Columnist: Warren’s wealth tax plan is unconstitutional

by WorldTribune Staff, November 20, 2019

Elizabeth Warren, with her wealth tax on America’s “super rich,” is taking class warfare to a new and “probably illegal” level, a columnist wrote.

The Massachusetts leftist senator and 2020 Democratic presidential hopeful’s “billionaire tax” actually “kicks in at 2 percent annually on households with a net worth of $50 million, rising to 6 percent for those with a net worth of a billion dollars or more,” James S. Robbins noted in a Nov. 15 op-ed for USA Today.

Sen. Elizabeth Warren’s wealth tax ‘covers every form of wealth and property.’ / C-SPAN

“And unlike income taxes, this covers every form of wealth and property, even ‘yachts, jewelry and fine art,’ held by Americans in the United States or abroad.”

Robbins pointed to Article 1 Section 9 of the Constitution, which “forbids the government from laying a ‘capitation, or other direct, tax’ unless in proportion to the census.”

Alexander Hamilton, in a brief supporting a national carriage tax, explained that a direct tax comprises, among other things, “taxes on lands and buildings. General assessments, whether on the whole property of individuals, or on their whole real or personal estate.”

In 1895, the Supreme Court ruled that income taxes were forbidden under this logic in Pollock v. Farmers’ Loan & Trust Co. Chief Justice Melville Fuller noted that “nothing can be clearer than that what the Constitution intended to guard against was the exercise by the general government of the power of directly taxing persons and property.”

Robbins noted that Hamilton and Fuller were laying the groundwork for the 16th (or income tax) Amendment, which was proposed, passed and ratified during President William Howard Taft’s single term.

The 16th Amendment, Robbins noted, “gave Congress the right to levy a form of taxation that was originally constitutionally suspect. But there is no provision in that amendment for a general federal property or wealth tax. And while the definition of ‘direct tax’ can be debated, if Washington is able to tax everything you own then it is either ‘direct’ or the term is meaningless.”

The wealthy in the United States “already bear a heavy tax burden; the top 1 percent of wage earners pay a greater share of federal income taxes than the bottom 90 percent combined,” Robbins wrote. “Why make the investment climate in the United States worse?”

If anything, Robbins continued, “we should be finding ways to attract wealth to the country, not punish it. And it should be equally clear that the super rich have enough clout to either have the loopholes they will need to escape the worst of the wealth tax written into the legislation, or find other ways to avoid it. In response, Sen. Warren has advocated a juiced-up IRS with ‘super duper enforcement’ powers, but most Americans would see that more as a threat than a promise.”

Robbins continued: “An argument can also be made that the Warren wealth tax is offensive to the fundamental rights on which the Constitution is based. In short, it is a recipe for unlimited government. Do we really want a system in which Washington has the right to tax anything you have simply because you have it? If so, no property would ever be safe. The introductory bottom tax line of $50 million would drop to $10 million, then lower. A government that can take the property and possessions of billionaires can as easily do the same to millionaires.

“And who is a millionaire anyway? Recall President Bill Clinton’s 1993 ‘millionaire’s surtax’ proposal that would have applied to households earning a million dollars over four years.”

President Franklin D. Roosevelt introduced a “wealth tax” in the Revenue Act of 1935, stating, “People know that vast personal incomes come not only through the effort or ability or luck of those who receive them, but also because of the opportunities for advantage which government itself contributes. Therefore, the duty rests upon the government to restrict such incomes by very high taxes.”

Robbins wrote: “The idea that the wealthy at some level owe their riches to society is the same, but Roosevelt’s wealth tax was a steeply graduated income tax. This is fundamentally different from Warren’s proposal, which is a national property tax on wealth and possessions. This has never been done before in America for a simple reason: It is unconstitutional.”

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