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in the Federal tax code; and conclude that the estate tax violates the U.S. Constitution and should therefore be repealed.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."