Only the U.S. Supreme Court can resolve the Constitutional question but as an attorney I note that most legal scholars believe that a net wealth tax would not require a “direct tax” apportionment (see Fixing the Constitutional Absurdity of the Apportionment of Direct Tax by Calvin H. Johnson, 21 Constitutional Commentary 295, 2004). A major boost to the legal argument also came with the Supreme Court’s recent approval of a tax on the failure to obtain health insurance (not a penalty) without apportionment because it, like a net wealth tax, is not the kind of “direct” or “indirect” tax envisioned when the constitution was drafted. In other words, new types of taxes are not subject to the constitutional apportionment requirement. Moreover, a net wealth tax is generally used as a replacement for estate and capital gains taxes which do not require apportionment. Read more at TaxNetWealth.com.

A person who makes $10M a year, and spends only $500K would not be contributing to the economy the same as one who earns $500K and spends it all. The latter is returning all of the cash to the economy while the former is extracting $9.5M (assuming it is being held in a near-interest free account, and not being re-invested), which means that money has to be replaced somewhere else, and the somewhere else has lately been the government.

I like the idea of consumption taxes, but they are ineffective when there is a lopsided distribution of income, as we have now. If the 0.1% were spending more of their income, they would be paying more taxes, but they are just accumulating it.

Taxing ‘wealth’ on death is simple – we do it now. Just take 100% of it after modest allowances for children. Nobody ‘deserves’ anything he or she didn’t earn, children especially; better if the family dog got the dough than the worthless spawn of the plutocrats – Fido wouldn’t be bribing Congressmen with it.

If income is taxed as it is converted to cash, it will effectively tax the wealthy, or at least those who are accumulating wealth, without the distortion. Those who build assets and don’t exchange them for cash are helping the economy, and shouldn’t be forced to liquidate their assets, which just extracts more capital from the economy.

Even before then though, how about a direct tax on corporate cash as a separate item? There’s probably trillions sitting uninvested, not being used to stimulate economic growth, and just lying in Corporate Bank Accounts. Companies taking money out of the economy like this is akin to a rise in interest rates or a reduction in credit – in other words, this is a problem that needs to be solved anyway, so might as well use it as a tax raising tool at the same time.

Needless to say, any kind of wealth tax would be extremely progressive compared to what we have today, even if you don’t build progressive brackets into the system directly (as Altman proposes). Since top 10% of the population control around 85% of total wealth, and top 20% control 95% of total wealth, even a straight 1%-of-all-wealth tax would fall almost entirely on the small wedge of the population at the top. It could be popular among the voters (everyone loves to milk the rich) but it would essentially be wealth redistribution.

One could argue that the problem with the current system is that there’s already too much wealth redistribution. We want all voters to pay their fair share of the cost of government. If everyone were to pay the same fraction of their income in federal and payroll taxes that is paid by the current top quintile (around 25%), we wouldn’t have a deficit problem, we’d have a surplus problem. Instead we’re trying to think up the ways to get some more out of the top 3% or 1% or whatever while cutting taxes for the 97% or 99%.

Non-authoritative source: https://en.wikipedia.org/wiki/Direct_tax

The fact is that the tax regime on income is NOT very progressive…just barely so….when payroll taxes are included it’s a more or less flat tax system….

the payroll tax is an abomination the only purpose of which is to fool the rubes into thinking they have “earned” their erntitlements….

so abolish it, without touching current benefits….create a mildly progressive simplified income tax structure that everybody pays….

the lower income qunintiles would see actual total tax burden reductions, the middle would be a wash and the top fractiles would see modest increases.

A huge win-win economically…and politically it poleaxes the blue states and the Obama coalition on may levels…what’;s not to like?