Elizabeth Warren Calls Reporter’s Concerns Over A Wealth Tax As A “Bluff”

Sen. Elizabeth Warren (D., Mass.) was back on the airways this week touting her signature “wealth tax” in a sharp exchange with CNBC’s “Closing Bell” host Sarah Eisen. I have previously written about the constitutional concerns over a true wealth (as opposed to an income) tax, the exchange concerned the impact of a tax on the most wealthy. Warren ridiculed the notion of the wealthy leaving the country as a mere “bluff” meant to deter her and others from forcing the wealthy to pay their fair share.

A wealth tax has long been a rallying cry for Democrats. During the Democratic primary, I wrote about New York Mayor Bill de Blasio and his “eat the rich” pitch for votes. He pledged to “tax the hell out of the rich.”   Recently, de Blasio added that he viewed the public schools as a tool for wealth redistribution and not just education:  “I’d like to say very bluntly our mission is to redistribute wealth. A lot of people bristle at that phrase. That is, in fact, the phrase we need to use.”

The wealth tax however has been the focus of Warren’s campaigns. She has the support of academics like Yale Professor Bruce Ackerman who assured Warren that such a tax would be constitutional. In a Slate column entitled “Constitutional Critiques of Elizabeth Warren’s Wealth Tax Proposal Are Absurd,” Ackerman dismisses any possible constitutional challenge and made reference to my earlier Washington Post column. As I have previously said, there are good-faith arguments on both sides of this issue and the outcome is likely to be a close vote. However, Ackerman reduction of countervailing arguments to absurdity not only omits key arguments but creates an incomplete account of the case against such a wealth tax. The “absurdity” of such a view is shared by a range of experts and law professors. Erik M. Jensen, the Coleman P. Burke Professor Emeritus of Law at Case Western Reserve University, analyzed the constitutionality of the proposal as concluded “at best, the wealth tax would be constitutional problematic.” Harvard Professor Noah Feldman concluded that it would be close question and would likely come down to Roberts’ vote. Chicago Law Professor Daniel Hemel also thought it would be close with a swing vote likely by Roberts. Michael Graetz, a professor of tax law at Columbia University, concluded “I think a constitutional challenge to an actual tax on wealth is inevitable.That it would fail does not seem to me to be obvious.” Brian Galle, a Georgetown professor at Georgetown Law, noted, as I did, that the absence of a transaction to tax would present a problem in a constitutional challenge. He added that, while he disagreed with earlier rulings of the Court like Pollock, “the Supreme Court doesn’t think that Pollock was wrong.”  He added that Warren’s academic supporters did not reveal the full strength of arguments against such a tax under the Constitution.

The problem is the text of Article I, Section 8 which permits Congress to “lay and collect taxes, duties, imposts and excises.” However, it requires that these “be uniform throughout the United States.” The next section says that “no capitation, or other direct, tax shall be laid, unless in proportion to the census or enumeration herein before directed to be taken.” A wealth tax by any measure is a “direct tax.” As I noted in my column, there are various contributing factors for this language from the infamous “Three-Fourths compromise” to early forms of taxation to a desire to limit federal tax authority.

Putting aside that interesting and unresolved constitutional question, Warren lashed out at the suggestion that such a tax would influence migration from the United States. Eisen reasonably noted that the tax “might also chase wealthy people out of this country as we’ve seen has happened with, with other wealth taxes. You just said how much we need the economy to be revitalized right now for companies to start adding jobs and not subtracting them anymore.”

Warren responded that “All I’m saying is can we have just, just a little fairness here? A two-cent wealth tax so that we can have universal childcare—”

Eisen interjected that she was “just presenting the counter argument.”  Warren shot back

Well, how about a counter argument though, based on fact? The wealthiest in this country are paying less in taxes than everyone else. Asking them to step up and pay a little more and you’re telling me that they would forfeit their American citizenship, or they had to do that and I’m just calling her bluff on that. I’m sorry that’s not going to happen.” 

Warren may be right that this is not enough to cause a wealth flight, particularly given the constitutional challenges that could be raised.  However, such flight from high taxes have occurred in countries like France.

I am still unclear on how Warren intends to do this constitutionally or logistically, as discussed in my Washington Post column. However, the fastest migration is likely to be into the courts rather than out of the country.

79 thoughts on “Elizabeth Warren Calls Reporter’s Concerns Over A Wealth Tax As A “Bluff””

  1. If you believe in the “fairness” of a wealth tax, just look how DC is responding to this Game Stop/RobinHood issue. DC’s reaction is to protect the wealthy against the little guy.

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