Hastings Constitutional Law Quarterly


John T. Plecnik


"Eat the poor children," proposes Jonathan Swift. "Nay," protests Occupy Wall Street, "Eat the rich!" This Article does not propose eating the rich with draconically high taxes. However, the United States has experienced years of multibillion dollar deficits. Many liberals have proposed a European-style value added tax or VAT to balance the budget. Many conservatives have proposed a "fair" or flat tax. Like the Devil, regressive consumption taxes go by many names. Whether they know it or not, liberals and conservatives are proposing essentially the same thing-a federal sales tax, which disproportionately impacts the poor and middle class. This Article counters with a truly modest proposal for the New Flat Tax on wealth rather than consumption.

Congressional power to "lay and collect Taxes" is subject to two rules. Indirect taxes must be uniform, whereas direct taxes must be apportioned so that states pay in proportion to their population. Under the Obamacare decision, there is little doubt that wealth taxes are direct taxes. However, levying a wealth tax based on population has the unfair result of different tax rates in different states.

For some time, scholars have debated ways to skirt the Apportionment Clause. For the first time, this Article demonstrates how a wealth tax may comply with Apportionment and still be fair. Under this Article's proposal, the federal government would collect a wealth tax at a uniform rate and retain each state's constitutionally apportioned share of the tax. The excess unapportioned share would be refunded to the state of origin via a statelevel "pick up" tax. This revenue sharing arrangement-inspired by the pre-EGTRRA credit for state death taxes-ensures a uniform state and federal tax burden without redistributing wealth among the states. Thus, horizontal equity is achieved and both the letter and spirit of the law are satisfied.