New York Times op-ed: The Big Problem With Wealth Taxes, by Daniel Hemel (Chicago) & Rebecca Kysar (Fordham):
Senator Elizabeth Warren unveiled a new wealth tax proposal last week that she says will raise — along with her previously announced wealth tax plan — $3.75 trillion over the next decade. Senator Bernie Sanders says his wealth tax will yield $4.35 trillion over the same period.
We fear these figures are vast overestimates. The likeliest outcome is that a wealth tax will raise exactly zero dollars. The problem, alas, is the Constitution. The Warren and Sanders plans run headlong into more than two centuries of precedent that cast doubt on the constitutionality of wealth taxation.
We are tax law professors who identify as liberal Democrats, donate to Democratic candidates, publicly opposed the Trump tax cuts and strongly support higher taxes on the affluent. We are heartened that prominent Democratic presidential candidates are taking the problem of wealth inequality very seriously. We are worried, though, that leading figures in our party are coalescing around an idea whose constitutionality is doubtful at best.
The constitutional objection to wealth taxation is based on two clauses that require any “direct tax” to be apportioned among the states based on population. So, since 12 percent of the population lives in California, Californians must pay 12 percent of any direct tax.
For the Warren and Sanders wealth taxes, that would be a deal breaker. To match revenue fractions to population percentages, as the Constitution’s direct tax clauses demand, we estimate that the wealth tax rate in West Virginia — the poorest state per capita — would need to be roughly 10 times the rate in more affluent California and more than 20 times the rate in prosperous Connecticut.
The Warren and Sanders wealth taxes would very likely be classified by courts as “direct taxes.” ...
[A] wealth tax that is struck down by the justices will do nothing to close the wealth gap. It will raise no money to pay for universal health care and child care, greater investments in education or ambitious efforts to halt global warming. It will, instead, mire the country and the courts in yearslong litigation. And it will most likely lead to a Supreme Court ruling that sends us back to square one in our fight to fix a tax system that all too often favors the rich.