Nate Silver/538-Warren's Wealth Tax Isn't The Slam Dunk Progressives Want It To Be

[Gothmog]

I personally doubt that the proposed Wealth Tax is constitutional. The direct tax clause of the US constitution is clear and the 16th Amendment does not authorize this tax

Link to tweet

Additionally, a wealth tax would almost certainly face a legal challenge from well-funded conservative opponents. And it’s genuinely unclear whether it would ultimately be ruled constitutional. The issue isn’t that Congress can’t enact a wealth tax. It’s that if a wealth tax counts as a “direct” tax, Congress would have to ensure that the amount of money coming from each state was roughly the same on a per-capita basis, as there is a provision of the Constitution that bans direct taxes unless the amount collected is drawn equally from the states based on their populations. Given that wealth is not evenly distributed across the states, that equal distribution would be functionally impossible to ensure.

The fate of a wealth tax, then, would hinge on whether it counts as a direct tax. That’s a tough question to answer, because the Constitution itself doesn’t really define what a direct tax is, beyond the fact that the category includes a poll tax, which is a fixed amount charged for every person. Taxes like tariffs and certain others that can’t be fairly distributed on a per-person basis are generally not considered direct taxes. But how all of this would apply to a wealth tax isn’t entirely clear. The Supreme Court weighed in on this question more than 100 years ago — and not in the wealth tax’s favor. In 1895, the court struck down a federal income tax law because it taxed income generated from property, including land and other kinds of personal property, like stocks and bonds. The decision was controversial, and Congress and the states effectively reversed part of it 20 years later with the passage of the 16th Amendment which allowed Congress to tax income without worrying about how evenly it was distributed. But Congress’s authority to tax wealth wasn’t addressed by the amendment, and the Supreme Court hasn’t really returned to the issue in the past century.

Warren’s defenders argue, however, that the court simply got it wrong back in 1895, and that a modern wealth tax wouldn’t count as a direct tax. But the court’s right-leaning justices might approach the tax with a less favorable eye. And the existence of the old precedent could give the court’s conservative justices a way to dispatch a wealth tax relatively easily, which gives experts like Daniel Hemel pause. “A wealth tax could raise trillions of dollars — or, if it’s struck down by the Supreme Court, it could raise nothing,” said Hemel, a law professor at the University of Chicago. “That’s a really big risk if you care about the redistribution of income and you’re trying to figure out how to get it done.”

This tax is not likely to survive legal challenge

[Thekaspervote]

1. Whether we like it or not... why would it be?

[Turin_C3PO]

2. I'm for a wealth tax.

But I doubt our RW Supreme Court would allow it.

[Magoo48]

9. Are our actions now determined by our doubts?

I’m looking for a president who will hold every republican responsible not one who will sit down and shoot the shit with them.

[Thekaspervote]

13. No, but they should be determined by what feasibly can become law and what's a pipe dream

[Lexblues]

23. How will Warren hold them responsible?

She will go and campaign against them in Idaho, Wyoming, Kansas, etc?

[Gothmog]

3. Constitutional Concerns Are a Major Risk for a Federal Wealth Tax

Link to tweet

“Any answer regarding the constitutionality of a wealth tax should come with the caveat that we have no idea what the Supreme Court would say,” Hemel wrote to me. “I think that rebates to states would satisfy the apportionment requirement but it’s conceivable that the Court would say apportionment applies to gross revenues rather than net revenues.”

The last Supreme Court case to deal with the direct tax issue at length was NFIB v. Sebelius, the case upholding the Affordable Care Act individual mandate as an exercise of Congress’s taxing power. Since the Court held the mandate was a tax, they had to address the question of whether it was a direct tax, and whether it must therefore be apportioned.

“Even when the Direct Tax Clause was written it was unclear what else, other than a capitation (also known as a ‘head tax’ or a ‘poll tax’), might be a direct tax,” Chief Justice Roberts wrote in the opinion of the court. He provided a tour of other things the Court had called direct taxes over the course of its history: land taxes, real-estate taxes more generally, and, in Pollock and Macomber, taxes on personal property. He then went on to note that the ACA mandate penalty was none of these things, and therefore was not a direct tax, and therefore was constitutional.

This does not address the question of which of the kinds of taxes the court has called direct taxes in the past it would still call direct taxes today.

[TheRealNorth]

4. I think we could get to the same place

If we started taxing capital gains like we do normal income.

