Democratic candidate for President Elizabeth Warren is proposing a “wealth tax”. Does Congress even have the authority to pass such legislation?
I know Warren’s announcement of her planned “wealth tax” isn’t exactly new, but I found a couple of articles explaining it, almost to the point of promoting it. So I thought it was worth asking the very first question we should ask about any federal legislation.
When asked where in the Constitution the Congress was given the authority to enact the Affordable Care Act, Speaker of the House Nancy Pelosi answered, “Are you serious? Are you serious?” Well, yes, Rep. Pelosi, and all members of Congress, I am serious. Apparently, unlike most of Congress, I support the supreme law of the land and hold those I elect to represent me accountable to their oath of office to support the U.S. Constitution.
One article on Vox compared Senator Warren’s proposed tax to property taxes:
Most Americans currently pay property taxes to their local government, a form of a wealth tax. The majority of middle class assets are property.
Elizabeth Warren’s proposed tax on enormous fortunes, explained
Conveniently ignored in this article is the fact that there is no restriction on direct taxation at the state level, only on the federal level. I read Article I, Section 2, Clause 3:
Representatives and direct Taxes shall be apportioned among the several States which may be included within this Union, according to their respective Numbers,
U.S. Constitution, Article I, Section 2, Clause 3
And then read Article I, Section 9, Clause 4:
No Capitation, or other direct, Tax shall be laid, unless in Proportion to the Census or enumeration herein before directed to be taken.
U.S. Constitution, Article I, Section 9, Clause 4
It was quite plain that the federal government has no authority to directly tax the people of the United States, with one exception:
The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.
U.S. Constitution, Amendment XVI
A wealth tax is NOT a tax on income, but a direct tax on assets. This is described in an NPR article I found:
What is a wealth tax?
It’s an annual tax on the net wealth a person holds — so, their assets minus their debts. Not just the income they bring in each year.
How Would A Wealth Tax Work?, NPR.org
While most of this article dealt with how a wealth tax would work, would it have the desired outcome, and does it have public support, it did not deal directly with the constitutionality of such a law. Instead, they linked to a “series of letters from legal experts asserting that such. tax would be constitutional”. While I suppose two does technically constitute a series, these letters use a series of judicial opinions as the basis of their rationale that such a tax would be constitutional. They claim that a wealth tax falls within the powers of Congress to “lay and collect Taxes… for the common Defence and general Welfare of the United States;” It appears these scholars seemed to ignore the opinion of James Madison on the limits of Congress’ power to collect money for the “general welfare of the United States”:
If Congress can apply money indefinitely to the general welfare, and are the sole and supreme judges of the general welfare, they may take the care of religion into their own hands; they may establish teachers in every State, county, and parish, and pay them out of the public Treasury; they may take into their own hands the education of children, establishing in like manner schools throughout the Union; they may undertake the regulation of all roads other than post roads.
In short, every thing, from the highest object of State legislation, down to the most minute object of police, would be thrown under the power of Congress; for every object I have mentioned would admit the application of money, and might be called, if Congress pleased, provisions for the general welfare.
James Madison during the House debate on the Cod Fisheries bill, February 1792
These “experts” claim that a wealth tax imposed on everyone, based on their net worth, is somehow neither a tax on each person (capitation tax) or on their real property (direct tax).
CAPITATION, A tax, or imposition upon each head or person; a poll-tax.
DIRECT tax, is a tax assess on real estate, as houses and lands.
Webster’s 1828 Dictionary
However, a little research on the debate over the direct taxation language in the Continental Congress shows the idea of direct taxation was not limited to real estate.
Will the people of this great community submit to be individually taxed by two different and distinct powers? Will they suffer themselves to be doubly harassed? These two concurrent powers cannot exist long together; the one will destroy the other: the general government being paramount to, and in every respect more powerful than the state governments, the latter must give way to the former.
Mr. GEORGE MASON – Elliot’s Debates, Wednesday, June 4, 1788
Mr. READ moved to insert after “capitation,” the words “or other direct tax.” He was afraid that some liberty might otherwise be taken to saddle the states with a readjustment, by this rule, of past requisitions of Congress; and that his amendment, by giving another east to the meaning, would take away the pretext.
