Warning: Joe Biden’s ‘Eat the Rich’ Pitch May Come Back to Bite You

Below is my column in the Hill on the renewed effort to pass a wealth tax by the Biden Administration. The effort to tax “unrealized capital gains” has been growing for months as an alternative to Elizabeth Warren’s wealth tax. However, it raises similar constitutional questions. What was most notable is that the new tax was simply put into the Senate bill with the support of the Biden Administration without a single hearing or debate. That led to objections from figures like the Chair of the House Ways and Means Committee Rep. Richard Neal who noted that it was not vetted or studied. It is not part of the House bill. However, many are still pushing the concept despite the significant questions over its constitutionality.

Here is the column:

President Joe Biden has struggled to get the massive new spending bill through Congress with a pitch that would make Joe Isuzu blush: “We talk about price tags. It is zero price tag” and “My Build Back Better agenda costs zero dollars.” The trillions in spending is “free” — according to Biden — because others will pay for it. It’s like claiming your college tuition was free because your parents got the bill.

Biden is hardly the first politician to shrug off spending by saying “the rich will pay for it.” Indeed, during the Democratic primary, the candidates lined up behind figures like New York Mayor Bill De Blasio declaring “we will tax the hell out of the wealthy.” Of course, the “eat the rich” mantra has been part of politics for over 200 years. What is different now is that President Biden has embraced a plan to tax the rich that is not just unworkable and unprecedented but likely unconstitutional.

The Biden administration appears ready to give up on a massive tax increase — but intends to keep its “freebee” pledge by taxing the “super rich.” However, it is not the target but the tax that is different. The administration wants to tax “unrealized capital gains,” a term akin to oxymorons like “exact estimate,” “openly deceptive,” or — perhaps more apropos with the Biden tax — “going nowhere.”

Biden is suggesting that he will pay for the new spending by taxing people not on what they have earned but what they could earn from selling assets. Most people have assets that increase in value over time. Consider a family home. Over the course of many years, it can easily double in value, but you do not “realize” that money unless you sell it. Biden is suggesting that the government should start taxing you based on any increased value of the things you own, even though you have not actually made that money. It doesn’t matter that the home or stock or art could ultimately go down in value after you are taxed on the higher value. Indeed, if you tax some unrealized gains, you could in extreme cases force people to sell assets like a home to pay the tax on income that they did not make.

The administration has started where few would object: billionaires.

The proposal would apply to fewer than 1,000 individuals who are worth more than $1 billion or have annual incomes above $100 million for three consecutive years. Taxing the appreciating asserts of a bunch of fat cats is hardly a rallying cry for street protests.

The “Wyden plan” would allow for a one-time tax on unrealized gains, with an annual tax on each billionaire’s gain in net worth. Initially, it is expected to address losses, illiquid assets and enforcement; however, the limitations to the super-rich is politically rather than constitutionally driven.

And, if successful, it is unlikely that this untapped source of money would be confined to the Bezos class. It would allow the government to tax wealth.

The point is that the Biden administration is seeking to tax the value of assets rather than income.

In many ways, this is a more creative way to achieve Sen. Elizabeth Warren’s (D-Mass.) long-standing dream of a wealth tax. As I have addressed earlier, the wealth tax runs counter to constitutional limits on the taxation authority of Congress. Article One 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, “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 is a “direct tax.”

There are arguments that a wealth tax would be constitutional, and there are cases on both sides of that issue. Advocates cite estate taxes and other forms of taxation. However, there is then the small problem of the 16th Amendment, which states “The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.” The 16th amendment was passed after the Supreme Court struck down an income tax as an unapportioned direct tax. The amendment was passed to allow for an expanded federal tax authority, but it was specifically limited to “income.”

While Warren thrilled liberal audiences by promising to go after the “Rembrandts … diamonds and … yachts” of the wealthy, it was practically and constitutionally dubious. Now however, the Biden administration wants to take a less direct and smaller step toward the same such tax. If successful, there would be little to stand in the way of a full wealth tax on all Americans.

