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Editor: Paul L. Caron, Dean
Pepperdine University School of Law

Thursday, April 18, 2019

The Estate Tax Is Unconstitutional

Henry Lowenstein (Coastal Carolina University) & Kathryn Kisska-Schulze (Clemson University College of Business), A Historical Examination of the Constitutionality of the Federal Estate Tax, 27 Wm. & Mary Bill Rts. J. 123 (2018):

During the 2016 presidential debate, Hillary Clinton vowed to raise the estate (death) tax to 65%, while Donald Trump pledged to abolish it as part of his overall tax reform proposal. An interesting question resonates as to whether the tax is even constitutional. This paper takes a fresh look at the Estate Tax, appropriate in an era of a U.S. Supreme Court consisting of a majority of adherents to a more “strict constructionist” view of constitutional interpretation. Although historically regarded by the U.S. Supreme Court as being a constitutional excise tax, it can be theorized that the estate tax is an unconstitutional overreach of taxing power by the Federal government and constitutes a “taking” of private property banned by the 5th Amendment. This article directly confronts the constitutionality of the federal Estate Tax from a purely bedrock perspective. To meet this objective, were review the enumerated powers of Federal taxation as allowed by the U.S. Constitution; dissect the scope of the estate tax, to include an analysis of the judicial and legislative history supporting its constitutionality; theorize that the tax does not have a constitutional basis legitimizing its inclusion in the Federal tax code; and conclude that the estate tax violates the U.S. Constitution and should therefore be repealed.

Notwithstanding historical challenges that the Estate Tax was neither an excise nor impost as prescribed in our nation’s Constitution, the Supreme Court adhered to its determination that the Estate Tax is an “excise” in New York Trust Company v. Eisner, without additional detailed analysis. Such dogma has since been maintained through the decades, without further re-examination by the Court. However, it is clear from a historical perspective that the 1921 Supreme Court failed to follow a “strict constructionist” constitutional analysis in making its decision.

President Trump’s election campaign pledge to repeal the Estate Tax failed. Instead, in 2017 he signed into law the Tax Cuts and Jobs Act,268 which temporarily doubles the exemption amount for estate, gift, and generation-skipping taxes, making the Tax itself inapplicable to the vast majority of Americans. However, the law’s sunset provision means a reversion back to the original $5 million base, or a movement by Congress or the Supreme Court to take action before the end of 2025.

With a Supreme Court bench consisting of a majority of adherents to a more “strict constructionist” point of view, we conclude that the time may be ripe for the current Supreme Court to re-examine and confront the constitutionality of the Federal Estate Tax. Such review is well within the long historical foundations of the Republic to assure government power is kept in check. The Estate Tax brings to mind the famous admonition of Thomas Jefferson, quoted by President Gerald F. Ford, “[a] government big enough to give you everything you want is a government big enough to take from you everything you have."

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Comments

Oh come on. The estate tax isn't different in spirit than the "ground rents" proposed by Thomas Jefferson. But of course "strict constructionism" usually means "what I want to say the Founders believed," not "what the Founders believed, assuming that this is one of the rare issues where more than a plurality of the Founders were in agreement in the first place."

And given that Jefferson and Madison both openly and knowingly engaged in matters that either violated the Constitution or their understanding of it (Jefferson's executive branch buying the Louisiana Purchase without Congress's assent, Madison's shifting views on the constitutionality of the Necessary & Proper Clause to create the First Bank of the US, etc), how much stock are we really supposed to put in strict constructionism, anyways? Perhaps this is why approximately 0.01% of American historians place any weight on originalism.

Posted by: Unemployed Northeastern | Apr 18, 2019 12:52:10 PM

Great idea! Let's have the Supreme Court design our tax system as well. I have no idea what a "strict constructionist" tax system would look like, but I'm sure I could teach my students how to game it.

Posted by: Theodore P Seto | Apr 18, 2019 5:34:22 PM

If the state can confiscate 40% of your property when you die, why can't they do it every year while you're alive? Or whenever they feel like it? The whole concept of an estate tax or death tax seems to be on intellectually shaky ground.

Posted by: ruralcounsel | Apr 19, 2019 3:50:20 AM

Inheritance and estate taxes tax the transfer of property at death. When one dies, one no longer “owns” property because one is dead and dead people own nothing. Passing property at death is not a natural right, but a privilege granted by the state. Hence, inheritance and estate taxes are constitutional for the states and the federal government. These professors are barking up the wrong tree. BTW, Jefferson never said “[a] government big enough to give you everything you want is a government big enough to take from you everything you have." That quote was misstated and mis-attributed by Ford on at least two occasions. The quote also has been attributed to Barry Goldwater and Davey Crockett. There is no reliable evidence that anyone other than Ford said it.

Posted by: Publius Novus | Apr 22, 2019 8:56:26 AM

"Passing property at death is not a natural right, but a privilege granted by the state."
That's the party line, of course. Not a particularly ethical or morally defensible one, but the one "taught" to everyone. Convenient too, since it justifies the taking. Those of us that believe that the right of private ownership of property is an inherent natural right, not one granted by the state, find this explanation to be total nonsense.

Posted by: ruralcounsel | Apr 23, 2019 3:53:42 AM

"Those of us that believe that the right of private ownership of property is an inherent natural right..." As opposed to what the late Murray Kempton once said: "All property is theft."

Posted by: Gerald Scorse | Apr 25, 2019 9:11:29 AM