It seems to me the reason the ultrarich have low tax rates is because most of their income comes from Capital Gains, which are taxed at lower rates and have additional deductions.

I think this tax would be more palatable then a wealth tax.

[redqueen]

6. Larry Summers makes that exact point in the debate I posted below

Yang and most likely other candidates have also said the same thing - fixing the capital gains tax would be much more effective and is much more likely to get through congress than a wealth tax.

[mopinko]

55. same goes for fica taxes.

which, imho, is the correct way to fix social security. NOT lifting the cap.

[redqueen]

5. There are several problems with it.

Larry Summers outlines a few in this debate. Greg Mankiw gives some examples of how even if implemented, there are issues with how it would work.

&t

[Mr.Bill]

7. There must be a way to do it,

aren't we currently taxing the rich at a higher rate than the poor?

[Demsrule86]

16. No, the poor got a tax hike and the rich got a huge tax cut.

[Mr.Bill]

19. I know that, but there is a progressive tax rate

that increases with income. I'm just saying if we can do that, we can do it more.

[Demsrule86]

20. We will be dealing with a hostile SCOTUS...and we need the Senate.

[redqueen]

21. Income is easier to measure.

Wealth is trickier. Which assets will be assessed in determining the tax? How do you assess the value of the assets?

[Mr.Bill]

28. If I knew all the answers

you would see my picture under some people's posts.

[Gothmog]

59. Biden's Wealth Tax? Tax Investors 40% on Capital Gains

Link to tweet

[Mr.Bill]

63. I like the capital gains idea.

I don't know what the right % is. Don't want to destroy the stock market, but money made without producing any goods or services on the part of the guy making the money, should certainly be taxed.

[Gothmog]

65. This concept is constitutional

[peggysue2]

8. The question of whether a Wealth Tax could pass constitutional muster is real

Doesn't mean it would absolutely fail in the courts but it would most definitely be challenged, delaying the funds Warren plans to use for her ambitious social programs. And there are inherent problems with the proposed Wealth Tax that a number of European countries have experienced, not the least of which are administrative, implementation and enforcement nightmares. Then there's the biggie in the room: the actual amount of collected revenue minus the costs.

I think most Americans across the board want the richy-rich to pay their fair share. The question is what is the quickest, most effective and reliable way to do that. The 538 article points out that the Wealth Tax is not the as-advertised, guaranteed silver bullet.

[aikoaiko]

10. Nate/538 needs to stick to empirical observations/analysis instead of trying to influence polls.

Stay in your lane, Nate.

[Thekaspervote]

14. It really is a well written article that doesn't bypass the hard facts. I appreciate anyone chiming

In with the facts, whether I agree or disagree

[The Mouth]

25. Nate really is great at admitting

errors, and using them as learnings, and communicating the 'why'.

As someone trained and who has worked in the same discipline (Political Science major, pollster, election correspondent, with a collegiate emphesis in the statistical analysis of survey data), he was a rock star. He is kind of a hero to stat geeks because he actually talks about the degree of uncertainty in every survey; which is hard because people don't want to her, or process our degree of uncertainty. They just want to know "A leads B", and don't process the "plus or minus four points with a three-point Margin Of Error'.

Most people's eyes glaze over when you talk about the actual mechanics of polling. There is always a margin of error,. How big it depends on your methodology, which often depends on budget and actual impartiality.

Nate has been quite open about what screwed up, why, and what will decrease the likelihood (never zero) of it screwing up next time, the mark of an academic; most pundits cultivate an aura of all-knowingness.

Sometimes, the best result is obtained by looking at accurate data, rather than the data that tells you what you want to hear.

[TidalWave46]

45. It delves into assumption after assumption.

Not saying it isn’t well written. Just that your characterization of it is way off.

[aikoaiko]

47. The premise is an example of what I'm talking about

Have you heard anyone say the phrase, "Warren's Wealth Tax is a slam dunk?"

I haven't. Not at all, but yet Nate paints the picture of naive or ignorant progressives based on nothing but his imagination.

[tritsofme]

15. "Shut up," he explained.

[TidalWave46]

46. I'm a big Biden fan but Nate has become transparent.

I read Nate when he is staying in his lane. He has been swerving a lot more lately.

[Hortensis]

11. WHICH "progressives"? This word is so abused. I've noted even

Sanders' anti-Democrat zealots seldom call themselves "progressives" any more, so is calling them that obsolete? (Not since they turned the nation over to the anti-progressive wolf pack, which suggests compartmentalization may be leaky. Our Repub neighbors here in GA don't call themselves patriots any more either.)

