In a recent interview with Insider, CEI President Kent Lassman outlined why the so-called Billionaire’s Minimum Income Tax included in President Biden’s 2022 White House Budget is unconstitutional.
On Monday, Biden introduced what he’s calling the Billionaire Minimum Income Tax, which would impose a minimum 20% tax on Americans worth over $100 million.
A key part of that tax is how it defines “income.” Under Biden’s proposal, the growing value of things like stocks and real estate—which are called unrealized capital gains—would be considered a part of someone’s income, and subject to tax.
After presenting arguments in favor of the legality of the proposed tax, Insider asked Lassman for his assessment:
“What’s a problem with the proposal out of the White House is they are trying to transform something that has never been income into income, in order that they can claim these revenues under an exception made in the 16th Amendment,” Kent Lassman, the president and CEO of Competitive Enterprise Institute, a right-leaning think tank, told Insider.
The 16th Amendment gave Congress the power to tax incomes. Lassman said that the Constitution is designed with protections for citizens, and that “the heart of problem” is “that we’re trying to go around the taxpayer protections, because otherwise it would be very difficult to administer a wealth tax.”
CEI is currently challenging a similarly structured tax that was a provision of the 2017 tax reform law passed under former President Donald Trump. This provision taxes U.S. citizens on certain accumulated earnings of foreign corporations going back 30 years, even if the earnings have not been distributed or no shares have been sold. In Moore v. United States, a husband and wife couple are challenging the tax bill they received on an investment they made in a company in India that makes agricultural tools for farmers, even though they never sold a share of stock or received a dividend from the company. Under the Constitution, such direct federal taxes must be apportioned among the states unless they are taxes on income. Both the Biden proposal and the Trump tax illegally attempt to redefine income in order to skirt this constitutional requirement.