Below is my column in the Wall Street Journal on the bizarre claim of Gov. Gavin Newsom and others that the Framers would have supported wealth taxes, including the proposed Billionaire’s Tax. It is a claim that seeks to mask the economically unwise with the historically unfounded. The Framers sought to protect property from legislative redistributive impulses. James Madison wrote that the bicameral system, and particularly the Senate, “ought to be so constituted as to protect the minority of the opulent against the majority.” That does not sound like an ally of Bernie Sanders and Ro Khanna.
Here is the column:
Was James Madison the Zohran Mamdani of his time? Gavin Newsom appears to think so. In joining the growing number of Democratic leaders supporting a wealth tax, the California governor claimed that the U.S. Constitution and our Founders were all about wealth distribution: “The system America’s founders built,” he said, “was designed to prevent the concentration of power in a few hands, but we have allowed that concentration to happen anyway, slowly, in plain sight, over decades.”
The only problem with this argument is that it is utterly and demonstrably false. The Madisonian democracy is designed to avoid the concentration of political power, not the concentration of wealth.
The Founders were great believers in capitalism and the free market. In my recent book, “Rage and the Republic,” I discuss the economic philosophy of the Founders in exploring the history and future of this unique republic. This isn’t simply the 250th anniversary of the Declaration of Independence but also the anniversary of the publication of Adam Smith’s “The Wealth of Nations,” which the Founders embraced.
Many of the Founders were themselves quite wealthy, including banker Robert Morris Jr., who was known as the “Financier of the Revolution” and would be a billionaire today.
Our revolution was the first true Enlightenment revolution, heavily influenced by writers such as John Locke, who believed in a natural right to property. That right came not from the government, but from God, and “excludes the common right of other Men.”
That Lockean principle was manifest in George Mason’s Virginia Declaration of Rights, which was a basis for the Declaration of Independence. It extolled “the enjoyment of life and liberty, with the means of acquiring and possessing property, and pursuing and obtaining happiness and safety.”
James Madison drafted protections from government seizure of property, including the Takings Clause of the Fifth Amendment, which requires compensation for any property taken by the government.
The Constitution not only protects property, but was later amended to allow for income taxes rather than wealth taxes. Far from supporting a wealth tax, the constitutional system referenced by Mr. Newsom makes a federal wealth tax unconstitutional.
Mr. Newsom’s recent endorsement of a national wealth tax was likely meant to blunt the outrage over his opposition to the resolution to create a state Billionaires’ Tax on the coming November ballot.
California has reportedly lost trillions of dollars in the exodus of billionaires and other wealthy taxpayers fleeing the high taxes and class politics of the state. Mr. Newsom knows that this draining of wealth spells doom for his state, which is already grappling with a massive, growing deficit. He offered a curious argument for opposing the state wealth tax: “You may not be able to pick up and move to Texas or Florida to shelter your income from taxation, but I promise you that billionaires can, and do.”
The argument suggested that most citizens are effectively a captive population to be culled by California leaders, dupes who are unable to escape a state with a deadly combination of some of the highest taxes and highest living costs in the nation.
Unions and others pushed the Billionaire Tax to avoid budget cuts and fund the state’s runaway expenditures, from pension funds to projects such as the infamous high-speed train to nowhere.
To deal with California’s reverse Gold Rush, drafters made the proposed Billionaire Tax retroactive to claw back money from those who have escaped.
The national Billionaire Tax pushed by Sens. Bernie Sanders (I., Vt.) and Elizabeth Warren (D., Mass.) seeks to cut off any escape for the wealthy short of leaving the country. When she ran for president, Ms. Warren warned the wealthy that she was coming for “your Rembrandts, your stock portfolio, your diamonds and your yachts.”
Of course, this assumes that the wealthy would be little more than passive prey in a hunt by the Internal Revenue Service. That is precisely what socialists thought in France decades ago, before an exodus from the country that, along with other socialist policies, brought it to near economic ruin. It was later rescinded.
Nevertheless, wealth taxes make for great politics. What is concerning is that, in addition to a wealth tax, Democratic leaders like Ms. Warren are pledging to pack the Supreme Court if they retake power. A packed court with an insistent liberal majority would let the Democrats push through measures that would otherwise be declared unconstitutional, including a wealth tax.
