For decades, Democratic leaders have pitched that the US should have a federal wealth tax. The idea is that money should be redistributed from the wealthy to the poor using the tax powers of the federal government. Sen. Elizabeth Warren (D-MA) has been its strongest proponent, devised a plan, and has for years stated she was coming for the rich.
The question I’m asking isn’t a constitutional one but a political one. Do the Democrats know a wealth tax isn’t constitutional? If so, why are they making false promises to their constituents?
Many scholars have debated the issue as a practical legal matter, tax policy issue, and question if it would pass Constitutional muster. Many may know I follow George Washington University Constitutional Law Professor Jonathan Turley. As a GWU Graduate School of Political Management graduate, I’ve followed him on such issues with keen interest.
In 2022, Turley joined a distinguished panel of attorneys and scholars to ask, is a federal wealth tax constitutional?
One of the panel members is Indiana Law Professor David Gamage. He worked closely with Warren’s 2016 presidential campaign to devise a wealth tax plan.
If you want to watch the debate, the video is below.
Article 1, Section 2, Clause 3 of the Constitution says, “direct taxes shall be apportioned among the several States.” The words of importance are “direct taxes” and “apportioned.”
Gamage argues that questioning if a wealth tax is Constitutional is misleading. He said the Constitution clearly provides Congress with the means to tax citizens. The question is, according to him, what form does a wealth tax take? Can it be uniform, or must it be apportioned among the states based on population?
Is it an excise tax, income tax, or an indirect tax; or is a wealth tax a direct tax?
The Indiana professor and former Warren tax policy adviser believes a federal wealth tax would be an excise tax, which is in the Constitution, that could be uniform. While acknowledging uncertainty about its constitutional muster, Gamage believed the Supreme Court would uphold such a tax since an excise tax is based on one’s activity.
Turley argues a federal wealth tax is highly questionable. He noted the framers added Article !, Section 2, Clause 3, to purposely limit Congress’ taxation powers. Alexander Hamilton had proposed the government should have wide-ranging taxation powers, but in Federalist 36, he admits he lost the debate and that the government’s tax powers were limited.
The GWU law professor noted that James Madison defined a direct tax as one on the whole property of an individual or on their whole or real personal estate. Turley did point out that the judicial cases were a mix of messy rulings. In the video above, he went through them and stated they didn’t provide the clear picture that Prof. Gamage presented.
Additionally, Turley noted that in 2012, Chief Justice John Roberts raised the issue in The National Federation of Independent Businesses vs. Sebelius. He stressed the high court continues to consider taxes on personal property to be “direct taxes.”
If a wealth tax is a direct tax, is it constitutional?
It appears the answer is a clear “no.”
Politically, here’s what I believe is really going on — Democrats are using identity politics, in this case, demagoguing the rich, to make promises they know they can’t keep. Still, they need the “little guy” to believe they are fighting for them based on the premise of equity (meaning equal outcomes) and unfairness.
This debate is about acquiring votes by agitating those who aren’t familiar with civics or constitutional law. By keeping people continually restless, Democrats ensure they keep power, and power in Washington, DC, is the name of the game. Those who hold it get to enact their policy initiatives.
Today’s Democratic agenda is far more left than most people realize. The equity agenda is a socialist one. What else could it be if the Democrats wanted to use government to create equal outcomes instead of ensuring equal opportunities?
So, a wealth tax may be an interesting constitutional question, but it’s a far more dangerous political form of rhetoric to promise an action that isn’t permissible.
In short, it’s a dog whistle issue.
At least, that’s how I see it.
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