What’s Next

We have seen the Republicans go after abortion, trans healthcare, birth control, IVF, marriage equality, and Mifepristone. So what is next on the Republican “hit parade”?

Does the Fourteenth Amendment’s Section 1 on equal protection make tax brackets illegal? Could this be the next blockbuster court case?

The Founders’ View vs. the Progressive Income Tax

Tenth Amendment

April 14, 2016

By Burton W. Folsom

America’s founders rejected the income tax entirely, but when they spoke of taxes they recognized the need for uniformity and equal protection to all citizens. “[A]ll duties, imposts and excises shall be uniform throughout the United States,” reads the U.S. Constitution. And 80 years later, in the same spirit, the Fourteenth Amendment promised “equal protection of the laws” to all citizens.

In other words, the principle behind the progressive income tax—the more you earn, the larger the percentage of tax you must pay—would have been appalling to the founders. They recognized that, in James Madison’s words, “the spirit of party and faction” would prevail if Congress could tax one group of citizens and confer the benefits on another group.

Of course we don't know what the founding fathers thought because there was no income tax back then. What I think pokes holes in their argument is in 1913 the first income tax had brackets! 

Biden 2025 budget…

• Major individual, capital gains, and estate tax provisions modeled:
• Expand the base of the net investment income tax (NIIT) to include nonpassive business income and increase the rates for the NIIT and the additional Medicare tax to reach 5 percent on income above $400,000 (effective 2024)
• Increase top individual income tax rate to 39.6 percent on income above $400,000 for single filers and $450,000 for joint filers (effective 2024) [My emphasis]
• Tax long-term capital gains and qualified dividends at ordinary income tax rates for taxable income above $1 million and tax unrealized capital gains at death above a $5 million exemption ($10 million for joint filers)
• Limit retirement account contributions for high-income taxpayers with large individual retirement account (IRA) balances
• Tighten rules related to the estate tax
• Tax carried interest as ordinary income for people earning more than $400,000
• Limit 1031 like-kind exchanges to $500,000 in gains

It is the increase of the top tax brackets that has the billionaires hopping mad and if they are mad so are the Republicans. So I would not be surprised to a see a tailor made court case going to the Supreme Court.