Last week, the wealthiest Americans had their day in court. The case before the Supreme Court, Moorev. United States, is a challenge to an obscure and narrow provision of the tax code, in former President Donald Trump’s Tax Cuts and Jobs Act, that taxes certain assets held abroad.
An activist lower court judge, most likely inspired by right-wing constitutional scholars and think tanks, cleverly framed Moore as a grand occasion to rule against some future wealth tax, and the high court took it up.
Supporters of the Moore litigation probably hope to persuade conservatives on the court to issue a broad ruling that would declare unconstitutional any attempt to enact a tax on wealth (like proposals that Senator Elizabeth Warren of Massachusetts and others have floated).
The argument for why a tax on wealth would be unconstitutional is both premature and exceptionally weak. And indeed, the consensus after oral arguments last week was that a majority of justices — but certainly not all — were skeptical of a sweeping ruling.
Still, something like this argument prevailed with a similarly conservative Supreme Court once before, long ago — only to be repudiated decisively by the American people through a constitutional amendment.
The question now is whether the conservative justices will practice the originalism they preach and listen to the framers and ratifiers of the 16th Amendment, or whether instead, like the Supreme Court over a century ago, they will be moved by political sympathy for the wealthy to reach out and rule in their favor.
The Moore case should not be hard to decide. The court can easily uphold the tax, making no new law, by holding that Congress has the power today to tax shareholders for certain kinds of gains held in offshore corporations. This sort of thing is common in the tax code; to hold otherwise would be highly disruptive.
But this court has not shied from rulings with sweeping impact, as evidenced by the fact that it took up this unlikely case in the first place. At oral argument, Justice Samuel Alito, the court’s most reliable ally of billionaires, asked the solicitor general: “So let’s say that somebody graduates from school and starts up a little business in his garage, and 20 years later, 30 years later, the person is a billionaire. Under your argument can Congress tax all of that?”
It would not be a shock if some justices were tempted to go big and declare Congress powerless under the Constitution to tax the wealthiest Americans. If so, it would not be the first time.
At the founding of the Republic, the Constitution gave Congress a broad power to “lay and collect taxes” of all kinds. The Constitution required only that taxes be “uniform,” and that “direct taxes” — taxes like a head tax that it makes sense to apportion to the states by population — were indeed apportioned by population, accounting for enslaved people according to the infamous three-fifths clause.
There was no forbidden category of taxes, no rule that said “no taxes on income” or “no taxes on wealth.” What to tax, and how much, were questions for Congress. “Direct taxes” were those that could be apportioned by population without defeating their purpose — not an income tax, or a wealth tax, because “numbers” (of people) “do not afford a just estimate or rule of wealth,” as the Supreme Court ruled in a 1796 case. The Supreme Court reaffirmed this original understanding, repeatedly and forcefully, for 100 years.
Then, in 1895, a single case upended this history and tradition. In Pollock v. Farmers’ Loan and Trust Company, a 5-to-4 majority struck down the income tax. The ostensible rationale was that an income tax was a “direct tax” — a tax that would have to be apportioned by population, which it could not be, since some states have more per-capita income than others.
Therefore, the income tax fell into a newly invented, Supreme Court-devised loophole, a tax that Congress cannot constitutionally enact at all.
The backlash against the court was sustained and furious. Public outrage was fueled by the outrage of the court’s own dissenters. The Pollock majority had complained that the income tax unfairly singled out the rich, but the dissenters pointed out that it was the majority who were creating a special privileged class of rich people who were now constitutionally protected from tax. The court’s reckless new doctrine, declared Justice John Marshall Harlan, not only betrayed the original understanding of the tax power and a century of precedent — it also granted the wealthiest Americans “power and influence” that would leave ordinary citizens “subjected to the dominion of aggregated wealth.”
Justice Henry Billings Brown decried the court’s “surrender of the taxing power to the moneyed class,” a move that risked creating “a sordid despotism of wealth.” All four dissenters called on the court — or, if need be, the people themselves — to restore the broad taxing power Pollock had undermined.
Populists, Democrats and ultimately even Republicans argued that the dissenters were right. The Pollockmajority was helping to cement a kind of oligarchy — an economic elite with such outsize economic and politicalpower that it was ultimately incompatible with republican government.
This anti-oligarchy argument drew on a long tradition in American constitutional thought. In it, the primary responsibility for preventing oligarchy lies with the political branches; the court’s job is to get out of the way. In this case, it took a massive cross-party political movement to overturn Pollockand restore Congress’ broad power to tax.
This movement succeeded in putting the 16th Amendment — the first amendment since Reconstruction — into our Constitution.
While the amendment was pending, the court itself seemed to back off, upholding several new forms of progressive taxation and making it clear that by reversing Pollock, the 16th Amendment would, as Justice Oliver Wendell Holmes put it, “get rid of nice questions as to what might be direct taxes.”
It is thus strange that the anti-tax lawyers arguing last week at the Supreme Court purport to rely on the 16th Amendment for their new claim that Congress can’t tax wealth. Their claim is that somehow, the logic of Pollockwas right: There are kinds of tax that the Constitution secretly forbids, by demanding that they be apportioned when apportionment is not possible.
And once again it just so happens that those secretly forbidden kinds of tax are ones that fall on the rich. The anti-tax advocates in Mooreare asking the court to follow in the Pollock majority’s footsteps and invent a new doctrine to protect the super-wealthy from tax — this time, from a wealth tax that hasn’t yet even been enacted.
Often in its history, the Supreme Court has been the branch of government most sympathetic to the interests of the wealthy. The court that handed down Pollock in the 1890s also aggressively repressed union organizing — a project the current court has resumed with gusto, in our new era of right-wing judicial activism
Is this court really prepared to reprise Pollock — a move that would be flagrantly at odds with the fidelity to the original language of the Constitution that this court so loudly preaches?
Unlike in 1895, this time the court would have to disregard not only the 1789 Constitution but also the 16th Amendment, which squarely repudiated the court’s last attempt to undermine Congress’s taxing power in order to protect the rich. Even if the court chooses to resolve Mooreon narrow grounds, it may still use the occasion to signal, in the spirit of Pollock, that a future wealth tax will be struck down.
Instead, this would be a good time for the court to back off. If it does not, then it would be a good time for the other branches of government to take more seriously their responsibilities to act as a check on a runaway court.
Joseph Fishkin, a professor of law at U.C.L.A., and William E. Forbath, a professor of law and history at the University of Texas at Austin, are the authors of “The Anti-Oligarchy Constitution: Reconstructing the Economic Foundations of American Democracy.” They wrote (with Bruce Ackerman) an amicus brief in Moore v. United States.
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