The Constitutionality of a Wealth Tax: A Legal Analysis
The Constitutionality of a Wealth Tax: A Legal Analysis
by Joe Wallace
SEPTEMBER 5, 2024
The idea of a wealth tax, particularly on the ultra-wealthy, has garnered significant attention in recent years as a potential means to reduce inequality and generate revenue. However, the constitutionality of such a tax raises complex legal questions rooted in the interpretation of the U.S. Constitution, especially regarding direct taxes, apportionment, and the meaning of “income.”
Constitutional Framework for Taxation
The U.S. Constitution grants Congress broad taxing powers under Article I, Section 8, which allows Congress to “lay and collect Taxes, Duties, Imposts and Excises.” However, it also imposes specific limitations on how taxes can be levied. Article I, Section 9, Clause 4 states that “No Capitation, or other direct, Tax shall be laid, unless in Proportion to the Census or Enumeration herein before directed to be taken.” This provision requires that direct taxes be apportioned among the states based on population, a significant restriction that has influenced tax policy throughout U.S. history.
The 16th Amendment, ratified in 1913, grants Congress the power to tax incomes “from whatever source derived, without apportionment among the several States.” This amendment was pivotal, as it allowed for the federal income tax without the need for apportionment, previously required for direct taxes. However, the scope of the 16th Amendment is limited to income and does not explicitly extend to wealth.
Is a Wealth Tax a Direct Tax?
The primary constitutional question surrounding a wealth tax is whether it qualifies as a “direct tax.” The Constitution does not clearly define “direct tax,” but the Supreme Court has addressed this issue in several cases. In Pollock v. Farmers’ Loan & Trust Co. (1895), the Court ruled that taxes on real estate and personal property (i.e., wealth) are direct taxes that must be apportioned. This decision was later narrowed by the 16th Amendment, but the question remains whether a wealth tax falls outside the amendment’s reach because it is not a tax on income but rather on the ownership of assets.
A wealth tax would likely be considered a direct tax under the reasoning of Pollock since it taxes the net worth of individuals rather than income generated from that wealth. Because a wealth tax is not tied to income, it would require apportionment under the Constitution unless the Supreme Court reinterprets the definition of direct taxes or creates a new exception.
Wealth Tax on Unrecognized Gains: A Constitutional Distinction?
Proposals have emerged to tax unrecognized gains—essentially unrealized capital gains—among the extremely wealthy. This approach targets the appreciation of assets that have not been sold and therefore not taxed as income under current law. While creative, this type of tax still confronts constitutional hurdles.
The Supreme Court’s decision in Eisner v. Macomber (1920) established that income means “the gain derived from capital, from labor, or from both combined,” and it must be “realized” to be taxable under the 16th Amendment. Under this precedent, taxing unrealized gains would likely fall outside the scope of income taxation as defined by the 16th Amendment, reinforcing the view that such a tax would be a direct tax requiring apportionment.
Financial Disruptions Associated with Taxing Unrealized Gains
Beyond constitutional issues, taxing unrealized gains could lead to significant financial disruptions, including capital flight, devaluation of assets, and liquidity crises. Wealthy individuals may move assets abroad or relocate themselves to jurisdictions with more favorable tax regimes, draining domestic capital. Taxing unrecognized gains could also cause a decline in asset values, as forced sales to pay taxes flood the market. Additionally, many individuals may lack the liquid cash needed to pay taxes on unrealized gains, necessitating borrowing against their assets. This scenario could trigger a liquidity crisis, increasing the risk of defaults and market instability, as asset-backed loans become difficult to manage under volatile market conditions.
Conclusion: Constitutional Challenges Remain
The constitutionality of a wealth tax, particularly on unrealized gains, is uncertain and would face significant legal challenges. The tax would likely be classified as a direct tax, necessitating apportionment among the states—a requirement that is practically unfeasible. While the Supreme Court could potentially revisit and reinterpret the definitions and scope of direct taxes, historical precedent suggests that a wealth tax, as currently proposed, would not align with constitutional requirements without a fundamental shift in judicial interpretation.
