I keep reading that Republicans are arguing that Senator Warren’s proposal to tax the wealth, property and all assets of individuals who accumulate more than $50 million in these categories is unconstitutional. Is this true? Would such a tax violate the 16th amendment? Could this violation be cured if the money collected under such a law were distributed directly to the states in proportion to the population? Could such money be designated for a particular use such as free college tuition?
The Constitution specifically authorizes a tax on income. I’m sure any actual law (as opposed to campign rhetoric) will be designed on that basis.
Actually, the Constitution authorizes any number of taxes, in the main body of the text.
From the wiki article on the 16th Amendment.
What the 16th Amendment says:
So, I don’t see any reason why a “wealth tax” - a property tax by any other name - could not be levied, so long as the proceeds are in proportion to the census, as in Article I, Section 9, Clause 4 above.
I am not a lawyer, much less a Constitutional lawyer.
That second to the last sentence should be
“So, I don’t see any reason why a “wealth tax” - a property tax by any other name - could not be levied, so long as the proceeds are distributed in proportion to the census, as in Article I, Section 9, Clause 4 above.”
More research indicates I may be misunderstanding the use of some of these phrases; see this article here. In any event, it appears more complex than I’d thought.
I think I’d better wait for the Constitutional scholars. 
There is a federal estate tax. That’s pretty obviously a wealth tax though it’s directed at a subset of (I guess not still) people. I know many Republicans have tried to get rid of this tax, but I’ve never herard it argued it was Unconstitutional.
My state already assess an annual tax on the real estate I own, and my car’s annual registration fee is based on its value. Which is to say that states already tax people on parts of their net worth, and have been doing so for a long time. If taxing possessions (as opposed to acquisitions) were unconstitutional, I would think someone would have argued that case a long time ago.
Sigh. Those are state taxes. The United States Constitution requirement that direct federal taxes be apportioned among the states in proportion to population doesn’t apply to the states.
No, it isn’t. It’s transactional. The estate is income to the recipient.
This article seems to lay out the Constitutional issue:
I’m not sure I really grasp the reasoning that Federal taxation of wages was okay prior to the 16th, but in any event the rest seems to make sense.
The article misstates the reasons for the proportional-to-population requirement; it has nothing to do with slavery. In fact, slavery added a complication that made proportionality more difficult to define; without it, the concept would have gained easier acceptance.
The need for proportionality arose during the debates (1776-77) on the Articles of Confederation, when Congress had no power to tax. Congress would ask the states for money. But, how much money should they demand from each state? The framers of the Articles of Confederation decided that they should ask in proportion to the wealth within each state. That didn’t work well, so in 1783 Congress moved to amend the Articles to assess by population, and introduced the 3/5 clause; see here for background.
The next evolution occurred in 1787, when the framers of the COTUS granted Congress the power to tax. Taxes might include indirect taxes such as tariffs, which are paid by importers and only indirectly by the ultimate consumer, or direct taxes which would apply directly to individuals. The ultimate example of a direct tax would be a capitation tax–every individual owes the federal government a dollar every year. Or, the government could tax property, or it could tax purchases via an excise tax.
It was virtually impossible to allocate indirect taxes among the states; how could an importer know who would ultimately consume an imported product? The COTUS imposes no proportionality requirement on indirect taxes.
Direct taxes were different. Granting Congress the power to impose direct taxes was scary in 1787. It would be easy to design a direct tax that hit some states but not others; for example, Congress could tax fishing boats, or blacksmith forges, or cotton bales. These would effectively target states or groups of states. Hence the proportionality requirement, carried over from the Confederation but now with the 3/5 clause: “No capitation, or other direct, Tax shall be laid, unless in proportion to the Census or Enumeration herein before directed to be taken.”
In general, Congress under the COTUS did not lay direct taxes; tariffs and land sales brought in sufficient revenue. On three occasions, however–during the Quasi-War with France (1798-1801), the War of 1812, and the Civil War–Congress did enact wartime property taxes. These were universally understood to be direct taxes, and were assessed in proportion to population (as modified by the 3/5 clause). This required a two-step assessment–first, an assessor would determine your property value, then the rates in each state would be set based on the total wealth of the state, so that the dollars collected would be in the right proportions. Your tax would then be your assessed value times the rate for your state.