Such a tax, however, would have to pass constitutional muster with the Supreme Court, which would have to accept the oxymoronic notion of non-income income. It would also have to sign off on the idea of the government taxing the value of assets that continually fluctuate or change. It is like waiting for a gambler to win a hand at blackjack in Vegas and taking 37 percent of his chips before he can play the next hand.

Underlying this push is the notion that the wealth of individuals is really “our” money being kept from us. That was born out during the last primary debates when Warren made a show of gleefully rubbing her hands together after saying that she would take some of the wealth of her opponent John Delaney, a self-made millionaire worth $65 million. People pay taxes on income when it is earned. They also pay taxes when assets are sold. Now the Biden administration wants to tax assets before they become income — imposing a continual taxation of wealth.

Even law professors pushing this tax admit that it is not clear that it would pass constitutional review. If it didn’t — with Biden’s “free” trillions already spent — the public, already saddled with a deficit in the trillions, could find itself the recipient of a bill for trillions more for what they thought was free tuition, day care and other programs.

Some lies can be harmless, even charming. When Joe Isuzu promised customers that a new car “has more seats than the Astrodome,” you did not have to buy the car. With this new tax, Joe Biden is promising a free car that the public may have to buy whether they like it or not.

Jonathan Turley is the Shapiro Professor of Public Interest Law at George Washington University. You can find his updates on Twitter @JonathanTurley.

33 thoughts on “Warning: Joe Biden’s ‘Eat the Rich’ Pitch May Come Back to Bite You”

  1. Is there a democrat with a working brain cell ?

    We tried something much less consequential than this during the Clinton administration – a “Luxury tax” – the consequence was a loss of government revenue, decline in the value and the production of taxed luxuries and jobs lost all over the place.

    But the “luxury tax” was small and covered few goods, therefore the devastation though consequential was confined.

    If democrats wish to cause a recession or even a depression – this is just about the best possible way to go about it.

    For those of you without a witt of sense – you can not actually tax “the rich” without significant negative impact.

    “The rich” can nearly always either avoid taxes, or pass them down to “the little people”. When that is not possible – they can simply choose to make less – no one making over a few million a year will personally see significant changes to their life from less income.
    But the rest of us will. When the most productive people choose to produce less, EVERYONE suffers.
    But this proposal goes even farther than disincentivizing the most productive – it will actually devalue the economy.
    It will cause the value of everything that it taxes to decline – that particularly means a decline int he value of stocks.

    Stocks – actually all securities are essentially an asset backed form of non-government money.

    For those who have forgotten – the financial crisis was caused by a sudden drop in the the value of one security – mortgages.

    Imagine what the consequences would be if there was a sudden drop in the value of ALL securities.

    This would be fairly similar to the Fed pulling $4T from the economy overnight.

    It will not go well.

    But what the hell – if democrats want to make sure that no one with a D after their name ever gets elected again

    GO FOR IT!!

  2. “Righty” and “Lefty” are two words on the comments every day. Which hand do you wipe with when you sit on the toilet?
    Ask Trump.

  3. Jonathan: The Biden administration and the Dems have cut their social spending legislation in half but you are still complaining. The various proposals to levy a capital gains tax from unrealized gains on stuff like stock, property, expensive yachts, cars and art are unlikely to get any traction, especially among the GOP and moderate Dems. But Tesla CEO Elon Musk is running around with his hair on fire complaining he might have to pay a few more billion in taxes. Donald Trump threatens to flee the country if he is taxed. The single best reason to support the tax. No loyal patriot is the former and disgraced president when it comes to protecting his wealth.

    In support of your position that the super wealthy should not be taxed you try to scare the hell out of the average homeowner. You say: “Biden is suggesting that the government should start taxing you based on the increased value of the things you own, even though you have not actually made that money”. Fact check: None of the capital-gain tax proposals would affect the average homeowner. Not me nor probably you. The proposals would affect about 700 billionaires. But using scare tactics is standard fare for right-wing pundits.