Ultimately, adopting a wealth tax on unrecognized gains for the ultra-wealthy requires either a constitutional amendment or a bold reimagining of existing tax law by the Supreme Court. As it stands, significant constitutional and economic obstacles would need to be addressed before such a tax could be deemed permissible under current law.
ABOUT THE HAITIAN CENTER OF EVANSVILLE
The Secretary OF HOMELAND SECURITY may designate a country for TPS due to the following temporary conditions in the country:
- Ongoing armed conflict (such as civil war)
- An environmental disaster (such as an earthquake or hurricane), or an epidemic
- Other extraordinary and temporary conditions
During a designated period, individuals who are TPS beneficiaries or who are found preliminarily eligible for TPS upon initial review of their cases (prima facie eligible):
- Are not removable from the United States
- Can obtain an employment authorization document (EAD)
- May be granted travel authorization
Once granted TPS, an individual cannot be detained by DHS based on his or her immigration status in the United States.
TPS is a temporary benefit that does not lead to lawful permanent resident status or any other immigration status. However, registration for TPS does not prevent you from:
- Applying for nonimmigrant status
- Filing for adjustment of status based on an immigrant petition
- Applying for any other immigration benefit or protection for which you may be eligible
PLEASE NOTE: To be granted any other immigration benefit you must still meet all the eligibility requirements for that particular benefit. An application for TPS does not affect an application for asylum or any other immigration benefit and vice versa. Denial of an application for asylum or any other immigration benefit does not affect your ability to register for TPS, although the grounds of denial of that application may also lead to denial of TPS.
Posted without editing, bias or opinion
Aurora’s River City Wiffle Ball Classic
Join us at Historic Bosse Field (23 Don Mattingly Way Evansville, Indiana 47711) on Saturday, October 5 for the 3rd Annual River City Wiffle Ball Classic benefitting Aurora. This year’s Presenting Grand Slam Sponsor is Fifth Third Bank.
Registration is open for teams of five at rivercitywiffleball.org. The team entry fees is $500. There are also opportunities for your team to crowdfund the cost of team entry. The team that raises the most money will win the team spirit award. To learn more about sponsorships, team entry, or crowdfunding contact Crystal Southern at 812-901-1043. The double elimination tournament is limited to 48 teams and signups are on a first come basis. Teams can be comprised of anyone aged 16 and up. Play competitively in the majors league or just for fun in the minors league. Both garner bragging rights and a traveling trophy for the champs.
The event begins at 8:10 a.m. with a welcoming ceremony followed by the first games starting at 8:30 a.m. Games will take place on eight different fields thanks to our generous field sponsors; Fifth Third Bank, Moore Guitars/Evansville Music Academy, RK Gives Back, Ascension St. Vincent, Liberty Federal Credit Union, SealCorp USA, National Vet Help, and Berry/Plumbers & Steamfitters Local 136. Forty-eight teams and 240 players will be vying for the coveted traveling trophies as they help “Strike Out Homelessness” in our community.
Even though you must be at least 16 to play on a team, there will be plenty of exciting activities for the whole family including Celebrity All-Star Game, food trucks, inflatables, temporary tattoos, a Kids Field sponsored by Hafer, and a free Pick-Up Game Field for adults.
The public is invited to attend. Admission is free.
PUBLIC NOTICE OF SPECIAL MEETING TO CONSIDER THE EXTENSION OF “OPEN BURNING EMERGENCY”
PUBLIC NOTICE OF SPECIAL MEETING TO
CONSIDER THE EXTENSION OF “OPEN BURNING EMERGENCY”
The Vanderburgh CountyCommissioners will hold a special meeting on Friday, September 6,2024 at 11:15 a.m. in Meeting Room 307 of the Civic Center Complex, at 1 NW Martin LutherKing Jr. Blvd., Evansville, Indiana 47708 for the purpose of considering the extension of the
“Open Burning Emergency.”
