I wrote two articles for The Federalist about Elizabeth Warren’s wealth tax plan. In Part 1, published today, I discuss why the tax would be unconstitutional.
I wrote two articles for The Federalist about Elizabeth Warren’s wealth tax plan. In Part 1, published today, I discuss why the tax would be unconstitutional.
Enjoyed your article about a wealth tax, but believe you need to investigate further “income regardless of the source.” The Pollack case was about a hedge fund that derived half its income from real estate and the other half from corporate dividends. We are talking about income from assets. The supreme court ruled that income from assets was the same thing as assets and so it was a direct tax.
The 16th Amendment changed the definition of income but only if it had a source, an underlying asset. Direct taxes on people’s wages and wealth do not have a source. Adam Smith in the Wealth of Nations admonished taxing people’s wages as it was a horrific direct tax (the ancient common law definition being “sweat of the brow”) only practiced by ignorant third world nations.
A direct tax on wealth or wages would have to be proportional as you correctly stated, which is unworkable for taxing billionaires and cruel for taxing wages (taking bread out of the mouth of working men.) Part of the problem is the definition of income. Even Adam Smith claimed wages were income, but they are not 16th amendment income which requires a source.
I find it strange that almost all editions of “The Wealth of Nations” in the US are abridged and do not contain the section on Labor. Also, Pollack claimed that there were only two types of property, land and slaves, but that is probably because taxing wages had never come up because everyone knew they would require a direct proportional tax.
Yes, that’s true. I didn’t want to get too bogged down in the details of Pollock in the article.
Great articles in The Federalist on Warren’s wealth tax. Could also mention the issue of relative liquidity of wealth. Will the government accept payment in assets, or would one have to liquidate assets to generate cash flow to pay the tax?
They could, but I’m sure they wouldn’t. It’s more work for them. But one could imagine some kind of deal of that sort with a donation of art to a government museum, maybe.
Enjoyed listening to you this morning on Glenn Beck’s show. I found both your commentary and his questions quite good. Please look to TaxAnalysts 11/4 and 11/11 issues for a two part piece on the wealth tax: part 1 focuses on the Constitution and part 2 focuses on the tax itself and the various issues which have not been completely considered (at least in the opinion of my co-author and myself).
Hank Adler
Associate Professor
George Argyros School of Business & Economics
Chapman University
Thanks, I’ll be glad to read that.