As part of her populist presidential campaign, Senator Elizabeth Warren has unveiled a proposal for an annual wealth tax of 2 percent for ultra-rich families whose net worth is between $50 million and $1 billion. That tax would increase to 3 percent for families whose net worth exceeds $1 billion. The tax is on top of many other taxes to which such a family would be subject, including, presumably, the progressive ideal of a 70 percent income tax as well as state and local taxes. The wealth tax would even apply to people whose net worth has declined during the past year so long as they remain above the stated threshold. Cumulative taxes could easily exceed 100 percent of income. That result is not an unanticipated bug but rather an essential feature: Warren wants to mandate greater income equality through tax policy, even if it means leveling down, not up.
In a future column, I shall address the economic ramifications of this proposal. But for now, I turn to the question of the constitutionality of this novel wealth tax. On that topic, Senator Warren offers in support two short letters signed by sixteen prominent American constitutional law scholars that vouch for the constitutionality of her plan.More