So is he talking about them or the committed progressives of the Democratic mainstream?

Personally, as one of the latter, I like Warren but she's campaigning and in general I have more confidence in whatever Pelosi and other big thinkers in our party, who include Warren, plan together. I'm sure they know how to tax and otherwise diminish dangerously excessive wealth away constitutionally.

"We may have democracy, or we may have wealth concentrated in the hands of a few, but we can't have both." Nancy Pelosi to the nation on opening the 116th congress.

[turbinetree]

12. I just gotta to ask......................when Congress gave a tax cut to the 1%

and damn those other things called (Corporations in the eyes of the Court got a huge tax cut), 538 comes out and basically says that a wealth tax is unconstitutional........................hmmmmmmmmmmmmmmmmmmmmm......................the above 1% pay nothing in taxes and a lot of corporation pay nothing in taxes......................and Warren is correct and as for the University of Chicago.............

Chicago School is an economic school of thought, founded in the 1930s by Frank Hyneman Knight, that promoted the virtues of free-market principles to better society.

The Chicago School includes monetarist beliefs about the economy, contending that the money supply should be kept in equilibrium with the demand for money.

The Chicago School's most prominent alumnus was Nobel Laureate Milton Friedman, whose theories were drastically different from Keynesian economics...................

[dsc]

17. I get that it may be unconstitutional

but I don't get why the idea is controversial. The majority of lower and middle class people pay a wealth tax yearly on their houses.

[redqueen]

18. They may be referring to the numbers

i.e. how much taxable wealth there is, how the gov't would identify / assess its value, and how much would end up being taxed

[MichMan]

31. The wealthy dont pay property taxes?

[dsc]

49. they do but they don't pay it on most of their wealth

like the rest of us do. A house is the single largest piece of wealth most middle and lower middle class people have. That isn't remotely true of the wealthy.

[The Mouth]

22. There's also the fear

That, like the income tax originally, what was SUPPOSED to only apply to the rich gradually gets expanded down to basically everyone with any net assets at all.

The original income tax was one percent on $3000 ($78,000 in today's dollars) in 1913, maxing out at 7 percent for $500,000 (12 million).

[Teach-only-love]

24. A wealth tax should be directed only at the deficit

until its constitutionally is determined. Only then should it be considered as income the government is receiving when new expenditures are considered.

[dchill]

26. Nate Silver isn't quite the political sage...

...Nate Silver wants him to be.

[progressoid]

27. Oh dear me. Well-funded conservative opponents won't like it.

We wouldn't want to risk making conservatives angry. Let's only do things that we know they'll accept.

[boomer_wv]

30. .

It's about what moderates will accept. Without them you can't do anything, including win.

[progressoid]

35. Yeah...

Good thing we didn't use that reasoning in the past. Civil Rights Act. Voting Rights Act. etc.

[boomer_wv]

37. ?

You think moderates didn't accept either of those things?

Also, neither of those things were going to add trillions to the annual federal budget.

[progressoid]

40. 54 days of filibuster for the Civil Rights Act.

When the bill came before the full Senate for debate on March 30, 1964, the "Southern Bloc" of 18 southern Democratic Senators and one Republican Senator led by Richard Russell (D-GA) launched a filibuster to prevent its passage.[15] Said Russell: "We will resist to the bitter end any measure or any movement which would have a tendency to bring about social equality and intermingling and amalgamation of the races in our (Southern) states."

Democratics

[boomer_wv]

41. Are we

pretending that Richard Russell and Strom Thurmond were moderates, even in their own time? In the early 1960s there was a very conservative block of democrats. Unless you think that guys like Roy Moore are moderates, then those guys don't make your point.

[progressoid]

42. Nate Siler cites opposition from "conservatives"

as a reason to avoid pushing progressive legislation.

[boomer_wv]

52. That...

Is hardly what the article says.

[boomer_wv]

29. Warren..

Is selling fairy tales disguised as plans. They are loser in a general election, and if she did manage to win, trying to enact most of them would lead to a political bloodbath for the left, similar to 2010.

[wasupaloopa]

34. I agree. If we win the White House and Congress all these

plans can be brought up as bills to be debated.

The way they are announced such as “I have a plan, give everyone an extra $1,000 a month” without telling everyone where the money comes from, is giving the Repubs their campaign talking points.

