Elizabeth Warren’s proposed wealth tax has stirred a lot of controversy and debate. Whether you like it or not, looming in the background of whether we should do such a thing is the constitutional question of whether we can do such a thing. Is a wealth tax, as proposed by Elizabeth Warren, constitutional? I am not a constitutional lawyer, and so as I tried to figure out the answer to this question by diving into what others had written, I got slightly confused. As I investigated, most confusing to me was that I found several scholars on both sides of the debate, all arguing vehemently that the tax is either so obviously constitutional that all arguments to the contrary are frivolous, or that it is so obviously unconstitutional as to be laughable. Even worse, it was pretty clearly split along partisan lines—generally those in favor of more taxes on a more encompassing base thought the tax was constitutional, and those who were generally not in favor of more taxes thought it unconstitutional.
What’s a person to do, especially a person whose formal constitutional training ended with introductory political science as an undergraduate? My perception was that the people most vocal about the tax were those that may have strong opinions on taxation in general, and who had decided the question before seriously investigating it. I had the idea to simply reach out to constitutional scholars and ask them what they thought about the tax, and especially how they thought it would fare in a Supreme Court challenge. I emailed 26 people (the 26 most successful constitutional scholars I could find, by an objective measure), and was startled that about half responded, and the vast majority had useful, interesting, and insightful things to say. Some insights:
Many of these things may be obvious to those of you more versed in the law, but I learned a lot from this exercise. I appreciate the time these scholars took to answer to me, and was pleasantly surprised how even-handed and unbiased and scholarly many people who responded to me were.
So, is the tax unconstitutional? I don’t think we can really know. The constitution does not explicitly say, and while we can certainly make arguments on either side, the question is not a trivial one, despite what many may say. Sometimes it is OK to just say we don’t know.
So what do I think of the wealth tax as a tax? I believe it tries to resolve a problem that does need some consideration. But, I don’t believe it is very enforceable, and believe it would create huge administrative costs for both tax administrators and taxpayers, would cause valuation and liquidity concerns, and I don’t think the tax, as she has proposed it, is a particularly workable idea (as history indicates).
But I still have no idea if it is allowed by the Constitution.
UPDATE: One of the constitutional scholars I talked to referred me to an excellent book, which references the discussion during the Constitutional Convention. This is a literal line from notes taking during the discussion: “Mr King asked what was the precise meaning of direct taxation? No one answered.” It seems like the framers themselves had no definition of the term.