May 19, 2024

President Joe Biden’s recent State of the Union spiel was a veritable fire-hose torrent of falsehoods. While the fact-checking of that entire speech will take some time just to deal with the volume of flapdoodle the president inflicted on the American populace, at least one claim has already been debunked, that being the president’s claim about taxes paid by billionaires. In an appearance on “Face the Nation” over the weekend, IBM Vice Chair and former Trump economic advisor Gary Cohn slam-dunked Biden’s claim, and he brought the receipts.

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Cohn appeared on CBS’s “Face the Nation” to dispel how Biden tried to tap into the perception that the wealthy have greater advantages than the “little guy” after Biden claimed that billionaires pay a lower tax rate than teachers and proposed slapping a minimum tax of 25% on billionaires.

“If you actually look at who pays taxes in this country, the bottom 50% of earners in the United States pay 2.3% of tax collected, and the top 10% pays over 70% of tax collected in this country,” Cohn said, adding that this is in large part thanks to how the Trump administration redid the tax code in 2017.

Cohn then identified a problem with Biden’s talking point about billionaires, noting that a billionaire is a measure of net worth, not a description of one’s taxable income.

That’s a problem in and of itself; cries of outrage from the left notwithstanding, the federal government has no power to tax the wealth (as opposed to the income) of individual Americans. Many experts say that it can’t be done, at least not without a constitutional amendment.

Here’s why: Article I, Section 8, Clause 1 of the Constitution states:

The Congress shall have Power To lay and collect Taxes, Duties, Imposts and Excises, to pay the Debts and provide for the common Defence and general Welfare of the United States; but all Duties, Imposts and Excises shall be uniform throughout the United States;

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Note that these taxes “shall be uniform throughout the United States.” According to Neil S. Siegel, Professor of Law and Professor of Political Science at Duke Law School, and Steven J. Willis, Professor of Law at the University of Florida Levin College of Law, there are three classes of taxation:

1. Direct taxes, which must be apportioned among the states in proportion to their populations;
2. “Indirect taxes,” specifically duties, imposts, and excises, which must be uniform throughout the country; and
3. Income taxes on humans (as opposed to businesses or other entities), which may apply to income derived from a source.

“Direct taxes” are taxes levied directly on individuals, excluding income taxes, which have their constitutional allowance in the 16th Amendment:

The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.

Any other direct taxes, say, a wealth tax, must be, as Siegel and Willis point out, apportioned among the states in proportion to their populations. In other words, a wealth tax is a direct tax on individuals and, therefore, will not be “uniform” throughout the states, as the states vary in the wealth of their residents. Therefore, a wealth tax cannot be levied without a similar amendment.

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Sorry, Joe.


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Cohn went on to clarify the difference between wealth and income:

“We do a very good job in this country of taxing income,” he said. “There is no income in this country, unless you buy a tax-free bond, that doesn’t get taxed at a minimum of 20%, whether it’s interest or dividends or capital gains. So, there’s no billionaire in this country that has income that is not paying at least 20%.”

In other words, billionaires follow the same tax code as everyone else, labyrinthian though it may be; there are different rates for direct income, investment income, capital gains, and so on. And a person may hold wealth – say, in the form of a family farm that has no paper on it but may be worth several million dollars – without seeing any income from the mere existence of that asset. Taxing a person on that basis would be ruinous for that person and for the economy.

So once again, Joe Biden doesn’t know what he’s talking about, and once again, someone from the private sector has had to set things straight. The problem is that the president spews falsehoods at such a rate to make debunking difficult.

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