Mr. Read – Elliot’s Debates, Friday, September 14
What are the objects of direct taxation? Will the taxes be laid on land? One gentleman has said that the United States would select out a particular object, or objects, and leave the rest to the states. Suppose land to be the object selected by Congress: examine its consequences. The landholder alone would suffer by such a selection. A very considerable part of the community would escape. Those who pursue commerce and arts would escape. It could not possibly be estimated equally. Will the taxes be laid on polls only? Would not the landholder escape in that case? How, then, will it be laid? On all property? Consider the consequences. Is it possible to make a law that shall operate alike in all the states? Is it possible that there should be sufficient intelligence for the men of Georgia to know the Situation of the men of New Hampshire? Is there a precise similitude of situation in each state? Compare the situation of the citizens in different states.
Are there not a thousand circumstances showing clearly that there can be no law that can be uniform in its operation throughout the United States? Another gentleman said that information would be had from the state laws. Is not this reversing the principles of good policy? Can this substitution of one body to thirteen assemblies, in a matter that requires the most minute and extensive local information, be politic or just? They cannot know what taxes can be least oppressive to the people. The tax that may be convenient in one state may be oppressive in another. If they vary the objects of taxation in different states, the operation must be unequal and unjust. If Congress should fix the tax on some mischievous objects, what will be the tendency? It is to be presumed that all governments will, some time or other, exercise their powers, or else why should they possess them? Inquire into the badness of this government. What is the extent of the power of laying and collecting direct taxes? Does it not give to the United States all the resources of the individual states? Does it not give an absolute control over the resources of all the states? If you give the resources of the several states to the general government, in what situation are the states left? I therefore think the general government will preponderate.
Mr. Monroe – Elliot’s Debates, Tuesday, June 10, 1788
It seems quite clear that the more common definition of direct (as an adjective meaning straight or to pass on a direct line), is what our founders were thinking when they debated direct taxes. Yet none of the people who signed on to these two letters referenced any debate about the language or reference to it in the Federalist Papers. In short, they seem to prefer the opinion of judges to allow Congress to tax whatever it wants, however it wants, for any purpose it wants, and regardless of what the Constitution says. If these opinions were correct, there would have been no need for the Sixteenth Amendment to allow Congress to impose an income tax, as it is not a tax on people or land.
Conclusion
A wealth tax is a direct tax, in that it’s imposed directly on the people of the United States. Therefore, it would have to be apportioned to the states based on their population, but that’s not what is being proposed. This is exactly what Mr. Mason, Mr. Read, and Mr. Monroe appeared to be worried about: A central government with the power to impose potentially crushing taxes directly on the people while making the states irrelevant.
As a direct tax, not on income and not apportioned to the states, a wealth tax is illegal and a violation of the U.S. Constitution, which is the supreme law of the land. It is therefore void.
This Constitution, and the Laws of the United States which shall be made in Pursuance thereof;… shall be the supreme Law of the Land;
U.S. Constitution – Article VI, Clause 2
There is no position which depends on clearer principles, than that every act of a delegated authority, contrary to the tenor of the commission under which it is exercised, is void.
Alexander Hamilton – Federalist #78
So for those of you who believe the supreme Court is the final arbiter of the meaning of the Constitution:
Thus, the particular phraseology of the Constitution of the United States confirms and strengthens the principle, supposed to be essential to all written Constitutions, that a law repugnant to the Constitution is void, and that courts, as well as other departments, are bound by that instrument.
Marbury v. Madison Opinion
My question to the media is why nobody is asking Senator Warren where, in the Constitution, does Congress have the authority to impose a tax directly on the American people on anything other than income? Of course, she seems to imply she will do this as President, even though the only role that office has in determining taxation is the signing or vetoing of a bill.
Maybe our general ignorance of the Constitution is why so many Americans, if they were asked if a wealth tax was constitutional, would answer, “Are you serious?”