On August 29, 2024 the Board of Commissioners of Vanderburgh County, in order to protect the public welfare and safety during this unusually dry period and pursuant to Vanderburgh County Ordinance 8.12, proclaimed an OPEN BURN EMERGENCY.
DCS celebrates importance of family, highlights resources and support during Kinship Care Awareness Month
DCS celebrates importance of family, highlights resources and support
during Kinship Care Awareness Month
INDIANAPOLIS (Sept. 4, 2024) – The Indiana Department of Child Services (DCS) is promoting awareness, resources and support during Kinship Care Awareness Month – a time to celebrate family members who help maintain familial connections, provide stability, reinforce cultural identity and support the well-being of children who can no longer live with their birth parents.
Governor Eric J. Holcomb has proclaimed Kinship Care Awareness Month to promote and preserve kinship, sibling and other familial connections for Indiana’s children. Read his proclamation here.
“Family is the backbone needed to help keep kids safe and loved,” said DCS Director Eric Miller, MPA, MBA. “It’s a selfless act to step forward and care for the child of a relative or a close family friend, often with little notice or training, to help that child maintain close connections and stability when they are needed most.”
According to The Annie E. Casey Foundation, Indiana has about 60,000 children in kinship care. About 3,500 of those children have DCS involvement.
Kinship placements among children in DCS care have risen by 20 percent since 2019 and now represent more than half of DCS out-of-home placements. DCS has been working to increase the number of kinship placements because research shows children removed from their parents generally experience better outcomes when placed with kin, including reduced trauma, better mental health, improved behavioral, social and educational outcomes, increased stability and stronger connections to the child’s biological family.
Most kinship caregivers in Indiana are grandparents between the ages of 55 and 64, with more than 20 percent being age 65 or older. Grandparents and other adults who agree to be kinship caregivers are often faced with unexpected challenges and barriers, such as shifting family dynamics, struggles with bonding or financial issues.
DCS recognizes the importance of ensuring that both the caregivers and the children receive the appropriate assistance to ensure success and offers a Kinship Navigator program to help identify kinship placements and support relatives as they care for children.
Additionally, DCS offers a monthly stipend of $300 per child to unlicensed kinship caregivers who are caring for a child in DCS custody. Since stipends were launched in July 2023, over $14 million has been distributed to more than 3,000 families. Other resources, including financial, health, legal, educational/developmental and adult support, can be found here or by calling Indiana 2-1-1 (866) 211-9966). DCS encourages all members of the community to help connect kinship families with these much-needed resources.
EPD DAILY ACTIVITY REPORT
FOOTNOTE: EPD DAILY ACTIVITY REPORT information was provided by the EPD and posted by the City-County-County Observer without opinion, bias, or editing.
HOT JOBS
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BOARD OF PARK COMMISSIONERS REGULAR MEETING AGENDA
BOARD OF PARK COMMISSIONERS
REGULAR MEETING
ROOM 307, CIVIC CENTER COMPLEX
WEDNESDAY, SEPTEMBER 4, 2024
NOON
AGENDA
1. CALL TO ORDER
2. MEETING MEMORANDUM AUGUST 21, 2024
3. CONSENT AGENDA
a. Request Re: Approve and Execute Contract with Mark Cody for the use of Swonder Ice
Arena by an Independent Skating Professional. – Lord
4. OLD BUSINESS
N/A
5. NEW BUSINESS
a. Request Re: Permission to seek quotes to repave McDonalds golf course parking
lot.- Bouseman
b. Request Re: Permission to seek quotes for repaving various athletic courts.-Bouseman
c. Request Re: Permission to conduct a Deer cull at Wesselman Nature Center.- Walsh
d. Request Re: Permission to conduct a prescribed burn at Howell Wetlands prairie.- Walsh
e. Request Re: Open sealed bids for Swonder Ice Arena Rooftop Unit #2 & #3 Replacement.
f. Request Re: Open quotes for pavement and concrete at Mesker Park Zoo & Botanic
Garden.- Beck
g. Request Re: Permission to pursue wildlife nuisance control in accordance with DNR protocol
at Howell Wetlands. – Crook
h. Request Re: Any Other Business the Board Wishes to Consider and Public Comment.