    For a long time the super wealthy have used a number of shady schemes to avoid paying their fair share of taxes. Just ask Donald Trump or your boss Rupert Murdock. The Pandora Papers has shown how the rich use money laundering and other schemes to hide their assets. But super wealthy Americans don’t now need to shift their assets to the Cayman Islands or other tax safe havens. Their US tax rates are so low and they can, in many cases, avoid any taxes. In several years Trump paid no federal taxes. In 2007 Jeff Bezos did the same. Same for Elon Musk. And now we have our own “Cayman Islands” right here in the US. South Dakota has no income tax, no capital gains tax or inheritance tax. A new law allows out-of-staters to set up trusts to avoid taxation. Even wealthy mainland Chinese are parking their money in this fly-over state. The South Dakota law allows billionaires to avoid most legal claims or scrutiny. Ten years ago South Dakota trusts held $57 billion in assets. Today those trust are worth over $355 billion!

    Leona Helmsley famously quipped: “We don’t pay taxes, only the little people pay taxes”. It is even more true today than in Helmsley’s time. But the GOP is adverse to taxing the rich. They call Biden’s proposals “class warfare”. That’s what the ruling class and their allies in Congress always say when their power and wealth is threatened. It is clear where you stand.

    1. “[T]he Dems have cut their social spending legislation in half . . .”

      Good start. Now cut it to zero. There’s already too much looting and welfare in this country.

  4. How can a tax Bill originate in the Senate? Fauxcahontas needs to let that idea go.
    In reality they know it will not stand any level of court scrutiny. It is a ruse to get the spending passed, checks in the hands of the greedy, whilst their stenographers in the press insist it is “paid for”.

    Once it becomes law, they expect the pusillanimous Chief Justice Roberts to contort and distort the law to allow it to stand. Should he discover a principle or a testicle, they will depend n the public outcry at the prospect of losing their free cheese. It is cynicism at its height.

    They are everything they warned we that Trump was.

  5. Every day something touches the Absurd coming from the Woke and or the Democratic Party. It reminds me of the meaning of ENTROPY (a state of disorder, randomness, or uncertainty), they, that is, the Woke Leftist Democratic Party knows not where they are going or come from. Just throw excrement on the wall and see what sticks.

  6. There’s never enough money for politicians. All politicians should read the famous short story “Rocking Horse Winner” by D. H. Lawrence published back in 1926. It’s available for free on the web for anyone else who hasn’t read it.

    1. That’s why the Founders wrote Article 1, Section 8.

      That section also precludes any and all regulation, other than that of the value of money, the flow of commerce among the several States (to preclude favor by one state over another), and land and naval Forces.

      The people are maximally free to “pursue happiness.” It is the government that is severely limited and restricted.

  7. Moot!

    Joke Buydem and the communists (liberals, progressives, socialists, democrats, RINOs) can pass any tax they like but they cannot tax for anything other than “…general Welfare…” which equates to physical infrastructure for the benefit of all, not one, not a few, not some, but all – that would include water, sewer, roads, post office, electricity, trash pick-up, etc., nothing more and nothing less. Bills taxing for anything other than “…general Welfare…” must be immediately struck down by the judicial branch. Someone ring up the Supreme Court and tell them that it’s time for them to execute the duty they swore to in an oath – Support the Constitution, and it’s literal “manifest tenor” – or be impeached and convicted.

    P.S. It is impossible to tax “evil” corporations. The corporate tax is a ruse. The proposal is a joke (Joke Buydem). A tax on “evil” corporations taxes Americans who buy from corporations. That’s everybody.

  8. “Biden is suggesting that he will pay for the new spending by taxing people not on what they have earned but what they could earn from selling assets.” But then you get taxed on the profits when you do sell it.

    It’s repeatedly dipping from the same well.

    This will destroy investment and plow the economy into the ground. Typical result of Leftist policies.

    We’re fools if we throw away our prosperity and freedoms with both hands. But that’s how great societies decay and fail from within.

