Last week, America's richest people had their day in court.Supreme Court case, Moore The lawsuit against the United States challenges vague and narrow tax provisions in President Donald Trump's Tax Cuts and Jobs Act that tax certain assets held overseas.
Activist lower court judges, perhaps inspired by right-wing constitutional scholars and think tanks, cleverly framed Moore as a grand opportunity to rule against future wealth taxes, and the high court seized on it.
Supporters of the Moore case will likely issue a broad ruling declaring any attempt to enact a tax on wealth unconstitutional (similar to proposals brought forward by Massachusetts Sen. Elizabeth Warren and others) The court will likely hope to convince the court's conservatives.
The argument for why taxes on wealth are unconstitutional is premature and extremely weak. And indeed, the consensus after last week's oral arguments was that most (though certainly not all) of the justices were skeptical of a blanket ruling.
Still, such an argument prevailed once in the distant past in a similarly conservative Supreme Court, only to be definitively rejected by the American people through a constitutional amendment.
The question now is whether conservative justices will practice the originalism they preach and listen to the framers and ratifiers of the 16th Amendment, or rather, will they practice the originalism they preach? The question is whether it will be driven by political sympathy for the wealthy, like the previous Supreme Court. Drive them out and rule in their favor.
Judging the Moore case shouldn't be difficult. By holding that Congress currently has the power to tax shareholders on certain types of profits held in offshore companies, the court could easily pass this tax without enacting new law. can be supported. This kind of thing is common in tax law. Otherwise it will be very destructive.
However, the fact that this court was the first to take up this unlikely case shows that it did not shy away from a decision with far-reaching implications. During oral arguments, Justice Samuel Alito, the court's most trusted billionaire ally, asked the attorney general: That person is a billionaire. Based on your argument, can Congress tax all of that?”
It would not be surprising if some justices were tempted to go overboard and declare that Congress has no power under the Constitution to tax the wealthiest Americans. If so, it wouldn't be the first time.
At the founding of the republic, the Constitution gave Congress broad powers to “levy and levy taxes” of all kinds. The Constitution required that taxes be “uniform” and that “direct taxes” (such as the poll tax, which makes sense to distribute to states according to population) be subject to the infamous five-minute All that was done was to distribute the enslaved people according to population according to 3. clause.
There were no categories of taxes that were prohibited, and there were no “no taxes on income” or “no taxes on wealth” rules. The question in Congress was how much to tax. A direct tax is a tax that can be distributed according to population without compromising its purpose, and, as the Supreme Court ruled in a 1796 case, many people do not “have the luxury of knowing a fair estimate of wealth or knowing the rules.” It is not an income tax or a wealth tax. . The Supreme Court has reiterated and forcefully reaffirmed this original understanding for 100 years.
In 1895, an event overturned this history and tradition. In Pollock v. Farmers Loan and Trust Company, the income tax was rejected by a 5-4 majority. The ostensible rationale is that income taxes are direct taxes and must be distributed according to population, but this is not possible because some states have higher per capita incomes than others. It was something.
Thus, the income tax fell into a new loophole devised by the Supreme Court, making it a tax that Congress could not constitutionally enact at all.
The backlash against the court persisted and raged. Public anger was compounded by the anger of the court's own opponents. Pollock's majority complained that the income tax unfairly singled out the wealthy, but opponents argued that the majority created a special privileged class of wealthy people who were constitutionally protected from taxes. He pointed out that. Justice John Marshall Harlan declared that the court's reckless new doctrine not only betrayed the original understanding of the right to tax and a century of precedent. He would also give “power and influence” to the wealthiest Americans, putting ordinary citizens “under the control of collective wealth.”
Justice Henry Billings Brown denounced the court's “abandonment of the power to tax the wealthy,” an action that risks creating “the despotism of wealth.” All four opponents called on the courts, or if necessary, the people themselves, to restore the broad taxing powers that Pollock had undermined.
Populists, Democrats, and eventually even Republicans insisted that their opponents were right.pollock The majority helped consolidate a kind of oligarchy, a very large economic and political elite. It is a power that is ultimately incompatible with Republican government.
This anti-oligarchic argument is based on a long tradition of American constitutional thought. Among them, the main responsibility for preventing oligarchy lies with the political sector. The court's job is to stay out of the way.In this case, overthrowing Pollock required a massive political movement across party lines. and restores Congress' broad taxing powers.
The movement succeeded in inserting the 16th Amendment (the first amendment since Reconstruction) into the Constitution.
While the amendment was pending, the court seemed to back off, upholding some new forms of progressive taxation and by overturning the Pollock decision, as Justice Oliver Wendell Holmes put it. The 16th Amendment asks, “What is a direct tax?''
So it's strange that the anti-tax lawyers who argued before the Supreme Court last week are relying on the 16th Amendment to make a new argument: Congress can't tax wealth.Their argument somehow contradicts Pollock's logic. You were right: Yes. A type of tax that the Constitution secretly prohibits by requiring proration when proration is not possible.
Then again, it just so happens that the kind of tax that is secretly prohibited is levied on the wealthy.Moore's anti-tax faction They are asking the court to follow in the footsteps of the Pollock majority and devise legal doctrine to shield the super-wealthy from taxes. This time, it comes from a wealth tax that has not yet been enacted.
Throughout its history, the Supreme Court has often been more sympathetic to the interests of the wealthy than the executive or legislative branches. The court that ruled against Pollock in the 1890s also actively suppressed union organizing. In a new era of right-wing judicial activism, the current court has enthusiastically restarted this project.
Is this court really prepared to redo Pollock—a move that is deeply inconsistent with the fidelity to the text of the Constitution that this court so vocally preaches?
Unlike in 1895, this time the court squarely rejected not only the 1789 Constitution, but also the 16th Amendment, which rejected the court's last-ditch attempt to weaken Congress's taxing power to protect the wealthy. will also have to be ignored.Even if the court chooses to resolve Mr. Moore. In the spirit of Pollock, one might use this opportunity to suggest that future wealth taxes will be abolished, albeit on narrow grounds.
In fact, now would be a good time for the court to step back. If not, it would be a good time for other branches of government to take more seriously their responsibility to rein in an out-of-control court.