Congress could then gradually lower the level of wealth needed to trigger the tax, opening up the homes and estates of citizens as an untapped reservoir of money for the taking.
“You’re next” could then apply not just to office holders but to property owners in a push to redistribute wealth.
That strategy may well unfold in coming years, but it will be the realization of a Mamdanian, not a Madisonian, system.
Mr. Turley is a law professor at George Washington University and author of “Rage and the Republic: The Unfinished Story of the American Revolution.”
Turley claims that a wealth tax is “historically unfounded” and completely alien to the Framers. This is factually false. The Founders did not just support the concept of wealth taxes; they actively voted for and implemented them.
Under the leadership of Founders like John Adams, the 5th U.S. Congress passed the Direct Tax of 1798. This was not an income tax. It was a direct tax levied on the value of real estate, land, and enslaved people. The tax was explicitly progressive—the higher the value of the property, the higher the tax rate. This is, by literal definition, a wealth tax.
During the founding era, nearly every state funded its government through “faculty taxes” and general property assessments. These taxes targeted the value of an individual’s accumulated assets (land, livestock, carriages, and ships), not their annual income.
Also,
Turley quotes James Madison’s Federalist No. 10 to argue that Madison wanted to protect the “opulent minority” from wealth redistribution. Turley completely strips Madison’s broader philosophy of its context.
While Madison feared unstable factions using the government to arbitrarily seize property, he was deeply alarmed by extreme economic inequality. In his 1792 essay Parties, Madison explicitly stated that the government should actively work to prevent the consolidation of extreme wealth. He wrote that the state should achieve this “by defying rules of property to reduce extreme wealth, and raise extreme indigence.” Madison argued for using the law to smoothly reduce inequality—the exact opposite of Turley’s
In a famous 1785 letter to James Madison, Jefferson observed the crushing poverty of Europe and wrote:
“The consequences of this enormous inequality producing so much misery to the bulk of mankind, legislators cannot invent too many devices for subdividing property… Another means of silently lessening the inequality of property is to exempt all from taxation below a certain point, and to tax the higher portions of property in geometrical progression as they rise.”
“Geometrical progression” is the 18th-century term for a highly aggressive, progressive wealth tax. Jefferson openly advocated for taxing the rich at exponentially higher rates specifically to break up concentrated fortunes.
Turley attempts to weaponize the Founders as a shield for modern billionaires. He relies on the myth that the American Revolution was fought to protect the hoarding of private capital.
Dear Prof Turley,
I believe it is President Trump who argues we must “Protect the minority of the opulent against the majority”. Clearly.
Afaict, Madison never said that. In Federalist No. 10, Madison did argue “that factions—groups united by common interests, passions, or property—would inevitably arise in any society where people have different degrees of wealth and property.”
In short, Madison concluded that “the causes of faction (i.e. wealth disparity) could not be removed, but the effects could be controlled.” Madison et al were converts of Adam Smith’s ‘free market’ described in the ‘Wealth of Nations’. And that a “well-constructed Union” would break and control the violence of faction, ensuring that even the “opulent minority” could have their ‘rights safeguarded against the tyranny of a majority’.
Obviously, Madison et al were not promoting an economic system to ‘protect an opulent Royal minority against the majority’ – or from the slings and arrows of outrageous Royal misfortune.
Madison et al were clearly promoting self-interested human innovation, fair rules/competition and the well-being of the ‘common good’. And that extreme degrees of wealth disparity not only should, but “could be controlled”. Extreme wealth disparity is a perversion of the free market .. . not a product of it.
Otoh, I do not believe Madison et al today, or then, would promote ‘wealth taxation’ as the best way to protect the ‘common good.’ Filling the coffers of an already compromised opulent ruling elite does nothing to promote the ‘common good’ or a free marketplace. Evidently, today political power is entirely contingent upon wealth. Ask Thomas Massie.
It’s the free market that must be protected. Overt fascism and centrally planned economies do not work.
Presently, I promote strict, rigid mandatory and/or voluntary ‘profit sharing’ to control Madison’s ‘violence of faction’ and ensure even the ‘opulent minority could have their rights safeguarded against the tyranny of pissed-off Americans’. .. whether Elon likes it or not.
*I’ve got change . .. from his hand to mine!