Elizabeth Warren's proposed 'ultra-millionaire tax' would be the rape of the Constitution

Elizabeth Warren has unleashed her bold new presidential campaign promise, which she cleverly calls "The Ultra-Millionaire Tax."  After all, none of us is an "ultra-millionaire," so why should we care?  This new tax won't hurt you; it would just impose a 2% annual tax on all household net worth over $50M, with an additional 1% surtax kicking in for assets held over $1B.  In her plan, wealth is defined as "all household assets ... including residences, closely held businesses, assets held in trusts, retirement assets, assets held by minor children and personal property with a value of $50,000 or more."

"I'm in," she says, "on the notion that we have to rewrite the tax code."  And a policy like the one she proposes, say two UC Berkeley economists, "would shrink the wealth of the superrich by $2.75 trillion over a 10-year period, while only affecting around 75,000 U.S. households."

"Ultra-millionaire."  "Superrich."  As you can see, this is all very scientific and measured stuff.

In truth, Alexandria Ocasio-Cortez's proposed 70% tax on the "tippy tops" of income-earners looks downright sober and rational compared to Warren's proposed policy.  And for all Ocasio-Cortez's ignorance about how government works (the three branches of government are not, in fact, "the presidency, the Senate, and the House," as she recently proclaimed), at least her proposed tax plan appears constitutional.  Yet Warren, a Harvard law professor, has proposed a tax plan that is not potentially, but certainly unconstitutional. 

This can be proven quite simply to anyone who cares to learn.

The Sixteenth Amendment of 1913 gave the federal government an additional right to tax income, and only income.  Most federal revenue currently derives from this method of taxation.  Individual income tax, business income tax (corporate tax), payroll taxes for Social Security and Medicare – all are collected as a percentage of income earned, and the government is deemed within its right to collect these revenues only because the Sixteenth Amendment exists.

Now, you don't have to be an economist or a Harvard law professor to know that "net worth" is not "income," and that the Sixteenth Amendment could not uphold the constitutionality of Warren's proposal.

So, what are the other means of taxation allowed by the Constitution?

Article I, Section 8 declares that "Congress shall have the power to lay and collect Taxes, Duties, Imposts, and Excises[.]"

Throughout our history, we've seen a bevy of "duties, imposts, and excises," but we did not see much in the way of "direct taxes" until 1913.

That is because the Constitution includes caveats as to how direct taxes can be applied, most notably in Article I, Section 9, Clause 4, which reads, "No Capitation or other direct, Tax shall be laid, unless in Proportion to the Census or Enumeration hereinbefore directed to be taken."

According to Roy Ulrich of U.C. Berkeley, this is the specific clause which any new "net worth tax" would unequivocally violate.  Warren's would most certainly qualify as violating this clause, as it's a direct tax that is uniform based upon a taxpayer's asset value, and without apportionment in relation to "Census or Enumeration" among the individual states.

There can be no argument that this clause was the reason for the necessity of the Sixteenth Amendment and that it remains troublesome to progressives today.

"A direct tax," Ulrich writes, "is a tax on real or personal property imposed solely by reason of its being owned by the taxpayer.  In contrast, indirect taxes are levied upon the happening of an event, such as the transmission of property.  Thus defined, the income tax is plainly a direct tax.  So, for that matter, is a tax on any asset."

It's really quite simple.  Income tax is a direct tax, but taxation of income is specifically protected by a constitutional amendment.  A direct tax on assets held without any "transmission" of property having taken place is the arbitrary confiscation of property by a federal government which clearly has no right enumerated in the Constitution to do so.

I personally do not think Elizabeth Warren has a shot at the presidency.  But as the current crop of Democrats seem to be doing perpetual end-arounds to continually stay to the left of one another, I don't think the fact that this policy proposal is insanely unconstitutional means that it has any less value in terms of its rhetorical legs.

And I personally do not think that Warren is so stupid as to not know that her proposal is clearly unconstitutional.  There's an endgame here, and it's a page torn right out of Franklin Delano Roosevelt's playbook.

Let's break it down.

First, it's popular with the Democrat base, who sees the Constitution as an obstruction to progress and not the safeguard against tyranny that it's designed to be.  In short, the contention is, as it was with FDR, that we need to be experimenting with new ideas to have progress, and if giving the federal government more power than the constitutional tether allows facilitates these experiments, then so be it.

Second, let's say Democrats are able to secure both chambers of Congress and the presidency in 2020.  They will then have a choice.  They could push for a constitutional amendment allowing for some sort of direct tax on net worth because, as that gaggle of lawyers in D.C. should damn well know, nothing in the Constitution currently allows it.

But setting the precedent, and enshrining in stone, that the federal government has a right to go diving into Americans' retirement accounts like Scrooge McDuck in his money bin, or requisitioning their securities, their real estate, or hell, even their collectible antique cars, is not something that will sit well with Americans.  Such an amendment would be dead on arrival.  Rather, they'll take the more sinister path of least resistance.

They'll just try to jam through a bill to "rewrite the tax code," as Warren says.   And let's say they are able to pass something to this effect, God forbid.  It should go without saying that if all members of the Court cared about the nature of the individual's rights in relation to the government as defined by the Constitution, it would be crushed unanimously.  But while it may not be shot down with extreme prejudice, it will be shot down by this Supreme Court.

Then a constitutional crisis will be declared, just as FDR did when the Supreme Court began laying waste to his reckless New Deal experiments.  You should know what comes next.  The left will cry that the Supreme Court is at odds with the people's desires and will call to pack the Court with new leftist justices.  They've already begun calling for this.  Knowing that they can't change the Constitution to allow what they desire to do, this is the only viable means to destroy the Constitution's safeguards that prohibit their radical and redistributive policy prescriptions.

It is the Democrats who are advocating this rape of the Constitution's protections, and not one single Republican is.  You should remember that the next time you hear a conservative sanctimoniously suggests that the moral thing to do to protect our country's integrity is to sit out on the coming election because he doesn't like the personal demeanor of the Republican candidate.

William Sullivan blogs at Political Palaver and can be followed on Twitter.  

Photo credit: Tim Pierce.