what is the legal justification for why taxes on real estate (which is a form of wealth and is taxed as a percentage of value each year) are constitutional but taxes on wealth itself may not be constitutional?
Also estate taxes are constitutional.
So what’s the argument against the constitutionality of wealth taxes?
Property taxes are not federal taxes.
I think it’s fully constitutional. But my WAG is that those who would argue that it’s not would say it’s an unfair or illegal double tax because you are being taxed on the same income twice without having necessarily bought or done something in between. Whereas a property tax is something you pay after you got to do something with your money - i.e., buy a house.
A wealth tax, on the other hand, could tax you twice simply for keeping money in a checking account. You could earn $100 million, pay income taxes on it the first time, and sock it in a checking account - then get taxed a second time (wealth tax) just based off of the money in the checking account. (Yes, I know, nobody that rich would keep their money in checkings. But it’s just a hypothetical.)
All taxes are double taxes, or triple or quadruple, if you use their odd definition.
Op, who says a wealth tax isnt Constitutional? Hmm, it is debatable.
Jensen, nonetheless, came to the conclusion that such a wealth tax would be unconstitutional… Bruce Ackerman, a professor at Yale Law School, got interested in a wealth tax even earlier. … In 1999, he published a long article arguing the policy would be constitutional…Without an amendment, the Supreme Court has the final word on the constitutionality of the wealth tax, and Jensen believes the current court, under Chief Justice John Roberts, would likely knock it down.
I understood the principle of apportionment was the problem. The 16th amendment excluded federal income taxes from that rule. Apportionment has a whole bunch of rules but it tries to require that every tax payer in a state pays the same amount for a federal tax, the opposite of what a wealth tax would do.
It’s hard to tell what you mean.
A federal wealth tax would (perhaps) be unconstitutional because, under Article 1, Sections 2 and 9, any direct tax must be “apportioned among the several States which may be included within this Union, according to their respective numbers”. That is, an equal amount must be collected, per capita, on each state. The exception is a tax on income under the 16th Amendment.
The 16th Amendment was necessary because (in 1895) the Supreme Court concluded, as I understand it, that an income tax was a tax on property, and therefore a direct tax, and therefore subject to the apportionment requirement. The first part of that (an income tax is a tax on property) was, I think, controversial, but the rest of it flowed naturally.
So, I think it’s pretty clear that Congress could not enact an unapportioned property tax (perhaps you’re not aware that these are generally imposed by state or local jurisdictions). An estate tax is constitutional because it is viewed as an excise tax on the transfer of the estate; I’m not sure how persuasive that distinction is, but it’s been the interpretation since 1921 (and the tax law imposes a tax on “the transfer of the taxable estate of every decedent who is a citizen or resident of the United States,” 26 USC 2001 (emphasis added), subject to exceptions).
Would a wealth tax be a direct tax? I think the answer is pretty clearly yes, but there hasn’t been much law on it in the last hundred years, so it’s possible that the courts would revisit the question. I think that it is unlikely that you could uphold a wealth tax on real property without stripping the constitutional provision of meaning (taxes on real estate have been understood to be direct taxes since long before the Pollock decision in 1895) – perhaps personal property.
I agree with your analysis. I also agree that the Court’s definition of a “direct tax” is hopelessly all over the place and one could point out how direct or indirect any tax is to make it as constitutional or unconstitutional as he likes. I don’t see how a tax on carriages, for example: Hylton v. United States - Wikipedia, is less direct than a tax on land or a tax on wealth.