6. REPORTS
Danielle Crook- Executive Directo
7. ACCEPTANCE OF PAYROLL AND VENDOR CLAIMS
8. ADJOURN
Vanderburgh County Council Meeting/2025 Budget Cuts
Vanderburgh County Council Meeting/2025 Budget Cuts
SEPTEMBER 4, 2024
3:30 P.M.
AGENDA
| 1. | OPENING OF MEETING |
| 2. | ATTENDANCE ROLL CALL |
| 3. | PLEDGE OF ALLEGIANCE |
| 4. | INVOCATION |
| 5. | APPROVAL OF MINUTES: |
A. County Council Meeting August 14, 2024
B. County Budget Hearing – Day 1 – August 14, 2024
C. County Budget Hearing – Day 2 – August 15, 2024
| 6. | PERSONNEL REQUESTS: |
A. Clerk
1. Request to fill vacancy for Bookkeeping Clerk 10001010-101133
2. Request to fill vacancy for Circuit/Superior Counter Clerk 10001010-101139
3. Request to fill vacancy for Circuit/Superior Certified Mail Clerk 10001010-101146
4. Request to fill vacancy for Circuit/Superior Counter Clerk 10001010-101152
5. Request to fill vacancy for Administrative Secretary/Court Archivist 10001010-101161
B. Sheriff 1. Request to fill vacancy for Deputy Sheriff 10001050-105100
2. Request to fill vacancy for PT Paper Server 10001050-199000 (Extra Help)
C. LIT – Sheriff
1. Request to fill vacancy for PT Special Deputy 11701050-199100
D. Health Department
1. Request to fill vacancy for Environmental Health Specialist I 11590000-115936
E. Health Dept – Safety Pin Grant
1. Request to fill vacancy for Public Health Nurse I 94150000-941517
| 7. | APPROPRIATION ORDINANCE: |
A. Sheriff
B. Voter Registration
C. Burdette Park
D. Cumulative Bridge
E. Health Department
F. Local Roads & Streets
G. LIT Public Safety – Jail
H. Reassessment – Assessor
I. General Fund Reserve
| 8. | REPEALS-None |
| 9. | TRANSFERS: |
A. Clerk
B. Sheriff
C. Prosecutor
D. Assessor
E. Voter Registration
F. Area Plan
G. Prosecutor IV-D
H. CCPI – Electronic Home Detention
I. CCPI – Work Release
J. Cumulative Bridge
K. Local Roads & Streets
| 10. | OLD BUSINESS-None |
| 11. | NEW BUSINESS: |
A. Public Hearing of Evansville Airport Authority 2025 Budget-Nate Hahn, Executive Director
B. Public Hearing of Solid Waste Management 2025 Budget-Jean Carlson, Director
C. Tax Phase In Compliance Review-Patrick Hickey, Economic Development Director
D. Sheriff Department Pension-Kevin Carey, Actuarial Consultant for Nyhart
| 12. | AMENDMENTS TO SALARY ORDINANCE |
| 13. | PUBLIC COMMENT |
| 14. | REMINDER OF UPCOMING MEETING DATES/TIMES: |
A. Budget Cuts Meeting – Immediately following adjournment of today’s meeting
B. P&F Meeting – September 25th @3:30 PM
C. County Council Meeting – October 2nd @3:30 PM
D. County Budget Adoption – October 2nd (following Council Meeting, but not before 4:00 PM)
| 15. | ADJOURNMENT |
2025 BUDGET HEARINGS/CUTS
A. Cuts/Changes to Departmental Budgets