The Wealth Tax is Unconstitutional
Despite what you may have heard, a federal wealth tax would be defeated at the U.S. Supreme Court. Such a tax is a way of taking accumulated wealth from those who have too much as determined by government policy makers.
Bernie Sanders (I-VT) and Elizabeth Warren (D-MA) are popular within the Democratic Party partially because of their support for confiscating the wealth of successful and prudent Americans. They aim to do so for equality reasons and also to support the left’s utopian objectives such as free college, free healthcare and a universal basic income.
Even though neither Bernard nor Liz became their party’s nominee for president, the idea of a wealth tax is still likely to be advanced with Joe Biden in the White House. President Biden has never endorsed a wealth tax, but he’s revealed that his promises of moderation were untrue. It’s apparent now that Joe is willing to acquiesce to the hard left on most issues.
Since the wealth tax has become such a prevalent idea, I devoted a substantial portion of my new book, Organic Wealth, to the issue. I detail the wealth tax’s invalidity, a workaround that exists for persistent proponents and the forever fix.
The primary reason why a federal wealth tax passed by Congress will be defeated at the Supreme Court is because of a long-standing decision known as Pollock.
Pollock v. Farmers’ Loan & Trust Co. was decided in 1895 in a 5 to 4 decision in favor of Charles Pollock. The case centered around the Wilson-Gorman Tariff Act of 1894, which was a federal flat tax of 2% on incomes over $4,000. Charles Pollock believed the tariff to be a direct tax requiring the Constitutional need for apportionment. I won’t define apportionment in this article, but did so rather elegantly in my book and in this post.
The Act was written to not only include employee income, but also the income derived from property; e.g., rent payments, stock dividends and bond yields. The Court did not consider employee income letting previous Court precedent stand that the income tax was not a direct tax, but indirect needing only uniformity.
The Court, however, concluded that a tax on income from personal or real property would be a direct tax. But they didn’t stop there; they also believed personal property itself couldn’t be taxed without apportionment.
Because the Act was written to include income from property, the law was found to be unconstitutional and therefore nullified the U.S. income tax. Instead of rewriting the income tax law to exclude income from property, Congress and the States went another route and passed the 16th Amendment which ensures all sources of income can be taxed without apportionment.
The 16th Amendment did take care of income from property, but the Pollock decision had also protected property itself from being taxed without apportionment calling such a tax on property direct taxes.
The High Court partly stated: “We are of opinion that taxes on personal property, or on the income of personal property, are likewise direct taxes.”1
This means that a wealth tax on real and personal property such as investment and bank accounts, business interests, real estate and shares of stock would be a direct tax as determined by this decision.
It’s not just the Pollock case sitting in the wind by itself. There are many other cases that have come before the Supreme Court that touched on Pollock, but no Court diminished its validity. Having such a long standing precedent, the Pollock case will likely stand against any push for a socialist wealth tax.
In order to pass a wealth tax law, progressive lawyers will have to convince the Supreme Court that Pollock should be ignored. I’ve taken of what I know of their would-be arguments and revealed just how erroneous they are. Please read more about their false claims in these articles:
“Pollock v. Farmers' Loan & Trust Company, Page 158 U.S. 637 (1895).” Justia Law, https://supreme.justia.com/cases/federal/us/158/601/ Click 'Case' tab