ALL! of these “plans” will raise taxes on some or all of us. But that is never said and the supporters know it is a negative that’s why they don’t talk about it.

Most supporters think they can have their plans and the price will be someone else’s to pay. Wealth tax is the most visible of this.

[blm]

32. How about she create a 36% to 39.6% tax on the top 1%

And 35% on big business?

No, no, that will never pass and will be awful for the economy. You won’t get one Republican to vote for it.




Omnibus Budget Reconciliation Act of 1993 was signed into law by Clinton. This act created a 36 percent to 39.6 percent income tax for high-income individuals in the top 1.2% of wage earners. Businesses were given an income tax rate of 35%

[wasupaloopa]

36. Why the hell don't you call for raising your taxes to pay for the plans

you hope to benefit from?

Because you want the benefit but pass the cost on to someone else!

[MichMan]

38. Lots of people love higher taxes

As long as someone else is paying them. Look at all the higher income people here complaining that they were limited to $10k deductions for SALT.

Seriously doubt that poor people were paying tens of thousands of $$ in property taxes

[progressoid]

43. Seriously? Why the hell does this have to be explained on a "Democratic" website?

The 400 Wealthiest Americans Are Paying Less In Taxes Than The Country’s Poorest For The First Time Ever




https://www.nytimes.com/interactive/2019/10/06/opinion/income-tax-rate-wealthy.html?action=click&module=Opinion&pgtype=Homepage

[blm]

48. The facts don't fit the narrative they're pushing against Warren.

[MichMan]

54. Only since last year?

I thought it was for the last couple decades at least?

[redqueen]

56. That is a very good question. nt

[kcr]

61. Yes! Someone else other than the poor and middle class

that have been unfairly disproportionately burdened with it! Wow, are we at Democratic Underground?

[wasupaloopa]

33. In my opinion these "plans" have not been examined by

individuals who are experts in these areas. Surely the candidates supporters have left their critical thinking skills home when they publicly shout the merits of the plans.

[blm]

50. Yeah ... What does Warren know about economics or the law?

[redqueen]

57. Here's some experts discussing it.

[Gothmog]

60. Unclear if Warren's Wealth Tax Proposal is Constitutional

The law is not clear here. https://taxfoundation.org/warren-wealth-tax-constitutionality/

Another issue is that a wealth tax may violate the U.S. Constitution, though legal opinions thus far are mixed. Our report did not analyze whether a wealth tax would be constitutional, and the short answer is that it’s unclear.

The Constitution prohibits federal direct taxes that are not apportioned by population, except for the income tax which is specifically permitted by the Sixteenth Amendment. I think every expert would agree on those points.

So the question is, what is and is not a direct tax? In one of the first U.S. Supreme Court cases, the Hylton case of 1796, they observed that a capitation, or head tax (flat rate on each person), would be a direct tax and thus unconstitutional if not apportioned. In the Pollock case of 1895, they came to a similar conclusion. That’s why the Sixteenth Amendment was adopted, to allow income taxes to be constitutional. An attempt to tax unrealized capital gains was struck down in the Macomber case of 1920.

This tax may be upheld but it would take years of litigation

[Bradshaw3]

39. Is this the same Nate Silver who's feeling the love for poor little Donnie?

https://www.democraticunderground.com/100212633009

Boy some Biden supporters sure are feeling the love for Nate once he started showing his biases. Wonder if they feel the same after Nate showed some love and pity for rump.

[regnaD kciN]

44. Nate Silver is a competent poll-analyzer...

...and nothing but. He's certainly not a Constitutional scholar, nor a political pundit with any great claims to wisdom.

In short, if the question is "what data shows the American electorate thinks about the various health-care plans," Nate's probably a good source of insight. But that's it. Period.

[exboyfil]

51. In lieu of a wealth tax

1. Increase capital gains and dividend earnings taxes to match wage income taxes.
2. No more increase in basis on capital at death - assets taxed like wage income as well.
3. A tax on every Wall Street transaction based on value.
4. Up corporate taxes to ensure a tax on retained earnings.
5. No more charitable deductions.

[beachbumbob]

53. the real answer is a 100% over haul of the US taxcode

the fixes are pretty simple and pretty obvious BUT the opposition would be huge as the corporations, businesses, the rich and powerful will never go quietly when being required to pay their "fair share".

