If I were on the U.S. Supreme Court, I would probably vote to find Senator Elizabeth Warren’s proposed wealth tax constitutional. But given the current composition of the court, that might well put me in the minority.
Warren, who is exploring a run for the Democratic presidential nomination in 2020, has suggested that the top 75,000 U.S. households pay an annual tax of 2 percent on each dollar of their net worth above $50 million. Billionaires would be taxed an additional 1 percent.
The truth is, in the light of the conservative resurgence on the court, it’s a genuinely open question whether the justices would strike down a tax on a proportion of total assets. A case would likely be decided 5-4, with Chief Justice John Roberts as the swing voter.
The intentions of the Constitution’s framers are unclear. The judicial precedent cuts both ways. And the 16th Amendment, which allowed an income tax, doesn’t address a wealth tax that isn’t on income. The court’s decision would have to consider all three.
Article I Section 8 of the Constitution says “the Congress shall have power to lay and collect taxes, duties, imposts and excises.” It also imposes the requirement that these taxes “be uniform throughout the United States.”
So far, so good: Congress can impose taxes so long as they are “uniform.”
But there’s a catch. Article I Section 9 says that “no capitation, or other direct, tax shall be laid, unless in proportion to the census or enumeration herein before directed to be taken.”
A “capitation tax” is a head tax (once also confusingly called a poll tax) — one that must be paid based on population. That kind of tax — or any other “direct” tax — can only be assessed based on the proportion of people who live in each state. In other words, each state or its residents must be assessed a pro-rata share of the total revenue to be raised.
Why would the framers have adopted this strange requirement? The answer, shamefully enough, is slavery. The clue lies in the reference to the “enumeration” requirement. That takes you back to the notorious Article I Section 2: the three-fifths compromise.
That provision says that “representatives and direct taxes shall be apportioned among the several states … according to their respective numbers,” determined by free persons, subtracting “Indians not taxed,” and adding “three fifths of all other persons” — the constitutional euphemism for enslaved African-Americans.