Comment by peterbecich
5 days ago
Agreed. For the revenue tax activists want from billionaires, it would necessitate a wealth tax, which I believe is unconstitutional. The non-profit tax exemption fight is about "income taxes" which billionaires already have to pay (but avoid). So it is an apples-to-oranges comparison.
> it would necessitate a wealth tax, which I believe is unconstitutional
I take it you haven't heard of property taxes.
I'm not a lawyer but I do not consider a property tax to be the same thing as a wealth tax.
If I own a house or condominium in San Francisco, at a fundamental level I do not own the land or space the residence is sitting on. "Ownership" is basically a lease of the parcel from the city. The house structure is an improvement on leased land; this ties the property tax calculation to the value of the structure. The property tax is the rent on the land/space. I believe this is the constitutional justification for property taxes (no opposition from me).
> If I own a house or condominium in San Francisco, at a fundamental level I do not own the land or space the residence is sitting on. "Ownership" is basically a lease of the parcel from the city.
It's interesting to me that medieval European peasants "renting" the land they farmed had much stronger ownership rights than Americans who "own" land do today.
> I believe this is the constitutional justification for property taxes
It isn't. The constitutional justification for property taxes is that they're assessed by the states, not by the federal government.
The federal government is free to assess property taxes too, except that it must apportion them between the states: https://constitution.congress.gov/browse/essay/artI-S9-C4-1/...
> An 1861 federal tax on real property illustrates how the rule of apportionment operates. Congress enacted a direct tax of $20 million. After apportioning the direct tax among the states, territories, and the District of Columbia, the State of New York was liable for the largest portion of the tax [...]
What this meant was that the federal government delegated tax quotas to the states and the states were responsible for collecting them as they saw fit.
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The Supreme Court explicitly allowed property taxes in Pollock decision. They haven’t for wealth taxes (they still might allow it but they also might not).
A federal property tax is also unconstitutional.
what is unconstitutional about a wealth tax?
>> what is unconstitutional about a wealth tax?
Article I, Section 9, Clause 4:
"No Capitation, or other direct, Tax shall be laid, unless in Proportion to the Census or Enumeration herein before directed to be taken"
A wealth tax is generally considered to be a direct tax. If you wanted to enact one at the federal level, my understanding is that it would have to be done in proportion to the census. So, given that Mississippi is around 1% of the total US population, Mississippi would have to pay 1% of the wealth tax. Mississippi is the poorest US state, so that would be a very regressive tax.
An income tax is also considered to be a direct tax, that's why it took an amendment to the Constitution to enact one.
The Constitution applies to taxes at the federal level, not state. States could enact a wealth tax the same way they enact property taxes now (depending on their state Constitutions). The problem for them is that wealth is a bit more mobile than property.
And yes there are arguments about what a direct tax really meant in the language at the time the Constitution was written, there are arguments that the income tax should have been legal without an amendment. But that's not how it went down.
It’s not totally clear if it would be but here’s a summary: https://city-countyobserver.com/the-constitutionality-of-a-w...
I'm not a lawyer but my reasoning is this:
- as far as I know, double taxation by any given entity (Federal Gov) is unconstitutional
- a given dollar is taxed once as income. A federal wealth tax on the remainder of that dollar would be double taxation.
That does not prohibit the Federal Gov from taxing once, and your residential state from taxing you a second time.
There are other arguments about "direct taxation" I don't fully understand.
"Double taxation" is absolutely constitutional. Tons of things are double, triple, quadruple and more taxed.
I make a W2 salary. I pay federal income taxes on it. I pay FICA taxes on it. My employer pays payroll taxes on it. I might pay state income taxes on it. One event, tons of taxes. I take that quadruple taxed money and buy a dinner with a beer. Sales taxes on the overall sale, additional taxes on the alcohol, additional sales tax riders because I bought it in the touristy night life area. Triple taxes on my quadruple taxes, good lord! Unconstitutional!
Worthless phrase, "double taxation".
> That does not prohibit the Federal Gov from taxing once, and your residential state from taxing you a second time.
Once again, the several different taxes applied to my salary income. Then on that I go buy a gallon of gasoline, uh oh, federal gas taxes on that. Or I buy a plane ticket and that gets Federal Excise Tax (7.5% of the base fare), the Federal Segment Fee (currently $5.20 per segment), the TSA Security Fee ($5.60 per passenger), and more. Oof, "double taxation"! Even at the federal level!