Even if passed, the proposals could face a rocky legal road. “Persons likely to be affected by the various wealth tax proposals should understand that any legislation to this end would be aggressively challenged in federal court. The 16th Amendment permits Congress to levy taxes on income earnings. It does not permit un-apportioned direct taxes on wealth itself,” said Phillip W. Magness, director of research and education and senior research fellow at the American Institute for Economic Research in Great Barrington, Mass. “Given the current Supreme Court, it’s almost certain that a measure of this type would be ruled unconstitutional.
“A wealth tax is essentially uncharted territory in the United States. Apart from the constitutional questions, we know that it would involve unprecedented levels of intrusion into personal financial privacy,” Magness said. “Wealth—and particularly unrealized earnings from personal holdings—is both difficult to accurately measure and constantly in flux. What we do know is that wealth taxes have largely proven disastrous in other countries that tried them.”
“On the practical level, proposals that will simply accelerate what will sunset from the Tax Cuts and Jobs Act in 2017 will most likely have the most impact, simply because it’s most likely to pass and become law,” Lo said. “If you had planned to take certain actions anyway because it’s good for the long term, then do it now. Don’t wait for certainty in the law, because you’re likely not going to get it.”