Senator Elizabeth Warren (D., Mass.) Was back on the air this week extolling her signature “wealth tax” in a sharp exchange with CNBC’s “Close the bellHostess Sarah Eisen. I previously wrote about the constitutional concerns about a true wealth tax (as opposed to an income tax). The exchange concerned the effects of a tax on the richest. Warren ridiculed the notion of the rich leaving the country as a mere “bluff” designed to deter them and others from forcing the rich to pay their fair share.
A wealth tax has long been a rallying cry for Democrats. In Democratic Elementary School, I wrote about the New York City Mayor Bill de Blasio and his “eat the rich” pitch for votes. He promised to “tax the rich to hell”. Recently, de Blasio added that he viewed public schools as a tool for redistributing wealth, not just for education: “I would like to say frankly that our mission is to redistribute wealth. Many people bristle with this phrase. Indeed, that is the phrase we have to use. “
However, the wealth tax was at the center of Warren’s campaigns. It has the support of scholars like Yale Professor Bruce Ackerman, who assured Warren that such a tax would be constitutional. In a Slate column titled “Constitutional Criticism of Elizabeth Warren’s Property Tax Proposal Is Absurd,” Ackerman denies any possible constitutional challenge, referring to my previous column in the Washington Post. As I said, there are arguments in good faith on both sides and the result should be a close vote. The reduction of the counter-arguments by Ackerman to absurdity not only leaves out important arguments, but also leads to an incomplete presentation of the case against such a wealth tax. The “absurdity” of such a view is shared by a number of experts and law professors. Erik M. Jensen, law professor emeritus of Coleman P. Burke at Case Western Reserve University, analyzed the constitutionality of the proposal as “at best the wealth tax would be constitutionally problematic”. Harvard Professor Noah Feldman concluded that this would be a close question and would likely lead to Robert’s vote. Chicago law professor Daniel Hemel also thought a swing vote from Roberts would get it tight. Michael Graetz, Professor of Tax Law at Columbia University, concluded, “I think a constitutional challenge to an actual wealth tax is inevitable. That it would fail doesn’t seem obvious to me.” Brian Galle, a Georgetown professor at Georgetown Law, noted, like me, that the absence of a tax transaction would be an issue with a constitutional challenge. He added that although he disagreed with previous court rulings such as Pollock, “the Supreme Court does not believe Pollock was wrong”. He added that Warren’s academic supporters did not reveal the full strength of the arguments against such a tax under the Constitution.
The problem is with the text of Article I, Section 8, which allows Congress to “collect and collect taxes, duties, levies and excise duties”. It does, however, require that these be “consistent across the United States”. The next section states: “No capital or other direct tax may be levied, unless this is in relation to the census or enumeration mentioned here, which was previously ordered.” A wealth tax is in all respects a “direct Tax”. As I noted in my column, there are a number of factors driving this language, from the infamous “three-quarter compromise” to early forms of taxation to a desire to restrict federal taxation.
Warren put aside this interesting and unresolved constitutional issue and proposed that such a tax would affect migration from the United States. Eisen sensibly noticed this The tax could also drive wealthy people out of this country, as we have seen, along with other wealth taxes. You just said how much we need to revitalize the economy now so that companies can create new jobs and not leave them. “
Warren answered that “I’m just saying, can we just have a little fairness here? A two-cent wealth tax so that we can have universal childcare – “
Eisen threw in that she “I am just presenting the counter-argument. “ Warren shot back
“Well, how about a counter-argument based on fact? The richest in this country pay less tax than anyone else. If you ask them to pay a little more, tell me they were going to lose their American citizenship or they had to, and I just call them bluff. I’m sorry that won’t happen. ”
Warren may be right that this is not enough to cause wealth flight, especially given the constitutional challenges that could be posed. However, such an escape from high taxes has occurred in countries like France.
I’m still not sure how Warren will constitutionally or logistically do this, as discussed in my Washington Post column. However, the fastest migration is likely to occur in court rather than outside the country.