    1. Karen says:

      “Biden is suggesting that he will pay for the new spending by taxing people not on what they have earned but what they could earn from selling assets.” But then you get taxed on the profits when you do sell it. It’s repeatedly dipping from the same well. This will destroy investment and plow the economy into the ground. Typical result of Leftist policies.”

      I hope the Biden tax proposals pass, just to see if your dire predictions are correct.

  9. The proposal relating to the taxation of “unrealized” capital gains is absurd. In addition to the fact that such a tax would be unconstitutional, it would result in an even larger governmental payroll consisting of IRS employees trying to figure out how to value assets in various asset classes. There are also issues of privacy. Especially at a time when the so-called Social Security Trust Fund is inadequate to meet its obligations to those who have actually incurred payroll deductions to fund it, the government should not be creating new entitlements. The Biden Administration continues to squander taxpayer dollars.

  10. Dems have to tax us citizens, Biden is about to reward illegal aliens in the United States to the turne of $1,000,000,000. (yes billion, I counted the zeros twice)

    So steal wealth from citzens, an unconstitutional takings, and then hand those $ over to criminals . Democrats are absolutely shameless, in their vote buying schemes.

    This is just becoming public, but already 940 families have filed claims and are in the que to recieve their bribe. (a billion is one thousand millions.)

    If you want to know how these govt slush funds end up, just google “pigford settlements”

    1. And when the Defendant in such claims is actually on your side, “settlements” are just a stand-in for rubberstamping an unmitigated transfer of taxpayer money to non-citizen aliens.
      It is so bad, that you really have to wonder if they are affirmatively trying to take down our system of government and leave our society destitute and vulnerable.

  11. Seems to me a VAT tax is the way to go.
    Of course first they have to pass a constitutional amendment to repeal the 16th amendment.

    With the 16th amendment the federal govt attained the power to tax INCOME. unrealized gains are not income. Of course the problem is one of VALUING an ass
    Think car dealership. Whats it worth? Inventory and real estate? Nope. Its the franchise. The brand. The market. The reputation. Our little town the Sole proprietorship dealership sold, to another dealer with multiple stores. My estimation, 10X its inventory and real estate. It sold again after 3 years to a conglomerate dealership in Des Moines metro…Price not known, but for more then then the1st sale.

    How is the govt going to value that single operation in this town? Ok for the next 3-5 years, but after that? Its impossible to defend or fight any number the govt comes up with.

    Assets, as always are worth what a person is willing to pay. Not on a spread sheet calculation.

  12. Our Lefties plainly have no grasp of economics, finance, taxation, the Law, Constitution or plain old commonsense when it comes to their pursuit of other people’s money to spend on government.

    To even offer to tax unrealized gains (such as appreciation on a house, boat, pickup truck, shotgun, or antique table) each year before it is sold….and the Gain is realized….is patently stupid.

    If one thinks it is only the Billionaires that are the target….they would have to have the brains of a jellyfish in light of the attempt to get every transaction of Six Hundred Dollars or more reported to the IRS.

    The Tax Law already has a requirement for the issuance of 1099’s for annual payments in excess of that amount now….but very few comply with that law….and for darn good reason.

    I, like most rational people, are fed up with the radical Leftist agenda of the current Federal Government Administration and Democrats in Congress.

    What Nation ever taxed itself to prosperity?

    Current events prove the real reason the Left refuses to learn from history as it would indict their agenda and lead to its defeat.

    I have lived in many Third World countries during my working career….and know what the empty shelves thing is all about.

    If the Left has its way, we are headed directly to that right here in our own Country that used to be the most prosperous in the World.

  13. Tax the poor. Kick em out of the public housing they have lived in for six generations. The girls get knocked up at age 14 so they “can get my check”.

  14. It may be a stretch but I wonder if the confiscation of people’s unrealized capital gains (capital gains are not considered income under tax rules) would fall under ‘unreasonable search and seizure’. The government searches for your assets and seizes them to satisfy the hungry beast that is the federal government.

