An Unapportioned Wealth Tax Has Constitutional Problems

Abstract

This article is a response to one written by Professor Calvin Johnson, who contends that a wealth tax like those proposed by presidential candidates Warren and Sanders would be clearly constitutional. This article argues that a wealth tax would be a direct tax and that, under the Constitution, it would therefore have to be apportioned among the states on the basis of population to be valid. If a wealth tax would have to be apportioned, it couldn’t work in the way intended. Among other things, the article challenges Professor Johnson’s arguments that the apportionment rule wasn’t intended to constrain the national taxing power and that it applies only when it makes no difference — when the tax base is spread state-by-state in a way proportionate to state populations. Most important, Professor Johnson, like many other academics who have supported the constitutionality of an unapportioned wealth tax, ignores what the Supreme Court held in National Federation of Independent Business v. Sebelius only seven years ago: that a tax on any property — and what is a wealth tax but a tax on property? — is direct. In the real world, what the Supreme Court says about constitutional meaning trumps the writing of academics.

Keywords: Wealth tax, Direct-tax apportionment rule, National Federation of Independent Business v. Sebelius, Pollock v. Farmers’ Loan & Trust Co., Sixteenth Amendment

JEL Classification: K34