Simple slogans like "wealth tax" won't make that happen. Warren and ALL other candidates should declare the US Tax code needs to be reformed

[Gothmog]

58. Wealth Tax - That Pesky Constitution Might Get In The Way

It is not clear that a wealth tax is constitutional https://www.forbes.com/sites/peterjreilly/2019/06/25/wealth-tax-that-pesky-constitution-might-get-in-the-way/#1ea357a0779c

I reached out to Louis Vlahos of Farrel Fritz for some thoughts on the constitutionality of a wealth tax. After a pretty good history lesson, he wrote:

Which brings me to the wealth tax. It is clearly a direct tax – period – which means that it has to satisfy the apportionment requirement . Given the geographic concentration of wealth (NYC, Miami, LA, etc.), how can such a tax ever be “apportioned” among the States according to their populations, in the commonly-accepted sense of that word? Or do we need to reconsider what we mean by apportionment or the relevant population?

We will hear legal arguments from every side of the debate. Unfortunately, much of it will be a question of semantics and wordplay. Much of it will be politically-motivated, in the worst sense of that phrase.

Moreover, if any legislation were enacted, the lawyers would be the primary beneficiaries of interpreting and planning for the new rules. (Just witness what has followed the TCJA.)

I am not going to comment on the impetus for such a tax, or on the need for it, or on the wisdom of imposing it. Nor am I going to comment on providing more funds to a dysfunctional Washington via a new tax rather than through an existing tax – the consequences will be the same.

[Garrett78]

62. It didn't work in some European countries because...

...the tax didn't follow the wealthy wherever they went (hopping from one country to another is easy to do in Europe). And there were far too many exemptions. Those are fairly easy problems to solve. 

Legal scholars argue that a wealth tax would be constitutional. Of course, Trump has appointed a hell of a lot of right wing ideologues to the bench, including 2 Supremes. 

That said, a wealth tax by executive order (the only way it would happen) would result in massive backlash, including backlash from tens of millions of poor white ignoramuses.

[BlueWI]

64. Hopefully, 1890s levels of wealth inequality aren't what any Democrat wants them to be.

The left of the party is proposing actions to address this ongoing issue, which worsened even during Obama/Biden.

The harmful consequences of concentrated wealth are numerous and obvious, and American political discourse has been woefully short on potential solutions. Shooting the messenger with no alternative solutions or analysis is the very definition of elitism in the service of oligarchy.

Maybe superpacs are the answer? I guess we'll see.

[Gothmog]

66. There are constitutional ways of raising taxes on the wealthy

Link to tweet

[BlueWI]

67. I appreciate the post

and I would be unable to compare the legality of each approach, myself. This issue is being vetted in public, thanks to the critique of Sanders, Warren, Reich, Stiglitz, etc. of the issue of wealth inequality. I'd be most interested in objective assessments of this legal question.

Your current source includes the following line in its request for support: "The liberal media are terrified of the truth, especially when it leads to uncomfortable questions about their own leftist worldview." This is a broad brush statement that might be good for fundraising in certain circles, but it doesn't suggest a fair-minded approach to policies and people that are associated with the "left."

All the same, thanks for responding.

[Gothmog]

68. There is something called the 16th Amendment that allows income taxes

There are no constitutional restrictions in raising the tax rate on capital gains. Capital Gains have been taxed at different rates over the years and Congress can raise capital gain rates at any time

[BlueWI]

69. There are several amendments that I can quote

language from, but not the 16th.

However, I do assume that others, perhaps even Warren, are familiar with the potential legal issues with the 16th Amendment. So, perhaps you and your OP are correct that this amendment prohibits the Warren plan, or perhaps other interpretations are possible. It's not something I will ever litigate of course, but I am confident that the issue will be clarified publicly in the appropriate manner.

[Gothmog]

70. My administration will repeal the Trump tax cuts for the super-wealthy and reward work, not just wea

I like plans that can be adopted in the real world

Link to tweet

[BlueWI]

71. I like plans that imagine a full scale solution to a problem

AND plans that account for the anticipated political realities. You need both.

Biden has too little of the former, IMO. Zero carbon emissions by 2050? Miami will have 250 sewer floods a year by then

Compromise is a tool as needed, but half measures do not solve problems, they buy time. At some point, the focus has to be on envisioning actual solutions. Otherwise, our goose is cooked on multiple fronts.

[Gothmog]

72. the Republican ad writes itself" on Elizabeth Warren's $52 trillion

Link to tweet

[Cha]

73. K