This proposal is a variation on a wealth tax, and it does contravene the Sixteenth Amendment, but that's not all there is to it. The idea of taxing unrealized income, and indeed the idea of taxing wealth (as opposed to income), has other constitutional problems, not to mention that such a tax would reduce the repatriation of capital — in other words, it would reduce the likelihood of corporations bringing capital back on-shore, to work at growing our economy instead of, say, China's.

That won't stop the economically illiterate in Congress. Now, one of the usual suspects in the Senate, namely Elizabeth Warren (D-MA), is pushing the idea of a wealth tax.

The wealth tax was a fringe ideology when Elizabeth Warren talked about it frequently on the 2020 presidential campaign trail. But now it’s become mainstream. So much so, that it’s been included in every Greenbook presented by the Biden administration. While no specific guidance exists, the general concept calls for an annual tax (separate from and in addition to income tax) to be applied at a set rate on a taxpayer’s net worth in excess of a threshold. So, the wealth tax would tax unrealized capital gains – every single year.

Let's be honest — it's still a fringe ideology. But let's take a look at the Constitution on the subject of taxation, bearing in mind that this is the best argument against the tax problem argued in Moore v. United States and against wealth taxes in general. Article One, Section Nine of the U.S. Constitution, Limits on Congress, contains the following unambiguous statement:

No capitation, or other direct, Tax shall be laid, unless in Proportion to the Census or Enumeration herein before directed to be taken.

See also my colleague Streiff's take on Moore here.

What does this mean? Simply this: Congress can levy no direct tax unless that tax is levied in proportion to the population of the several States. In other words, if California contains 12 percent of the nation’s population, then California must supply 12 percent of any direct tax. If Alaska contains two percent of the country's population, then the residents of Alaska are only responsible for two percent of the total of said direct tax. Now, it’s pretty apparent to anyone who’s been paying attention that a few states, like New York and California, contain a proportion of wealth far higher than their percentage of the nation’s total population; other states, like Alaska and Arkansas, rather less so.

To levy the existing income tax, the Sixteenth Amendment was passed:

The Congress shall have 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.

Note that final clause: A specific exemption was included to allow the current income tax to be collected without regard to “…any census or enumeration.”

A wealth tax, which proposes to confiscate the wealth of many successful Americans, a tax that would wreck our economy and lay a heavy levy on the wealth generated with post-tax dollars – thus representing double taxation – would require a Constitutional amendment, one which has rather fewer chances of ratification than would an amendment denying the vote to all persons with red hair and blue eyes.

It gets worse. This kind of taxation — and while it's common for pols to claim, "Oh, this will only affect the richest one percent of Americans" or some such, ignoring that this was the argument also made for the income tax after the Sixteenth Amendment was ratified — applies only to those most able to evade it.

For all of the left’s prattle about “making the rich pay their fair share,” they don’t mean it, and they know they don’t mean it. They can’t mean it. The rich are the most capable, after all, of making use of tax shelters. They have off-shore accounts, batteries of tax attorneys, and every other possible means of shielding income from taxation. The middle class, especially independent business owners like me or most of you reading these words, have no such resources. If the IRS wants to target us, they can, and we have little recourse. The IRS can make use of a tax code that is so Brobdingnagian, so convoluted, so confusing, and so contradictory that no one, not even the IRS, really understands it.

Taxation is a hot topic, and with good reason. We have seen in recent weeks how even the well-connected get nailed for not paying taxes. It's common in the libertarian circles in which I move to note that taxation is theft, and it's true that the government can and will use force to compel payment, as Hunter Biden may soon be learning to his sorrow.

There is a solution to all this, of course: Repeal the Sixteenth Amendment, repeal all capital-gains taxes and other taxes on productivity, eliminate the IRS and our horrific tax code, and instead tax consumption. That captures a much broader base, as any retail-level transaction is taxed. Drug dealers and illegal immigrants buy cars. Visitors to the United States buy souvenirs and pay for hotel stays. All of that would be captured, increasing the tax base, and in the proposed FairTax plan, to give one example, a "prebate" would largely remove the burden from those least able to afford it.

A consumption tax is an idea whose time has come. And ask yourself this: As a taxation scheme, could it possibly be any worse than what we have now?