Fauxcahontas wants to tax wealth, not just income. If your net worth is north of $50 million, she wants to take 2% of it annually. (If your net worth is north of $50 million, can we talk?) Being rich is evil, don’t you know, because if you’re rich you must have stolen it from all the poor people. Or at least that’s how leftists think. And if she got her way, you can be sure that the $50 million floor would be lowered rapidly and relentlessly, bccause there aren’t enough people that rich to bring in the amount of loot that the leftists want to get their hands on.
But don’t worry, it’s not going to happen. Not without a radical change in the Supreme Court. As Professor Erik M. Jensen noted at City Journal, a wealth tax would at best be “constitutionally problematic.” That’s because a wealth tax would be a direct tax, and the Constitution makes levying direct taxes difficult:
… The Founders worried that Congress might use the relatively dangerous direct taxes as everyday revenue-raisers. To prevent abuse, the Constitution requires apportioning a direct tax among the states based on population: regardless of how the tax base is distributed across the country, taxpayers in each state in the aggregate must pay tax in proportion to their state’s share of the national population. The apportionment rule makes imposition of a direct tax often technically—and politically—impossible. That’s not a glitch, as some suggest; that was the point.
Suppose Warren’s wealth tax had to be apportioned. Imagine two states—one rich, one poor—each having a population of, say, 2 million. Despite the disparity in wealth, the tax collected from the two states must be the same. To make the numbers work, either tax rates would have to be higher in the poorer state than in the richer one, or some other absurd mechanism would have to be used. The result would obviously not satisfy Senator Warren’s goals. If apportionment is required, the proposed tax is dead in the water.
“But what about the income tax,” you say, “isn’t that a direct tax?” Well, our stinkin’ Progressive forebears amended the Constitution to make that possible, but they didn’t go as far as Warren and her ilk would have liked:
The Sixteenth Amendment, ratified in 1913, exempted “taxes on incomes” from apportionment. That made the modern income tax possible, but the amendment doesn’t allow an unapportioned wealth tax. The income tax targeted the wealthy, but late nineteenth-century and early twentieth-century debates specifically distinguished taxes on income from taxes on wealth. Senator Norris Brown of Nebraska, who in 1909 introduced the resolution that ultimately became the amendment, refused to extend the amendment’s scope beyond taxes on incomes. Many members of Congress wanted to do away with apportionment altogether—to make the meaning of “direct tax” irrelevant—but Brown said no, and he prevailed. As a result, a direct tax that is not a tax on incomes remains subject to apportionment. Like it or not, that’s the law.
I like it. It’s about the only thing I like about the Sixteenth Amendment.