I also wanted to comment on the breast-beating about Moore v U. S. soon to be decided by the Supreme Court. The central question is whether the Congress has the power to tax unrealized income. I don’t think that a trivial question. Here’s the wording of the 16th Amendment:
The Congress shall have the 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 question is whether the Congress has the authority to levy taxes against income that has not be realized. I think the answer is obvious (it doesn’t) but lots of other people think it does.
Previous to the 16th Amendment the Congress only had the authority to levy taxes on a per capita basis not on the basis of income. Our modern tax system would be impossible without it.
It seems to me that the basic reason that there is any question about this at all is that some Americans really, really, really want us to have a civil code system rather than the common law system we have. Under a common law system if the law and previous decisions do not determine that a law applies to the specific case under consideration, it doesn’t apply. Under a civil code system the law always applies to every situation. It’s up to jurists to determine how it applies.
Under our common law system if the 16th Amendment actually means “income” where it says income, then the Congress does not have the authority to levy taxes on unrealized income. If we had a civil code system the courts might decide that “income” didn’t actually mean income but applied to pretty much anything.
If the SCOTUS finds that “income” means income, that kills a wealth tax without amending the Constitution. I doubt that such a tax would end with a “billionaire’s tax”. Eventually, it might apply to everything you own.
Buy, borrow, die allows the rich to live rich while avoiding income tax or capital gains tax. Then their heirs get the step-up value of the assets. Meanwhile, the teacher, police officer, and other workers pay significant income taxes. Hey! Somebody has to pay the bills.
Here in Illinois they tax wealth or, at least most of the wealth of most of the people. We pay among the highest property taxes in the country and our homes are reassessed regularly. Property tax based on the assessed value is a wealth tax. I’m paying ten times what I was when I bought my home even though its assessed value hasn’t increased tenfold.
California, on the other hand, doesn’t update property taxes as the values of houses increase since Prop. 13.
Dave Schuler: Property tax based on the assessed value is a wealth tax.
Well, someone has to foot the bill. It’s really your own fault you weren’t born rich.
The people of Illinois have repeatedly rejected anything but a fixed rate income tax (not proportional). Illinois’s legislators have steadfastly refused to comply with the implications of that—that the services provided by the state and public employee payscales must be limited to what the tax base can pay.
Instead, Illinois relies excessively on the property tax which has the adverse effect of driving not just the wealthy but a sizeable chunk of the middle income out of the state. The figure I’ve heard is that 100,000 left the state last year. Immigrants from Central and South America, the majority of whom are actually drains on the public purse rather than net contributors, are not a solution.
Which explains why Illinois has one of the worst credit ratings of any state.