“Enough is enough.” With those words, Senator Bernie Sanders of Vermont launched an effort to impose a 5% annual wealth tax on America’s billionaires. Featuring Rep. Ro Khanna, the legislation, “Make Billionaires Pay Their Fair Share Act,” reflects the growing “eat-the-rich” mantra on the left — which seeks to repeat a disastrous push in California that has led to an exodus from that state and an estimated loss of $2 trillion in taxable assets.
It is also blatantly unconstitutional.
Under the plan, Congress would target 938 billionaires to tap them for $4.4 trillion. That money would then be redistributed as a direct payment of $3,000 to every man, woman and child in a household earning $150,000 or less — $12,000 for a family of four.
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The timing of the move is telling. This is not only calculated ahead of the midterm elections, in which Democrats hope to regain power, but also follows pressure from California Democrats and labor unions to impose a similar wealth tax in that state.
The practical problem is that the rich, like their wealth, are mobile. As a result, many are fleeing California. So now Khanna is joining the country’s leading Democratic Socialists to ensure there is no place to hide in the United States. Billionaires in California could get doubled on 10% of their wealth.
It has long been the dream of the far left. Years ago, Warren delighted Democratic voters in her quest for the presidency by telling the wealthy that she was after “your Rembrandts, your stock portfolio, your diamonds and your yachts.” In one debate, she rubbed her hands together dramatically after saying she would take some of the wealth from fellow candidate John Delaney, a self-made millionaire.
In my new book, Rage and the Republic: The Unfinished Story of the American Revolution, I discuss the growing threat of ‘economic factionalism’ as politicians stoke anger against the wealthy on the false premise that they are not ‘paying their fair share’. While there are good-faith arguments for adjusting tax burdens to meet budget requirements, the top 1% pays more in taxes than the bottom 90% combined.
There is little reason to believe that a wealth tax targeted at billionaires, if retained, will not later be expanded to lower tax brackets, starting with multi-millionaires. That is the hallmark of economic factionalism, which fuels an insatiable hunger for greater wealth.
The Sanders-Khanna plan is notable for its explicit commitment to direct wealth redistribution. It also explains why the left has made seizing the Supreme Court a priority. As Harvard professor Michael Klarman explained years ago, the radical agenda to change the system and guarantee that Republicans will “never win elections again” requires Supreme Court control to enforce such measures.
The problem is that the Constitution prohibits the introduction of such a federal wealth tax. When the 16th Amendment was ratified, it allowed federal income taxes, and only income taxes: “The Congress shall have power to lay and collect taxes upon incomes, from whatever source whatsoever, without apportionment among the several States, and without regard to any census or enumeration.”
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The attempt to expand federal taxation beyond income taxes will require a constitutional amendment or a powerful, packed Court.
Nevertheless, these politicians will continue to put the distribution of prosperity before the voters. They will demonize figures like Mark Zuckerberg and Elon Musk for their wealth, while ignoring the fact that these same figures create wealth and jobs and drive our economic growth. Instead, Sanders declared that “billionaires can’t have it all.”
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The irony of Rep. Khanna turning on his own Silicon Valley voters underscores the appeal of wealth redistribution campaigns. He is upending the core of his state’s economic growth as deficits and out-of-state migration increase.
For Sanders, the legislation marks a key moment in advancing his long-standing socialist agenda. He declared the beginning of the end of “unprecedented income and wealth inequality” in the United States through such redistribution. The stated goal of eliminating wealth inequality highlights how this is just the beginning and the end of wealth taxes.
As discussed in Rage and the Republic, none of this is new. Countries like France previously targeted the wealthy, causing an exodus of taxpayers and their companies from the country. The country had to reverse its policies when the economy collapsed.
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Of course, many young people have no memory of such failures in the 20th century. Instead, they are drawn to the same sound bites used in France and Britain before the disastrous experiments with socialism. Without experience with socialist economies, figures such as socialist mayor Zohran Mamdani can entice voters to ‘the warmth of collectivism’.
There are legitimate concerns about the glaring and growing wealth gap in the United States. However, a wealth tax is neither a constitutional nor a practical way to tackle the problem.
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