expect to raise $1 trillion. The problem is that the border tax is not a tax on “income” and therefore would not be sheltered by the 16th Amendment. Courts repeatedly have held that, to qualify as an income tax, the tax must be on income – and must therefore allow taxpayers to deduct the full cost of goods sold so that the tax falls upon only the taxpayers’ gain. Indeed, so well established is this principle that courts have upheld even the right of drug dealers and illegal gamblers to deduct their costs of generating revenue. The reason is that the simple meaning of the word “income,” in its constitutional significance, refers to “gain,” or a net increase, and a tax on revenue without subtracting costs isn’t, in fact, a tax on “income.” “Border adjustment” denies this subtraction to businesses that use imported materials or components in their US manufacturing. And if it is not an income tax, “border adjustment” is in serious constitutional jeopardy. As currently described, the tax would be imposed on taxpayers themselves, rather than on a transaction or activity. That makes it a direct tax that should be subject to the long-dormant requirement of apportionment, which the “border adjustment” plan cannot possibly satisfy. If retail politics does not sink “border adjustment,” the Supreme Court should. How pointless to pass an experimental and unfair tax only to have it struck down after all that political capital is spent getting it passed.