  15. The Lefties are going crazy.

    TDS is morphing into plain derangement.

    In their lust for other people’s money, the Lefties are proposing ever crazier schemes – just look at the idea of banks reporting at the $600 level.

    Americans are getting a glimpse of what a Lefty world would look like and they are recoiling.

    1. The tried the $600 shitck under with the Affordable Care Act in 2009. At that time they wanted all businesses to issue a 1099-Misc to any entity that was paid $600 or more. If you paid Verizon, the utility bill, anything in the course of your business you would have to issue a 1099. That was nuts enough. Well, it was killed, thankfully, so they are trying a different tactic….they want the banks to do it. They are not looking to capture the millionaires with that because the money they make is already easily traceable through normal W2, 1099s, K1s, etc. They are trying to get to your carpenter, plumber, baby sitter, who may be paid by cash or check which then gets deposited to a bank account.

    2. ‘Is morphing? Oh, I think we are already there. If we do not put on the brakes soon, as in *this year*, there won’t be a country to save anymore. We are careening toward a multitude of disasters that make the 20s and 30s look like a cakewalk, and it has absolutely zero to do with ‘the climate’. I talk with perfect strangers about this all the time when out and about. Very few over the age of 35 disagree. There is no question about the illegitimacy of a great many dem ‘victories’.

      1. James says:

        “If we do not put on the brakes soon, as in *this year*, there won’t be a country to save anymore. We are careening toward a multitude of disasters that make the 20s and 30s look like a cakewalk, and it has absolutely zero to do with ‘the climate’.”

        If you Trumpists can’t save the country in a year or so, are you likely to emigrate to another country since America has been stolen from you?

        Tucker Carlson admires Victor Orban’s Hungary. What about you?

          1. Monument threatens:

            “We will keep our country, one way or another.”

            I get it. Bloody violence is not off the table.

  16. BIDEN, DEM’s, Radical Left don’t care who pays for their spending spree so if the tax increases don’t hold up in court so what all they know s spend and give aways.

    I wonder if Biden family and etc. will exempt themselves from such taxes???

    As respects to Elizabeth Warren Tax the rich plans – take a look how she and her husband made their $$$$$$$$$$$$$ and will she exempt herself.

    They don’t care who they burden with the taxes, destruction of the Middle Class continues.

    1. Rs are more then happy to shed the constitution when it suits their cause.
      Also the constitutionality of the wealth tax is debatable. Many legal experts think it is.

      1. Oralloy wrote, “Rs are more then happy to shed the constitution when it suits their cause.”

        That’s not an argument, that’s an unethical rationalization.

        1. The Golden Rationalization, or “Everybody does it”

        “It is based on the flawed assumption that the ethical nature of an act is somehow improved by the number of people who do it, and if “everybody does it,” then it is implicitly all right for you to do it as well…”

        Unethical Rationalizations and Misconceptions

        You made a claim in that rationalization, how about you support that claim with a few notable factual examples.

        Oralloy wrote, “Also the constitutionality of the wealth tax is debatable.”

        Everything is “debatable”. I think it’s pretty clear that you didn’t actually read Turley’s post.

        As I have addressed earlier, the wealth tax runs counter to constitutional limits on the taxation authority of Congress. Article One 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, “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 is a “direct tax.”

        Oralloy wrote, “Many legal experts think it is [constitutional].”

        That’s not an argument, that’s an unethical rationalization.

        1E. Tom’s Delusion, or “Everyone agrees with me!”

        “Tom’s Delusion is another point where the rationalization list intersects with logical fallacies. #1E is a particularly foolish version of the Appeal to Authority fallacy, which is bad enough when the user believes that the fact that someone of note has adopted his or her position is evidence of the dubious position’s validity…”

      2. Rs are more then [sic] happy to shed the constitution when it suits their cause. — Oralloy

        We agree.

        Also the constitutionality of the wealth tax is debatable. Many legal experts think it is. Pralloy

        Many things are debatable, but the only legal experts whose opinions actually matter are those on the bench.

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