In the Twentieth Century the income tax came along, relegating direct taxes further to the margins of federal tax policy. Nobody cared any more what was a direct tax, because Congress no longer attempted to enact them.
Until now, perhaps. My personal opinion is that a wealth tax would be directly analogous to the earlier property taxes, and would be a direct tax and would need to be assessed in proportion to population, which would probably make it unworkable.
Then it wouldn’t be a wealth tax. 
But I agree a wealth tax is unlikely. The reasons against it besides constitutional question is the way it creates incentives for people to put wealth into illiquid forms, which is generally bad for economic efficiency. But it would allow a ‘reasonable’ appraiser can value it at half of market, as opposed ownership of stock in a public company where the value is obvious. And it would very expensive for the IRS to hire enough people to value every private company, art collection etc in the country. Nor even if did could the IRS simply say ‘this is the value, tough luck if you don’t agree’. That’s not how tax law works. The IRS has to show in court your valuation isn’t reasonable.
This is why various countries had such taxes and abandoned them.
I agree taxes on upper wealth/income people have only one way to go from here in the US, up. But this particular proposal does have a genuine constitutional issue*, and isn’t a good policy anyway.
*as mentioned it’s not like the estate tax which is a tax on income to heirs. And the 16th amendment had to be written to exempt income taxes, only, from the requirement that taxes be collected from the states in proportion to their population. That would make a wealth tax even more of a rat’s nest of complication, and create further incentive for very rich people to congregate where there were already lots of rich people, those states wouldn’t owe as much per rich person.
My understanding is that estate tax was upheld as constitutional because estate taxes were not “direct taxes” because they were understood as “being imposed not on property, real or personal, as ordinarily understood, but as being levied on the transmission or receipt of property occasioned by death, and which had from the foundation of the government been treated as a duty or excise”. Knowlton v. Moore, 178 U.S. 41, 81 (1900).
The estate tax is *effectively *a tax on heirs, but it is the estate that is taxed and the estate that files a return before assets are transferred to the heirs. I am not sure why it works that way.
That’s true and in fact there is a distinction between an inheritance tax (which some states have) as a function of what’s received by each heir, and an estate tax (which is charged on what goes out from the estate).
Anyway as others more exactly stated, the legal justification is that it’s a tax on a transaction, death and resulting transfer, thus ‘indirect’.
Could a court gin up some way to call a wealth tax ‘indirect’? Look at the history of court decisions, including ones virtually everyone now disagrees with (Plessy v Ferguson as not violating the 14th amendment) or some people like and some people don’t (race based preferences as not violating the 14th amendment). If there’s a court will, there’s a way, to a significant extent at least.
But here there was a list of left leaning law professors signing a letter for Warren saying this would pass muster, but only months after the total freak out by many people on the left as the USSC went solidly 5-4 conservative. Would Roberts again bail out a questionably constitutional Democratic tax/fee plan for the sake of national unity like he did with the ACA mandate? I guess maybe, but it’s really not imaginary or ‘right wing propaganda’ to think a wealth tax might have trouble in the courts, or unless the rate was different in each state (and adjusted at each census) for the take by state to come out proportional to population. Which it would not be close to if you set a single national % rate, because there’s a lot more $'s of personal wealth above the threshold relative to population in some states than others. Then gradually more very rich people would move to the states with the lowest rate, which would be the ones that already had the higher concentration of wealth above the threshold compared to population. And the take would decline for that reason, like it also would once all the structures to put wealth into illiquid and difficult to value forms really got cranked up, which would not be good for efficient use of capital.
Good headline for a general idea that resonates with many people. The proposal itself, not a good idea.
So then, could we impose a tax on individual wealth and then distribute that income to the states in proportion to the population as prescribed by the constitution? Then we could simply choose to lower distribution of other federal funds to supplement government coffers as necessary?
Reading this thread has convinced me that a wealth tax per se in unconstitutional. But a 90% tax on giant estates should be legitimate.