Written by 01:15 Business

Democrats’ Dream of a Wealth Tax Is Alive. For Now.

For years, liberal Democrats have agitated for the United States to tax wealth, not just income, as a way to ensure that rich Americans who derive wealth from real estate, stocks, bonds and other assets were paying more in taxes.

On Thursday, that dream survived a Supreme Court scare, but just barely.

Thanks to a narrow court ruling, a raft of plans to use the tax code to address the gaping divide between the very richest Americans and everyone else appear set to live for years to come in the campaign proposals and official budgets of top Democrats.

The idea of a wealth tax was not directly before the court on Thursday. Justices were considering the constitutionality of a new tax imposed under former President Donald J. Trump that applies to certain income earned by businesses overseas. But in taking the case, the court could have pre-emptively ruled federal wealth taxation unconstitutional.

It did not, and liberal groups celebrated the victory.

“The Supreme Court also could have taken an activist turn of the worst kind by pre-emptively ruling federal wealth taxes unconstitutional today,” Amy Hanauer, the executive director of the Institute on Taxation and Economic Policy, which supports higher taxes on corporations and the wealthy, said in a statement. “To its credit, the court did not do so.”

But the case also offered a window into the legal fight to come over various iterations of a wealth tax should Congress ever adopt one. It showed a solid four justices firmly opposed to such a tax — and two more who appeared skeptical.

“This is a narrow decision,” Joe Bishop-Henchman, the vice president of the National Taxpayers Union, which opposes wealth tax proposals, said in a statement on Thursday. But, he added, “the court makes clear it is not opening the door to a wealth tax.”

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Last modified: 21 June 2024
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