A Constitutional Wealth Tax

Ari Glogower*

Policymakers and scholars are giving serious consideration to a federal wealth tax. Wealth taxation could address the harms from rising economic inequality, promote equality of social and economic opportunity, and raise the revenue needed to fund critical government programs. These reasons for taxing wealth may not matter, however, if a federal wealth tax is unconstitutional.

Scholars debate whether a tax on a wealth base (a “traditional wealth tax”) would be a “direct tax” subject to apportionment among the states by population. This Article argues, in contrast, that this possible constitutional restriction on a traditional wealth tax may not matter. If the Court struck down a traditional wealth tax, Congress could instead tax wealth by adjusting a taxpayer’s income tax liability on account of her wealth. This Article describes three general methods for making this adjustment (collectively, “Wealth Integration” methods). A taxpayer’s wealth could affect her taxable income base (the “Base Method”), the applicable rate schedule (the “Rate Method”), or the availability of credits against tax (the “Credit Method”).

Wealth Integration methods could replicate the economic effects of a traditional wealth tax but with an intrinsically different constitutional analysis. The Court could strike down Wealth Integration methods only by overruling settled prior precedent, invalidating many current features of the income tax, and fundamentally restricting Congress’s power to tax income under the Sixteenth Amendment.

Finally, the possibility that Congress could instead tax wealth through Wealth Integration methods provides a new argument why the Court should uphold a traditional wealth tax. Otherwise, the Court would have to choose between fundamentally restricting the Sixteenth Amendment—and jeopardizing the income tax as we know it—or distinguishing between economically similar taxes on the basis of their formal label while still allowing Congress to tax wealth and diminishing the effect of the apportionment requirement as a restraint on Congress’s taxing power.


*Assistant Professor of Law, The Ohio State University Moritz College of Law. I thank Ellen Aprill, Susan Azyndar, Josh Blank, Martha Chamallas, Bryan Choi, Ruth Colker, Charlotte Crane, Victor Fleischer, Brian Galle, Stephanie Hoffer, Hayes Holderness, Calvin Johnson, Michael Knoll, Omri Marian, Katie Pratt, Eric Rakowski, Chris Sanchirico, Ted Seto, David Shakow, Reed Shuldiner, Marc Spindelman, Clint Wallace, and participants at the University of Pennsylvania Law School Tax Law and Policy Workshop Series, the Loyola Law School, Los Angeles Tax Policy Colloquium, the Northwestern Pritzker School of Law Advanced Topics in Taxation Colloquium Series, the University of California, the UC Irvine School of Law Tax Colloquium, and the Ohio State University Moritz College of Law Junior Faculty Forum for helpful comments and suggestions. All errors are my own.


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