People with good memories will remember that in 1999 billionaire Donald J. Trump proposed a levy of 14.25 percent on wealth over $10 million (https://tinyurl.com/aqcnlmh). In view of this, Sen. Elizabeth Warren’s proposed annual tax of 2 percent on wealth over $50 million appears to be decidedly moderate.
One possible objection is that Article I, Section 9, Clause 4 of the Constitution (No Capitation, or other direct, Tax shall be laid, unless in proportion to the Census or Enumeration herein before directed to be taken) appears to prohibit it. But the same objection originally was made against a federal income tax and that objection was overcome by the 16th Amendment.
Could Warren’s wealth tax therefore be modified to a tax on income from all property (not only capital gains)? In the Netherlands this route has been followed since the early 2000s. Originally that country had a tax on wealth, but this has been changed into a flat tax of 30 percent on fictional income of 6 percent from all property over a certain (low) exemption. This amounts to a tax of 1.8 percent on wealth if real property income turns out to be zero, as it frequently is in low-interest times, like the present. But normally interest rates will easily surpass Warren’s 2 percent. So this tax on the rich will not even make a dent in their wealth; it will just slow down the increase in their wealth. What is not to like?
