The Constitutionality of a Federal Net Wealth Tax

Richard W. Lindholm

American Journal of Economics and Sociology, 1984, vol. 43, issue 4, 451-454

Abstract: Abstract. Consideration of a Federal Net Wealth Tax would help settle the question of the scope and limits of the taxing powers of the United States Government. The confusion attending this, which has prevented the federal government from taxing land and kept state taxation of land too low to bean efficient allocator of this resource, can be clarified. The Constitution's Article I, Section VIII, gave the federal government power to levy taxes, duties, imports and excises, as “indirect” taxes, requiring only that the duties, imposts and excises be “uniform throughout the United States.” The 16th Amendment authorized a “direct” tax on “incomes, from whatever source derived.” The intent of the Founding Fathers—almost all large landholders—was to prevent the new federal government from using land as a tax base. But the distinction between the types of taxes lacks economic meaning. By making the base of a new tax the net wealth of taxpayers. Congress could obtain a Supreme Court test to end the confusion. If the Court, following precedent, required that land be excluded from the tax base, this would assure land as a tax base to the states and permit them to tax it in a way to end speculative withholding of tracts and sites and to bring about orderly development according to current need.

Date: 1984
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